SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
AMENDMENT NO. 1
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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commissions 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 (IRS 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, 1998, 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
1
<PAGE>
This Amendment amends and supplements the Annual Report on Form 10-K
filed by CLARK Material Handling Company, a Delaware corporation (the
"Company"), with the Securities and Exchange Commission on March 31, 1998.
The purpose of this amendment is to correct two typographical errors in
the Company's Consolidated Statement of Cash Flows (Page F-6) filed on March 31,
1998 with the Annual Report on Form 10-K for the year ended December 31, 1997.
Specifically, "Depreciation" and "Other assets and liabilities, net" for the
year ended December 31, 1997 should be 8,900 and (5,218), respectively, not
1,900 and (5,211), respectively, as previously reported.
The Consolidated Financial Statements of the Company (marked to show
the changes to the Consolidated Statement of Cash Flows) along with the Report
of Independent Accountants are reprinted and attached hereto as pages F-1
through F-25. The remainder of the Annual Report on Form 10-K filed by the
Company on March 31, 1998 remains the same.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 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/ Joseph F. Lingg
----------------------------
Joseph F. Lingg
Vice President, Finance, Human Resources
and Treasurer
(Principal Financial and Accounting Officer)
Dated: April 3, 1998
3
<PAGE>
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Consolidated financial statements as of December 31, 1997 and December 31, 1996
and for the year ended December 31,1997, the one month period ended December 31,
1996, the eleven month period ended November 26, 1996 and the year ended
December 31, 1995.
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 balance sheet and the related consolidated
statements of operations, of stockholder's equity and of cash flows present
fairly, in all material respects, the consolidated financial position of CLARK
Material Handling Company and its predecessor businesses at December 31, 1997
and December 31, 1996 and the results of their operations and cash flows for the
year ended December 31, 1997, the one month period ended December 31, 1996, the
eleven month period ended November 26, 1996 and the year ended December 31,
1995, 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
February 24, 1998
F-2
<PAGE>
CLARK Material Handling Company
Consolidated Balance Sheet (in thousands, except share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, December 31,
1996 1997
---- ----
<S> <C> <C>
Current assets
Cash and cash equivalents $ 16,554 $ 6,334
Cash securing letters of credit 1,092 320
Trade receivables (less allowance of $2,215 at
December 31, 1996 and $1,906 at December 31, 1997) 38,154 47,018
Net inventories 60,441 70,784
Other current assets 6,255 7,281
---------- -----------
Total current assets 122,496 131,737
Long term assets
Property, plant and equipment-net 51,014 47,836
Goodwill, net of accumulated amortization of
$231 at December 31, 1996 and $3,081 at
December 31, 1997 109,311 114,887
Other assets 18,486 18,794
---------- -----------
Total assets $ 301,307 $ 313,254
========== ===========
Current liabilities
Notes payable $ 3,246 $ 3,184
Current portion of capital lease obligations 2,407 2,732
Trade accounts payable 53,562 62,002
Accrued compensation and benefits 5,319 5,730
Accrued warranties and product liability 23,383 20,774
Other current liabilities 9,489 10,728
---------- -----------
Total current liabilities 97,406 105,150
Non-current liabilities
Senior notes payable 130,000 130,000
Capital lease obligations, less current portion 3,600 3,864
Accrued warranties and product liability 30,826 38,497
Other non-current liabilities 14,402 12,002
---------- -----------
Total liabilities 276,234 289,513
---------- -----------
Commitments and contingencies (Note 11) - -
Stockholder's equity
Common stock, par value $1 per share, 1,000
shares authorized, issued and outstanding 1 1
Paid-in-capital 24,999 24,999
Retained earnings 535 8,406
Cumulative translation adjustment (462) (9,665)
---------- -----------
Total stockholder's equity 25,073 23,741
---------- -----------
Total liabilities and stockholder's equity $ 301,307 $ 313,254
========== ===========
The accompanying notes are an integral part of these financial statements.
F-3
</TABLE>
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Operations (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Predecessor The Company
----------- -----------
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December3l, November26, December3l, December3l,
1995 1996 1996 1997
<S> <C> <C> <C> <C>
Net sales $ 528,759 $ 404,629 | $ 46,763 $ 489,294
Cost of goods sold 484,569 359,061 | 41,905 431,127
--------- --------- | --------- ---------
Gross profit 44,190 45,568 | 4,858 58,167
|
Engineering, selling and administrative expenses 30,649 26,613 | 2,923 37,133
|
Parent company management fees 6,996 5,672 | - -
|
Severance and exit charges 3,478 - | - -
--------- --------- | --------- ---------
Income from operations 3,067 13,283 | 1,935 21,034
|
Other income (expense): |
Interest expense (790) (370) | (1,393) (15,086)
Allocated interest expense from parent |
company (16,145) (14,656) | - -
Interest income 602 220 | 25 809
Amortization interest expense from parent |
company (530) (349) | - -
Property impairment charge (2,500) - | - -
Other income (expense) - net (975) (223) | (32) 1,598
--------- --------- | --------- ---------
Income (loss) before income taxes and |
extraordinary items (17,271) (2,095) | 535 8,355
|
Provision (benefit) for income taxes (148) - | - 484
--------- --------- | --------- ---------
Income (loss) before extraordinary items (17,419) (2,095) | 535 7,871
|
Extraordinary loss on retirement of allocated |
debt (1,347) - | - -
--------- --------- | --------- ---------
Net income (loss) $ (18,766) $ (2,095) | 535 $ 7,871
========== ========= ========= =========
</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 Stockholder's Equity (in thousands)
- --------------------------------------------------------------------------------
Foreign
Retained currency
Common Paid-in earnings translation
stock capital (deficit) adoustments
----- ------- --------- -----------
<S> <C> <C> <C> <C>
PREDECESSOR
Balance at December 31, 1994 $ (76,107) $ (3,915)
Net loss for the year ended December 31, 1995 (18,766)
Translation adjustment - 2,066
--------- ----------
Balance at December 31, 1995 (94,873) (1,849)
Net loss for the 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 stocks $ 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)
Net income for the year ended
December 31, 1997 - - 7,871
Translation adjustment - - - $ (9,203)
-------- --------- --------- ----------
Balance at December 31, 1997 $ 1 $ 24,999 $ 8,406 $ (9,665)
======== ========= ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Cash Flows (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Predecessor The Company
------------------------------ ------------------------------
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 3l, November 26, December 3l, December 3l,
1995 1996 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating activities: |
Net income (loss) $ (18,766) $ (2,095) | $ 535 $ 7,871
Adjustments to reconcile net income (loss) |
to cash provided by operating activities: |
Depreciation 11,534 9,312 | 778 8,900
Amortization 1,310 1,099 | 322 3,350
Extraordinary loss on retirement of allocated debt 1,347 - | - -
Loss on sale of property, plant and equipment 183 31 | 70 24
Property impairment charge 2,500 - |
Changes in operating assets and liabilities excluding |
business combinations: |
Restricted cash (516) (220) | (136) 638
Trade receivables (240) (2,406) | 2,800 (8,732)
Net inventories (2,685) (2,696) | 9,801 (7,015)
Trade accounts payable (2,084) 61 | (11,265) 7,866
Accrued compensation and benefits (73) 409 | (609) (156)
Accrued warranties and product liability 1,126 (2,248) | 237 3,581
Due to parent company 19,187 8,720 | - -
Other assets and liabilities, net (5,645) (5,876) | 223 (5,218)
--------- --------- | ---------- ---------
Net cash provided by operating activities 7,178 4,091 | 2,756 11,109
--------- --------- | ---------- ---------
Investing activities: |
Business combinations - - | - (14,646)
Capital expenditures (5,290) (3,208) | (317) (6,340)
Proceeds from sale of assets 534 139 | - -
--------- --------- | ---------- ---------
Net cash used in investing activities (4,756) (3,069) | (317) (20,986)
--------- --------- | ---------- ---------
Financing activities: |
Issuance of current notes payable - - | - 1,182
Repayment of current notes payable - - | - (1,020)
Repayment of allocated debt (51,754) - | - -
Proceeds from allocated debt 51,220 105 | - -
Other,net (1,607) 1,376 | 293 147
--------- --------- | ---------- ---------
Net cash provided by (used in) financing activities (2,141) 1,481 | 293 309
--------- --------- | ---------- ---------
Effect of exchange rate changes on cash and |
cash equivalents (976) (1,262) | (306) (652)
--------- --------- | ---------- ---------
|
Net increase (decrease) in cash and cash equivalents (695) 1,241 | 2,426 (10,220)
Cash and cash equivalents at beginning of period 1,514 819 | 14,128 16,554
---------- --------- | ---------- ---------
Cash and cash equivalents at end of period $ 819 $ 2,060 | $ 16,554 $ 6,334
========== ========= | ========== =========
|
Supplemental disclosures |
Cash paid for interest 793 $ 337 | $ 86 $ 14,465
Income taxes paid 17 | $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 1 - 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 3 for information regarding the acquisition.
Prior to the acquisition, the Company's predecessor businesses ("Predecessor")
operated as wholly-owned subsidiaries of the Parent Company. 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. The
Parent Company acquired the Predecessor in 1992 in a purchase business
combination and Parent Company's basis, including its acquisition debt and
goodwill associated with the 1992 acquisition, was "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 the Parent Company's 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 13.
NOTE 2 - 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, CLARK Forklift Korea, CLARK Material Handling of Brazil, HLT, Inc. ("HLT")
and Blue Giant Canada Limited and Blue Giant USA Corporation ("Blue Giant"). HLT
and Blue Giant were acquired in 1997-see Note 4. The Predecessor's financial
statements include the U.S, German, Brazilian and Korean material handling
operations of the Parent Company 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.
F-7
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Cash securing letters of credit. The Company has 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 operations.
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
on the straight-line method over forty 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. Debt issuance costs are included in other assets and totaled $6,625 and
$5,599 at December 31, 1997 and 1996, respectively. Amortization of these costs
totaled $625 and $47 for the year ended December 31, 1997 and for the one month
ended December 31, 1996, respectively.
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 the 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.
F-8
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Accrued warranties and product liability. Accruals for potential warranty and
product liability claims are recorded based on past claims 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. Foreign operations utilize
the local currency as the functional 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) and totaled $1,536, ($149), ($1,055) and ($1,232) for the year ended
December 31, 1997, the one month ended December 31, 1996, the eleven months
ended November 26, 1996 and for the year ended December 31, 1995, respectively.
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 is included in
the consolidated federal return of Holdings. The tax sharing arrangement does
not differ materially from that which would occur 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.
Reclassifications. Certain reclassifications of prior year amounts have been
made to conform with the current year presentation.
F-9
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 3 - 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 $116,942 is being amortized on a
straight-line basis over forty years.
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,
-----------------------
1995 1996
---- ----
Net sales $ 528,759 $ 451,392
========== =========
Income from operations $ 5,894 $ 16,976
========== =========
Net income (loss) $ (12,452) $ 1,881
========== =========
NOTE 4 - BUSINESS COMBINATIONS
Blue Giant
On November 7, 1997, the Company closed its acquisitions of substantially all of
the assets and certain liabilities of Blue Giant USA Corporation ("BGU") and
Blue Giant Canada Limited ("BGC") (collectively, "Blue Giant") in two separate
purchase business combinations effective November 1, 1997. Although separate
legal entities, BGU and BGC were under the common control of substantially the
same stockholder group. The purchase price for the acquisitions comprised $9,365
in cash (of which $200 was paid to a shareholder of Blue Giant under a
noncompete agreement), an obligation payable over three years totaling $1,105
under a noncompete agreement with a shareholder of the Blue Giant and related
expenses of $333. The purchase price was allocated to the estimated fair value
of the tangible and intangible net assets acquired, with the residual being
allocated to goodwill. The goodwill of $1,026 is being amortized on a
straight-line basis over forty years.
F-10
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The operating results of Blue Giant are included in the consolidated results of
operations since November 1, 1997. The following unaudited pro forma summary
presents the consolidated results of operations as though the acquisition of the
Company described in Note 3 had been completed and the Company had completed the
acquisition of Blue Giant on January 1 of each period presented.
Year Ended December 31,
-----------------------
1996 1997
---- ----
Net sales $ 477,254 $ 509,187
========== =========
Income from operations $ 17,293 $ 21,583
========== =========
Net income $ 1,415 $ 8,320
========== =========
HLT, Inc.
On February 28, 1997, the Company purchased substantially all of the assets of
HLT, Inc., a supplier of upright material handling equipment, for $4,948. Assets
acquired included inventory, equipment and tooling. The purchase was financed
through a short-term note which matured in the second quarter of 1997. The
Company is leasing the former company's facility and is continuing production of
the equipment, primarily for its own use. The acquisition was not significant
and pro forma data is not presented.
NOTE 5 - INVENTORIES
Inventories consist of the following:
December 31, December 31,
1996 1997
---- ----
Finished equipment $ 12,797 $ 12,000
Replacement parts 24,107 28,302
Work-in-progress 1,402 5,356
Raw material and supplies 22,135 25,126
--------- ----------
Net inventories $ 60,441 $ 70,784
========= ==========
F-11
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
December 31, December 31,
1996 1997
---- ----
Property $ 7,364 $ 7,005
Plant 15,556 14,574
Equipment 28,779 33,854
---------- -----------
51,699 55,433
Less: Accumulated depreciation (685) (7,597)
---------- -----------
Net property, plant and equipment $ 51,014 $ 47,836
========== ===========
NOTE 7 - BORROWINGS, LINES OF CREDIT AND INDEBTEDNESS
Long-term debt is summarized as follows:
December 31, December 31,
1996 1997
---- ----
10.75% Senior Notes due 2006 $ 130,000 $ 130.000
Capital lease obligations (Note 8) 6,007 6,596
--------- ----------
Total long-term debt 136,007 136,596
Less: current portion 2,407 2,732
--------- ----------
Long-term debt, less current
portion $ 133,600 $ 133,864
========= ==========
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%
F-12
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
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.
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,
excluding HLT and Blue Giant.
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 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 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. Borrowings on the Facility are classified
in the consolidated balance sheet as notes payable and were $799 and $0 at
December 31, 1997 and 1996, respectively. The average interest rate on
borrowings during 1997 was 9%.
Fair Value Disclosures
The fair value of the Company's Senior Notes at December 31, 1997 is
approximately $137,800 based on quoted market prices. The fair value of the
Senior Notes approximated carrying value at December 31, 1996. The Company
believes that the carrying value of its other borrowings approximates fair
market value based on discounted future cash flows using rates currently
available for debt with similar terms and remaining maturities.
NOTE 8 - LEASE COMMITMENTS
The Company leases certain facilities, machinery and equipment, and vehicles
with varying terms under operating leases. In most leasing arrangements, the
Company pays the property taxes, insurance, maintenance and expenses related to
the leased property.
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:
F-13
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Year ended December 31, 1997 $ 2,807
=========
One month ended December 31, 1996 $ 191
=========
Eleven months ended November 26, 1996 $ 1,886
=========
Year ended December 31, 1995 $ 2,557
=========
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 receivable under the leases. The
Company's net investment in sales-type leases was $7,901 and $7,517 at December
31, 1997 and 1996, respectively, and is included in other current and
non-current assets on the consolidated balance sheet.
In connection with the original sale-leaseback arrangements underlying the
customer lease program, the Company has an outstanding rental installment
obligation which is recorded based on the present value of minimum payments due
under the leases of $6,596 of which $2,732 is current at December 31, 1997.
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1997 are as
follows:
Capital Operating
Leases Leases
------ ------
1998 $ 2,446 $ 3,139
1999 2,001 2,439
2000 1,556 2,023
2001 1,038 1,454
2002 371 1,314
Thereafter - 29
-------- --------
Total minimum obligations 7,412 $ 10,398
========
Less amount representing interest 816
--------
Present value of net minimum obligations 6,596
Less current portion 2,732
--------
Long-term obligations $ 3,864
========
F-14
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 9 - INCOME TAXES
The components of income (loss) before income taxes and extraordinary items are
as follows:
<TABLE>
<CAPTION>
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
United States $ (16,405) $ 2,541 | $ 165 $ 4,080
Foreign (866) (4,636) | 370 4,275
---------------- ---------------- | ---------------- ----------------
Income (loss) before income taxes |
and extraordinary items $ (17,271) $ (2,095) | $ 535 $ 8,355
================ ================ | ================ ================
</TABLE>
As a result of the Predecessor's operating losses for book and tax purposes,
provision (benefit) for income taxes for the year ended December 31, 1995 and
the eleven months ended November 26, 1996 were minimal, relating primarily to
state or foreign jurisdictions where taxable income occurred but net operating
loss ("NOL") carryforwards were limited.
Provisions for income taxes during the year ended December 31, 1997 and the one
month ended December 31, 1996 relate to state and local income taxes. The
Company did not provide for federal income taxes during the year ended December
31, 1997 and 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>
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Expected income tax at U.S. Federal
rates $ (6,045) $ (712) | $ 182 $ 2,841
NOL with no current benefit 5,651 1,575 | - -
Foreign NOL carryforward benefit - - | (166) (1,987)
Benefit of domestic NOL - (863) | (56) (1,387)
Foreign tax differential on income/ |
losses of foreign subsidiaries 303 - | 40 533
State and local taxes - - | - 484
Other 239 - | - -
---------------- ---------------- | ---------------- ----------------
|
Total provision for income taxes $ 148 $ - | $ - $ 484
================ ================ | ================ ===============
</TABLE>
F-15
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The tax effects of the basis differences and NOL carryforwards as of December
31, 1997 and December 31, 1996 are summarized below:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1997
---- ----
<S> <C> <C>
Property, plant and equipment $ (81) $ (1,846)
Goodwill - (942)
---------- ----------
Total deferred tax liabilities (81) (2,788)
---------- ----------
Warranties and product liability 19,602 21,478
Net inventories 2,586 975
Receivables 536 414
Other 2,330 1,620
Benefit of net operating loss carryforwards 19,506 19,293
---------- ----------
Total deferred tax assets 44,560 43,780
---------- ----------
Deferred tax valuation allowance (44,479) (40,992)
---------- ----------
Net deferred taxes $ - $ -
========== ==========
</TABLE>
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 $40,992. In light of the Company's and Predecessor's
operating history, management provided a valuation allowance in the same amount.
At December 31, 1997, the Company had U.S. federal NOL carryforwards of $3,049
which begin to expire in 2011.
In addition, the Company's foreign subsidiaries have approximately $43,036 of
loss carryforwards, $18,407 in corporate losses for Germany, $20,763 in
municipal losses for Germany and $3,866 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 1998 through 2001.
F-16
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 10 - RETIREMENT PLANS
Pension Plans
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 of service rendered. The plans are unfunded.
The components of pension expense relating to defined benefit plans for each of
the reporting periods covered by these financial statements are as follows:
<TABLE>
<CAPTION>
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Current service cost $ 57 $ 38 | $ 2 $ 37
Interest cost 886 840 | 52 837
Net amortization and deferrals (927) 107 | 7 -
---------------- ---------------- | ---------------- ----------------
$ 16 $ 985 | $ 61 $ 874
================ ================ | ================ ================
</TABLE>
The following table summarizes the funded status of the Company's defined
benefit pension plans to the amounts recognized in the financial statements:
December 31, December 31,
1996 1997
---- ----
Projected benefit obligations $ 12,379 $ 11,073
--------- ---------
Accrued pension cost $ 12,379 $ 11,073
========= =========
The accumulated benefit obligations do not differ materially from the projected
benefit obligations.
F-17
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
A discount rate of 7.5% was used in 1997 and 1996 to determine the projected
benefit obligations.
Savings Plans
The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. Generally,
the Company matches contributions up to a maximum of 3% of compensation. In
connection with the required match, the Company's contribution to the plan was
$512, $30, $237 and $283 for the year ended December 31, 1997, for the one month
ended December 31, 1996, for the eleven months ended November 26, 1996 and for
the year ended December 31, 1995, respectively.
Other Postemployment Benefits
The Company does not have any benefit programs which provide retiree health or
life insurance benefits.
NOTE 11 - LITIGATION, COMMITMENTS AND CONTINGENCIES
In the normal course of business, lawsuits have been filed alleging damages for
accidents relating to use of the Company's products. 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, 1997, there
were 76 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.
The Company is involved in various other legal proceedings which have arisen in
the normal course of business. 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 of its dealers'
financing arrangements with a financial institution. In certain circumstances of
dealer default, the Company is obligated to: a) repurchase new equipment
financed under dealer floor plan obligations and b) purchase dealers' long-term
rental equipment contracts with customers for which financing has been provided
by the financial institution to the dealer. The guarantees
F-18
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
under these financing arrangements aggregated approximately $25,000 and
$110,000, respectively, at December 31, 1997. When a dealer default does occur,
a newly selected dealer generally assumes the assets of the prior dealer and any
related financial obligations. Historically, the Company and the Predecessor
have 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. Historically, the Company and the Predecessor have made a profit on the
subsequent resale of repurchased machines. At December 31, 1997, the maximum
contingent liability was approximately $6,273. At December 31, 1997 and December
31, 1996, there were $1,887 and $1,188, respectively, of repurchased machines
included in inventory.
The Company is contingently liable on guarantees given by the Predecessor to
financial institutions relating to loans and other dealer and customer
obligations arising in the ordinary conduct of its business. Such guarantees
approximated $2,272 at December 31, 1997. Estimated losses, if any, on such
guarantees are accrued as a component of the allowance for doubtful accounts.
Historically, the Company and the Predecessor have not incurred material losses
on these guarantees.
The Company's outstanding letters of credit totaled $1,084 at December 31, 1997.
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 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-19
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 12 - RELATED PARTY TRANSACTIONS
The following table summarizes related party transactions conducted with the
Parent Company:
<TABLE>
<CAPTION>
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Distribution and parts warehousing |
expenses $ 7,088 $ 6,100 | $ 490 $ 5,580
Management fee allocation 6,996 5,672 | - -
Interest expense 16,145 14,656 | - -
Interest income 480 150 | - -
</TABLE>
NOTE 13 - GEOGRAPHIC SEGMENT INFORMATION
<TABLE>
<CAPTION>
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales
North America $ 385,611 $ 286,992 $ 31,480 $ 388,185
Europe 162,396 126,045 15,787 134,437
All other 116 85 231 3,829
Eliminations (19,364) (8,493) (735) (37,157)
---------------- ---------------- ---------------- ----------------
Total $ 528,759 $ 404,629 $ 46,763 $ 489,294
================ ================ ================ ================
Income (loss) from operations
North America $ (523) $ 10,307 $ 1,389 $ 17,164
Europe 3,973 3,664 571 4,741
All other (379) (688) (25) (768)
Eliminations (4) - - (103)
---------------- ---------------- ---------------- ----------------
Total $ 3,067 $ 13,283 $ 1,935 $ 21,034
================ ================ ================ ================
Indentifiable assets
North America $ 95,107 $ 98,553 $ 265,472 $ 305,184
Europe 101,054 96,595 89,861 79,249
All other 9,650 10,353 10,161 6,839
Eliminations (13,102) (12,794) (64,187) (78,018)
---------------- ---------------- ---------------- ----------------
Total $ 192,709 $ 192,707 $ 301,307 $ 313,254
================ ================ ================ ================
</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.
F-20
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The Company is not dependent upon any single customer.
NOTE 14 - 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.
NOTE 15 - FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES
The Company conducts a portion of its business through subsidiaries. The Senior
Notes referred to in Note 7 are unconditionally guaranteed, jointly and
severally, by certain subsidiaries (the "Subsidiary Guarantors") which presently
constitute HLT and BGU operations. Certain of the Company's subsidiaries do not
guarantee the Senior Notes (the "Non-Guarantor Subsidiaries"), presently the
Company's foreign subsidiaries.
Presented below is condensed financial information for the Company, the
Subsidiary Guarantors and the Non-Guarantor Subsidiaries at December 31, 1997.
The equity method has been used by the Company with respect to investments in
subsidiaries. Separate financial statements for Subsidiary Guarantors are not
presented based on management's determination that they do not provide
additional information that is material to investors.
F-21
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Consolidating Balance Sheet
December 31, 1997
CLARK Material
Handling Company Non-
(Parent Company Subsidiary Guarantor
Only) Guarantors Subsidiaries Eliminations Consolidated
----------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 70 $ 1 $ 6,263 $ - $ 6,334
Cash securing letters of credit - - 320 - 320
Trade receivables 24,224 3,081 19,713 - 47,018
Affiliate accounts receivable 4,900 11,982 189 (17,071) -
Net inventories 47,331 5,106 18,347 - 70,784
Other current assets 1,614 552 5,115 - 7,281
-------------- ---------- ----------- ----------- -----------
Total current assets 78,139 20,722 49,947 (17,071) 131,737
Long term assets
Property, plant and equipment-net 18,275 1,639 27,922 - 47,836
Goodwill 113,861 1,026 - - 114,887
Investment in affiliates 60,844 - - (60,844) -
Other assets 9,638 1,178 7,978 - 18,794
-------------- ---------- ------------ ----------- -----------
Total assets $ 280,757 $ 24,565 $ 85,847 $ (77,915) $ 313,254
============== ========== ============ =========== ===========
Current liabilities
Notes payable $ 1,261 $ - $ 1,923 $ - $ 3,184
Current portion of capital lease obligations - - 2,732 - 2,732
Trade accounts payable 44,437 3,664 13,901 - 62,002
Affiliate accounts payable 12,043 1,680 2,707 (16,430) -
Accrued compensation and benefits 3,051 503 2,176 - 5,730
Accrued warranties and product liability 19,345 196 1,233 - 20,774
Other current liabilities 4,424 303 6,001 - 10,728
-------------- ---------- ------------ ----------- -----------
Total current liabilities 84,561 6,346 30,673 (16,430) 105,150
Non-current liabilities
Senior notes payable 130,000 - - - 130,000
Capital lease obligations, less current portion - - 3,864 - 3,864
Accrued warranties and product liability 38,497 - - - 38,497
Other non-current liabilities 730 7,168 4,745 (641) 12,002
-------------- ----------- ------------ ----------- -----------
Total liabilities 253,788 13,514 39,282 (17,071) 289,513
-------------- ----------- ------------ ----------- -----------
Commitments and contingencies - - - - -
Stockholder's equity
Common stock 1 - - - 1
Paid-in-capital 24,999 - - - 24,999
Retained earnings 1,969 1,741 4,696 - 8,406
Subsidiary investment - 9,310 51,534 (60,844) -
Cumulative translation adjustment - - (9,665) - (9,665)
-------------- ---------- ------------- ----------- -----------
Total stockholder's equity 26,969 11,051 46,565 (60,844) 23,741
-------------- ---------- ------------- ----------- -----------
Total liabilities and stockholder's equity $ 280,757 $ 24,565 $ 85,847 $ (77,915) $ 313,254
============== ========== ============= =========== ===========
</TABLE>
F-22
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Consolidating Statement of Operations
Year Ended December 31, 1997
<TABLE>
<CAPTION>
CLARK Material
Handling Company Non-
Parent Company Subsidiary Guarantor
Only) Guarantors Subsidiaries Eliminations Consolidated
-------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 358,103 $ 27,849 $ 140,499 $ (37,157) $ 489,294
Cost of goods sold 316,068 24,579 127,535 (37,055) 431,127
------------ ------------ ------------- ------------- ------------
Gross profit 42,035 3,270 12,964 (102) 58,167
Engineering, selling and administrative expenses 26,918 1,399 8,816 - 37,133
------------ ------------ ------------- ------------- ------------
Income from operations 15,117 1,871 4,148 (102) 21,034
Other income (expense):
Interest income 699 8 102 - 809
Interest expense (14,480) (48) (558) - (15,086)
Other income - net 907 6 685 - 1,598
------------ ------------ ------------- ------------- ------------
Income before income taxes 2,243 1,837 4,377 (102) 8,355
Equity in earnings of subsidiaries 5,952 - - (5,952) -
Provision for income taxes 324 105 55 - 484
------------ ------------ ------------- ------------- ------------
Net income $ 7,871 $ 1,732 $ 4,322 $ (6,054) $ 7,871
============ ============ ============= ============= ============
</TABLE>
F-23
<PAGE>
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Consolidating Statement of Cash Flows
Year Ended December 31, 1997
<TABLE>
<CAPTION>
CLARK Material
Handling Company Non-
(Parent Company Subsidiary Guarantor
Only) Guarantors Subsidiaries Consolidated
--------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net cash provided by operating activities $ 3,347 $ 326 $ 7,436 $ 11,109
------------- --------- ---------- ---------
Investing activities:
Business combinations (14,646) - - (14,646)
Capital expenditures (4,532) (325) (1,483) (6,340)
------------- --------- ---------- ---------
Net cash used in investing activities (19,178) (325) (1,483) (20,986)
------------- --------- ---------- ---------
Financing activities:
Issuance of current notes payable 822 - 360 1,182
Repayment of current notes payable - - (1,020) (1,020)
Other, net - - 147 147
------------- --------- ---------- ---------
Net cash provided by (used in) financing activities 822 - (513) 309
------------- --------- ---------- ---------
Effect of exchange rate changes on cash and
cash equivalents - - (652) (652)
------------- --------- ---------- ---------
Net increase (decrease) in cash and cash equivalents (15,009) 1 4,788 (10,220)
Cash and cash equivalents at beginning of period 15,079 - 1,475 16,554
------------- --------- ---------- ---------
Cash and cash equivalents at end of period $ 70 $ 1 $ 6,263 $ 6,334
============= ========= ========== =========
</TABLE>
F-24
<PAGE>
NOTE 16 - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
Balance
at Balance
beginning (1) (2) at end
of period Provision Other Deductions of period
--------- --------- ----- ---------- ---------
Allowance for Doubtful Accounts
The Company
- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997 $ 2,215 $ 27 $ (123) $ (213) $ 1,906
One month ended December 31, 1996 2,063 164 (12) - 2,215
The Predecessor
- ---------------
Eleven months ended November 26, 1996 2,867 59 (48) (740) 2,138
Year ended December 31, 1995 3,600 - 71 (804) 2,867
(1) Effect of exchange rate
(2) Utilization of established reserves,
net of recoveries
</TABLE>
F-25
