<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 December 28, 1997.
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 February 10, 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.
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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 Dec. 29 Dec. 28
1997 1996 1997
(audited) (unaudited) (unaudited)
-------- -------- --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 77,345 $ 6,045 $ 70,397
Accounts receivable (net of allowance for doubtful 23,591 17,689 23,514
accounts of $364, $327, and $405, respectively)
Inventories 16,833 14,979 19,084
Prepaid expenses and other 1,773 2,529 1,737
Deferred income taxes 1,091 1,003 1,091
--------------------------------------
Total current assets 120,633 42,245 115,823
Property, plant and equipment, net 42,143 37,968 51,558
Other assets 5,049 301 5,531
--------------------------------------
Total assets $167,825 $ 80,514 $172,912
======================================
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 11,585 $ 9,364 $ 10,790
Other accrued liabilities 9,373 7,141 6,527
Current portion of long-term debt 840 4,783 1,265
Note Payable - Related Party 0 7,466 0
Revolving line of credit 0 0 746
--------------------------------------
Total current liabilities 21,798 28,754 19,328
Senior Subordinated Notes Payable 104,523 0 104,547
Long-term debt, net of current portion 8,521 25,459 12,170
Other long-term liabilities 3,817 3,414 5,031
Deferred income taxes 2,135 1,941 2,548
--------------------------------------
Total liabilities $140,794 $ 59,568 $143,624
--------------------------------------
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) 16,095 10,010 18,352
--------------------------------------
27,031 20,946 29,288
--------------------------------------
Total liabilities and stockholder's equity $167,825 $ 80,514 $172,912
======================================
</TABLE>
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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 Six Months Ended
------------------------ ------------------------
Dec. 29 Dec. 28 Dec. 29 Dec. 28
1996 1997 1996 1997
------------------------ ------------------------
<S> <C> <C> <C> <C>
Revenues
Equipment sales
New $ 23,182 $ 32,411 $ 47,505 $ 61,599
Used 611 905 1,234 1,426
Rental and services 6,083 6,740 11,897 14,065
------------------------ ------------------------
Total revenues 29,876 40,056 60,636 77,090
------------------------ ------------------------
Cost of Revenues
Equipment sales
New 15,773 22,444 32,732 43,475
Used 318 516 631 767
Rental and services 3,539 3,975 6,852 8,346
------------------------ ------------------------
Total cost of revenues 19,630 26,935 40,215 52,588
------------------------ ------------------------
Gross profit
Equipment sales
New 7,409 9,967 14,773 18,124
Used 293 389 603 659
Rental and services 2,544 2,765 5,045 5,719
------------------------ ------------------------
Total gross profit 10,246 13,121 20,421 24,502
------------------------ ------------------------
Operating expenses
Selling, general and administrative 4,360 5,650 8,568 11,311
Product liability 786 758 1,631 1,697
Research and development 1,098 1,710 2,278 3,095
------------------------ ------------------------
Total operating expenses 6,244 8,118 12,477 16,103
------------------------ ------------------------
Income from operations 4,002 5,003 7,944 8,399
Other income (expense)
Interest expense, net (768) (2,163) (1,626) (4,289)
Other expense (38) (168) (49) (353)
------------------------ ------------------------
Income before income taxes 3,196 2,672 6,269 3,757
Provision for income taxes (1,218) (1,068) (2,389) (1,500)
------------------------ ------------------------
Net income $ 1,978 $ 1,604 $ 3,880 $ 2,257
------------------------ ------------------------
Net income per common share $ 33 $ 27 $ 65 $ 38
------------------------ ------------------------
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>
Six Months Ended
------------------------
Dec. 29 Dec. 28
1996 1997
------------------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 3,880 $ 2,257
------------------------
Adjustments to reconcile net income to net cash provided (used) by operating
activities
Depreciation and amortization 2,851 3,616
Gain on disposition of property, plant and equipment (651) (667)
Changes in operating assets and liabilities
Accounts receivable (2,095) 77
Inventories 322 (2,251)
Prepaid expenses and other assets (776) 36
Deferred income taxes, net 837 413
Accounts payable (1,422) (795)
Accrued expenses (353) (2,833)
Other, net 884 1,463
------------------------
Total adjustments (403) (941)
------------------------
Net cash provided by operating activities 3,477 1,316
------------------------
Cash flows from investing activities
Additions to property, plant and equipment (7,920) (13,672)
Proceeds from disposition of assets 1,275 1,333
------------------------
Net cash used by investing activities (6,645) (12,339)
------------------------
Cash flows from financing activities
Proceeds from long-term debt 14,799 4,688
Repayment of long-term debt (10,751) (613)
Repayment of note payable - related party (5,999) 0
------------------------
Net cash (used)/provided by financing activities (1,951) 4,075
------------------------
Net decrease in cash and cash equivalents (5,119) (6,948)
Cash and cash equivalents at beginning of period 11,164 77,345
------------------------
Cash and cash equivalents at end of period $ 6,045 $ 70,397
========================
</TABLE>
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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 six months
ended December 28, 1997, 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 did 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
------------------
December 28, 1997 December 29, 1996
--------------------- ---------------------
(Dollars in Thousands)
(Unaudited)
<S> <C> <C> <C> <C>
Revenue $40,056 100.0% $29,876 100.0%
Cost of revenue 26,935 67.2 19,630 65.7
Gross profit 13,121 32.8 10,246 34.3
Operating expenses 8,118 20.3 6,244 20.9
Operating income 5,003 12.5 4,002 13.4
Interest expense, net 2,163 5.4 768 2.6
Other expenses 168 0.4 38 0.1
Income taxes 1,068 2.7 1,218 4.1
Net income 1,604 0.4 1,978 6.6
EBITDA 6,672 16.7 5,457 18.3
Depreciation and amortization 1,837 4.6 1,493 5.0
</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 10.2% and 19.0% of UpRight's revenue for the three
months ended December 28, 1997 and December 29, 1996, respectively. Sales to
Horizon accounted for approximately 15.5% and 17.7% of UpRight's revenue for the
six months ended December 28, 1997 and December 29,1996, 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
December 28, 1997
(Dollars in Thousands)
(Unaudited)
---------------------------------------------------------------------------
Carpenter Horizon UpRight Eliminations Consolidated
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
New equipment sales $ 5,048 $ 30,461 $ (3,098) $ 32,411
Used equipment sales 905 905
Rentals and services 6,740 6,740
---------------------------------------------------------------------------
TOTAL REVENUES 12,693 30,461 (3,098) 40,056
---------------------------------------------------------------------------
COST OF REVENUES
New equipment sales 3,898 21,494 (2,948) 22,444
Used equipment sales 516 516
Rentals and services 3,975 3,975
---------------------------------------------------------------------------
TOTAL COST OF REVENUES 8,389 21,494 (2,948) 26,935
---------------------------------------------------------------------------
GROSS PROFIT
New equipment sales 1,150 8,967 (150) 9,967
Used equipment sales 389 389
Rentals and services 2,765 2,765
---------------------------------------------------------------------------
TOTAL GROSS PROFIT 4,304 8,967 (150) 13,121
---------------------------------------------------------------------------
% of revenue 33.9% 29.4% 32.8%
INCOME FROM OPERATIONS
Selling, general and administrative $ 642 2,433 2,575 5,650
Product liability 758 758
Research and development 1,710 1,710
---------------------------------------------------------------------------
Total operating expenses 642 2,433 5,043 8,118
===========================================================================
INCOME FROM OPERATIONS (642) 1,871 3,924 (150) 5,003
% of revenue 14.7% 12.9% 4.8% 12.5%
</TABLE>
<TABLE>
<CAPTION>
Consolidating Statement of Operations
Three Months Ended
December 29, 1996
(Dollars in Thousands)
(Unaudited)
--------------------------------------------------------------------------
Carpenter Horizon UpRight Eliminations Consolidated
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
New equipment sales $ 4,964 $ 22,498 $ (4,280) $ 23,182
Used equipment sales 611 611
Rentals and services 6,083 6,083
--------------------------------------------------------------------------
TOTAL REVENUES 11,658 22,498 (4,280) 29,876
--------------------------------------------------------------------------
COST OF REVENUES
New equipment sales 3,874 16,167 (4,268) 15,773
Used equipment sales 318 0 0 318
Rentals and services 3,539 0 0 3,539
--------------------------------------------------------------------------
TOTAL COST OF REVENUES 7,731 16,167 (4,268) 19,630
--------------------------------------------------------------------------
GROSS PROFIT
New equipment sales 1,090 6,331 (12) 7,409
Used equipment sales 293 0 0 293
Rentals and services 2,544 0 0 2,544
--------------------------------------------------------------------------
TOTAL GROSS PROFIT 3,927 6,331 (12) 10,246
--------------------------------------------------------------------------
% of revenue 33.7% 28.1% 34.3%
INCOME FROM OPERATIONS
Selling, general and administrative $ 31 2,208 2,121 0 4,360
Product liability 0 786 0 786
Research and development 0 1,098 0 1,098
--------------------------------------------------------------------------
Total operating expenses 31 2,208 4,005 0 6,244
==========================================================================
INCOME FROM OPERATIONS (31) 1,719 2,326 (12) 4,002
% of revenue 14.7% 10.3% 0.3% 13.4%
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
Consolidating Statement of Operations
Six Months Ended
December 28, 1997
(Dollars in Thousands)
(Unaudited)
---------------------------------------------------------------------------
Carpenter Horizon UpRight Eliminations Consolidated
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
New equipment sales $ 9,389 $ 61,816 $ (9,606) $ 61,599
Used equipment sales 1,426 1,426
Rentals and services 14,065 14,065
---------------------------------------------------------------------------
TOTAL REVENUES 24,880 61,816 (9,606) 77,090
---------------------------------------------------------------------------
COST OF REVENUES
New equipment sales 7,330 44,169 (8,024) 43,475
Used equipment sales 767 767
Rentals and services 8,346 8,346
---------------------------------------------------------------------------
TOTAL COST OF REVENUES 16,443 44,169 (8,024) 52,588
---------------------------------------------------------------------------
GROSS PROFIT
New equipment sales 2,059 17,647 (1,582) 18,124
Used equipment sales 659 659
Rentals and services 5,719 5,719
---------------------------------------------------------------------------
TOTAL GROSS PROFIT 8,437 17,647 (1,582) 24,502
---------------------------------------------------------------------------
% of revenue 33.9% 28.5% 31.8%
INCOME FROM OPERATIONS
Selling, general and administrative $ 1,245 4,793 5,273 11,311
Product liability 1,697 1,697
Research and development 3,095 3,095
---------------------------------------------------------------------------
Total operating expenses 1,245 4,793 10,065 16,103
===========================================================================
INCOME FROM OPERATIONS (1,245) 3,644 7,582 (1,582) 8,399
% of revenue 14.6% 12.3% 16.5% 10.9%
</TABLE>
<TABLE>
<CAPTION>
Consolidating Statement of Operations
Six Months Ended
December 29, 1996
(Dollars in Thousands)
(Unaudited)
--------------------------------------------------------------------------------
Carpenter Horizon UpRight Eliminations Consolidated
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
New equipment sales $8,664 $47,186 $(8,345) $47,505
Used equipment sales 1,234 1,234
Rentals and services 11,897 11,897
--------------------------------------------------------------------------------
TOTAL REVENUES 21,795 47,186 (8,345) 60,636
--------------------------------------------------------------------------------
COST OF REVENUES
New equipment sales 6,724 33,975 (7,967) 32,732
Used equipment sales 631 631
Rentals and services 6,852 6,852
--------------------------------------------------------------------------------
TOTAL COST OF REVENUES 14,207 33,975 (7,967) 40,215
--------------------------------------------------------------------------------
GROSS PROFIT
New equipment sales 1,940 13,211 (378) 14,773
Used equipment sales 603 603
Rentals and services 5,045 5,045
--------------------------------------------------------------------------------
TOTAL GROSS PROFIT 7,588 13,211 (378) 20,421
--------------------------------------------------------------------------------
% of revenue 34.8% 28.0% 33.7%
INCOME FROM OPERATIONS
Selling, general and administrative $262 4,201 4,105 8,568
Product liability 1,631 1,631
Research and development 2,278 2,278
--------------------------------------------------------------------------------
Total operating expenses 262 4,201 8,014 12,477
================================================================================
INCOME FROM OPERATIONS (262) 3,387 5,197 (378) 7,944
% of revenue 15.5% 11.0% 4.5% 13.1%
</TABLE>
Page 8
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THREE MONTHS ENDED DECEMBER 28, 1997 COMPARED TO THREE MONTHS ENDED DECEMBER 29,
1996
Revenue increased by 34.1% to $40.1 million in the three months ended December
28, 1997 from $29.9 million in the three months ended December 29, 1996. The
increase of $10.2 million was mainly due to increased revenue from sales of new
equipment of $9.2 million (including sales of UpRight equipment by Horizon) and
increased rental and service revenue for Horizon of $0.7 million. UpRight's new
equipment sales increased due primarily to the introduction of new products such
as UpRight's AB-46 boom product (introduced in February, 1997) and UpRight's
sale of large scissor lifts and Horizon's sales of forklift and reachlift
products. International sales increased by $4.2 million to $13.8 million in the
three months ended December 28, 1997 compared to $9.6 million in the three
months ended December 29, 1996. International sales as a percentage of the
Company's revenue increased from 32.1% to 34.6% during the same periods. The
increase in rental and service revenue for Horizon is attributable to additional
units in the rental fleet and the inclusion of results from businesses acquired
subsequent to the second quarter of fiscal 1997.
Gross profit increased by $2.9 million, or 28.1%, to $13.1 million for the three
months ended December 28, 1997 from $10.2 million for the three months ended
December 29, 1996, while gross margin decreased to 32.8% in the three months
ended December 28, 1997 from 34.3% in the three months ended December 29, 1996.
The increase in gross profit is attributable to increased revenue and higher
individual gross margins by both UpRight and HORIZON. However, consolidated
gross margin contracted due to a higher elimination of gross profit or
intercompany sales from UpRight to Horizon which were included in Horizon's
rental fleet or held as inventory as of December 28, 1997 compared to December
29, 1996.
Operating expenses, consisting of selling, general and administrative expenses
(SG & A), product liability and research and development expenses, increased to
$8.1 million or 20.3% of revenue for the three months ended December 28, 1997
from $6.2 million or 20.9% of revenue for the three months ended December 29,
1996. SG & A expenses increased by $1.3 million to $5.7 million in the three
months ended December 28, 1997 compared to the three months ended December 29,
1996, but as a percentage of revenue decreased to 14.1% from 14.6% during the
same periods. SG & A expenses increased due to increased level of operations,
and higher corporate costs following the Company's issuance in June 1997 of its
Senior Subordinated Notes due 2007 ("Senior Subordinated Notes"). Research and
development expenses increased by $0.6 million to $1.7 million in the three
months ended December 28, 1997 compared to the three months ended December 29,
1996, primarily as a result of the Company's emphasis in developing new and
redesigned aerial work platform products. Product Liability expenses were flat
during the same periods.
Interest expense, net of interest income, increased to $2.2 million for the
three months ended December 28, 1997 from $0.8 million for the three months
ended December 29, 1996 due to the Company's issuance of the Senior Subordinated
Notes.
Income tax for the three months ended December 28, 1997 was $1.1 million
compared to $1.2 million for the three months ended December 29, 1996. The
Company's effective tax rate was 40.0% for the three months ended December 28,
1997 compared to 38.1% for the three months ended December 29, 1996.
Net income for the three months ended December 28, 1997 was $1.6 million,
representing a decrease of $0.4 million from net income of $2.0 million for the
three months ended December 29, 1996, as a result of the factors described
above.
SIX MONTHS ENDED DECEMBER 28, 1997 COMPARED TO SIX MONTHS ENDED DECEMBER 29,
1996
Revenue for the first six months of fiscal year 1998 was $77.1 million,
representing an increase of 27.1% over the comparable period in the previous
year. The increase in sales of $16.5 million for the six months ended December
28, 1997 is primarily due to an increase in revenue from sale of new equipment
of $14.1 million during such period. Export sales increased by 25.4% to $25.8
million for the six months ended December 28, 1997 compared to the six months
ended December 29, 1996.
Gross profit as a percent of total revenue declined to 31.8% for the six months
ended December 28, 1997 compared to 33.7% for the same period during the prior
year due to the factors described above.
Operating expenses increased by $3.6 million to $16.1 million during the six
months ended December 28, 1997 compared to the same period in the previous year,
but represented approximately 21% of revenue for both periods.
This increase in operating expenses resulted from the factors described above.
Interest expense, net of interest income, increased to $4.3 million for the six
months ended December 28, 1997 compared to $1.6 million during the comparable
period in the previous year. This increase in interest income resulted from the
factors described above.
The Company's effective income tax rate was 40.0% and 38.1% for the six months
ended December 28, 1997 and December 29, 1996, respectively.
Net income for the six months ended December 28, 1997 was $2.3 million,
representing a decrease of $1.6 million compared to the six months ended
December 29, 1996. This decrease in net income resulted 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 $96.5 million and $98.8 million at December
28, 1997 and June 29, 1997, respectively. The reduction of working capital is
mainly due to the increase in inventory offsetting a decrease in accrued
expenses. Inventory increased by $2.3 million during the six months ended
December 28, 1997 as a result of growth in revenue. Accrued expenses decreased
mainly due to payment of taxes, and expenses related to the issuance of the
Company's Senior Subordinated Notes.
The Company's debt was $118.0 million and $113.9 million at December 28, 1997
and June 29, 1997, respectively. Increased borrowings were due to UpRight
financing its capital expenditure of $4.6 million during the six months ended
December 28, 1997. Cash was $70.4 million and $77.3 million at December 28, 1997
and June 29, 1997, respectively.
Net cash provided by operating activities was $1.3 million in the six months
ended December 28, 1997 and $3.5 million for the six months ended December 29,
1996. The decrease in net cash provided by operating activities of $2.2 million
is primarily related to interest payments to the Company's Senior Subordinated
Notes and a higher level of inventory to support the increased revenue during
the comparable periods.
Net cash used in investing activities was $12.3 million and $6.6 million in the
six months ended December 28, 1997, and December 29, 1996, respectively. Such
cash was used primarily to fund the Company's capital expenditure program
associated with the expansion of UpRight's manufacturing facilities at Selma,
California and the upgrading and expansion of Horizon's rental fleet.
Net cash provided/(used) by financing activities was $4.1 million and $(2.0)
million in the six months ended December 28, 1997 and December 29, 1996,
respectively. The primary reason for the difference in net cash provided/(used)
by financing activities related to the $6.0 million repayment of a loan to a
related party during the six months ended December 29, 1996. The Company paid no
dividends in either period.
In addition to its cash on hand, the Company believes that 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
Page 10
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The Company did not file any reports on Form 8-K during the quarter
ended December 28, 1997
(b) EXHIBITS. The following Exhibits are filed herewith and made a part
hereof:
Exhibit
Number Description of Document
------ -----------------------
*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.
- --------------------
* 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 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: February 10, 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
Exhibits Description
- -------- -----------
*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.
- -------------------
* 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
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