<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998.
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: 333-31187
W.R. CARPENTER NORTH AMERICA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1049647
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1775 PARK STREET
SELMA, CALIFORNIA 93662
(Address of principal executive offices and zip code)
(209) 891-5344
(Registrant's telephone number, including area code)
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 [ ]
At May 11, 1998, there were 55,000 shares of Class A common stock, $1.00 par
value, and 5,000 shares of Class B common stock, $1.00 par value, of the
registrant issued and outstanding.
Page 1
<PAGE> 2
PART I - - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
Jun 29 Mar. 30 Mar. 29
1997 1997 1998
(audited) (unaudited) (unaudited)
-------- -------- --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 77,345 $ 5,984 $ 67,640
Accounts receivable (net of allowance for doubtful
accounts of $364, $308, and $516 respectively) 23,591 23,223 31,343
Inventories 16,833 16,943 22,720
Prepaid expenses and other 1,773 1,789 2,644
Deferred income taxes 1,091 1,003 1,091
-------- -------- --------
Total current assets 120,633 48,942 125,438
Property, plant and equipment, net 42,143 38,459 53,558
Other assets 5,049 748 5,948
-------- -------- --------
Total assets $167,825 $ 88,149 $184,944
======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 11,585 $ 11,964 $ 14,902
Other accrued liabilities 9,373 8,311 10,112
Current portion of long-term debt 840 6,131 1,354
Note Payable - Related Party 0 7,466 0
Revolving line of credit 0 0 2,146
-------- -------- --------
Total current liabilities 21,798 33,892 28,514
Senior Subordinated Notes Payable 104,523 0 104,559
Long-term debt, net of current portion 8,521 25,156 11,741
Other long-term liabilities 3,817 3,520 4,868
Deferred income taxes 2,135 1,972 4,273
-------- -------- --------
Total liabilities $140,794 $ 64,520 $153,955
-------- -------- --------
Commitments and contingencies
Stockholder's equity
Common stock 60 60 60
Preferred stock 25 25 25
Additional paid-in capital 8,767 8,767 8,767
Cumulative currency translation adjustment (CTA) 2,084 2,084 2,084
Retained earnings (on July 3, 1994 a deficit
of $31,395 was eliminated due to a subsidiary's
quasi-reorganization) 16,098 12,693 20,053
-------- -------- --------
27,031 23,629 30,989
-------- -------- --------
Total liabilities and stockholder's equity $167,825 $ 88,149 $184,944
======== ======== ========
</TABLE>
Page 2
<PAGE> 3
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per-share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
Mar. 30 Mar. 29 Mar. 30 Mar. 29
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues
Equipment sales
New $ 29,402 $ 34,459 $ 76,907 $ 96,058
Used 615 629 1,849 2,055
Rental and services 5,434 6,534 17,331 20,599
--------- --------- --------- ---------
Total revenues 35,451 41,622 96,087 118,712
--------- --------- --------- ---------
Cost of Revenues
Equipment sales
New 20,106 24,202 52,838 67,677
Used 302 299 933 1,066
Rental and services 3,647 4,486 10,499 12,832
--------- --------- --------- ---------
Total cost of revenues 24,055 28,987 64,270 81,575
--------- --------- --------- ---------
Gross profit
Equipment sales
New 9,296 10,257 24,069 28,381
Used 313 330 916 989
Rental and services 1,787 2,048 6,832 7,767
--------- --------- --------- ---------
Total gross profit 11,396 12,635 31,817 37,137
--------- --------- --------- ---------
Operating expenses
Selling, general and administrative 4,646 5,679 13,214 16,990
Product liability 765 555 2,396 2,252
Research and development 832 1,236 3,110 4,331
--------- --------- --------- ---------
Total operating expenses 6,243 7,470 18,720 23,573
--------- --------- --------- ---------
Income from operations 5,153 5,165 13,097 13,564
Other income (expense)
Interest expense, net (832) (2,254) (2,458) (6,543)
Other expense 15 (76) (35) (429)
--------- --------- --------- ---------
Income before income taxes 4,336 2,835 10,604 6,592
Provision for income taxes (1,652) (1,134) (4,040) (2,634)
--------- --------- --------- ---------
Net income $ 2,684 $ 1,701 $ 6,564 $ 3,958
========= ========= ========= =========
Net income per common share $ 45 $ 28 $ 109 $ 66
========= ========= ========= =========
Weighted average number of common
shares used to compute net income
per share 60,000 60,000 60,000 60,000
========= ========= ========= =========
</TABLE>
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W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
Mar. 30 Mar. 29
1997 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income $ 6,564 $ 3,958
-------- --------
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 4,558 5,815
Gain on disposition of property, plant and equipment (1,017) (1,071)
Changes in operating assets and liabilities
Accounts receivable (7,630) (7,752)
Inventories (1,642) (5,887)
Prepaid expenses and other assets (35) (871)
Deferred income taxes, net 867 2,138
Accounts payable 1,177 3,317
Accrued expenses 817 739
Other, net 518 2,137
-------- --------
Total adjustments (2,387) (1,435)
-------- --------
Net cash provided by operating activities 4,177 2,523
-------- --------
Cash flows from investing activities
Additions to property, plant and equipment (9,660) (18,018)
Proceeds from disposition of assets 1,909 2,055
-------- --------
Net cash used by investing activities (7,751) (15,963)
-------- --------
Cash flows from financing activities
Proceeds from long-term debt 22,412 4,778
Repayment of long-term debt (18,019) (1,043)
Repayment of note payable - related party (5,999) 0
-------- --------
Net cash (used)/provided by financing activities (1,606) 3,735
-------- --------
Net decrease in cash and cash equivalents (5,180) (9,705)
Cash and cash equivalents at beginning of period 11,164 77,345
-------- --------
Cash and cash equivalents at end of period $ 5,984 $ 67,640
======== ========
</TABLE>
Page 4
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W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements for the three and nine months
ended March 29, 1998, have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Results of operations for the interim periods are not necessarily indicative of
the results that may be expected for a full year.
2. CONTINGENCIES
W.R. Carpenter North America, Inc. ("the Company") and its subsidiaries have
various product liability claims and suits pending. The Company's policy is to
defend each suit vigorously, regardless of the amount sought in damages.
Although the outcome of such litigation cannot be predicted with certainty, it
is the opinion of management, based on the advice of legal counsel and other
considerations, that all claims, legal actions, complaints and proceedings which
have been filed or are pending against the Company and its subsidiaries, as well
as possible future claims, are adequately covered by reserves or insurance, and
are not expected to have a material adverse effect on the Company's consolidated
financial position.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements in this Quarterly Report on Form 10-Q include forward-looking
information within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
are subject to the "safe harbor" created by those sections. These
forward-looking statements involve certain risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statement. Such risks and uncertainties include, but are not limited to, the
following factors: substantial leverage of the Company; industrial cyclicality;
dependence on the construction industry; consolidation of the customer base;
dependence upon major customers; risks relating to growth; significance of new
product development; the need for continual capital expenditures; competition;
product liability; insurance; availability of product components; reliance on
suppliers; foreign sales; government and environmental regulation; labor
matters; holding company structure; restrictions under debt agreements;
fraudulent conveyance; and control by the sole stockholder.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain historical
income statement data derived from the Company's consolidated statements of
operations expressed in dollars and as a percentage of net revenue.
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------
March 29, 1998 March 30, 1997
---------------------- ----------------------
(Dollars in Thousands)
(Unaudited)
-----------------------------------------------------
$ % $ %
------ ----- ------ -----
<S> <C> <C> <C> <C>
Revenue 41,622 100.0 35,451 100.0
Cost of revenue 28,987 69.6 24,055 67.9
Gross profit 12,635 30.4 11,396 32.1
Operating expenses 7,470 17.9 6,243 17.6
Operating income 5,165 12.4 5,153 14.5
Interest expense, net 2,254 5.4 832 2.3
Other expenses 76 0.2 15 0.0
Income taxes 1,134 2.7 1,652 4.7
Net income 1,701 4.1 2,684 7.6
EBITDA 7,288 17.5 6,875 19.4
Depreciation and amortization 2,199 5.3 1,707 4.8
</TABLE>
SEGMENT OPERATIONS
The Company, through its wholly-owned subsidiaries, UpRight, Inc. ("UpRight")
and Horizon High Reach, Inc. ("Horizon"), manufactures, sells, rents and
services aerial work platform equipment to a diverse customer base.
UpRight is a leading manufacturer of aerial work platforms. Horizon is a leading
industrial equipment rental, sales and service company specializing in aerial
work platforms and is a significant customer of UpRight. Sales to Horizon
accounted for approximately 9.9% and 12.7% of UpRight's revenue for the three
months ended March 29, 1998 and March 30, 1997, respectively. Sales to Horizon
accounted for approximately 13.6% and 15.8% of UpRight's revenue for the nine
months ended March 29, 1998 and March 30, 1997, respectively.
When equipment purchased from UpRight by Horizon is included in Horizon's rental
fleet, or held as sales inventory at the end of a reporting period, the gross
profit earned by UpRight on the sale of this equipment is eliminated from the
Company's consolidated Gross Profit. As Horizon's purchases of equipment for
rental fleet purposes vary by quarter, and the level of UpRight equipment held
in sales inventory by Horizon fluctuates by quarter, the resulting elimination
of Gross Profit on consolidation can cause consolidated Income from operations
to fluctuate on a quarterly basis.
The Company believes its results of operations for its UpRight and Horizon
subsidiaries are most meaningful when analyzed from the perspective of two
arm's-length companies. The following table sets forth for the periods indicated
certain historical consolidating income statement data derived from the
Company's consolidated statements of operations expressed in dollars and as a
percentage of revenue.
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<TABLE>
<CAPTION>
Consolidating Statement of Operations
Three Months Ended
March 29, 1998
(Dollars in Thousands)
(Unaudited)
------------------------------------------------------------------------------
Carpenter Horizon UpRight Eliminations Consolidated
--------- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
New equipment sales $ 5,176 $32,496 $(3,213) $34,459
Used equipment sales 629 629
Rental and services 6,534 6,534
------- ------- ------- ------- -------
TOTAL REVENUES 12,339 32,496 (3,213) 41,622
------- ------- ------- ------- -------
COST OF REVENUES
New equipment sales 3,883 23,422 (3,103) 24,202
Used equipment sales 299 299
Rental and services 4,486 4,486
------- ------- ------- ------- -------
TOTAL COST OF REVENUES 8,668 23,422 (3,103) 28,987
------- ------- ------- ------- -------
GROSS PROFIT
New equipment sales 1,293 9,074 (110) 10,257
Used equipment sales 330 330
Rental and services 2,048 2,048
------- ------- ------- ------- -------
TOTAL GROSS PROFIT 3,671 9,074 (110) 12,635
------- ------- ------- ------- -------
% of revenue 29.8% 27.9% 30.4%
INCOME FROM OPERATIONS
Selling, general and administrative $ 538 2,584 2,557 5,679
Product liability 555 555
Research and development 1,236 1,236
------- ------- ------- ------- -------
Total operating expenses 538 2,584 4,348 7,470
======= ======= ======= ======= =======
INCOME FROM OPERATIONS (538) 1,087 4,726 (110) 5,165
% of revenue 8.8% 14.5% 12.4%
</TABLE>
<TABLE>
<CAPTION>
Consolidating Statement of Operations
Three Months Ended
March 30, 1997
(Dollars in Thousands)
(Unaudited)
------------------------------------------------------------------------------
Carpenter Horizon UpRight Eliminations Consolidated
--------- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
New equipment sales $ 5,107 $27,831 $(3,536) $29,402
Used equipment sales 615 615
Rental and services 5,434 5,434
------- ------- ------- ------- -------
TOTAL REVENUES 11,156 27,831 (3,536) 35,451
------- ------- ------- ------- -------
COST OF REVENUES
New equipment sales 3,960 19,703 (3,557) 20,106
Used equipment sales 302 -- -- 302
Rental and services 3,647 -- -- 3,647
------- ------- ------- ------- -------
TOTAL COST OF REVENUES 7,909 19,703 (3,557) 24,055
------- ------- ------- ------- -------
GROSS PROFIT
New equipment sales 1,147 8,128 21 9,296
Used equipment sales 313 -- -- 313
Rental and services 1,787 -- -- 1,787
------- ------- ------- ------- -------
TOTAL GROSS PROFIT 3,247 8,128 21 11,396
------- ------- ------- ------- -------
% of revenue 29.1% 29.2% 32.1%
INCOME FROM OPERATIONS
Selling, general and administrative $ 453 2,233 1,960 -- 4,646
Product liability -- 765 -- 765
Research and development -- 832 -- 832
------- ------- ------- ------- -------
Total operating expenses 453 2,233 3,557 -- 6,243
======= ======= ======= ======= =======
INCOME FROM OPERATIONS (453) 1,014 4,571 21 5,153
% of revenue 9.1% 16.4% 14.5%
</TABLE>
Page 7
<PAGE> 8
<TABLE>
<CAPTION>
Consolidating Statement of Operations
Nine Months Ended
March 29, 1998
(Dollars in Thousands)
(Unaudited)
------------------------------------------------------------------------------
Carpenter Horizon UpRight Eliminations Consolidated
--------- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
New equipment sales $14,565 $94,312 $(12,819) $96,058
Used equipment sales 2,055 2,055
Rental and services 20,599 20,599
-------- ------- ------- ------- -------
TOTAL REVENUES 37,219 94,312 (12,819) 118,712
-------- ------- ------- ------- -------
COST OF REVENUES
New equipment sales 11,213 67,591 (11,127) 67,677
Used equipment sales 1,066 1,066
Rental and services 12,832 12,832
-------- ------- ------- ------- -------
TOTAL COST OF REVENUES 25,111 67,591 (11,127) 81,575
-------- ------- ------- ------- -------
GROSS PROFIT
New equipment sales 3,352 26,721 (1,692) 28,381
Used equipment sales 989 -- 989
Rental and services 7,767 -- 7,767
-------- ------- ------- ------- -------
TOTAL GROSS PROFIT 12,108 26,721 (1,692) 37,137
-------- ------- ------- ------- -------
% of revenue 32.5% 28.3% 31.3%
INCOME FROM OPERATIONS
Selling, general and $ 1,783 7,377 7,830 16,990
administrative
Product liability 2,252 2,252
Research and development 4,331 4,331
-------- ------- ------- ------- -------
Total operating expenses 1,783 7,377 14,413 23,573
======== ======= ======= ======= =======
INCOME FROM OPERATIONS (1,783) 4,731 12,308 (1,692) 13,564
% of revenue 12.7% 13.1% 11.4%
</TABLE>
<TABLE>
<CAPTION>
Consolidating Statement of Operations
Nine Months Ended
March 30, 1997
(Dollars in Thousands)
(Unaudited)
------------------------------------------------------------------------------
Carpenter Horizon UpRight Eliminations Consolidated
--------- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
New equipment sales $ 13,771 $ 75,017 $(11,881) $ 76,907
Used equipment sales 1,849 1,849
Rental and services 17,331 17,331
-------- -------- -------- ------- --------
TOTAL REVENUES 32,951 75,017 (11,881) 96,087
-------- -------- -------- ------- --------
COST OF REVENUES
New equipment sales 10,684 53,678 (11,524) 52,838
Used equipment sales 933 933
Rental and services 10,499 10,499
-------- -------- -------- ------- --------
TOTAL COST OF REVENUES 22,116 53,678 (11,524) 64,270
-------- -------- -------- ------- --------
GROSS PROFIT
New equipment sales 3,087 21,339 (357) 24,069
Used equipment sales 916 -- 916
Rental and services 6,832 -- 6,832
-------- -------- -------- ------- --------
TOTAL GROSS PROFIT 10,835 21,339 (357) 31,817
-------- -------- -------- ------- --------
% of revenue 32.9% 28.4% 33.1%
INCOME FROM OPERATIONS
Selling, general and $ 715 6,434 6,065 13,214
administrative
Product liability -- 2,396 2,396
Research and development -- 3,110 3,110
-------- -------- -------- ------- --------
Total operating expenses 715 6,434 11,571 18,720
======== ======== ======== ======= ========
INCOME FROM OPERATIONS (715) 4,401 9,768 (357) 13,097
% of revenue 13.4% 13.0% 13.6%
</TABLE>
Page 8
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THREE MONTHS ENDED MARCH 29, 1998 COMPARED TO THREE MONTHS ENDED MARCH 30, 1997.
Revenue for the three months ended March 29, 1998 was $41.6 million, an increase
of $6.1 million over revenue of $35.5 million for the three months ended March
30, 1997. The increase in revenue was mainly due to an increase in revenue from
sales of new equipment of $5.1 million (including sales of UpRight products by
Horizon) and an increase in Horizon's rental and services revenue of $1.1
million. UpRight's sale of larger scissor lifts and the AB46 Boom lift were the
primary reasons for the increase in new equipment sales. The increase in
Horizon's rental and services revenue is primarily attributable to rental fleet
additions and the inclusion of results from businesses acquired subsequent to
the third quarter of Fiscal 1997.
Gross Profit for the three months ended March 29, 1998 was $12.6 million, an
increase of $1.2 million over Gross Profit of $11.4 million for the three months
ended March 30, 1997. However, gross margin decreased to 30.4% in the three
months ended March 29, 1998 compared to 32.1% in the three months ended March
30, 1997 due to new product introductions and higher elimination of gross profit
attributable to UpRight's products held in Horizon's inventory as of March 29,
1998 compared to March 30, 1997.
Operating expenses, consisting of selling, general and administrative expense
(SG & A), product liability and Research and Development expense, were $7.5
million in the three months ended March 29, 1998 compared to $6.2 million for
the same period last year. SG & A expenses increased by $1.0 million to $5.7
million in the three months ended March 29, 1998 compared to the three months
ended March 30, 1997 due to an increase in domestic and international selling
and marketing expense associated with higher unit volumes, as well as expenses
incurred in connection with the introduction of new products and establishing a
sales office in South America and a sales office in Asia. Product liability
expense was $0.6 million in the three months ended March 29, 1998 compared to
$0.8 million in the three months ended March 30, 1997. Research and Development
expenses for the three months ended March 29, 1998 were $1.2 million, an
increase of $ 0.4 million compared to the three months ended March 30, 1997. The
increase in Research and Development expenses reflected the Company's increased
emphasis on developing new and re-designed aerial work platform products.
Interest expense, net of interest income, increased to $2.3 million for the
three months ended March 29, 1998 from $0.8 million for the three months ended
March 30, 1997 due to the Company's issuance of its Senior Subordinated Notes in
June 1997.
Income tax for the three months ended March 29, 1998 was $1.1 million compared
to $1.7 million for the three months ended March 30, 1997. The Company's
effective tax rate was 40.0% for the three months ended March 29, 1998 compared
to 38.1% for the three months ended March 30, 1997.
Net income for the three months ended March 29, 1998 was $1.7 million,
representing a decrease of $1.0 million from net income of $2.7 million for the
three months ended March 30, 1997, as a result of the factors described above.
NINE MONTHS ENDED MARCH 29, 1998 COMPARED TO NINE MONTHS ENDED MARCH 30, 1997
Revenue for the nine months ended March 29, 1998 was $118.7 million, an increase
of $22.6 million over the revenue of $96.1 million for the nine months ended
March 30, 1997. The increase in revenue was mainly attributable to an increase
in revenue from sales of new equipment (such as larger scissor lifts and AB46
Boom lifts) of $19.2 million compared to the nine months ended March 30, 1997.
Gross profit increased from $31.8 million in the nine months ended March 30,
1997 to $37.1 million for the nine months ended March 29, 1998. However, gross
profit as a percentage of total revenue decreased to 31.3% for the nine months
ended March 29, 1998 compared to 33.1% for the same period during the prior year
due to factors described above.
Operating expenses were $23.6 million for the nine months ended March 29, 1998
compared to $18.7 million for the same period in the previous year, but
represented approximately 20% of revenue for both periods. The $4.9 million
increase in operating expenses primarily resulted from the factors described
above.
Interest expense, net of interest income, increased to $6.5 million for the nine
months ended March 29, 1998 compared to $2.5 million during the comparable
period in the previous year. This increase in interest expense resulted
primarily from the factors described above.
The Company's effective income tax rate was 40.0% and 38.1% for the nine months
ended March 29, 1998 and March 30, 1997, respectively.
Net income for the nine months ended March 29, 1998 was $4.0 million,
representing a decrease of $2.6 million compared to the nine months ended March
30, 1997. This decrease in net income resulted primarily from the factors
described above.
Page 9
<PAGE> 10
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow requirements are for working capital, capital
expenditures and debt service.
The Company's working capital was $97.0 million and $98.8 million at March 29,
1998 and June 29, 1997, respectively. The reduction of working capital is mainly
due to the increase in inventories and accounts receivable offsetting an
increase in current liabilities. Inventories increased by $5.9 million during
the nine months ended March 29, 1998 as compared to the year ended June 29, 1997
due to introduction of new products. Current liabilities increased mainly due to
increase in accounts payable resulting from increased sales activity.
The Company's debt was $117.7 million and $113.9 million at March 29, 1998 and
June 29, 1997, respectively. This increase in borrowings was due to UpRight's
financing its capital expenditure of $4.6 million during the nine months ended
March 29, 1998. Cash and cash equivalents were $67.6 million and $77.3 million
at March 29, 1998 and June 29, 1997, respectively.
Net cash provided by operating activities was $2.5 million in the nine months
ended March 29, 1998 and $4.2 million for the nine months ended March 30, 1997.
The decrease in net cash provided by operating activities of $1.7 million is
primarily related to interest payments on the Company's Senior Subordinated
Notes and a higher level of inventory to support the introduction of new
products during the comparable periods.
Cash used in the nine months ended March 29, 1998 for the purchase of property,
plant and equipment totaled $18.0 million, including $4.3 million used in the
three months ended March 29, 1998. This capital expenditure was incurred to
expand UpRight's manufacturing facilities at Selma, California and to upgrade
and expand Horizon's rental fleet.
Net cash (used)/provided by financing activities was $3.7 million and $(1.6)
million in the nine months ended March 29, 1998 and March 30, 1997,
respectively. The change in net cash (used)/provided by financing activities
resulted primarily from the $6 million repayment of a loan to a related party
during the nine months ended March 30, 1997. The Company paid no dividends in
either period.
The Company believes that, in addition to its cash on hand, internally generated
funds and amounts available to UpRight and Horizon under revolving credit
facilities are and will continue to be sufficient to satisfy its operating cash
requirements and planned capital expenditures. The Company may, however, require
additional capital through borrowings if the Company undertakes acquisitions.
SEASONALITY
The Company's revenue and operating results historically have fluctuated from
quarter to quarter, and the Company expects that they will continue to do so in
the future. These fluctuations have been caused by a number of factors,
including seasonal purchasing patterns of UpRight's customers and seasonal
rental patterns of Horizon's customers (principally due to the effect of weather
on construction activity). The operating results of any historical period are
not necessarily indicative of results for any future period.
SUBSEQUENT EVENTS
Effective April 1, 1998, Horizon completed the stock acquisition of High Trak
Equipment Co., Inc., an equipment sales and rental company specializing in
telescopic reach lifts. The transaction was valued at approximately $9.0
million.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
Page 10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. The following Exhibits are filed herewith and made a part hereof:
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------ -----------------------
<S> <C>
*3.1(i) Certificate of Incorporation of the Company, as amended.
*3.1(ii) Bylaws of the Company, as amended.
*4.1 Indenture, dated as of June 10, 1997, by and among the Company, the
Guarantors named therein and U.S. Trust Company of California, N.A.
*4.2 Registration Rights Agreement, dated as of June 10, 1997, by and among
the Company, the Guarantors named therein and the Initial Purchasers
named therein.
*4.3 Form of Original Global Note.
*4.4 Form of Exchange Global Note.
*10.1 Securities Purchase Agreement, dated as of June 4, 1997, by and among
the Company, the Guarantors named therein and the Initial Purchasers
named therein.
*10.2 Revolving Loan Agreement, dated October 16, 1996, between UpRight and
Union Bank of California.
*10.3 Industrial Lease, dated February 7, 1997, between A.L.L., a general
partnership, and UpRight.
*10.4 Lease, entered into as of November, 1995, by and between Townview
Partners, an Ohio partnership, and UpRight.
*10.5 Recourse Agreement, dated February 11, 1997, by and between Horizon
and American Equipment Leasing.
*10.6 Management Services Agreement, dated May 12, 1997, by and between the
Company and Griffin Group International Management Ltd.
*10.7 Lease, dated November 15, 1996, by and between Akzo Nobel Coatings,
Inc., and Horizon.
*10.8 Lease, dated January, 1997, by and between Morris Ragona and Joan
Ragona, and Horizon.
*10.9 Agreement of Lease, dated January 26, 1995, by and between Richard V.
Gunner and George Andros, and Horizon.
*10.10 Lease Agreement, executed November 10, 1989, by and between Trussel
Electric, Inc., and Up-Right, including Lease Extension Agreement
dated February 28, 1994, Lease Modification Agreement dated January
26, 1994, and Notice of Option to Renew dated May 7, 1992.
*10.11 Lease Agreement (undated) by and between T.T. Templin and Horizon.
*10.12 Agreement of Lease, dated October 15, 1992, by and between Robert I.
Selsky and Up-Right Aerial Platforms, Assignment of Lease, dated June
1994, by and between Up-Right and Horizon and Consent to Assignment
dated July 15, 1994.
*10.13 Lease Agreement, dated April 27, 1990, by and between D.L. Phillips
Investment Builders, Inc., and Up-Right, together with Supplemental
Agreement to Lease, dated September 30, 1994, Assignment of Lease,
dated June 18, 1990, by and between D.L. Phillips Investment Builders,
Inc., and JMA, Ltd., Assignment of Lease dated June 1994, by and
between Up-Right and Horizon and Consent to Assignment dated July 15,
1994.
*10.14 Lease Renewal Agreement, dated October 19, 1992, between Ronald W.
Werner and UpRight.
*10.15 Lease, dated March 7, 1995, by and between BMB Investment Group and
Horizon.
27.1 Financial Data Schedule.
</TABLE>
- --------------------
* Incorporated herein by reference to the Company's Registration Statement on
Form S-4 (Reg. No. 333-31187), filed with the Securities and Exchange
Commission on July 14, 1997.
(b) The Company did not file any reports on Form 8-K during the quarter
ended March 29, 1998.
Page 11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
W.R. CARPENTER NORTH AMERICA, INC.
Date: May 11, 1998
By: /s/ Graham D. Croot
-------------------------------
Graham D. Croot
Chief Financial Officer
(Principal Financial Officer and Duly
Authorized Signatory)
Page 12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits Description
- -------- -----------
<S> <C>
*3.1(i) Certificate of Incorporation of the Company, as amended.
*3.1(ii) Bylaws of the Company, as amended.
*4.1 Indenture, dated as of June 10, 1997, by and among the Company, the
Guarantors named therein and U.S. Trust Company of California, N.A.
*4.2 Registration Rights Agreement, dated as of June 10, 1997, by and among
the Company, the Guarantors named therein and the Initial Purchasers
named therein.
*4.3 Form of Original Global Note.
*4.4 Form of Exchange Global Note.
*10.1 Securities Purchase Agreement, dated as of June 4, 1997, by and among
the Company, the Guarantors named therein and the Initial Purchasers
named therein.
*10.2 Revolving Loan Agreement, dated October 16, 1996, between UpRight and
Union Bank of California.
*10.3 Industrial Lease, dated February 7, 1997, between A.L.L., a general
partnership, and UpRight.
*10.4 Lease, entered into as of November, 1995, by and between Townview
Partners, an Ohio partnership, and UpRight.
*10.5 Recourse Agreement, dated February 11, 1997, by and between Horizon
and American Equipment Leasing.
*10.6 Management Services Agreement, dated May 12, 1997, by and between the
Company and Griffin Group International Management Ltd.
*10.7 Lease, dated November 15, 1996, by and between Akzo Nobel Coatings,
Inc., and Horizon.
*10.8 Lease, dated January, 1997, by and between Morris Ragona and Joan
Ragona, and Horizon.
*10.9 Agreement of Lease, dated January 26, 1995, by and between Richard V.
Gunner and George Andros, and Horizon.
*10.10 Lease Agreement, executed November 10, 1989, by and between Trussel
Electric, Inc., and Up-Right, including Lease Extension Agreement
dated February 28, 1994, Lease Modification Agreement dated January
26, 1994, and Notice of Option to Renew dated May 7, 1992.
*10.11 Lease Agreement (undated) by and between T.T. Templin and Horizon.
*10.12 Agreement of Lease, dated October 15, 1992, by and between Robert I.
Selsky and Up-Right Aerial Platforms, Assignment of Lease, dated June
1994, by and between Up-Right and Horizon and Consent to Assignment
dated July 15, 1994.
*10.13 Lease Agreement, dated April 27, 1990, by and between D.L. Phillips
Investment Builders, Inc., and Up-Right, together with Supplemental
Agreement to Lease, dated September 30, 1994, Assignment of Lease,
dated June 18, 1990, by and between D.L. Phillips Investment Builders,
Inc., and JMA, Ltd., Assignment of Lease dated June 1994, by and
between Up-Right and Horizon and Consent to Assignment dated July 15,
1994.
*10.14 Lease Renewal Agreement, dated October 19, 1992, between Ronald W.
Werner and UpRight.
*10.15 Lease, dated March 7, 1995, by and between BMB Investment Group and
Horizon.
27.1 Financial Data Schedule.
</TABLE>
- -------------------
* Incorporated herein by reference to the Company's Registration Statement on
Form S-4 (Reg. No. 333-31187), filed with the Securities and Exchange Commission
on July 14, 1997.
Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> JUN-28-1997 JUN-28-1998
<PERIOD-START> JUN-30-1996 JUN-28-1997
<PERIOD-END> MAR-30-1997 MAR-29-1998
<EXCHANGE-RATE> 1 1
<CASH> 5,984 67,640
<SECURITIES> 0 0
<RECEIVABLES> 23,531 31,859
<ALLOWANCES> 308 516
<INVENTORY> 16,943 22,720
<CURRENT-ASSETS> 48,942 125,438
<PP&E> 62,009 81,288
<DEPRECIATION> 23,550 27,730
<TOTAL-ASSETS> 88,149 184,944
<CURRENT-LIABILITIES> 33,892 28,514
<BONDS> 31,287 117,654
0 0
25 25
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<SALES> 96,087 118,712
<TOTAL-REVENUES> 96,087 118,712
<CGS> 64,270 81,575
<TOTAL-COSTS> 18,720 23,573
<OTHER-EXPENSES> 35 429
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,458 6,543
<INCOME-PRETAX> 10,604 6,592
<INCOME-TAX> 4,040 2,634
<INCOME-CONTINUING> 6,564 3,958
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
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