SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 333-18957
CLARK Material Handling Company
(Exact name of registrant as specified in its charter)
Delaware 61-1312827
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
172 Trade Street
Lexington, Kentucky 40511
(Address of registrant's principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (606) 288-1200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ x ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]
As of January 1, 1997, there were 1,000 shares of the registrant's
common stock outstanding, all of which were owned by an affiliate of the
registrant.
Documents incorporated by reference: None
<PAGE>
CLARK Material Handling Company
Index to Annual Report on Form 10-K
Page
----
PART I........................................................................3
Item 1 -- BUSINESS........................................................3
Item 2 -- PROPERTIES......................................................8
Item 3 -- LEGAL PROCEEDINGS...............................................9
Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............9
PART II.......................................................................9
Item 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.............................................9
Item 6 -- SELECTED FINANCIAL DATA........................................10
Item 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................11
Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................15
Item 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE............................15
PART III.....................................................................16
Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............16
Item 11 -- EXECUTIVE COMPENSATION.........................................17
Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.................................................19
Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................21
PART IV......................................................................23
Item 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K............................................23
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The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial statements
(including notes thereto) included elsewhere in this report. Unless otherwise
indicated or the context otherwise requires, references to the "Company" or
"CLARK" are to Clark Material Handling Company (including its predecessors) and
the other material handling operations acquired from certain subsidiaries of
Terex Corporation ("Terex") pursuant to the Acquisition (as defined) for periods
prior to the Acquisition, and to CLARK Material Handling Company and its
subsidiaries for periods from and after the Acquisition, after giving effect
thereto.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward looking statements. Certain matters discussed in
this filing could be characterized as forward looking statements, such as
statements relating to plans for future expansion, capital spending, financing
sources and effects of regulation and competition. Such forward looking
statements involve important risks and uncertainties that could cause actual
results to differ materially from those expressed in such forward looking
statements.
PART I
Item 1 -- BUSINESS
General
CLARK is a leading international designer, manufacturer and marketer of
a complete line of forklift trucks including internal combustion trucks,
electric riders, narrow aisle stackers and powered hand trucks. The Company
invented the platform truck in 1917, the tow tractor in 1924 and the forklift in
1928, and produced the first electric forklift in 1942. As a result of this
history of innovation, management believes CLARK(R) is one of the most
recognized brand names of forklift trucks in North America.
Management believes that CLARK has a large installed fleet in North
America with over 250,000 units, and has a total of approximately 350,000 units
in operation worldwide. This large installed fleet has allowed CLARK to generate
significant ongoing replacement parts sales, which typically generate
substantially higher gross margins and provide a more stable revenue base than
new truck sales. CLARK's North American operations generally account for
approximately 70% of its net sales and its European operations account for the
remaining 30%. CLARK distributes its products to a diverse customer base through
a global network of 285 dealers, with more than 560 locations.
For information concerning the Company's backlog orders, see "Item
7--Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Backlog." Information about industry and geographic segments is
included in notes A and L, respectively, to the Company's consolidated financial
statements included under "Item 8 -- Financial Statements and Supplementary
Data."
The Acquisition
The Company and CMH Holdings Corporation, a Delaware corporation
("Holdings"), were formed by Citicorp Venture Capital Ltd. ("CVC") and certain
members of management of CLARK (the "Management Investors") to effect the
acquisition (the "Acquisition") of substantially all the assets and certain
liabilities of Clark Material Handling Company, a Kentucky corporation, and all
of the outstanding capital stock of certain of its affiliates, including its
German, Korean,
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Brazilian and Canadian affiliates. The Acquisition was consummated on November
27, 1996 pursuant to a Stock and Asset Purchase and Sale Agreement dated as of
November 9, 1996 among Terex and certain of its subsidiaries, as sellers, and
the Company, as buyer (the "Acquisition Agreement"). The aggregate consideration
for the Acquisition was $139.5 million, which was subject to certain
post-closing adjustments. To finance the Acquisition (including the payment of
related fees and expenses): (i) CVC, Dr. Martin M. Dorio, President and Chief
Executive Officer of the Company, and Thomas J. Snyder, who was elected to the
Board of Directors of the Company in connection with the Acquisition, purchased
$17.0 million of preferred stock (the "Holdings Preferred Stock"), $1.0 million
of voting common stock (the "Holdings Class A Stock") and non-voting common
stock (the "Holdings Class B Stock", and together with the Holdings Class A
Stock, the "Holdings Common Stock") and $7.0 million of junior subordinated
debentures (the "Holdings Debentures") from Holdings for $25.0 million in cash;
(ii) Holdings contributed such $25.0 million to the Company in exchange for all
of the capital stock of the Company; and (iii) the Company issued and sold $130
million of 10 3/4% Senior Notes due 2006 (the "Notes").
In connection with the Acquisition, the Company entered into a new
$30.0 million revolving credit facility (the "Revolving Credit Facility"), which
is secured by the accounts receivable and inventory of the Company's domestic
operations. The Company did not draw upon the Revolving Credit Facility in
connection with the transactions.
Products
CLARK currently offers over 100 truck designs within five major product
lines: light internal combustion ("IC") trucks (with a capacity of 1.0 to 5.0
tons), heavy IC trucks (with a capacity of 5.5 to 17.5 tons), narrow-aisle
stackers (with a capacity of 1.5 to 2.5 tons), electric riders (with a capacity
of 1.3 to 6.0 tons) and powered hand trucks (with a capacity of 2.0 to 4.0
tons).
Light IC trucks are used for general warehousing needs and are
generally powered by liquid propane. Such trucks are well suited for
manufacturing and distribution applications which require a high degree of
maneuverability. Heavy IC trucks are specialty products designed for use in more
demanding situations such as heavy manufacturing or container handling
applications. Narrow-aisle stackers provide solutions for high density storage
needs and operate in six to eight foot aisles and reach heights of more than 30
feet. Electric riders are designed for indoor use in warehousing, manufacturing,
distribution and other applications and are powered by a rechargeable electric
battery. Management estimates that light IC trucks, heavy IC trucks,
narrow-aisle stackers and electric riders represent approximately 58%, 3%, 15%
and 24% of the unit volume of the forklift truck industry, respectively. Powered
hand trucks are generally used in the transportation and order-selecting
businesses.
CLARK tailors its products to meet customers' particular material
handling needs. To further meet these needs, CLARK adds attachments such as
container handlers, side shifters, roll clamps, block handlers, carton clamps,
push-pulls (slip-sheet) and fork positioners.
Rapid development and introduction of new and redesigned products
incorporating the latest materials handling technology is a key component of
CLARK's strategy. Management believes that CLARK has introduced more new and
redesigned models in the last two years than any other major forklift truck
manufacturer and plans to continue a rapid pace of new product introduction.
CLARK maintains an engineering staff which is responsible for designing new
products and improving existing product lines.
Since 1993, CLARK has redesigned a substantial portion of its product
line. In December 1994, CLARK introduced the 2-3 ton Genesis(TM) IC truck
targeting the light IC market. CLARK invested approximately $15.0 million to
develop the Genesis(TM) truck. The Genesis(TM) truck provides improved
ergonomics, performance, reliability and serviceability, and provided higher
gross margins than its predecessor, primarily due to its lower production cost.
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CLARK's European subsidiaries ("CLARK Europe") introduced the
Genesis(TM) 2-3 ton gas and diesel MegaStat(TM) model in April 1995. The
Genesis(TM) 2-3 ton MegaStat(TM) IC received the "General Lift Truck Innovation"
award in 1996 from the Fork Truck Association in the United Kingdom. In August
1996, CLARK continued to expand its Genesis(TM) family with the addition of a
4-5.5 ton CGP lift truck. Also, in 1995, CLARK made significant additions to its
narrow aisle stackers product line which was expanded to include double reach
and straddle models.
Aftermarket Parts
Management estimates that since the Company's inception nearly one
million forklift trucks have been manufactured by CLARK and its predecessors and
that it currently has in service approximately 350,000 trucks worldwide, with
approximately 250,000 in North America, 70,000 in Europe and 30,000 in other
international markets, generating a substantial aftermarket parts business for
CLARK. CLARK's worldwide installed fleet of approximately 350,000 forklift
trucks generates an estimated $240.0 million in annual global aftermarket parts
sales, of which CLARK has historically captured an estimated 40% share.
CLARK's parts distribution operation undertakes purchasing and customer
services for aftermarket parts. CLARK distributes its aftermarket parts in North
America through a distribution center in Southaven, Mississippi, (the "Southaven
Facility"), in Europe through a warehouse located in Saarn, Germany and for the
World Trade Division of CLARK, through two sales and distribution facilities
located in Seoul, Korea and the State of Sao Paulo, Brazil, respectively. CLARK
shares the Southaven Facility with Terex and, pursuant to the Acquisition, CLARK
and Terex entered into a Service Agreement providing for the continued use by
CLARK of such facility. For information regarding the Service Agreement, see
"Item 13--Certain Relationships and Related Transactions--Service Agreement."
Manufacturing Operations
CLARK's Lexington, KY plant produces both IC and electric forklifts
with lift capacities ranging from 1-17.5 tons and is equipped with five assembly
lines and two heavy IC assembly bays. The Lexington plant is primarily an
assembly operation with welding and painting capabilities, operates one shift
per day and produces an average of 50 lift trucks per day.
CLARK Europe's Mulheim manufacturing facility produces both IC
forklifts (Diesel, LP gas and natural gas) with hydrodynamic as well as
electronically controlled hydrostatic drive (MegaStat(TM)) and electric powered
forklifts equipped with D/C as well as frequency-controlled A/C motors
(MegaAC(TM)) in the capacity range of 1-5 tons. The Mulheim facility is equipped
with four assembly lines, one for electric trucks, two for IC trucks and one for
uprights. The manufacturing process includes pre-production and welding
production of frames and uprights and a powder dry paint system was recently
installed to ensure high-quality painting of frames and uprights. CLARK Europe's
plant currently operates one shift per day and produces an average of 20 lift
trucks per day. The Mulheim plant has been awarded ISO 9001 certification,
indicating that the Company has achieved and sustained a high degree of quality
and consistency with respect to its products.
Dealer Network
CLARK markets both original equipment and parts through a worldwide
dealer network. CLARK currently has approximately 100 independent dealers in
each of North America and Europe and owns three dealers in Europe. In addition,
outside of North America and Europe, CLARK markets and distributes its export
products through its Clarklift World Trade Division (the "World Trade
Division"). The World Trade Division markets its products through 95
distributors operating in the Asian, African, Middle Eastern, Caribbean and
Latin American markets. CLARK's dealers and distributors generally market the
full CLARK product line and maintain comprehensive service capabilities. CLARK's
sales organization coordinates sales and promotional activities, provides
ongoing dealer training and facilitates dealer communications. CLARK sells to a
diversified customer base, with no single customer accounting for more than 5%
of total sales.
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Suppliers
The Company strategically relies upon outside suppliers for a vast
majority of the individual components of a lift truck. Management believes that
such outsourcing allows CLARK greater flexibility in varying its cost structure
in response to changing market conditions.
Principal materials used by CLARK in its various manufacturing
processes include steel, castings, engines, tires, electric controls, uprights,
transaxles and motors, and a variety of other fabricated or manufactured items.
While substantially all such materials are typically available from multiple
suppliers, CLARK depends exclusively upon certain suppliers of key parts used in
its lift trucks. From time to time, certain of CLARK's suppliers have
experienced difficulties in meeting CLARK's production schedules. The failure of
a key supplier to meet the Company's requirements on a timely basis or the loss
of a key supplier could lead to delays in the Company's manufacturing operations
and have a material adverse effect on the Company.
Competition
CLARK produces one of the leading forklift truck brands in North
America, although NACCO Industries, Inc., ("NACCO"), through its Hyster and Yale
divisions, produces more forklift trucks annually. In addition to NACCO, other
major North American competitors include Toyota Lift, Inc., Mitsubishi
Caterpillar Forklift America Inc., Nissan Forklift Corp. North America, Komatsu
Forklift USA Inc. and Daewoo in both IC trucks and electric riders, and Crown
Equipment Corp. and Raymond Corporation in electric riders alone. In Europe,
CLARK competes with Linde AG, the European market leader, as well as
Jungheinreich AG, Toyota Lift, Inc. and NACCO. CLARK also competes with a number
of specialty manufacturers.
The truck market in which the Company competes is highly competitive.
The Company encounters significant competition particularly from lower cost
foreign competitors, including manufacturers located in Japan and Korea. The
Company competes on the basis of quality, price, on-time delivery, product line,
ease of use, safety, comfort and customer service. Many of the Company's
competitors have greater financial resources than the Company. Additionally,
certain of the Company's products are subject to changing technology which could
place the Company at a competitive disadvantage relative to product innovations
by competitors. There can be no assurance that the Company will be able to
achieve the technological advances that may be necessary to remain competitive.
Intellectual Property
The Company relies on a combination of trademarks, service marks, trade
names, patents, licensing arrangements, trade secrets, know-how and proprietary
technology to secure and protect its intellectual property rights. In
particular, the Company's CLARK(R), Clarklift(R), Powrworker(R) and Genesis(TM)
trademarks are of particular importance to the Company's business. The Company
is currently undertaking to obtain trademark registrations for its
MegaValve(TM), MegaStat(TM), MegaPro(TM) and MegaAC(TM) marks. The loss of the
Company's rights under one or more of the Company's trademarks could have a
material adverse effect on the Company's business.
There can be no assurance that the Company will be successful in
obtaining approval of any present or future patent or trademark applications;
that any patents, patent applications and patent licenses will adequately cover
the Company's technologies or protect the Company from potential infringements
by third parties; that any nondisclosure and confidentiality agreements will
provide meaningful protection for the Company's trade secrets, know-how or
proprietary technology in the event of any unauthorized use or disclosure of
such information; or that others will not obtain access to, or independently
develop technologies or know-how similar to, that of the Company. There also can
be no assurance that future litigation by the Company will not be necessary to
enforce its trademark, patent and other proprietary rights, or to defend the
Company against claimed infringement of the rights of others, adverse
determinations in which could have a material adverse effect on the Company.
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Employees
As of December 31, 1996, CLARK's total North American work force
consisted of approximately 550 salaried, hourly and temporary employees. In
addition, approximately 25 CLARK employees are located at the Southaven
Facility, which the Company shares with Terex, who are responsible for
aftermarket customer service and administration. There has not been a union at
CLARK's North American manufacturing operations for the past nine years since
moving to Kentucky.
The union employees of Terex at the Southaven Facility engaged in a
labor dispute beginning in 1995, which had a short term effect on the Company's
distribution operations at the facility but had no appreciable effect on the
conduct of business or results of operations. Although such union employees
filed a petition with the National Labor Relations Board in May 1996 for
decertification of the union, there can be no assurance that similar labor
disputes will not occur in the future which, depending upon the timing and
duration of such disputes, could have a material adverse effect on the Company.
As of December 31, 1996, CLARK's total work force outside of North
America consisted of approximately 450 employees. The Mulheim facility at Saarn
is represented by the German Metal Workers (Industrie Gewerkschaft Metal) and
the aftermarket parts facility at Saarn is represented by the German Union for
Trading, Banking and Insurance (Gewerkschaft Handel, Banken und Versicherungen).
The Mulheim facility has a total work force of approximately 350, of which
approximately 200 are members of the German Metal Workers, and the aftermarket
parts facility at Saarn has a total workforce of approximately 65, of which
approximately 20 are members of the German Union for Trading, Banking and
Insurance. There are no contracts between CLARK and the unions, but CLARK
follows standard practices by complying with contracts between the unions and
the employers' association.
Management believes that its relationships with its employees and
unions are good.
Environmental Matters
As with most industrial companies, the Company's facilities and
operations are required to comply with and are subject to liability under
federal, state, local and foreign environmental and worker health and safety
laws, regulations and ordinances, including those relating to air emissions,
wastewater discharges and the management and disposal of certain materials,
substances and wastes ("Environmental Laws"). Certain of these Environmental
Laws hold owners or operators of land or businesses liable for their own and for
previous owners' or operators' releases of hazardous or toxic substances,
materials or wastes, pollutants or contaminants, including, in some instances,
petroleum and petroleum products. Compliance with Environmental Laws also may
require the acquisition of permits or other authorizations for certain
activities and compliance with various standards or procedural requirements.
Although the Company believes that its operations are in substantial compliance
with current regulatory requirements under material applicable Environmental
Laws, the nature of the Company's operations and the history of industrial uses
at some of its facilities expose the Company to the risk of liabilities or
claims with respect to environmental and worker health and safety matters. The
Company may also have contingent responsibility for liabilities with respect to
environmental matters arising in connection with the prior operations of the
material handling business of Clark Equipment Company, a predecessor of the
Company ("CEC"). There can be no assurance that material costs or liabilities
will not be incurred in connection with such liabilities or claims.
In connection with the Acquisition, the Company agreed to indemnify
Terex and hold it harmless from and against all losses which are incurred or
suffered by Terex with respect to or arising out of the Company's business and
assets except for such losses which arise from or are in connection with any
real property, business entities or assets which were not acquired as part of
the Acquisition (which Terex agreed to retain responsibility for and indemnified
the Company against). No specific environmental losses were identified by the
parties in the Acquisition Agreement nor are there any known material losses
which have been asserted by Terex pursuant to the environmental indemnity
provisions of the Acquisition Agreement or incurred by the Company. The
environmental indemnities are subject to certain deductibles, caps and time
limitations depending on the nature of the environmental claim.
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Based upon the Company's experience to date and the indemnities obtained in
connection with the Acquisition, the Company believes that the future cost of
compliance with existing Environmental Laws (or liability for known
environmental liabilities or claims) should not have a material adverse effect
on the Company's business, financial condition or results of operations.
Compliance with such laws has, and will, require expenditures by the Company on
a continuing basis. Future events, such as changes in existing laws and
regulations or their interpretation, may give rise to additional compliance
costs or liabilities that could have a material adverse effect on the Company's
business, financial condition or results of operations. Compliance with more
stringent laws or regulations, as well as more vigorous enforcement policies of
regulatory agencies or stricter or different interpretations of existing laws,
may require additional expenditures by the Company that may be material.
Item 2 -- PROPERTIES
The Company is headquartered in Lexington, Kentucky. The Company
currently owns or leases 10 facilities in North America, Europe, Brazil and
Korea which are used for manufacturing, distribution, sales, warehousing and
service center activities.
The following table outlines the principal facilities owned or leased
by CLARK or its subsidiaries:
Facility Location Type of Facility
----------------- ----------------
Lexington, Kentucky......... Manufacturing, warehouse and office
Lexington, Kentucky*........ Sales, training and engineering
Lexington, Kentucky......... Warehouse
Mulheim-Ruhr, Germany**..... Manufacturing, engineering, power
generation, maintenance and office
Saarn, Germany.............. Warehouse
Barcelona, Spain............ Sales branch
Paris, France............... Sales branch
Lyon, France................ Sales branch
State of Sao Paulo,
Brazil.................... Parts distribution
Seoul, Korea................ Parts distribution
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* Owned.
** A portion of the facility is owned.
CLARK also owns a manufacturing facility in Banwaal, Korea which was
closed in the fourth quarter of 1994 and is presently held for sale. CLARK
Europe also presently leases unoccupied office space in Mulheim-Ruhr, Germany.
Management believes that the Company's facilities are suitable for its
operations and provide sufficient capacity to meet the Company's requirements
for the foreseeable future.
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Item 3 -- LEGAL PROCEEDINGS
From time to time product liability claims are asserted against the
Company for various injuries alleged to have resulted from defects in the
manufacture and/or design of its products. As of December 31, 1996, the Company
had approximately 99 pending lawsuits relating to claims arising from accidents
involving its products. Most of these lawsuits are in various stages of pretrial
completion, and certain plaintiffs are seeking punitive as well as compensatory
damages. The Company is self-insured, up to certain limits, for these product
liability claims, as well as certain exposures related to general workers'
compensation and automobile liability. The Company has recorded and maintains on
its balance sheet reserves relating to the estimated liability, based in part
upon actuarial determinations, of the Company's aggregate exposure for such
self-insured risks. Effective November 27, 1996, the Company was no longer
self-insured for general workers compensation and auto liability and had various
insurance policies with insuring agencies. The Company is involved in various
other legal proceedings which have arisen in the normal course of its
operations. The Company has recorded provisions for estimated losses in
circumstances where a loss is probable and the amount or range of possible
amounts of the losses is estimable. There can be no assurance that any of the
foregoing reserves are adequate.
The Company also has certain other contingent liabilities or
uncertainties for other obligations, including contingent liabilities relating
to the Company's guarantees of certain floor plan obligations and its obligation
to repurchase equipment from certain dealers and customers upon the occurrence
of certain events. The unfavorable resolution of product liability claims or any
other contingencies or uncertainties in the future could have a material adverse
effect on the Company. See "Item 7 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Contingencies, Commitments and
Uncertainties."
Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders for the
period ended December 31, 1996.
PART II
Item 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common equity is not publicly traded and, accordingly,
an established market does not exist for such common equity. The Company is a
wholly owned subsidiary of Holdings. For certain information concerning the
ownership of Holdings Preferred Stock and Holdings Common Stock, see "Item 12 --
Security Ownership of Certain Beneficial Owners and Management."
No dividends have been paid on the Company's common equity. There are
certain limitations on the payment of dividends in the Company's borrowing
arrangements.
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Item 6 -- SELECTED FINANCIAL DATA
During the five year period ended December 31, 1996, the Company has
been acquired two times in two separate purchase business combinations. On July
31, 1992, Terex acquired the Company from CEC. From July 31, 1992, through
November 26, 1996, the Company operated as wholly owned subsidiaries of Terex.
On November 26, 1996, the Company was acquired by Holdings. Accordingly, the
selected financial data shown below is not necessarily comparable as a result of
these ownership changes and the resulting adjustments required for purchase
business combinations under generally accepted accounting principles.
The information contained in this table should be read in conjunction
with "Item 7 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's consolidated financial statements
included under "Item 8--Financial Statements and Supplementary Data.".
<TABLE>
<CAPTION>
Predecessor Wholly owned Subsidiaries of Terex The Company
----------- -------------------------------------------------------- -----------
Seven Months Five Months Years Ended Eleven Months One Month
Ended Ended December 31, Ended Ended
July 31, December 31, ---------------------------- November 26, December 31,
1992 1992 1993 1994 1995 1996 1996
---- ---- ---- ---- ---- ---- ----
Operating Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $288.5 $240.9 $395.6 $472.7 $528.8 $404.6 $46.8
Gross Profit 13.4 22.5 22.3 42.9 44.7 45.9 4.9
Engineering, selling and
administration expenses 29.9 19.3 46.5 41.7 31.2 27.0 3.0
Income (loss) from operations(1) (16.4) 2.2 (28.6) (14.0) 3.1 13.3 1.9
Income (loss) before
extraordinary items and
cumulative effect of change
in accounting (1) (17.7) (5.1) (44.9) (25.3) (17.4) (2.1) .5
Balance sheet data (at end
of period):
Working capital (2) 77.9 59.1 50.8 41.4 46.4 51.4 45.0
Net property, plant and
equipment 47.2 92.9 75.3 60.7 58.2 51.2 51.0
Total assets 215.1 270.2 208.0 194.7 192.7 192.7 301.3
Long-term obligations (3) 7.8 93.4 120.0 125.9 143.0 151.3 133.6
<FN>
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(1) Includes corporate charges allocated by Terex of (a) $1.1 million for the
five months ended December 31, 1992; (b) $4.4 million, $8.5 million and
$7.0 million in the years ended December 31, 1993, 1994 and 1995,
respectively; and (c) $5.7 million in the eleven month period ended
November 26, 1996. Also includes severance and exit charges of $6.7
million and $3.5 million in the years ended December 31, 1994 and 1995,
respectively.
(2) Calculated as net trade receivables plus net inventories less trade
payables.
(3) Prior to August 1, 1992, the Company was included as part of CEC's
consolidated financial statements. CEC did not allocate any indebtedness
to the predecessor, and the amounts of long-term obligations as of July
31, 1992 do not include any such indebtedness. The amounts of long-term
obligations as of December 31, 1993, 1994 and 1995, and November 26,
1996, include Due to Parent of $40.2 million, $68.5 million, $87.6
million and $96.4 million, respectively; such amounts also include the
long-term portion of capital lease obligations. At December 31, 1996, the
amount of long-term obligations includes the Notes and the long-term
portion of capital lease obligations.
</FN>
</TABLE>
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Item 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
CLARK is a leading international designer, manufacturer and marketer of
a complete line of forklift trucks, which it markets through a global network of
285 dealers. CLARK's large installed base, which management estimates to be
approximately 350,000 units in operation worldwide, provides for substantial
ongoing replacement parts sales, which typically generate significantly higher
gross margins than new product sales. CLARK's North American operations
generally account for approximately 70% of its net sales and CLARK Europe
accounts for the remaining 30%.
CLARK experienced operating losses of $28.6 million and $14.0 million
for the years ended December 31, 1993 and 1994, respectively. These losses were
largely due to high operating expenses and cash constraints. Since 1993, CLARK
has undertaken a series of initiatives aimed at reducing fixed costs, developing
a largely variable cost structure and maximizing the Company's ability to
respond to market changes. These initiatives involved (i) elimination of
redundant manufacturing and distribution facilities, (ii) head-count reductions
involving termination of over 600 employees, representing approximately 40% of
the Company's workforce, (iii) elimination of non-core, unprofitable product
lines and (iv) greater reliance on outsourcing. In addition to cost
rationalization, the Company has redesigned a significant portion of its product
portfolio. The Company's new and redesigned products have earned higher gross
margins due to their lower production costs.
The Company's products are sold in more than 50 countries worldwide.
Accordingly, a substantial portion of the sales of the Company are generated in
foreign currencies, while the costs associated with these sales are only
partially incurred in the same currencies. Consequently, the Company's financial
performance and results of operations are affected by fluctuations between the
U.S. dollar and such foreign currencies. In addition, currency fluctuations
could improve the competitive position of the Company's foreign competitors if
the value of the U.S. dollar rises in relation to the local currencies of such
competitors. The risks associated with operating in foreign countries could
adversely affect the Company in the future.
Sales of products manufactured and sold by the Company have
historically been subject to substantial cyclical variation based, among other
things, on general economic conditions. The Company experienced a softening in
the demand for forklift trucks in North America and Europe during 1996. It is
expected that there will be a further decline in such demand in 1997,
particularly in Europe, with a modest improvement thereafter. Management
believes that the Company has improved its ability to sustain profitability in
changing market conditions. There can be no assurance, however, as to the
magnitude or timing of any decline or recovery, or that any future decline will
not have a material adverse effect on the Company's business.
- 11 -
<PAGE>
Results of Operations
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------- Eleven Months Ended One Month Ended
1994 1995 November 26, 1996 December 31, 1996
------------------ ----------------- ------------------ -----------------
($) (%) ($) (%) ($) (%) ($) (%)
(dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales ............ $ 472.7 100.0% $ 528.8 100.0% $ 404.6 100.0% $ 46.8 100.0%
Gross Profit ......... 42.9 9.1% 44.7 8.5% 45.9 11.3% 4.9 10.5%
Engineering, Selling
and Administrative
Expenses............ 41.7 8.8% 31.2 5.9% 27.0 6.7% 3.0 6.4%
Income (Loss) from
Operations (1)...... (14.0) (3.0%) 3.1 0.6% 13.3 3.3% 1.9 4.0%
<FN>
- ----------
(1) Includes corporate charges allocated to the Company by Terex of $8.5
million, $7.0 million and $5.7 million in the years ended December 31, 1994
and 1995 and the eleven months ended November 26, 1996, respectively. Also
includes severance and exit charges of $6.7 million and $3.5 million in the
years ended December 31, 1994 and 1995, respectively.
</FN>
</TABLE>
Eleven Months Ended November 26, 1996 Compared to Year Ended December 31, 1995
Net Sales
Net sales were $404.6 million for the eleven months ended November 26,
1996 compared to $528.8 million for the twelve month period in 1995, a decrease
of $124.2 million or 23.5%. This decrease was primarily due to reduced demand by
CLARK's customers, which management believes was related to lower industry
activity beginning in the last quarter of 1995. Net truck sales decreased $112.6
million, or 26.0%, primarily due to a softening in the demand for lift trucks in
North America and Europe, while parts sales declined 12.1%. CLARK derived 68.8%
and 31.2% of its net sales from its North American operations and CLARK Europe,
respectively, in the eleven months ended November 26, 1996, and 69.3% and 30.7%
respectively, in the twelve months ended December 31, 1995.
Gross Profit
Gross profit increased $1.2 million, or 2.7%, to $45.9 million for the
eleven months ended November 26, 1996, compared to $44.7 million for the twelve
month period in 1995, despite the 23.5% decline in net sales. As a percentage of
net sales, gross profit was 11.3% and 8.5% for the eleven months ended November
26, 1996 and the twelve month period of 1995, respectively. Cost reduction
efforts and production improvements accounted for most of this increase. Factory
overhead expenses were reduced by $13.8 million. Of this amount, $10.1 million
was attributable to lower salaries, wages and benefits. Other significant areas
of cost decreases included lower product liability costs, lower freight costs
and lower material costs from improved outsourcing. These improvements were
partially offset by lower absorption of fixed costs due to lower production
levels and by lower margins for aftermarket parts due to a change in product
mix.
- 12 -
<PAGE>
Engineering, Selling and Administrative Expenses
For the eleven months ended November 26, 1996, engineering, selling and
administrative expenses decreased $4.2 million to $27.0 million from $31.2
million for the twelve month period in 1995, primarily due to the
rationalization of staff levels, facilities and support costs in response to
lower industry activity. Engineering, selling and administrative expenses as a
percentage of net sales were 6.7% and 5.9% in the eleven months ended November
26, 1996 and twelve months ended December 31, 1995, respectively.
Income (Loss) from Operations
Income from operations increased $10.2 million to $13.3 million for the
eleven months ended November 26, 1996, compared to $3.1 million for the twelve
months ended December 31, 1995. In addition, CLARK had $3.5 million of severance
and exit charges related to workforce rationalization in Europe and the
termination of certain leases, in 1995 which did not recur in 1996. Terex
allocated corporate charges to CLARK of $5.7 million and $7.0 million in the
1996 and 1995 periods. Income (loss) from operations expressed as a percentage
of net sales was 3.3% and 0.6% for the eleven months ended November 26, 1996 and
the twelve months ended December 31, 1995, respectively.
Month ended December 31, 1996
The acquisition of the Company on November 26, 1996 resulted in a
significant change in the Company's capital structure and a revaluation of the
Company's assets and liabilities in accordance with the provisions of purchase
accounting required by generally accepted accounting principles. Accordingly,
the results of operations for the month ended December 31, 1996, are not
comparable to the results of operations for the eleven month period ended
November 26, 1996 or the years ended December 31, 1995 and 1994.
Net sales for the month of December totaled $46.8 million, which was in
line with management's expectations. Cost of sales was $41.9 million, resulting
in a gross margin of 10.5%. In December 1996, parts sales as a percentage of
total net sales declined. This mix change resulted in a lower gross margin
percentage as compared to the previous eleven months. Dealer positioning for
year-end inventory levels was felt to be one of the reasons for the change in
product mix. Engineering, selling and administrative expenses totaled $3.0
million for the month ending December 31, 1996, or 6.4% of net sales. This
percentage differs from previous periods because sales for the month of December
were at a higher level then the previous eleven months while engineering,
selling and administrative expenses were slightly higher but did not increase
proportionally.
Fiscal Year Ended December 31, 1995 Compared to Fiscal Year Ended
December 31, 1994
Net Sales
Net sales were $528.8 million in 1995, an increase of $56.1 million or
11.9% from $472.7 million in 1994. Truck sales increased $50.5 million and parts
sales increased 6.2%. The increase in truck sales was primarily due to improved
market conditions for most of 1995, more efficient manufacturing operations
during 1995 and shipments of the new Genesis(TM) line of IC trucks, introduced
in December 1994. The light IC forklift market, in which this product competes,
represents approximately 60% of the rider forklift truck industry. Parts sales
increased 6.2% because of improved parts inventory availability, the impact of
which was partially offset by the adverse effects of a labor dispute at the
Southaven Facility, the primary effect of which occurred in March and April
1995. CLARK derived 71.6% and 28.4% of its net sales in 1995 from its North
American operations (which include sales of trucks manufactured in Korea
primarily for sale in North America) and CLARK Europe, respectively, compared to
74.8% and 25.2%, respectively, in 1994.
- 13 -
<PAGE>
Gross Profit
Gross profit increased $1.8 million to $44.7 million in 1995 from $42.9
million in 1994. As a percentage of net sales, gross profit was 8.5% and 9.1%
for 1995 and 1994, respectively. Favorable efficiencies due to higher production
and sales volumes, combined with the effects of 1994 severance actions, resulted
in this gross profit increase. This increase was partially offset by additional
costs associated with the commencement of production of the new Genesis(TM)
product line and manufacturing inefficiencies arising from the difficulties in
key suppliers meeting CLARK's demand requirements.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses decreased by $10.5
million to $31.2 million for 1995 from $41.7 million for 1994, primarily as a
result of severance actions taken by management during the second half of 1994.
As a consequence of such action, staff levels primarily for CLARK's North
American operations were reduced resulting in savings of approximately $3.0
million for the year ended December 31, 1995. Promotional expenses and facility
costs were also reduced during this period. Engineering, selling and
administrative expenses expressed as a percentage of sales were 5.9% and 8.8%,
respectively, in 1995 and 1994, respectively.
Income (Loss) from Operations
Income from operations increased $17.1 million from a $14.0 million
loss from operations for the year ended December 31, 1994 to $3.1 million for
the year ended December 31, 1995. In addition to the increased sales and
manufacturing efficiencies noted above, the increase in income from operations
was due in part to a $3.3 million reduction in severance, legal and exit charges
and a $1.5 million reduction in corporate charges allocated in 1995 from 1994.
CLARK incurred $3.5 million of severance charges in 1995 as compared to $6.7
million of such charges in 1994. In 1994, CLARK implemented personnel reductions
in plant supervision, engineering, marketing and administration in its North
American and European operations. In addition, in 1994, CLARK implemented
additional personnel reductions in conjunction with the closing of the Korean
plant and a certain branch sales office in France. Terex also allocated
corporate charges to CLARK of $7.0 million and $8.5 million for the years ended
December 31, 1995 and 1994, respectively. Income (loss) from operations as a
percentage of net sales was 0.6% and (3.0)% for the years ended December 31,
1995 and 1994, respectively.
Backlog
The Company's backlog orders at December 31, 1996 and December 31, 1995
were $80.4 million and $78.9 million, respectively. Substantially all of the
Company's backlog orders are expected to be filled within one year, although
there can be no assurance that all such orders will be filled within that time
period. The cancellation or delay of certain orders could have a material
adverse effect on the Company.
Capital Resources, Liquidity and Financial Condition
The Company's business is capital intensive and requires funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities as well as
financing of accounts receivables from customers and dealers. The Company will
continue to have significant debt service requirements. On December 31, 1996,
the Company had $17.6 million of cash, cash equivalents and cash securing
letters of credit, $130.0 million of debt and $6.0 million of capital lease
obligations. The Company's ability to incur additional indebtedness is somewhat
restricted by the covenants set forth in the Company's borrowing arrangements.
In connection with the Acquisition, the Company entered into a
Revolving Credit Facility with Congress Financial Corporation. The Revolving
Credit Facility has an aggregate undrawn availability of $30.0 million, subject
to the borrowing conditions contained therein. Management believes that it has
adequate available borrowing capacity under the Revolving Credit Facility to
cover its foreseeable working capital requirements.
- 14 -
<PAGE>
The Company had $3.2 million and $0.3 million of capital expenditures,
including tooling and new product development expenditures, for the eleven
months ending November 26, 1996 and the one month ended December 31, 1996,
respectively. This compares to $5.3 million in capital expenditures in 1995. The
Company believes that its operating cash flow and borrowing availability under
the Revolving Credit Facility will be sufficient to cover its near term capital
requirements.
As of December 31, 1996, the Company was not in violation of any
covenants or restrictions in the Revolving Credit Facility or the indenture
governing the Notes.
Contingencies, Commitments and Uncertainties
CLARK is contingently liable as a guarantor for certain customer floor
plan obligations with financial institutions pursuant to which it is obligated
to purchase repossessed new and unused equipment based upon the unamortized
principal balance outstanding. Management estimates that the guarantee under the
floor plan obligations aggregated approximately $25 million at December 31,
1996. Historically, the Company has incurred only minimal losses relating to
these arrangements.
CLARK is contingently liable for a portion of the related value of
machines sold to and leased by a third party to users for terms generally
ranging from three to five years. CLARK repurchases certain machines leased
under this program and then sells or leases such machines to other users. At
December 31, 1996, the maximum contingent liability under this program was
approximately $11 million. CLARK has historically recorded profits on the sale
of repurchased machines.
Pursuant to certain dealer sales agreements, CLARK has agreed to
repurchase certain new and unused equipment in the event of the termination of
the dealer. Similar repurchase obligations exist under certain dealer operating
agreements in the event of the dealer's default under the dealer's financing
agreements with financial institutions. CLARK has historically incurred minimal
losses from the foregoing arrangements.
For additional information on contingencies and uncertainties, see Note
J to the Company's consolidated financial statements included under "Item
8--Financial Statements and Supplementary Data."
Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company, along with the
Report of Independents Accountants, is included on pages F-1 through F-20 of
this Form 10-K.
Supplementary data called for by this item is not presented as it is
not applicable to the registrant.
Item 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
- 15 -
<PAGE>
PART III
Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or executive officers of the
Company. Directors serve for a term of one year or until their successors are
elected and qualified; officers serve at the discretion of the Board of
Directors.
Name Age Position
---- --- --------
Dr. Martin M. Dorio...... 51 President, Chief Executive Officer
and Director
Dr. J. Frithjof Timm..... 54 Managing Director and President,
CLARK Europe
Joseph F. Lingg.......... 51 Vice President, Finance and Human
Resources and Treasurer
Kevin M. Reardon......... 52 Vice President, Sales and Marketing,
North America
Michael J. Grossman...... 46 Vice President, General Counsel and
Secretary
Jeffrey J. Kirk.......... 49 Vice President, Purchasing
Thomas J. Snyder......... 51 Director
Diether Klingelnberg..... 52 Director
Michael A. Delaney....... 42 Director
James A. Urry............ 42 Director
Dr. Martin M. Dorio, President, Chief Executive Officer and Director.
Dr. Dorio joined the Company in June 1995 as President and Chief Executive
Officer. From 1990 until he joined the Company, Dr. Dorio served in various
positions with Case Corporation, a manufacturer of tractors and construction
equipment, including Vice President, Corporate Planning and Development. Dr.
Dorio has over 20 years of experience in manufacturing and has served in key
management positions of FMC Corp. and General Electric Co.
Dr. J. Frithjof Timm, Managing Director and President, CLARK Europe.
Dr. Timm joined the Company in May 1995 as Managing Director and President of
CLARK Europe. From 1992 to 1995, he was President of Komatsu Europe and, prior
to that, he was Managing Director of Sales of the Hydraulic Mobile Crane
Division of Krupp A.G.
Joseph F. Lingg, Vice President, Finance, Human Resources and
Treasurer. Mr. Lingg joined the Company in January 1996 as Vice President,
Finance and Treasurer. In 1995, Mr. Lingg served as Vice President and Chief
Financial Officer of RBC Company of America, a manufacturer of bearings, and for
more than five years prior thereto he served as Vice President and Chief
Financial Officer of Mosler Inc., a manufacturer and servicer of security
products.
Kevin M. Reardon, Vice President, Sales and Marketing, North America.
Mr. Reardon joined the Company in 1984 and has been Vice President of Sales and
Marketing, North America since 1995. Previously, Mr. Reardon served as Director
of Marketing and National Sales Manager for the Company.
Michael J. Grossman, Vice President, General Counsel and Secretary.
Mr. Grossman joined the Company in 1985 as Assistant General Counsel. Since 1991
he has served as Vice President, General Counsel and Assistant Secretary of the
Company.
Jeffrey J. Kirk, Vice President, Purchasing. Mr. Kirk joined the
Company in 1995 as Vice President of Human Resources and Purchasing of the
Company. From 1993 to 1994, Mr. Kirk was a consultant in Human Resources
Management, and from 1988 to 1993, he was Vice President of Human Resources and
an officer of OHM Corporation, an environmental remediation firm.
Thomas J. Snyder, Director. Mr. Snyder has been President, Chief
Operating Officer and a director of Delco Remy International, Inc. since 1994.
From 1962 to 1994, Mr. Snyder held several executive positions with the Delco
Remy Division of General Motors, most recently as Product Manager, Heavy Duty
Systems. He is also a director of St. John's Health Systems.
- 16 -
<PAGE>
Diether Klingelnberg, Director. Mr. Klingelnberg served as Chief
Executive Officer of International Knife & Saw, Inc. until March 1996. In
addition, he served as Chairman of the Board and Chief Executive Officer of IKS
Corporation from 1979 until November 1996. Mr. Klingelnberg is currently
Managing Director of Klingelnberg Beteillgungs-GmbH and is a director of Honsel
AG, IKS Corporation and the Alfred H. Schulte Company.
Michael A. Delaney, Director. Mr. Delaney has been a Vice President of
CVC since 1989. From 1986 through 1989, he was Vice President of Citicorp
Mergers and Acquisitions. Mr. Delaney is a director of Aetna Industries, Inc.,
AmeriSource Health Corporation, Ballentray Corp., CORT Business Services
Corporation, Delco Remy International, Inc., Enterprise Media Inc., GVC
Holdings, IKS Corporation, JAC Holdings, Palomar Technologies, Inc., SC
Processing, Inc., and Triumph Holdings, Inc.
James A. Urry, Director. Mr. Urry has been with Citibank, N.A. since
1981, serving as a Vice President since 1986. He has been a Vice President of
CVC since 1989. He is a director of AmeriSource Health Corporation, CORT
Business Services Corporation, Hancor Holding Corporation, IKS Corporation,
Recreational Vehicle Products and York International Corporation.
Director Compensation and Arrangements
It is not currently contemplated that directors of the Company will
receive compensation for their services as directors. Members of the Board of
Directors are elected pursuant to certain voting agreements among Holdings and
its stockholders. See "Item 12 -- Security Ownership of Certain Beneficial
Owners and Management--The Stockholders' Agreement."
Item 11 -- EXECUTIVE COMPENSATION
The compensation of executive officers of the Company will be
determined by the Board of Directors of the Company. None of the historical
benefit or compensation plans of Terex are described herein because they were
not assumed by the Company in connection with the Acquisition. The Company
intends to adopt a 401(k) retirement plan and an employee stock purchase plan.
See "-- 401(k) Plan" and "Item 12 -- Security Ownership of Certain Beneficial
Owners and Management--Employees Stock Purchase Plan."
The following table sets forth certain information concerning the
compensation received by the Chief Executive Officer and the four most highly
compensated officers of the Company for services rendered in 1996.
- 17 -
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards
-------------------------------------- --------------------------
Other Restricted Stock
Annual Stock Options All Other
Salary Bonus Compensation Awards(1) (# Shares) Compensation(2)
------ ----- ------------ --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Martin M. Dorio................. $202,083 -- -- -- -- $ 37,807
President and Chief Executive
Officer
Dr. J. Frithjof Timm................ 208,333 -- -- -- -- 67,225
President, CLARK Europe(3)
Kevin M. Reardon.................... 112,500 -- -- -- -- 80,727
Vice President of Sales and
Marketing
Michael J. Grossman................. 117,501 -- -- -- -- 83,817
Vice President and General Counsel
Jeffrey J. Kirk..................... 112,875 -- -- -- -- 81,659
Vice President, Purchasing
<FN>
_______________________
(1) No awards of Terex restricted stock were made in 1996. Based upon a price of
$9.875 per share, the price at which Terex has agreed to repurchase
restricted stock, the aggregate holdings and valuation of Terex restricted
stock held by each of the named executive officers on December 31, 1996 were
as follows: for Dr. Dorio, 12,500 shares (of which 3,125 were vested) valued
at $123,438; for Dr. Timm, 2,500 shares (of which 625 were vested) valued at
$24,688; for each of Messrs. Reardon and Grossman, 1,000 shares (of which
500 were vested) valued at $9,875; and for Mr. Kirk, 1,000 shares (of which
250 were vested) valued at $9,875. Dividends are payable only with respect
to shares which have vested.
(2) Includes, for each officer, a one-time bonus paid by Terex in connection
with the Acquisition, Company 401(k) contributions and group term life
insurance premiums, respectively, as follows: Dr. Dorio, $229,751, $4,750
and $3,306; Dr. Timm, $67,225, $0 and $0; Mr. Reardon, $75,752, $3,612 and
$1,363; Mr. Grossman, $79,040, $3,562 and $1,215; and Mr. Kirk, $76,081,
$3,006 and $2,573.
(3) Dr. Timm's salary and bonus are calculated from Deutsche Marks using
a conversion rate of 1.5 DM/$.
</FN>
</TABLE>
Fiscal Year-End Option Values
No options on Terex stock were granted to any of the named executive
officers in 1996, and no previously granted options were exercised. The
following table sets forth the number of shares underlying both exercisable and
unexercisable options on common stock of Terex held by the named executive
officers as of December 31, 1996.
Number of Shares
Underlying Options Value of
--------------------------- Unexercised
Exercisable Unexercisable Options(1)
----------- ------------- ----------
Dr. Martin M. Dorio 6,250 18,750 $98,438
Dr. J. Frithjof Timm 1,000 4,000 17,750
Kevin M. Reardon... 1,000 3,000 21,500
Michael J. Grossman 1,000 5,000 32,750
Jeffrey J. Kirk.... 500 5,500 30,500
_______________
(1) Unexercisable options are valued at the excess of $9.875 over the exercise
price per share, the cash out price agreed with Terex; exercisable options
are valued at the excess of $10.125, the closing market price for Terex
stock on December 31, 1996, over the exercise price per share for the
option.
- 18 -
<PAGE>
Employment Agreement
Concurrently with the consummation of the Acquisition, Holdings entered
into a three-year employment contract with Dr. Martin M. Dorio pursuant to which
Dr. Dorio is employed as the President and Chief Executive Officer of Holdings
and the Company. The agreement provides for an annual base salary of $225,000,
which is subject to annual merit increases, and an annual performance bonus. The
Company has agreed that, in the event that Holdings is unable to pay Dr. Dorio
any amounts due to him with respect to annual bonuses, the Company will pay such
amounts. In addition, the agreement provides for the receipt by Dr. Dorio of
standard company benefits. The agreement is terminable by Holdings with or
without cause. In the event the agreement is terminated without cause or as a
result of the total disability of Dr. Dorio, Dr. Dorio will be entitled to
continue to receive his base salary and certain other benefits for specified
periods. Following any termination of Dr. Dorio's employment, he will be subject
to a non-competition covenant for up to two years.
401(k) Plan
The Company intends to adopt a qualified 401(k) retirement plan for
certain of its employees who were entitled to participate in a 401(k) retirement
plan maintained by Terex prior to the Acquisition. Subject to certain statutory
limitations, eligible employees will be able to contribute a percentage of their
compensation to the plan on a pre-tax basis ("elective deferrals"). For 1996,
the maximum amount of elective deferrals that could be made by any employee was
$9,500. Employees are fully vested in their elective deferrals at all times.
Generally, employees may not receive a distribution of their account balances
prior to their death, disability, termination of employment or retirement, and
their account balances cannot be assigned or alienated.
Compensation Committee Interlocks and Insider Participation
Although the Company has no compensation committee, each of Messrs.
Snyder, Klingelnberg, Delaney and Urry participated in deliberations of the
Board of Directors concerning executive compensation.
Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the outstanding capital stock of the Company is currently owned
by Holdings. The following table sets forth certain information with respect to
the beneficial ownership of the Holdings Preferred Stock and Holdings Common
Stock by (i) each person or entity who owns five percent or more thereof, (ii)
each director of the Company who is a stockholder, (iii) the Chief Executive
Officer of the Company and the other executive officers named in the "Summary
Compensation Table" above who are stockholders, and (iv) the directors and
officers of the Company as a group. Unless otherwise specified, all shares are
directly held.
- 19 -
<PAGE>
<TABLE>
<CAPTION>
Number and Percent of Shares
--------------------------------------------------------------------
Holdings
Preferred Holdings Class A Holdings Class B
Stock Stock(1) Stock(2)
-------------------- -------------------- ---------------------
Name of Beneficial Owner Number Percent Number Percent Number Percent
------------------------ ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Citicorp Venture Capital Ltd 15,953.3 94.0% 134,211.0 49.1% 717,550.5 98.8%
399 Park Avenue
New York, New York 10043
Dr. Martin M. Dorio (3) 404.8 2.4% 55,180.7 20.2% -- --
172 Trade Street
Lexington, Kentucky 40511
Dr. J. Frithjof Timm 130.1 0.8% 19,879.5 7.3% -- --
172 Trade Street
Lexington, Kentucky 40511
Kevin M. Reardon 37.1 0.2% 5,391.6 2.0% -- --
Michael J. Grossman 68.4 0.4% 6,566.3 2.4% -- --
Jeffrey T. Kirk 54.0 0.3% 6,024.1 2.2% -- --
Thomas J. Snyder -- -- 5,000.0 1.8% -- --
Diether Klingelnberg -- -- 42.0 0.02% 8,943.5 1.2%
All directors and officers as
a group (10 persons) (3) 734.9 4.3% 103,602.3 37.9% 8,943.5 1.2%
<FN>
- ----------
(1) Does not include shares of Holdings Class A Stock issuable upon conversion
of Holdings Class B Stock. See "--Holdings Common Stock." Assuming the
conversion of all of a holder's shares of Holdings Class B Stock into
Holdings Class A Stock, but no such conversion by any other holder of
Holdings Class B Stock, the number of shares and the percentage of total
Holdings Class A Stock held by the converting holder would be as follows:
for CVC, 851,761.5 and 86.0%; for Diether Klingelnberg, 8,985.5 and 3.2%;
and for all directors and officers as a group, 112,545.8 and 39.8%.
(2) Does not include shares of Holdings Class B Stock issuable upon conversion
of Holdings Class A Stock. See "--Holdings Common Stock." Assuming the
conversion of all of a holder's shares of Holdings Class A Stock into
Holdings Class B Stock, but no such conversion by any other holder of
Holdings Class A Stock, the number of shares and the percentage of total
Holdings Class B Stock held by the converting holder would be as follows:
for CVC, 851,761.5 and 99.0%; for Dr. Martin M. Dorio, 55,180.7 and 7.1%;
for Dr. J. Frithjof Timm, 19,879.5 and 2.7%; for Kevin M. Reardon, 5,391.6
and 0.7%; for Michael J. Grossman, 6,566.3 and 0.9%; for Jeffrey T. Kirk,
6,024.1 and 0.8%; for Thomas J. Snyder, 5,000 and 0.7%; for Diether
Klingelnberg, 8,985.5 and 1.2%; and for all directors and officers as a
group, 103,602.3 and 12.5%.
(3) Certain members of the Company's management are expected to participate in
an Employee Stock Purchase Plan pursuant to which management will be offered
the opportunity to acquire Holdings Class A Stock which would equal in the
aggregate up to an additional 10.0% of the Holdings Class A Stock
outstanding. The table does not include any such securities that may be
acquired.
</FN>
</TABLE>
Holdings Common Stock
The Certificate of Incorporation of Holdings provides that Holdings may
issue 2,500,000 shares of Holdings Common Stock, divided into two classes
consisting of 1,250,000 shares of Holdings Class A Stock and 1,250,000 of
Holdings Class B Stock. The holders of Holdings Class A Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders. Except as required by law, the holders of Holdings Class B Stock
have no voting rights. Under the Certificate of Incorporation of Holdings, a
holder of either class of Holdings Common Stock may convert any or all of his
shares into an equal number of shares of the other class of Holdings Common
Stock; provided that in the case of a conversion from Holdings Class B Stock,
which is nonvoting, into Holdings Class A Stock, which is voting, the holder of
shares to be converted would be permitted under applicable law to hold the total
number of shares of Holdings Class A stock which would be held after giving
effect to the conversion.
The Stockholders' Agreement
Pursuant to the a Securities Purchase and Holders Agreement entered
into among the stockholders of Holdings (the "Stockholders' Agreement"), the
Board of Directors of Holdings and the Company shall be composed at all times of
five directors as follows: the President of the Company, Dr. Martin M. Dorio (so
long as he continues to serve as President); two individuals designated by CVC;
and two additional directors who shall not be employees of CVC but who shall be
designated by CVC, subject to the right of holders of the majority of the
outstanding shares of Holdings Class A Stock to veto the election of either of
such additional directors.
- 20 -
<PAGE>
The Stockholders' Agreement contains certain provisions which, with
certain exceptions, restrict the ability of the stockholders from transferring
any Holdings Common Stock, Holdings Preferred Stock or Holdings Debentures
except pursuant to the terms of the Stockholders' Agreement. So long as Holdings
has not consummated a public offering of Holdings Common Stock resulting in
aggregate net proceeds of $30.0 million or more, if holders of at least 50% of
the Holdings Common Stock then outstanding approve the sale of the Company, each
stockholder has agreed to consent to such sale and, if such sale includes the
sale of stock, each stockholder has agreed to sell all of such stockholder's
Holdings Common Stock on the terms and conditions approved by holders of a
majority of the Holdings Common Stock then outstanding. In the event Holdings
proposes to issue and sell (other than in a public offering pursuant to a
registration statement) any shares of Holdings Common Stock and/or Holdings
Preferred Stock or any securities containing options or rights to acquire any
shares of Holdings Common Stock and/or Holdings Preferred Stock or any
securities convertible into Holdings Common Stock and/or Holdings Preferred
Stock to CVC or its corporate affiliates, Holdings must first offer to each of
the other shareholders a pro rata portion of such shares. Such preemptive rights
are not applicable in certain circumstances including the issuance of shares of
Holdings Common Stock and/or Holdings Preferred Stock upon the conversion of
shares of one class of Holdings Common Stock and/or Holdings Preferred Stock
into shares of the other class or upon an initial public offering.
The Stockholders' Agreement also provides for certain additional
restrictions on transfer of shares by Management Investors, including the right
of Holdings to repurchase shares upon termination of such stockholder's
employment prior to 2001, at a formula price, and the grant of a right of first
refusal in favor of Holdings in the event a Management Investor elects to
transfer shares of Holdings Common Stock.
Registration Rights Agreement
In connection with their entry into the Stockholders' Agreement,
Holdings, CVC, Dr. Martin M. Dorio and Thomas J. Snyder entered into a
Registration Rights Agreement (the "Holdings Registration Rights Agreement").
Pursuant to the Holdings Registration Rights Agreement, upon the written request
of CVC, Holdings has agreed to (subject to certain exceptions) prepare and file
a registration statement with the Securities and Exchange Commission concerning
the distribution of all or part of the shares held by CVC and use its best
efforts to cause such registration statement to become effective. If at any time
Holdings files a registration statement for the Holdings Common Stock pursuant
to a request by CVC or otherwise (other than a registration statement on Form
S-8, Form S-4 or any similar form, a registration statement filed in connection
with a share exchange or an offering solely to Holdings' employees or existing
stockholders, or a registration statement registering a unit offering), Holdings
will use its best efforts to allow the other parties to the Holdings
Registration Rights Agreement to have their shares of Holdings Common Stock (or
a portion of their shares under certain circumstances) included in such offering
of Holdings Common Stock if the registration form proposed to be used may be
used to register such shares. Registration expenses of the selling stockholders
(other than underwriting fees, brokerage fees and transfer taxes applicable to
the shares sold by such stockholders or the fees and expenses of any accountants
or other representatives retained by a selling stockholder) are to be paid by
Holdings.
Employee Stock Purchase Plan
It is currently contemplated that Holdings will adopt an Employee Stock
Purchase Plan pursuant to which members of the Company's management
("Participants") will be offered the opportunity to purchase Holdings Class A
Stock. The Participants will be given the opportunity to acquire or be granted
options to acquire an aggregate of up to 10.0% of Holdings Class A Common Stock
outstanding on a fully-diluted basis.
Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Service Agreement
In connection with the Acquisition, the Company entered into a service
agreement (the "Service Agreement") with Terex pursuant to which the Company
shares space in the Southaven Facility with the Terex Distribution Center, a
division of Terex ("TDC"). In addition, pursuant to such agreement the Company
hired approximately 25 employees of TDC who are responsible for aftermarket
customer support and administration. The Company pays an aggregate annual
- 21 -
<PAGE>
fee to TDC under such agreement of approximately $6.0 million (the "Base Fee"),
payable in monthly installments. In addition to the Base Fee, certain provisions
of the Service Agreement may require each of TDC and CLARK to share the
responsibility for additional costs and savings resulting from, among other
things, changes or increases in the provision of services or the implementation
of certain cost savings. The term of the agreement is for three years.
Management believes that the terms of the Service Agreement are no less
favorable to the Company than those which could have been obtained from
non-affiliated parties at the time the agreement was entered into.
Tax Sharing Agreement
Holdings and the Company will be included in the consolidated United
States federal income tax return of Holdings. Holdings and the Company entered
into a tax sharing agreement (the "Tax Sharing Agreement") whereby the Company
will pay Holdings (or Holdings will pay the Company) its pro rata share of the
total tax liability, as set out in the Tax Sharing Agreement. In the event the
Company is included in a joint, combined, consolidated or unitary state or local
income or franchise tax return with Holdings, the Company shall make payments to
Holdings, and Holdings shall make payments to the Company, in a manner
consistent with that described above for federal tax purposes.
License Agreement
In connection with the Acquisition, Holdings acquired certain patents
and patent applications related to the Company's business from Terex. Pursuant
to a License Agreement dated as of November 27, 1996, Holdings granted to the
Company a perpetual, world-wide, exclusive royalty-free, fully-paid-up license
to practice methods, and to make, use, import, offer for sale or sell any
products, covered by such patents and patent applications.
Other
Effective as of January 31, 1997, Holdings repurchased certain
outstanding shares of Holdings Preferred Stock and Holdings Class B Stock having
an aggregate value of approximately $1.1 million from CVC and, simultaneously
therewith, issued and sold shares of Holdings Preferred Stock and Holdings
Common Stock having an equivalent value to Dr. Martin M. Dorio, other members of
management and Diether Klingelnberg. In connection therewith, the Company loaned
Dr. Dorio $200,000 toward the purchase price of the securities acquired by him.
Such loan is evidenced by a demand promissory note which does not bear interest.
- 22 -
<PAGE>
PART IV
Item 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) List of Financial Statements.
- Financial Data Schedule
The following Consolidated Financial Statements of the Company and the
Report of Independent Accountants set forth on pages F-1 through F-20
and F-2, respectively, are incorporated by reference into this item
14 of Form 10-K by item 8 hereof:
- See Index to Consolidated Financial Statements on page F-1.
(a)(2) Financial Statement Schedules.
No financial statement schedules have been filed herewith since they
are either not required, are not applicable, or the required
information is shown in the consolidated financial statements or
related notes.
(a)(3) Exhibits.
Exhibit
No. Description
- --- -----------
3.1 Certificate of Incorporation, as amended, of the Company (incorporated
by reference to Exhibit 3.1 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
3.2 By-laws of the Company (incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement on Form S-4, Registration No.
333-18957)
4.1 Indenture dated as of November 27, 1996 between the Company and United
States Trust Company of New York, as Trustee (incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
4.2 Registration Rights Agreement dated as of November 27, 1996 among the
Company, Jefferies & Company, Inc. and Bear, Stearns & Co. Inc.
(incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
4.3 Form of 103/4% Senior Notes due 2006 (included in Exhibit 4.1)
(incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.1 Purchase Agreement dated November 22, 1996 among the Company,
Jefferies & Company, Inc. and Bear, Stearns & Co. Inc. (incorporated
by reference to Exhibit 10.1 to the Company's Registration Statement
on Form S-4, Registration No. 333-18957)
10.2 Loan and Security Agreement dated November 27, 1996 by and between
Congress Financial Corporation and the Company (incorporated by
reference to Exhibit 10.2 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.3 Stock and Asset Purchase and Sale Agreement, dated as of November 9,
1996 among Terex Corporation, and certain of its subsidiaries and the
Company (incorporated by reference to Exhibit 10.3 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.4 Service Agreement dated as of November 27, 1996 between Terex
Corporation and the Company (incorporated by reference to Exhibit 10.4
to the Company's Registration Statement on Form S-4, Registration No.
333-18957)
10.5 Indemnity as to Letters of Credit, Performance Bonds, Appeal Bonds,
Guaranties, etc. dated November 27, 1996 by the Company in favor of
Terex Corporation, for itself and as successor to CMH Acquisition
Corp., CMH Acquisition International Corp., Clark Material Handling
Company and Clark Material Handling International, Inc. (incorporated
by reference to Exhibit 10.5 to the Company's Registration Statement
on Form S-4, Registration No. 333-18957)
- 23 -
<PAGE>
10.6 Employment Agreement dated as of November 27, 1996 between Holdings
and Dr. Martin M. Dorio (incorporated by reference to Exhibit 10.6 to
the Company's Registration Statement on Form S-4, Registration No.
333-18957)
10.7 Tax Sharing Agreement made as of November 27, 1996 between Holdings
and the Company (incorporated by reference to Exhibit 10.7 to the
Company's Registration Statement on Form S-4, Registration No.
333-18957)
10.8 Stock Purchase Agreement, dated as of May 27, 1992, by and between
Clark Equipment Company and Terex Corporation (incorporated by
reference to Exhibit 10.8 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.9 First Amendment to the Stock Purchase Agreement, dated as of July 31,
1992, by and between Clark Equipment Company and Terex Corporation
(incorporated by reference to Exhibit 10.9 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.10 Trademark Assignment Agreement, dated as of July 31, 1992, by and
between Clark Equipment Company and Clark Material Handling Company
(incorporated by reference to Exhibit 10.10 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.11 Second Amended and Restated General Operating Agreement, dated
November 29, 1990, by and between Clark Material Handling Company and
Chase Manhattan Leasing Company, Inc. (incorporated by reference to
Exhibit 10.11 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.12 Second Amendment to the Second Amended and Restated General Operating
Agreement, dated April 15, 1994, by and among Clark Material Handling
Company, Drexel Industries, Inc. and Clark Credit Corporation
(incorporated by reference to Exhibit 10.12 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.13 Third Amendment to the Second Amended and Restated General Operating
Agreement, dated August 1, 1994, by and between Clark Material
Handling Company and Clark Credit Corporation (incorporated by
reference to Exhibit 10.13 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.14 Assignment of Second Amended and Restated General Operating Agreement,
dated March 22, 1995, by and between Clark Material Handling Company,
Clark Credit Corporation, f/k/a Chase Manhattan Leasing Company, and
Associates Commercial Corporation (incorporated by reference to
Exhibit 10.14 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.15 Master Software License and Service Agreement, dated May 17, 1996,
between Clark Material Handling Company and SDRC Operations
(incorporated by reference to Exhibit 10.15 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.16 Letter Agreement, dated October 26, 1995, between Clark Material
Handling Company, Manufacturers Distribution Services, Inc. and Maine
Rubber International (incorporated by reference to Exhibit 10.16 to
the Company's Registration Statement on Form S-4, Registration No.
333-18957)
10.17 MCI Services Agreement, effective as of July 1, 1995, between MCI
Telecommunications Corporation and Clark Material Handling Company
(incorporated by reference to Exhibit 10.17 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.18 Agreement for Systems Operations Services, dated as of March 2, 1992,
between Clark Material Handling Company and Integrated Systems
Solutions Corporation, as amended by Amendments #1 through #5
(incorporated by reference to Exhibit 10.18 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.19 Supply Agreement, dated December 14, 1994, between Clark Material
Handling Company and Funk Manufacturing Company (incorporated by
reference to Exhibit 10.19 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.20 Supply Agreement, dated July 1, 1995, between Clark Material Handling
Company and Funk Manufacturing Company (incorporated by reference to
Exhibit 10.20 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
- 24 -
<PAGE>
10.21 Supply Agreement, dated January 1, 1988, between Clark Material
Systems Technology Company and HydroElectric Lift Trucks Inc.
(incorporated by reference to Exhibit 10.21 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.22 Amendment Agreement, dated March 2, 1992, between Clark Material
Handling Company and HydroElectric Lift Trucks, Inc. (incorporated by
reference to Exhibit 10.22 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.23 Second Amendment Agreement, dated September 30, 1992, between Clark
Material Handling Company and HydroElectric Lift Trucks, Inc.
(incorporated by reference to Exhibit 10.23 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.24 Agreement, dated June 1, 1983, between Clark Equipment Company and
Mitsubishi Corporation, Mitsubishi Heavy Industries, Ltd. and
Mitsubishi Motors Corporation, as amended (incorporated by reference
to Exhibit 10.24 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.25 Master Contract for Purchase and Sale, dated July 17, 1995, between
Clark Material Handling Company and Custom Tool and Manufacturing
Company (incorporated by reference to Exhibit 10.25 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.26 Supply Agreement, dated December 20, 1991, between Clark Material
Handling Company and Dixson, Inc. (incorporated by reference to
Exhibit 10.26 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.27 Lease Agreement, dated as of April 15, 1987, between Vergil D. Kelly
and Kenny Angelucci and Clark Equipment Company with respect to 172
Trade Street, Lexington, Kentucky, as amended by Amendment #1 to Lease
dated April 15, 1987 (incorporated by reference to Exhibit 10.27 to
the Company's Registration Statement on Form S-4, Registration No.
333-18957)
10.28 Standard Form Dealer Sales Agreements between Clark Material Handling
Company and domestic dealer entities (incorporated by reference to
Exhibit 10.28 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.29 Agreement, dated as of September 12, 1995, by and between Clark
Material Handling Company and Nissan Forklift Corporation, North
America (incorporated by reference to Exhibit 10.29 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.30 License Agreement dated as of November 27, 1996 between Holdings and
the Company (incorporated by reference to Exhibit 10.30 to the
Company's Registration Statement on Form S-4, Registration No.
333-18957)
21.1 Subsidiaries of the Company (incorporated by reference to Exhibit 12.1
to the Company's Registration Statement on Form S-4, Registration No.
333-18957)
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
- 25 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
CLARK Material Handling Company
BY: /s/ Dr. Martin M. Dorio
----------------------------------
Dr. Martin M. Dorio
President and CEO
March 27, 1997
Pursuant to the requirements of the securities exchange act of 1934, as
amended this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on March 27, 1997.
/s/ Dr. Martin M. Dorio President, Chief Executive Officer and
----------------------- Director (Principal Executive Officer)
Martin M. Dorio
/s/ Joseph F. Lingg Vice President, Finance Human Resources and
----------------------- Treasurer (Principal Financial and
Joseph F. Lingg Accounting Officer)
/s/ James A. Urry Director
-----------------------
James A. Urry
/s/ Thomas J. Snyder Director
-----------------------
Thomas J. Snyder
/s/ Michael A. Delaney Director
-----------------------
Michael A. Delaney
- 26 -
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT
BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
The registrant has not sent the following to security holders: (i)
any annual report to security holders covering the registrant's last
fiscal year; or (ii) any proxy statement, form of proxy or other proxy
soliciting material with respect to any annual or other meeting of
security holders.
- 27 -
<PAGE>
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996,
NOVEMBER 26, 1996 AND DECEMBER 31, 1995 AND FOR THE
ONE MONTH PERIOD ENDED DECEMBER 31, 1996, THE ELEVEN MONTH
PERIOD ENDED NOVEMBER 26, 1996 AND THE YEARS ENDED
DECEMBER 31, 1995 AND 1994
Page
----
Report of independent accountants...........................................F-2
Consolidated balance sheet..................................................F-3
Consolidated statement of operations........................................F-4
Consolidated statement of stockholder's equity..............................F-5
Consolidated statement of cash flows........................................F-6
Notes to consolidated financial statements..................................F-7
Schedules for which provision is made in the applicable regulations of the
Securities and Exchange Commission are not required under the related
instructions, or the information is included in the notes to the consolidated
financial statements, or are not applicable, and therefore have been omitted.
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholder of Clark Material
Handling Company
In our opinion, the consolidated financial statements listed in the accompanying
index on page F-1 present fairly, in all material respects, the consolidated
financial position of Clark Material Handling Company and its predecessor
businesses at December 31, 1996, November 26, 1996 and December 31, 1995, and
the results of their operations and cash flows for the one month period ended
December 31, 1996, the eleven month period ended November 26, 1996 and the years
ended December 31, 1995 and 1994, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
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 audits 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
Cincinnati, Ohio
March 28, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
Clark Material Handling Company
and Predecessor Businesses
Consolidated Balance Sheet (in thousands)
- -----------------------------------------------------------------------------------------------------------
The Company Predecessor
------------ ---------------------------
December 31, November 26, December 31,
1996 1996 1995
------------ ----------- ------------
Current assets
<S> <C> <C> <C>
Cash and cash equivalents $ 16,554 $ 2,060 $ 819
Cash securing letters of credit 1,092 956 736
Trade receivables (less allowance of $152 at
December 31, 1996, $2,138 at November 26, 1996
and $2,867 at December 31, 1995) 38,154 41,839 39,433
Net inventories 60,441 71,160 68,464
Other current assets 6,255 4,472 4,660
----------- ----------- ----------
Total current assets 122,496 120,487 114,112
Long-term assets
Property, plant and equipment-net 51,014 51,153 58,194
Goodwill, net of accumulated amortization of $231 at
December 31, 1996, $1,243 at November 26, 1996 and
$871 at December 31, 1995 109,311 2,766 3,138
Other assets 18,486 18,301 17,265
----------- ----------- ----------
Total assets $ 301,307 $ 192,707 $ 192,709
=========== =========== ==========
Current liabilities
Notes payable $ 3,246 $ $ 2,775 $ 879
Current portion of capital lease obligations 2,407 2,404 2,414
Trade accounts payable 53,562 61,596 61,535
Accrued compensation and benefits 5,319 4,994 4,585
Accrued warranties and product liability 23,383 17,764 19,012
Other current liabilities 9,489 7,160 9,834
----------- ----------- ----------
Total current liabilities 97,406 96,693 98,259
Non-current liabilities
Senior notes payable 130,000 - -
Capital lease obligations, less current portion 3,600 3,630 4,140
Allocated long-term debt - 51,325 51,220
Due to parent company - 96,366 87,646
Accrued warranties and product liability 30,826 30,661 31,661
Other non current liabilities 14,402 15,395 16,505
----------- ----------- ----------
Total liabilities 276,234 294,070 289,431
----------- ----------- ----------
Commitments and contingencies
Stockholder's equity (deficit)
Common stock, par value $1 per share, 1,000 shares
authorized, issued and outstanding at December 31, 1996 1 - -
Paid-in-capital 24,999 - -
Retained earnings (deficit) 535 (96,968) (94,873)
Cumulative translation adjustment (462) (4,395) (1,849)
----------- ----------- ----------
Total stockholder's equity (deficit) 25,073 (101,363) (96,722)
----------- ----------- ----------
Total liabilities and stockholder's equity (deficit) $ 301,307 $ 192,707 $ 192,709
=========== =========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
Clark Material Handling Company
and Predecessor Businesses
Consolidated Statement of Operations (in thousands)
- ----------------------------------------------------------------------------------------------------------------
The Company Predecessor
----------- ------------------------------------
One Eleven
Month Months
Ended Ended
December November Years ended December 31,
31, 1996 26, 1996 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 46,763 $ 404,629 $ 528,759 $ 472,652
Cost of goods sold 41,817 358,698 484,035 429,744
--------- --------- --------- ---------
Gross profit 4,946 45,931 44,724 42,908
Engineering, selling and administrative expenses 3,011 26,976 31,183 41,702
Parent company management fees - 5,672 6,996 8,453
Severance and exit charges - - 3,478 6,736
--------- --------- --------- ---------
Income (loss) from operations 1,935 13,283 3,067 (13,983)
Other income (expense):
Interest income 25 220 602 653
Allocated interest expense from parent company - (14,656) (16,145) (14,361)
Interest expense (1,393) (370) (790) (2,221)
Amortization interest expense from parent company - (349) (530) (822)
Gain on sale of Drexel business - - - 4,742
Property impairment charge - - (2,500) -
Other income (expense)-net (32) (223) (975) 1,523
--------- --------- --------- ---------
Income (loss) before income taxes and extraordinary items 535 (2,095) (17,271) (24,469)
Provision for income taxes - - (148) (786)
--------- --------- --------- ---------
Income (loss) before extraordinary items 535 (2,095) (17,419) (25,255)
Extraordinary loss on retirement of allocated debt - - (1,347) (565)
--------- --------- --------- ---------
Net income (loss) $ 535 $ (2,095) $ (18,766) $ (25,820)
========= ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
Clark Material Handling Company
and Predecessor Businesses
Consolidated Statement of Stockholders' Equity (in thousands)
- ----------------------------------------------------------------------------------------------------------------
Foreign
Retained currency
Common Paid-in earnings translation
stock capital (deficit) adjustments
------------ ------------ ------------ ------------
THE PREDECESSOR
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $ (50,287) $ (8,646)
Net loss, year ended December 31, 1994 25,820)
Translation adjustment 4,731
------------ ------------
Balance at December 31, 1994 (76,107) (3,915)
Net loss, year ended December 31, 1995 (18,766)
Translation adjustment 2,066
------------ ------------
Balance at December 31, 1995 (94,873) (1,849)
Net loss, eleven months ended
November 26, 1996 (2,095)
Translation adjustment (2,546)
------------ ------------
Balance at November 26, 1996 $ (96,968) $ (4,395)
============ ============
THE COMPANY
Issuance of common stock $ 1 $ 24,999 $ $
Net income for the month ended
December 31, 1996 535
Translation adjustment (462)
------------ ------------ ------------ ------------
Balance at December 31, 1996 $ 1 $ 24,999 $ 535 $ (462)
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
Clark Material Handling Company
and Predecessor Businesses
Consolidated Statement of Cash Flows (in thousands)
- -----------------------------------------------------------------------------------------------------------------
The Company Predecessor
----------- --------------------------------------
One Eleven
Month Months
Ended Ended Years ended December 31,
December November ------------------------
31, 1996 26, 1996 1995 1994
--------- --------- --------- ---------
Operating activities:
<S> <C> <C> <C> <C>
Net income (loss) $ 535 $ (2,095) $ (18,766) $ (25,820)
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities:
Depreciation 778 9,312 11,534 10,066
Amortization 322 1,099 1,310 1,382
Extraordinary loss on retirement of allocated debt - - 1,347 565
Gain on sale of Drexel business - - - (4,742)
(Gain) loss on sale of property, plant and equipment 70 31 183 16
Property impairment charge - - 2,500 -
Other, net - - 328 -
Changes in operating assets and liabilities:
Restricted cash (136) (220) (516) 251
Trade receivables 2,800 (2,406) (240) (6,210)
Net inventories 9,801 (2,696) (2,685) 2,672
Trade accounts payable (11,265) 61 (2,084) 13,027
Accrued compensation and benefits (609) 409 (73) 559
Accrued warranties and product liability 237 (2,248) 1,126 1,344
Due to parent company - 8,720 19,187 28,262
Other, net 223 (5,876) (5,973) (12,377)
--------- --------- --------- ---------
Net cash provided by (used in) operating activities 2,756 4,091 7,178 8,995
--------- --------- --------- ---------
Investing activities
Capital expenditures (317) (3,208) (5,290) (6,570)
Proceeds from sale of assets - 139 534 2,984
Proceeds from sale of Drexel business - - - 10,289
Proceeds from sale-leaseback of Saarn property - - - 9,981
--------- --------- --------- ---------
Net cash provided by (used in) investing
activities (317) (3,069) (4,756) 16,684
--------- --------- --------- ---------
Financing activities
Principal repayments of long-term debt - - - (6,090)
Repayment of allocated debt - - (51,754) (23,254)
Proceeds from allocated debt - 105 51,220 -
Other, net 293 1,376 (1,607) 135
--------- --------- --------- ---------
Net cash provided by (used in) financing
activities 293 1,481 (2,141) (29,209)
--------- --------- --------- ---------
Effect of exchange rate changes on cash and cash
equivalents (306) (1,262) (976) 748
--------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents 2,426 1,241 (695) (2,782)
Cash and cash equivalents at beginning of period 14,128 819 1,514 4,296
--------- --------- --------- ---------
Cash and cash equivalents at end of period $ 16,554 $ 2,060 $ 819 $ 1,514
========= ========= ========= =========
Supplemental disclosures
Cash paid for interest $ 86 $ 337 $ 793 $ 2,218
Income taxes paid $ - $ 17 $ 148 $ 790
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-6
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- -------------------------------------------------------------------------------
NOTE A - REPORTING ENTITY AND BASIS OF PRESENTATION
Clark Material Handling Company (the "Company") is a wholly-owned subsidiary of
CMH Holdings Corporation ("Holdings"). Prior to November 27, 1996, Holdings had
no previous business operations and was formed for the purpose of acquiring the
Company and its subsidiaries from Terex Corporation ("Terex" or the "Parent
Company") in a purchase business combination. That acquisition was consummated
on November 27, 1996. See Note C for information regarding the acquisition.
Prior to the acquisition, the Company's predecessor businesses ("Predecessor")
operated as wholly-owned subsidiaries of Terex. Reference to the Company relates
to the period subsequent to November 26, 1996, while reference to the
Predecessor relates to operations on or prior to November 26, 1996. Terex
acquired the Predecessor in 1992 in a purchase business combination and Terex's
basis, including its acquisition debt and goodwill associated with the 1992
acquisition were "pushed down" to the Predecessor's financial statements.
The Predecessor's financial statements include allocations of Parent Company
acquisition debt and related interest expense. Management fees, which include
corporate overhead costs (including legal, treasury and other shared services),
have been allocated to the Predecessor based generally on the percentage of
Predecessor revenues to Terex consolidated revenues. Interest has been charged
on the management fee allocated and the due to Parent Company balance at a rate
of 13% compounded monthly.
The Company and the Predecessor operate in one industry segment, that being the
design, manufacture, marketing and worldwide distribution and support of
internal combustion and electric lift trucks, electric walkies and related
components and replacement parts. Geographic segment information is shown in
Note L.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. The Company's financial statements include the
accounts of the Company and its subsidiaries, including Clark Material Handling
GmbH ("Germany") and Clark Forklift Korea ("Korea"). The Predecessor's financial
statements include these same entities, prior to their acquisition on November
27, 1996, on a combined basis. All material intercompany balances, transactions
and profits have been eliminated.
Cash and cash equivalents. Cash equivalents consist of highly liquid investments
with original maturities of three months or less. The carrying amount of cash
and cash equivalents approximates their fair value.
Cash securing letters of credit. The Company and the Predecessor have certain
cash and cash equivalents that are not fully available for use in operations.
Certain international operations collateralize letters of credit and performance
bonds with cash deposits.
Inventories. Inventories are stated at the lower of cost or market value. The
Company determines cost on the first-in, first-out (FIFO) method for all
inventories. The Predecessor determined cost using the last-in, first-out (LIFO)
method for U.S. inventories and by the FIFO method for inventories of
international subsidiaries. Approximately 67% and 68% of combined inventories at
November 26, 1996 and December 31, 1995, respectively, were accounted for under
the LIFO method.
Goodwill. Goodwill represents the difference between the total purchase price
and the fair value of assets and liabilities (tangible and intangible) acquired
at the date of acquisition. Goodwill related to the Company is being amortized
F-7
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- -------------------------------------------------------------------------------
on the straight-line method over forty years while goodwill related to the
Predecessor was being amortized on a straight-line method over fifteen years.
The Company reviews the carrying value of goodwill for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. Measurement of any impairment would include a comparison of
discounted estimated future operating cash flows anticipated to be generated
during the remaining amortization period of the goodwill to the net carrying
value of goodwill.
Debt issuance costs. Debt issuance costs of the Company have been capitalized
and are being amortized on the straight-line method over the term of the related
debt. With respect to the Predecessor, debt issuance costs incurred in securing
the Parent Company's financing arrangements were capitalized and amortized over
the term of the associated debt. Allocated debt issuance costs related to
Terex's acquisition debt were also allocated to the Predecessor. Allocated
capitalized debt issuance costs related to allocated debt retired early were
also charged to expense at the time of retirement. Unamortized debt issuance
costs are included in other assets and totaled $5,552, $2,549 and $2,898 at
December 31, 1996, November 26, 1996 and December 31, 1995, respectively. During
1995 and 1994, the Predecessor incurred extraordinary losses of $1,347 and $565,
respectively, relating to early retirement of allocated debt.
Property, plant and equipment. Property, plant and equipment are stated at cost.
Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred.
Depreciation is determined for financial reporting purposes using the
straight-line method over estimated useful asset lives, generally 20 to 35 years
for buildings, eight to twelve years for machinery and equipment and two to
eight years for other assets.
Revenue recognition. Revenue and costs are generally recorded when products are
shipped and invoiced to customers. Certain new units may be invoiced prior to
the time customers take physical possession. Revenue is recognized in such cases
only when the customer has a fixed commitment to purchase the units, the units
have been completed, tested and made available to the customer for pickup or
delivery, and the customer has requested that the units be held for pickup or
delivery at a time specified by the customer in the sales documents. In such
cases, the units are invoiced under the customary billing terms, title to the
units and risks of ownership pass to the customer upon invoicing, the units are
segregated from inventories and identified as belonging to the customer and
there are no further obligations under the order.
Accrued warranties and product liability. Accruals for potential warranty and
product liability claims are recorded based on past claim experience. Warranty
costs are accrued at the time revenue is recognized. Self-insurance accruals are
provided for estimated product liability experience on known claims and for
claims anticipated to have been incurred which have not yet been reported.
Product liability accruals are presented on a gross settlement basis.
Foreign currency translation. Assets and liabilities of international operations
are translated at year-end exchange rates. Income and expenses are translated at
average exchange rates prevailing during the year. For operations whose
functional currency is the local currency, translation adjustments are
accumulated in the cumulative translation adjustment account in equity. Gains or
losses resulting from foreign currency transactions are included in other income
(expense).
Environmental policies. Environmental expenditures that relate to current
operations are either expensed or capitalized depending on the nature of the
expenditure. Expenditures relating to conditions caused by past operations that
do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial actions
are probable, and the costs can be reasonably estimated. Such amounts were not
material at December 31, 1996, November 26, 1996 and December 31, 1995.
F-8
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Income taxes. Income taxes are provided using the asset and liability method
required by Statement of Financial Accounting Standards (SFAS) No. 109. Pursuant
to a tax sharing agreement with Holdings, the Company records a provision for
income taxes on a consolidated basis, including Holdings. At December 31, 1996
and the month then ended, this tax sharing arrangement did not differ materially
from that which would have occurred on a separate entity basis. The Predecessor
provided for income taxes on a separate entity basis.
Use of estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
NOTE C - ACQUISITION
On November 27, 1996 Holdings acquired the Company and the Company's
subsidiaries in a business combination accounted for as a purchase. The
aggregate purchase price for the acquisition was $139,500, which was subject to
certain immaterial post-closing adjustments, and was financed through a $25,000
equity investment by Holdings in the common stock of the Company and the
issuance of $130,000 in Senior Notes due 2006 by the Company. The purchase price
was allocated to the estimated fair values of the Company's tangible and
intangible net assets with the remainder allocated to goodwill. The excess of
purchase price over the net assets acquired of $109,542 is being amortized on a
straight-line basis over forty years. Certain purchase allocation issues remain
open, however, they are not expected to be material and will be resolved within
one year.
The operating results of the Company are included in the consolidated results of
operations since November 27, 1996. The following unaudited pro forma summary
presents the consolidated results of operations as though Holdings completed the
Acquisition on January 1 of each period presented.
Year ended December 31,
-----------------------
1996 1995
-------- --------
Net sales $451,392 $528,759
-------- --------
Income (loss) from operations $ 16,976 $ 5,894
-------- --------
Net income (loss) $ 1,881 $(12,452)
-------- --------
F-9
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE D - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, November 26, December 31,
1996 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
Finished equipment $ 12,797 $ 18,043 $ 9,410
Replacement parts 24,107 22,428 22,966
Work-in-progress 1,402 3,938 3,405
Raw materials and supplies 22,135 27,297 33,229
---------- ---------- ----------
60,441 71,706 69,010
Less: Excess of FIFO inventory value over LIFO cost - (546) (546)
---------- ---------- ----------
Net inventories $ 60,441 $ 71,160 $ 68,464
========== ========== ==========
</TABLE>
In 1994, certain inventory quantities were reduced, resulting in the liquidation
of LIFO inventory quantities carried at lower costs prevailing in prior years.
The effect of such liquidation was to decrease cost of goods sold and net loss
by $1,581 in 1994.
NOTE E - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
December 31, November 26, December 31,
1996 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
Property $ 7,364 $ 7,902 $ 8,348
Plant 15,556 19,498 20,262
Equipment 28,779 56,552 55,433
---------- ---------- ----------
51,699 83,952 84,043
Less: Accumulated depreciation (685) (32,799) (25,849)
---------- ---------- ----------
Net property, plant and equipment $ 51,014 $ 51,153 $ 58,194
========== ========== ==========
</TABLE>
F-10
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE F - BORROWINGS, LINES OF CREDIT AND INDEBTEDNESS
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
December 31, November 26, December 31,
1996 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
10.75% Senior Notes due 2006 $ 130,000 $ - $ -
13.25% Secured Notes due May 15, 2002 ("Senior
Secured Notes") - 51,325 51,220
Capital lease obligations (Note G) 6,007 6,034 6,554
---------- ---------- ----------
Total long-term debt 136,007 57,359 57,774
Current portion of long-term debt 2,407 2,404 2,414
---------- ---------- ----------
Long-term debt, less current portion $ 133,600 $ 54,955 $ 55,360
========== =========== ===========
</TABLE>
Senior Notes due 2006
The Senior Notes due 2006 ("Senior Notes") were issued in connection with the
acquisition of the Company and are due on November 15, 2006. The Senior Notes
are not redeemable at the Company's option prior to November 15, 2001.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon, if any, to the
applicable date of redemption, if redeemed during the 12 month period beginning
on November 15 of the years indicated below:
Year Percentage
2001 105.375%
2002 102.688
2003 and thereafter 100.000
The Senior Notes also contain provision for early redemption upon the occurrence
of certain significant corporate events, including an offering of equity
securities or a change in control of the Company.
Senior Secured Notes
The Senior Secured Notes represented debt allocated to the Predecessor by Terex
and were eliminated upon the acquisition of the Company on November 27, 1996.
Revolving Line of Credit
The Company has entered into a $30,000 revolving credit facility (the
"Facility") with Congress Financial Corporation (the "Bank"). Borrowings under
the Facility are available for working capital and general corporate purposes,
including letters of credit. The Facility is secured by first priority liens on
all accounts receivable and inventory of the Company's domestic operations.
The Facility expires in November 1999, unless extended. The interest rate per
annum applicable to the Facility is the prime rate, as announced periodically,
plus 0.50% or, at the Company's option, the
F-11
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
adjusted Eurodollar rate plus 2.50%. The Facility permits the Company to prepay
loans and to permanently reduce revolving credit commitments or letters of
credit, in whole or in part, at any time in certain minimum amounts. The Company
is required to pay certain fees in connection with the Facility, including a
closing fee of 0.75% of the total commitment and a commitment fee of 0.25% on
the undrawn portion of the revolving credit commitment.
The Facility contains customary representations and warranties, and events of
default and certain other covenants. No borrowings were made on the Facility
through December 31, 1996.
Due to the recent issuance of the Senior Notes, the Company believes that the
fair value approximated carrying value at December 31, 1996. At November 26,
1996, based on quoted market values, the Company believes that the fair value of
the Senior Secured Notes (allocated long-term debt) was approximately $47,744.
The Company believes that the carrying value of its other borrowings approximate
fair market value based on discounting future cash flows using rates currently
available for debt for similar terms and remaining maturities.
NOTE G - LEASE COMMITMENTS
The Company leases certain facilities, machinery and equipment, and vehicles
with varying terms. Under most leasing arrangements, the Company pays the
property taxes, insurance, maintenance and expenses related to the leased
property. Certain of the equipment leases classified as capital leases and the
related assets have been included in property, plant and equipment. Gross assets
under capital leases were $7,618, $9,689 and $10,350 (accumulated depreciation
of $101, $2,131 and $2,308) at December 31, 1996, November 26, 1996 and
December 31, 1995, respectively.
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1996 are as
follows:
Capital Operating
Leases Leases
------ ------
1997 $ 2,839 $ 3,421
1998 1,968 1,514
1999 1,280 476
2000 650 126
2001 252 29
Thereafter 20 29
---------- ----------
Total minimum obligations 7,009 $ 5,595
==========
Less amount representing interest 1,002
----------
Present value of net minimum obligations 6,007
Less current portion 2,407
----------
Long-term obligations $ 3,600
==========
F-12
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- -------------------------------------------------------------------------------
Most of the Company's operating leases provide the Company with the option to
renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases based upon the fair
rental values at the date of expiration of the initial lease. Total rental
expense under operating leases was as follows:
One month ended December 31, 1996 $ 191
========
Eleven months ended November 26, 1996 $ 1,886
========
Year ended December 31, 1995 $ 2,557
========
Year ended December 31, 1994 $ 4,414
========
In 1994, the Predecessor entered into a sale-leaseback transaction for its parts
distribution center in Germany. The Predecessor received net proceeds of
DM16,500 ($11,000) and leased the facility under the terms of a five year lease.
The Predecessor realized a gain of $3,866 which was deferred and was amortized
as a reduction of rental expense over the lease term ($774 per year). The
unamortized gain is included in other non-current liabilities at November 26,
1996 and December 31, 1995 and was eliminated upon the Company's acquisition on
November 27, 1996.
The Company also routinely enters into sale-leaseback arrangements for certain
equipment, which is similarly sold to third-party customers under sales-type
lease agreements. The Company maintains a net investment in these leases,
represented by the present value of payments due under the leases of $6,007 of
which $2,407 is current at December 31, 1996.
In connection with the original sale-leaseback arrangements underlying the
customer leasing program, the Company has an outstanding rental installment
obligation which is recorded based on the present value of minimum payments due
under the leases.
NOTE H - INCOME TAXES
The components of income (loss) before income taxes and extraordinary items are
as follows:
<TABLE>
<CAPTION>
One Eleven
Month Months
Ended Ended Years ended December 31,
December November ------------------------
31, 1996 26, 1996 1995 1994
-------- -------- --------- --------
<S> <C> <C> <C> <C>
United States $ 165 $ 2,541 $ (16,405) $ (6,817)
Foreign 370 (4,636) (866) (17,652)
------ -------- --------- --------
Income (loss) before income taxes and
extraordinary items $ 535 $ (2,095) $ (17,271) $(24,469)
====== ======== ========= ========
</TABLE>
F-13
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
As a result of the Predecessor's operating losses for book and tax purposes,
provision (benefit) for income taxes have been minimal, relating primarily to
state or foreign jurisdictions where taxable income occurred but net operating
loss ("NOL") carryforwards were limited.
The Company did not provide for income taxes during the one month period ended
December 31, 1996 as the result of incurring a taxable loss in the United States
and utilizing NOL carryforwards to offset taxable income in foreign
jurisdictions.
The provision for income taxes is different from the amount which would be
provided by applying the statutory federal income tax rate to income (loss)
before income taxes and extraordinary items. The reasons for the difference are
summarized below:
<TABLE>
<CAPTION>
One Eleven
Month Months
Ended Ended Years ended December 31,
December November ------------------------
31, 1996 26, 1996 1995 1994
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Statutory federal income tax rate $ 182 $ (712) $ (6,045) $ (8,564)
NOL with no current benefit 1,575 5,651 2,449
NOL benefit (126) (863)
Foreign tax differential on income/losses of foreign
subsidiaries 303 6,178
State taxes 498
Other (56) 239 225
------ -------- --------- --------
Total provision for income taxes $ - $ - $ 148 $ 786
====== ======== ========= ========
</TABLE>
The tax effects of the basis differences and net operating loss carryforwards as
of December 31, 1996, November 26, 1996 and December 31, 1995 are summarized
below:
<TABLE>
<CAPTION>
December 31, November 26, December 31,
1996 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net inventories $ - $ (9,343) $ (8,982)
Property, plant and equipment (81) (247) (2,085)
---------- ---------- ---------
Total deferred tax liabilities (81) (9,590) (11,067)
---------- ---------- ---------
Receivables 536 479 759
Net inventories 2,586 - -
Warranties and product liability 19,602 17,912 18,773
All other items 2,330 991 1,538
Benefit of net operating loss carryforwards 19,506 54,574 52,838
---------- ---------- ---------
Total deferred tax assets 44,560 73,956 73,908
---------- ---------- ---------
Deferred tax assets valuation allowance (44,479) (64,366) (62,841)
---------- ---------- ---------
Net deferred tax assets $ - $ - $ -
========== ========== =========
</TABLE>
F-14
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Basis differences between the amounts assigned to net assets for financial
reporting purposes and the amounts assigned for tax purposes resulted in a net
deferred tax asset of $44,479. In light of the Company's and Predecessor's
operating history, management provided a valuation allowance in the same amount.
At December 31, 1996, the Company had U.S. federal net operating loss
carryforwards of $93 which expire in 2011. U.S. net operating loss carryforwards
at November 27, 1996 remain with Terex in connection with the acquisition of the
Company.
In addition, the Company's foreign subsidiaries have approximately $42,128 of
loss carryforwards, $38,294 in Germany and $3,834 in other countries, which are
available to offset future foreign taxable income. The loss carryforwards in
Germany are available without expiration. The loss carryforwards in other
countries expire in the years 1997 through 2001.
NOTE I - RETIREMENT PLANS
Pension Plans
The Company does not provide any pension plans for its U.S. employees. Certain
of the Company's German employees are covered by noncontributory defined benefit
pension plans. The Company also maintains separate pension benefit plans for
German executive employees and for other staff. The executive pension plans are
based on final pay and service, and, in some cases, are dependent on social
security pensions while the other staff plans are based on fixed amounts applied
to the number of years service rendered. The plans are unfunded.
The components of consolidated pension expense for each of the reporting periods
covered by these financial statements is as follows:
<TABLE>
<CAPTION>
One Eleven
Month Months
Ended Ended Years ended December 31,
December November ------------------------
31, 1996 26, 1996 1995 1994
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Current service cost $ 2 $ 38 $ 57 $ 174
Interest cost 52 840 886 877
Net amortization and deferrals 7 107 (927) (820)
-------- -------- --------- --------
Defined benefit pension expense $ 61 $ 985 $ 16 $ 231
======== ======== ========= ========
</TABLE>
F-15
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The following table summarizes the funded status of the Company's defined
benefit pension plans to the amounts recognized in the financial statements:
<TABLE>
<CAPTION>
December 31, November 26, December 31,
1996 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Projected benefit obligations $ 12,379 $ 12,427 $ 12,843
Unrecognized net gain/(loss) - 256 (930)
Unrecognized prior service cost - (331) 368
Unrecognized transition asset (liability) - (522) 620
Adjustment required to recognize minimum liability - - 5
--------- --------- ---------
Accrued pension cost $ 12,379 $ 11,830 $ 12,906
========= ========= =========
</TABLE>
The accumulated benefit obligations do not differ materially from the projected
benefit obligations. A discount rate of 7.5% was used in 1996 and 1995 to
determine the projected benefit obligation. During 1994, the Predecessor
significantly reduced its German work force in connection with restructuring of
its operations. As a result, the Predecessor realized a curtailment gain with
respect to these plans, which was recognized as a reduction of the unrecognized
transition liability. In 1994, the Predecessor changed certain assumptions used
in the actuarial valuation of the plans. These changes in assumptions reflected
the reductions in personnel and other changes in the Predecessor's operations,
including changes in compensation arrangements, implemented during 1994. These
changes resulted in an actuarial gain of $2,724. The gain in excess of 10% of
the projected benefit obligation was amortized over 2 years.
Savings Plans
The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. The Company
can, but is not obligated to, contribute to certain of these plans.
Other Postemployment Benefits
The Company does not have any benefit program which provides retiree health or
life insurance benefits.
NOTE J - LITIGATION, COMMITMENTS AND CONTINGENCIES
Business lawsuits have been filed alleging damages for accidents that have
arisen in the normal course of operations. As part of the acquisition of the
Predecessor, the Company assumed both the outstanding and future product
liability exposures related to such operations. As of December 31, 1996, there
were approximately 99 lawsuits outstanding alleging damages for injuries or
deaths arising from accidents involving forklift products. Most of the foregoing
suits are in various stages of pretrial completion, and certain plaintiffs are
seeking punitive as well as compensatory damages. The Company is self-insured,
up to certain limits, for these product liability exposures, as well as for
certain exposures related to general, workers' compensation and automobile
liability. Insurance coverage is obtained for catastrophic losses as well as
those risks required to be insured by law or contract. The Company has recorded
and maintains an estimated liability, based in part upon actuarial
determinations, in the amount of management's estimate of the Company's
aggregate exposure for such self-insured risks. Effective November 27, 1996, the
Company was no longer self-insured for general, workers compensation and auto
liability and had various insurance policies with insuring agencies.
F-16
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The Company is involved in various other legal proceedings which have arisen in
the normal course of operations. The Company has recorded provisions for
estimated losses in circumstances where a loss is probable and the amount or
range of possible amounts of the loss is estimable.
The Company is contingently liable as a guarantor for certain customers' floor
plan obligations with financial institutions. As a guarantor, the Company is
obligated to purchase equipment which has been repossessed by the financial
institution based upon the unamortized principal balance outstanding. The
Company records the repossessed inventory at its estimated net realizable value.
Any resultant losses are charged against related reserves. The guarantee under
such floor plans aggregated approximately $25,000 at December 31, 1996. The
Company has recorded reserves based on management's estimates of potential
losses arising from these guarantees. Historically, the Predecessor had incurred
only minimal losses relating to these arrangements.
The Company is contingently liable for a portion of the residual value of
machines sold by the Company to an independent company which subsequently leases
those machines to third parties for terms generally ranging from three to five
years. At December 31, 1996, November 26, 1996 and December 31, 1995 there was
$1,188, $1,065 and $1,453, respectively, of repurchased machines included in
inventory. Historically, the Predecessor had made a profit on the subsequent
resale of repurchased machines. At December 31, 1996, the maximum contingent
liability was approximately $11,000.
The Company is contingently liable on guarantees given by the Predecessor to
financial institutions relating to capital loans and other dealer and customer
obligations arising in the ordinary conduct of its business. Such guarantees
approximated $2,885 at December 31, 1996. Estimated losses, if any, on such
guarantees are accrued as a component of the allowance for doubtful accounts.
Historically, the Predecessor had not incurred material losses on these
guarantees.
To enhance its marketing effort and ensure continuity of its dealer network, the
Company's dealer sales agreements obligate the Company to repurchase certain new
and unused equipment in the event of a dealer termination. Repurchase agreements
included in operating agreements with an independent financial institution have
been patterned after those included in the dealer sales agreements, and provide
for repurchases of inventory in certain circumstances of dealer default on
financing provided by the financial institution to the dealer. Dealer inventory
of approximately $170,000 at December 31, 1996, was covered by those operating
agreements. Under these agreements, when dealer terminations do occur, a newly
selected dealer generally assumes the assets of the prior dealer and any related
financial obligations. Historically, the Predecessor had incurred only minimal
losses relating to these arrangements.
The Company's outstanding letters of credit totaled $1,637 at December 31, 1996.
The letters of credit generally serve as collateral for certain liabilities
included in the balance sheet. Certain of the letters of credit serve as
collateral guaranteeing the Company's performance under contracts.
The Company is a wholly-owned subsidiary of Holdings. Other than its investment
in the Company, Holdings has no other substantive business activities or
operations. Holdings has financed its investment in the Company through the
issuance of $7,000 of Junior Subordinated Debentures, bearing interest at 12%
per annum and maturing in 2007, $17,000 of preferred stock with an annual
cumulative dividend of 12% and $1,000 of common stock. Although the Company has
not guaranteed Holdings' debt or preferred stock dividend obligations, or
otherwise assumed such obligations, Holdings will look to the Company's assets
and cash flows to meet its interest, debt and dividend obligations when and if
they are paid.
F-17
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE K - RELATED PARTY TRANSACTIONS
The following table summarizes related party transactions conducted with Terex:
<TABLE>
<CAPTION>
One Eleven
Month Months
Ended Ended Years ended December 31,
December November ------------------------
31, 1996 26, 1996 1995 1994
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Distribution expenses $ - $ 6,100 $ 7,088 $ 6,584
Terex management fee allocation - 5,672 6,996 8,453
Interest expense - 14,656 16,145 14,361
Interest income - 150 480 480
</TABLE>
The Predecessor utilized the services of the Terex worldwide distribution center
for services related to its replacement parts business. Distribution expenses,
which are included in cost of goods sold, reflect the charges for those
services. This arrangement was continued by the Company subsequent to November
26, 1996 for an annual fee of approximately $6,000.
Sales to affiliated companies were not material in any of the years presented.
NOTE L - GEOGRAPHIC SEGMENT INFORMATION
<TABLE>
<CAPTION>
One Eleven
Month Months
Ended Ended Years ended December 31,
December November ------------------------
31, 1996 26, 1996 1995 1994
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Sales
North America $ 31,480 $ 286,992 $ 385,611 $ 350,604
Europe 15,787 126,045 162,396 137,478
All other 231 85 116 26,800
Eliminations (735) (8,493) (19,364) (42,230)
--------- --------- --------- ---------
Total $ 46,763 $ 404,629 $ 528,759 $ 472,652
========= ========= ========= =========
Income (loss) from operations
North America $ 1,389 $ 10,307 $ (523) $ (8,403)
Europe 571 3,664 3,973 (5,405)
All other (25) (688) (379) (541)
Eliminations - - (4) 366
--------- --------- --------- ---------
Total $ 1,935 $ 13,283 $ 3,067 $ (13,983)
========= ========= ========= =========
</TABLE>
F-18
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
One Eleven
Month Months
Ended Ended Years ended December 31,
December November ------------------------
31, 1996 26, 1996 1995 1994
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Identifiable assets
North America $ 265,472 $ 98,553 $ 95,107 $ 107,930
Europe 89,861 96,595 101,054 91,931
All other 10,161 10,353 9,650 14,899
Eliminations (64,187) (12,794) (13,102) (20,098)
--------- --------- --------- ---------
Total $ 301,307 $ 192,707 $ 192,709 $ 194,662
========= ========= ========= =========
</TABLE>
Sales between geographic areas are generally priced to recover costs plus a
reasonable markup for profit. Operating income equals net sales less direct and
allocated operating expenses, excluding interest and other nonoperating items.
The Company is not dependent upon any single customer.
NOTE M - SEVERANCE ACTIONS
The Predecessor announced personnel reductions totaling approximately 134
employees in the North American operations during 1995 as a continuation of the
Predecessor's programs to increase manufacturing efficiency, reduce costs and
improve liquidity. The Predecessor recorded a combined charge of $3,478 in 1995
for severance costs associated with these actions and additional costs
associated with the closing of certain administrative and warehouse facilities.
Also during 1995, the Predecessor recorded a charge of $2,500 to recognize the
impairment in value of certain properties held for sale in Korea.
In 1994, the Predecessor announced personnel reductions in plant supervision,
engineering, marketing and administration totaling approximately 160 employees
in its North American and European operations. Also in 1994, the Predecessor
announced additional personnel reductions totaling approximately 90 employees in
conjunction with the closing of the Korean plant and certain branch sales
offices in France. The Predecessor recorded a charge of $6,736 for costs,
principally severance costs, associated with these actions. Also in 1994 the
Predecessor sold its Drexel forklifts division and realized a pretax gain of
$4,742.
F-19
<PAGE>
Clark Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE N - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
Balance
at Balance
beginning (1) (2) at end
of period Provision Other Deductions of period
--------- --------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
The Company
One month ended December 31, 1996
Allowance for Doubtful Accounts $ - $ 164 $ (12) $ - $ 152
Reserve for Excess/Obsolete Inventory - 160 (13) - 147
The Predecessor
Eleven months ended November 26, 1996
Allowance for Doubtful Accounts $ 2,867 $ 59 $ (48) $ (740) $ 2,138
Reserve for Excess/Obsolete Inventory 4,713 1,373 (47) (2,526) 3,513
Year ended December 31, 1995
Allowance for Doubtful Accounts $ 3,600 $ - $ 71 $ (804) $ 2,867
Reserve for Excess/Obsolete Inventory 6,350 2,453 71 (4,161) 4,713
Year ended December 31, 1994
Allowance for Doubtful Accounts $ 4,643 $ - $ 106 $ (1,149) $ 3,600
Reserve for Excess/Obsolete Inventory 6,397 2,383 59 (2,489) 6,350
- --------------
(1) Effect of exchange rate
(2) Utilization of established reserves, net of recoveries
</TABLE>
F-20
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
--- -----------
3.1 Certificate of Incorporation, as amended, of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
3.2 By-laws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
4.1 Indenture dated as of November 27, 1996 between the Company
and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
4.2 Registration Rights Agreement dated as of November 27, 1996
among the Company, Jefferies & Company, Inc. and Bear,
Stearns & Co. Inc. (incorporated by reference to Exhibit 4.2
to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
4.3 Form of 103/4% Senior Notes due 2006 (included in Exhibit
4.1) (incorporated by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.1 Purchase Agreement dated November 22, 1996 among the
Company, Jefferies & Company, Inc. and Bear, Stearns & Co.
Inc. (incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.2 Loan and Security Agreement dated November 27, 1996 by and
between Congress Financial Corporation and the Company
(incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.3 Stock and Asset Purchase and Sale Agreement, dated as of
November 9, 1996 among Terex Corporation, and certain of its
subsidiaries and the Company (incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement on Form
S-4, Registration No. 333-18957)
10.4 Service Agreement dated as of November 27, 1996 between
Terex Corporation and the Company (incorporated by reference
to Exhibit 10.4 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.5 Indemnity as to Letters of Credit, Performance Bonds, Appeal
Bonds, Guaranties, etc. dated November 27, 1996 by the
Company in favor of Terex Corporation, for itself and as
successor to CMH Acquisition Corp., CMH Acquisition
International Corp., Clark Material Handling Company and
Clark Material Handling International, Inc. (incorporated by
reference to Exhibit 10.5 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.6 Employment Agreement dated as of November 27, 1996 between
Holdings and Dr. Martin M. Dorio (incorporated by reference
to Exhibit 10.6 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.7 Tax Sharing Agreement made as of November 27, 1996 between
Holdings and the Company (incorporated by reference to
Exhibit 10.7 to the Company's Registration Statement on Form
S-4, Registration No. 333-18957)
10.8 Stock Purchase Agreement, dated as of May 27, 1992, by and
between Clark Equipment Company and Terex Corporation
(incorporated by reference to Exhibit 10.8 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.9 First Amendment to the Stock Purchase Agreement, dated as of
July 31, 1992, by and between Clark Equipment Company and
Terex Corporation (incorporated by reference to Exhibit 10.9
to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
<PAGE>
10.10 Trademark Assignment Agreement, dated as of July 31, 1992,
by and between Clark Equipment Company and Clark Material
Handling Company (incorporated by reference to Exhibit 10.10
to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.11 Second Amended and Restated General Operating Agreement,
dated November 29, 1990, by and between Clark Material
Handling Company and Chase Manhattan Leasing Company, Inc.
(incorporated by reference to Exhibit 10.11 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.12 Second Amendment to the Second Amended and Restated General
Operating Agreement, dated April 15, 1994, by and among
Clark Material Handling Company, Drexel Industries, Inc. and
Clark Credit Corporation (incorporated by reference to
Exhibit 10.12 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.13 Third Amendment to the Second Amended and Restated General
Operating Agreement, dated August 1, 1994, by and between
Clark Material Handling Company and Clark Credit Corporation
(incorporated by reference to Exhibit 10.13 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.14 Assignment of Second Amended and Restated General Operating
Agreement, dated March 22, 1995, by and between Clark
Material Handling Company, Clark Credit Corporation, f/k/a
Chase Manhattan Leasing Company, and Associates Commercial
Corporation (incorporated by reference to Exhibit 10.14 to
the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.15 Master Software License and Service Agreement, dated May 17,
1996, between Clark Material Handling Company and SDRC
Operations (incorporated by reference to Exhibit 10.15 to
the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.16 Letter Agreement, dated October 26, 1995, between Clark
Material Handling Company, Manufacturers Distribution
Services, Inc. and Maine Rubber International (incorporated
by reference to Exhibit 10.16 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.17 MCI Services Agreement, effective as of July 1, 1995,
between MCI Telecommunications Corporation and Clark
Material Handling Company (incorporated by reference to
Exhibit 10.17 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.18 Agreement for Systems Operations Services, dated as of March
2, 1992, between Clark Material Handling Company and
Integrated Systems Solutions Corporation, as amended by
Amendments #1 through #5 (incorporated by reference to
Exhibit 10.18 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.19 Supply Agreement, dated December 14, 1994, between Clark
Material Handling Company and Funk Manufacturing Company
(incorporated by reference to Exhibit 10.19 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.20 Supply Agreement, dated July 1, 1995, between Clark Material
Handling Company and Funk Manufacturing Company
(incorporated by reference to Exhibit 10.20 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.21 Supply Agreement, dated January 1, 1988, between Clark
Material Systems Technology Company and HydroElectric Lift
Trucks Inc. (incorporated by reference to Exhibit 10.21 to
the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.22 Amendment Agreement, dated March 2, 1992, between Clark
Material Handling Company and HydroElectric Lift Trucks,
Inc. (incorporated by reference to Exhibit 10.22 to the
Company's Registration Statement on Form S-4, Registration
No. 333-18957)
<PAGE>
10.23 Second Amendment Agreement, dated September 30, 1992,
between Clark Material Handling Company and HydroElectric
Lift Trucks, Inc. (incorporated by reference to Exhibit
10.23 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.24 Agreement, dated June 1, 1983, between Clark Equipment
Company and Mitsubishi Corporation, Mitsubishi Heavy
Industries, Ltd. and Mitsubishi Motors Corporation, as
amended (incorporated by reference to Exhibit 10.24 to the
Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.25 Master Contract for Purchase and Sale, dated July 17, 1995,
between Clark Material Handling Company and Custom Tool and
Manufacturing Company (incorporated by reference to Exhibit
10.25 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.26 Supply Agreement, dated December 20, 1991, between Clark
Material Handling Company and Dixson, Inc. (incorporated by
reference to Exhibit 10.26 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.27 Lease Agreement, dated as of April 15, 1987, between Vergil
D. Kelly and Kenny Angelucci and Clark Equipment Company
with respect to 172 Trade Street, Lexington, Kentucky, as
amended by Amendment #1 to Lease dated April 15, 1987
(incorporated by reference to Exhibit 10.27 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.28 Standard Form Dealer Sales Agreements between Clark Material
Handling Company and domestic dealer entities (incorporated
by reference to Exhibit 10.28 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.29 Agreement, dated as of September 12, 1995, by and between
Clark Material Handling Company and Nissan Forklift
Corporation, North America (incorporated by reference to
Exhibit 10.29 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.30 License Agreement dated as of November 27, 1996 between
Holdings and the Company (incorporated by reference to
Exhibit 10.30 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
21.1 Subsidiaries of the Company (incorporated by reference to
Exhibit 12.1 to the Company's Registration Statement on Form
S-4, Registration No. 333-18957)
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> NOV-26-1996
<CASH> 3,016,000
<SECURITIES> 0
<RECEIVABLES> 43,977,000
<ALLOWANCES> (2,138,000)
<INVENTORY> 71,160,000
<CURRENT-ASSETS> 120,487,000
<PP&E> 83,952,000
<DEPRECIATION> (32,799,000)
<TOTAL-ASSETS> 192,707,000
<CURRENT-LIABILITIES> 96,693,000
<BONDS> 6,034,000
0
0
<COMMON> 0
<OTHER-SE> (96,968,000)
<TOTAL-LIABILITY-AND-EQUITY> 192,707,000
<SALES> 404,629,000
<TOTAL-REVENUES> 404,629,000
<CGS> 358,698,000
<TOTAL-COSTS> 358,698,000
<OTHER-EXPENSES> 32,648,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,026,000
<INCOME-PRETAX> (2,095,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,095,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,095,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 17,646,000
<SECURITIES> 0
<RECEIVABLES> 38,306,000
<ALLOWANCES> (152,000)
<INVENTORY> 60,441,000
<CURRENT-ASSETS> 122,496,000
<PP&E> 51,699,000
<DEPRECIATION> (685,000)
<TOTAL-ASSETS> 301,307,000
<CURRENT-LIABILITIES> 97,406,000
<BONDS> 136,007,000
0
0
<COMMON> 1,000
<OTHER-SE> 25,534,000
<TOTAL-LIABILITY-AND-EQUITY> 301,301,000
<SALES> 46,763,000
<TOTAL-REVENUES> 46,763,000
<CGS> 41,817,000
<TOTAL-COSTS> 41,817,000
<OTHER-EXPENSES> 3,011,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,393,000
<INCOME-PRETAX> 535,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 535,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 535,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
