<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------
FORM 8-K/A
CURRENT REPORT
----------------
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 2, 1999
----------------
NATIONAL EQUIPMENT SERVICES, INC.
(Exact name of registrant as specified in its charter)
----------------
Delaware 1-14163 36-4087016
(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
1603 Orrington Avenue, Suite #1600
Evanston, Illinois 60201
(Address of principal executive (Zip Code)
offices)
----------------
Registrant's telephone number, including area code: (847) 733-1000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
The financial statements required by Item 7(a) relating to the
acquisition of the business of The Plank Companies, L.P., a Delaware
limited partnership, and Plank Management, Inc., a Texas corporation
(collectively, the "Plank Companies"), described in Item 2 of Form 8-K of
National Equipment Services, Inc., dated August 17, 1999, are filed as
Exhibit 99.2 and incorporated herein by this reference.
(b) Pro Forma Financial Information.
The unaudited pro forma financial information required by Item 7(b)
relating to the acquisition of the business of the Plank Companies
described in Item 2 of Form 8-K of National Equipment Services, Inc., dated
August 17, 1999, is filed as Exhibit 99.3 and incorporated herein by this
reference.
The unaudited pro forma combined financial statements have been prepared
for comparative purposes only and do not purport to be indicative of the
results which would have been achieved had the acquisition been purchased
as of the assumed dates, nor are the results indicative of the Company's
future results.
(c) Exhibits
<TABLE>
<C> <S>
2.1 Purchase Agreement, dated as of July 31, 1999, by and among The
Plank Companies, L.P., The Plank Companies, Inc., Plank
Management, Inc., Michael J. Plank and NES Shoring Acquisition,
Inc.*
23.1 Consent of PricewaterhouseCoopers.
99.1 Press Release dated August 11, 1999.*
99.2 Financial Statements of The Plank Company, L.P.
99.3 Unaudited Pro Forma Financial Information.
</TABLE>
- --------
* Previously filed.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
National Equipment Services, Inc.
/s/ Paul R. Ingersoll
By:__________________________________
Name:Paul R. Ingersoll
Title:Senior Vice President and
Secretary
Dated: October 18, 1999
3
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-65365) of National Equipment Services, Inc. of
our report dated October 15, 1999 relating to the financial statements of The
Plank Company LP which appears in this Form 8-KA.
/s/ PricewaterhouseCoopers LLP
Chicago, IL
October 18, 1999
<PAGE>
EXHIBIT 99.2
The following financial statements are included herein:
Financial statements of The Plank Company L.P.
Independent Auditors' Report
Balance Sheets as of December 31, 1998 and June 30, 1999 (unaudited)
Statements of Operation's and Partners' Capital the Year Ended December
31, 1998 and for the Six Months Ended June 30, 1999 (unaudited) and
June 30, 1998 (unaudited)
Statements of Cash Flows for the Year ended December 31, 1998 and for
the Six Months Ended June 30, 1999 (unaudited) and June 30, 1998
(unaudited)
Notes to the Financial Statements
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of National Equipment Services, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations and partners' capital and of cash flows, present fairly, in all
material respects, the financial position of The Plank Company LP (formerly a
wholly-owned subsidiary of The Plank Companies, Inc.) at December 31, 1998 and
the results of its operations and its cash flows for the year then ended 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 audit. We
conducted our audit of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for the opinion expressed above.
Chicago, Illinois
October 15, 1999
F-2
<PAGE>
THE PLANK COMPANY LP
(Formerly a wholly-owned subsidiary of The Plank Companies, Inc.)
Balance Sheets
<TABLE>
<CAPTION>
December June 30,
Assets 31, 1998 1999
- ------ ----------- -----------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents.............................. $ 26,945 $ 39,495
Accounts receivable, net............................... 6,689,135 6,844,250
Inventory.............................................. 3,642,517 3,778,051
Related party receivables.............................. 8,375,966 9,125,671
Other assets........................................... 268,384 267,739
Rental fleet, net...................................... 9,212,176 9,576,601
Property and equipment, net............................ 2,401,601 2,399,630
----------- -----------
Total assets....................................... $30,616,724 $32,031,437
=========== ===========
<CAPTION>
Liabilities
- -----------
<S> <C> <C>
Cash overdrafts........................................ $ 267,791 $ 93,673
Accounts payable and accruals.......................... 1,501,442 1,413,706
Related party payables................................. 10,107,374 9,826,121
Revolving line of credit............................... 1,875,000 2,050,000
----------- -----------
Total liabilities.................................... 13,751,607 13,383,500
----------- -----------
Commitments and contingencies
Partners' capital
Partners' capital...................................... 16,865,117 18,647,937
----------- -----------
Total partners' capital.............................. 16,865,117 18,647,937
----------- -----------
Total liabilities & partners' capital.............. $30,616,724 $32,031,437
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
THE PLANK COMPANY LP
(Formerly a wholly-owned subsidiary of The Plank Companies, Inc.)
Statements of Operations and Partners' Capital
<TABLE>
<CAPTION>
Year ended 6 months 6 months
December ended ended
31, 1998 June 30, 1999 June 30, 1998
----------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenues:
Rental revenues...................... $20,465,250 $11,251,955 $ 8,964,892
Rental equipment sales............... 4,319,316 2,007,365 1,838,569
Equipment sales and other............ 5,588,488 3,534,890 2,578,166
----------- ----------- -----------
Total revenues..................... 30,373,054 16,794,210 13,381,627
----------- ----------- -----------
Cost of revenues:
Rental equipment depreciation........ 4,279,623 2,684,771 2,032,383
Cost of rental equipment............. 2,324,365 932,584 855,603
Cost of equipment sales.............. 2,102,475 1,611,124 1,089,111
Other operating expenses............. 6,618,181 3,492,361 2,965,630
----------- ----------- -----------
Total cost of revenues............. 15,324,644 8,720,840 6,942,727
----------- ----------- -----------
Gross profit........................... 15,048,410 8,073,370 6,438,900
Selling, general and administrative
expenses.............................. 8,240,375 3,970,927 3,674,249
Non-rental depreciation and
amortization.......................... 894,945 440,380 436,738
----------- ----------- -----------
Operating income....................... 5,913,090 3,662,063 2,327,913
Other expense, net..................... 289,748 230,363 12,232
Interest expense, net.................. 41,475 64,786 217,815
----------- ----------- -----------
Net income............................. $ 5,581,867 $ 3,366,914 $ 2,097,866
=========== =========== ===========
Pro forma income tax provision
(unaudited):
Income before income taxes........... $ 5,581,867 $ 3,366,914 $ 2,097,866
Pro forma provision for income taxes. 2,344,384 1,414,104 881,104
----------- ----------- -----------
Pro forma net income................. $ 3,237,483 $ 1,952,810 $ 1,216,762
=========== =========== ===========
Beginning partners' capital............ $12,302,791 $16,865,117 $12,302,791
Partnership withdrawls................. 1,019,541 1,584,044 636,473
----------- ----------- -----------
Ending partners' capital............... $16,865,117 $18,647,987 $13,764,184
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
THE PLANK COMPANY LP
(Formerly a wholly-owned subsidiary of The Plank Companies, Inc.)
Statements of Cash Flows
<TABLE>
<CAPTION>
6 months 6 months
December 31, ended ended
1998 June 30, 1999 June 30, 1998
------------ ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income ......................... $ 5,581,867 $3,366,914 $2,097,866
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization .... 5,192,568 3,135,151 2,469,123
Gain on sale of equipment......... (34,761) (8,384) 15,358
Changes in operating assets and
liabilities:
Accounts receivable............. (2,271,184) (155,115) (711,030)
Inventory....................... (1,119,495) (135,534) (793,500)
Prepaid and other assets........ (120,192) 645 (112,805)
Accounts payable and accruals... (306,603) (87,736) (282,698)
----------- ---------- ----------
Net cash provided by operating
activities................... 1,340,333 2,749,027 584,448
----------- ---------- ----------
Investing activities:
Purchases of rental equipment....... (8,445,793) (4,727,196) (3,839,651)
Purchases of property and equipment. (1,118,931) (451,792) (431,467)
Proceeds from sale of property and
equipment.......................... 54,211 21,767 16,000
----------- ---------- ----------
Net cash used in investing
activities................... (9,510,513) (5,157,221) (4,255,118)
----------- ---------- ----------
Financing activities:
Proceeds from line of credit........ 1,875,000 175,000 1,475,000
Cash overdraft...................... 34,197 (174,118) 5,783
Changes in related parties ......... 737,686 637,042 (223,102)
Distributions to partners........... (1,019,541) (1,584,044) (636,473)
----------- ---------- ----------
Net cash provided by (used in)
financing activities......... 1,627,342 (946,120) 621,208
----------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents................... (960,971) 12,600 (951,596)
Cash and cash equivalents at
beginning of period................ 987,916 26,945 987,916
----------- ---------- ----------
Cash and cash equivalents at end of
period............................. $ 26,945 $ 39,545 $ 36,320
=========== ========== ==========
Supplemental non-cash flow
information:
Non cash additions of rental
equipment.......................... 1,804,201 1,896,910 488,913
Cash paid for interest.............. 55,994 64,968 10,348
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
THE PLANK COMPANY LP
(Formerly a wholly-owned subsidiary of the Plank Companies, Inc.)
Notes to Financial Statements
1. Organization and Summary of Significant Accounting Policies
Organization
The Plank Company LP ("Plank") was organized as a limited partnership under
the laws of Delaware for the purpose of renting shoring equipment to the
construction industry. Plank was a wholly-owned subsidiary of The Plank
Companies, Inc and operates facilities in Texas, Florida, California,
Washington and Oregon. On August 2, 1999, Plank was purchased by National
Equipment Services, Inc. ("NES"). NES is primarily involved in the rental of
equipment to construction and industrial users throughout the United States.
Financial statement presentation
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 period. Actual results could differ from those estimates. ~
Interim Financial Information
The accompanying unaudited interim financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). Certain information related to the Company's
organization, significant accounting policies and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. These
unaudited financial statements reflect, in the opinion of management, all
material adjustments, consisting of only normal and recurring adjustments,
necessary to fairly state the financial position and the results of operations
for the periods presented and the disclosures herein are adequate to make the
information presented not misleading. Operating results for interim periods
are not necessarily indicative of the results that can be expected for a full
year.
Cash and cash equivalents
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.
Inventory
Plank's inventories primarily consist of parts and equipment and are valued
using an average cost method.
Rental equipment
Rental equipment is recorded at invoice cost. Depreciation for rental
equipment is computed using the straight-line method over 3 to 7 year useful
lives with no salvage value. Accumulated depreciation on rental equipment was
$14,090,428 and $15,362,954 (unaudited) at December 31, 1998 and June 30,
1999, respectively.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When rental equipment is disposed of, the related cost and
accumulated depreciation are removed from the respective accounts. Proceeds
from the disposal and the related net book value of the equipment are
recognized in the period of disposal and reported as revenue from rental
equipment sales and cost of equipment sales in the statement of operations.
Property and equipment
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets.
F-6
<PAGE>
THE PLANK COMPANY LP
(Formerly a wholly-owned subsidiary of The Plank Companies, Inc.)
NOTES TO FINANCIAL STATEMENTS--(Continued)
The estimated useful lives for property and equipment range from 3 to 5
years for machinery and equipment, 3 to 10 years for furniture and fixtures
and 3 to 5 years for vehicles. The estimated useful lives of leasehold
improvements are the shorter of the life of the improvement or the life of the
lease.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When property and equipment is disposed of, the related cost and
accumulated depreciation are removed from the respective accounts, and any
gains or losses are included in results of operations.
Adoption of new accounting pronouncement
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. Operating
segments are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. Generally, financial information is required to be reported on
the basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. The Company operates in one
segment, the equipment rental industry, and rents the majority of its
equipment on a domestic basis. Additionally, no single customer accounts for
more than 10% of the Company's sales.
Reporting Comprehensive
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and
losses) in a full set of general-purpose financial statements. The Statement
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. SFAS No. 130 requires that on enterprise (a) classify items of
other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in-capital in the equity section of a
statement of financial position. The Statement is effective for fiscal years
beginning after December 15, 1997. Reclassification of financial statements
for earlier periods provided for comparative purposes is required. SFAS No.
130 had no impact on the Company as it had no items of other comprehensive
income in any period presented.
Fair value of financial instruments
The carrying amounts reported in the balance sheet for cash, trade accounts
receivable, accounts payable and other liabilities approximate fair value due
to the immediate to short-term maturity of these financial instruments. The
fair value of the Line of Credit is based on quoted market prices and
approximates the carrying value at December 31, 1998. The carrying value of
bank debt approximates fair value as the interest on the bank debt is reset
every 30 to 90 days to reflect current market rates.
Concentration of credit risk
Financial instruments that potentially subject Plank to significant
concentrations of credit risk consist primarily of trade accounts receivable
from trade customers. Concentrations of credit risk with respect to trade
accounts receivable are limited due to the large number of customers and
Plank's geographic dispersion. Plank performs credit evaluations of its
customers' financial condition and generally does not require collateral on
accounts receivable, Plank maintains an allowance for doubtful accounts on its
receivables based upon expected
F-7
<PAGE>
THE PLANK COMPANY LP
(Formerly a wholly-owned subsidiary of The Plank Companies, Inc.)
NOTES TO FINANCIAL STATEMENTS--(Continued)
collectibility. Allowance for doubtful accounts was $1,011,794 and $495,606 at
December 31, 1998 and June 30, 1999, respectively.
Revenue recognition
Rental revenues are recognized ratably over the lease term. Sales revenues
are recognized at the point of delivery.
Income taxes
No provision for Federal income taxes is necessary in the financial
statements of the partnership because as a partnership, it is not a subject to
Federal income tax and the tax effect of its activities accrue to the
partners. State income taxes have been insignificant for the periods
presented. The pro forma provision for income taxes approximates what the
Company's tax provision would be if subject to income taxes as a C
corporation.
2. Related Party Transactions
Prior to its purchase by NES, Plank was owned by two partners, The Plank
Company Inc. ("TPCI") owned 99% and Plank Management Company owned the
remaining 1%. Plank Management Company is 100% owned by TPCI. TPCI also owns
several other entities, some of which do business with Plank, including Speed
Shore Corporation ("SSC"), Alta Vista Truck Center ("AVTC"). The results in
these financial statements are based on the company being part of a group.
Management has allocated a percentage of the costs of the group to these
financial statements on a reasonable allocation basis. The actual results of
Plank on a stand alone basis may differ from those presented in these
financial statements.
Plank entered into various transactions with other companies owned by TPCI
and with TPCI itself. It had purchases from SSC totaling $5,319,201 for the
year ended December 31, 1998 and totaling $3,564,910 (unaudited) for the six
months ended June 30, 1999. The Company paid $3,515,000 in cash to SSC during
the year ended December 31, 1998 and $1,668,000 (unaudited) in cash for the
six months ended June 30, 1999. Plank often made payments on behalf of SSC or
TPCI for various costs and, in turn, charge those costs back to the
responsible entity. During the year ended December 31, 1998, Plank made
payments for SSC and TPCI of $2,931,431 and $2,009,870, respectively. During
the six months ended June 30, 1999, the Company made payments for SSC and TPCI
of $2,178,164 (unaudited) and $973,875 (unaudited), respectively. TPCI charged
Plank a management fee for the year ended December 31, 1998 of $396,575 and of
$253,800 (unaudited) for the six months ended June 30, 1999. No interest has
been charged by any entity within TPCI for amounts due. The activity with AVTC
since December 31, 1997 has been minimal.
As of December 31, 1998, Plank had an amount due to SSC of $10,107,374 and
amounts due from TCPI and AVTC of $7,329,437 and $1,046,529, respectively. As
of June 30, 1999, Plank had an amount due to SSC of $9,826,121 (unaudited) and
amounts due from TCPI and AVTC of $8,049,512 and $1,076,159, respectively.
3. Property and Equipment
Property and equipment, net, consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
1998
------------
<S> <C>
Vehicles.................................................... $ 3,184,250
Machinery & Equipment....................................... 1,685,634
Furniture & Fixtures........................................ 606,085
Leasehold Improvements...................................... 832,882
-----------
Property and Equipment...................................... 6,308,851
Accumulated Depreciation.................................... (3,907,250)
-----------
Property and Equipment, Net................................. $ 2,401,601
===========
</TABLE>
F-8
<PAGE>
THE PLANK COMPANY LP
(Formerly a wholly-owned subsidiary of The Plank Companies, Inc.)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Property and equipment depreciation expense aggregated $849,945 for the
year ended December 31, 1998.
4. Accounts Payable & Accruals
Accrued expenses and other liabilities consists of the following (in
thousands):
<TABLE>
<CAPTION>
December 31,
1998
------------
<S> <C>
Accounts Payable--Trade...................................... $1,038,670
Accrued Sales Tax............................................ 168,276
Accrued--Other............................................... 294,496
----------
$1,501,442
==========
</TABLE>
5. Revolving Line of Credit
The Company along with its former parent and sister companies had a $6
million revolving line of credit with Chase Bank of Texas. The line of credit
was collateralized by assets of both Plank and SSC. The interest on this line
of credit is prime less 1.25% which was 6.5% and 6.5% at December 31, 1998 and
June 30, 1999, respectively. The ending balance for the line of credit at
December 31, 1998 was $1,875,000 and $2,050,000 (unaudited) at June 30, 1999.
The Company has various financial covenants that it must meet or the line is
callable by the lender.
6. Commitments and Contingencies
Operating leases
Plank leases certain facilities, office equipment and vehicles under
Operating leases, some of which contain renewal options. Rental expense was
$857,892 for the year ended December 31, 1999. Several of the leases are with
the former owners of the Company and are mostly for leases related to certain
operating facilities.
Future minimum rental commitments as of December 31, 1998 under leases are
(in thousands):
<TABLE>
<CAPTION>
December
31, 1988
----------
<S> <C>
1999.......................... $ 820,211
2000.......................... 708,700
2001.......................... 605,203
2002.......................... 580,200
2003.......................... 569,400
Thereafter.................... 2,704,000
----------
$5,987,714
==========
</TABLE>
Legal matters
Plank is party to legal proceedings and potential claims arising in t~e
ordinary course of its business. In the opinion of management, the ultimate
resolution of these matters will have no material adverse effect on Plank's
financial position, results of operating or cash flows.
7. Employee Benefit Plans
TPCI, Plank's parent, sponsors a 401 (k) plan (the "Plan") in which
employees over 21 years of age, 1000 hours worked, and I year of service are
eligible. Under the Plan, Plank contributes a discretionary matching
contribution equal to 15% of the employee's contribution up to the first 6% of
the employee's annual compensation, The employer contributions vest over a
five year period. Contributions by the Company to the Plan were S 30,264 for
the year ended December 31, 1998.
F-9
<PAGE>
THE PLANK COMPANY LP
(Formerly a wholly-owned subsidiary of The Plank Companies, Inc.)
NOTES TO FINANCIAL STATEMENTS--(Continued)
8. Subsequent Events
On August 2, 1999, The Plank Company LP was sold to National Equipment
Services for $85 million.
F-10
<PAGE>
EXHIBIT 99.3
NATIONAL EQUIPMENT SERVICES, INC.
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
National Equipment Services, Inc. ("the Company") was founded in June 1996
to acquire and integrate equipment rental companies. The accompanying
unaudited pro forma balance sheet of the Company as of June 30, 1999 includes
the acquisition of The Plank Company LP, and the accompanying unaudited pro
forma consolidated statements of operations of the Company give effect to the
acquisition of The Plank Company LP and the financing thereof, as if the
acquisition had occurred at the beginning of the period.
1
<PAGE>
NATIONAL EQUIPMENT SERVICES, INC.
UNAUDITED PRO FORMA BALANCE SHEET
(In thousands)
June 30, 1999
<TABLE>
<CAPTION>
The Pro Forma
Company Plank Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents.......... $ 478 $ 39 $ -- $ 517
Accountants receivables, net....... 73,864 15,970 (9,126)(i) 80,708
Inventory.......................... 21,056 3,778 -- 24,834
Rental equipment, net.............. 481,787 9,577 4,902 (ii) 496,266
Property and equipment, net........ 41,853 2,400 -- 44,253
Intangible assets, net............. 252,711 -- 45,607 (iii) 298,318
Loan origination costs, net........ 10,203 -- -- 10,203
Prepaids and other assets, net..... 20,102 267 -- 20,369
-------- ------- ------- --------
Total assets....................... $902,054 $32,031 $41,383 $975,468
======== ======= ======= ========
Liabilities
Cash Overdraft..................... $ -- $ 94 $ (94)(iv) $ --
Accounts payable................... 24,217 11,239 (9,825)(iv) 25,631
Accrued interest................... 4,201 -- -- 4,201
Accrued expenses and other
liabilities....................... 43,960 -- -- 43,960
Debt............................... 591,025 2,050 69,950 (v) 663,025
-------- ------- ------- --------
Total liabilities.................. 663,403 13,383 60,031 736,817
Convertible preferred stock........ 95,000 -- -- 95,000
Stockholders' Equity
Common Stock....................... 241 -- -- 241
Additional paid-in capital......... 123,606 -- -- 123,606
Retained earnings.................. 19,906 18,648 (18,648)(vi) 19,906
Stock subscriptions receivable..... (102) -- -- (102)
-------- ------- ------- --------
Stockholders' equity............... 143,651 18,648 (18,648) 143,651
-------- ------- ------- --------
Total liabilities and stockholders'
equity ........................... $902,054 $32,031 $41,383 $975,468
======== ======= ======= ========
</TABLE>
- --------
(i) Reflects the elimination of related party receivables which were not
assumed in conjunction with the transaction.
(ii) Reflects the step-up of rental equipment to fair value due to the
purchase of The Plank Company LP.
(iii) Reflects the additional goodwill generated by the purchase of The Plank
Company LP.
(iv) Reflects the elimination of related party payables and the cash overdraft
which were not assumed in the transaction.
(v) Reflects the indebtedness incurred to fund the acquisition of The Plank
Company LP.
(vi) Reflects the elimination of the equity of The Plank Company LP.
2
<PAGE>
NATIONAL EQUIPMENT SERVICES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(In thousands)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
The Pro Forma
Company Plank Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental revenue................. $165,902 $20,465 $ -- $186,367
Rental equipment sales......... 13,365 4,319 -- 17,684
New equipment sales and other.. 45,981 5,589 -- 51,570
-------- ------- ------- --------
Total revenues................... 225,248 30,373 -- 255,621
-------- ------- ------- --------
Rental equipment expense:
Rental equipment depreciation.. 29,422 4,280 (1,744)(a) 31,958
Cost of rental equipment sales. 8,462 2,324 -- 10,786
Cost of new equipment sales.... 22,462 2,102 -- 24,564
Direct operating expenses...... 62,109 6,619 (144)(b) 68,584
-------- ------- ------- --------
Cost of revenues................. 122,455 15,325 (1,888) 135,892
-------- ------- ------- --------
Gross profit..................... 102,793 15,048 1,888 119,729
-------- ------- ------- --------
Selling, general and
administrative expense.......... 45,001 8,240 (342)(c) 53,395
Non-rental depreciation.......... 7,855 895 1,140 (d) 9,394
-------- ------- ------- --------
Operating income................. 49,937 5,913 (1,090) 56,940
-------- ------- ------- --------
Other income (expense), net...... 389 (290) -- 99
Interest income (expense), net... (26,745) (41) (6,264)(e) (33,050)
-------- ------- ------- --------
Income before income taxes....... 23,581 5,582 (5,174) 23,989
Income taxes..................... 9,904 -- 171 (f) 10,075
-------- ------- ------- --------
Income before extraordinary item. $ 13,677 $ 5,582 $(5,345) $ 13,914
======== ======= ======= ========
Income before extraordinary item
per common share:
Basic.......................... $ 0.75(g)
========
Diluted........................ $ 0.69(g)
========
</TABLE>
3
<PAGE>
NATIONAL EQUIPMENT SERVICES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(In thousands)
Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
The Pro Forma
Company Plank Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental revenue.................. $138,829 $11,252 $ -- $150,081
Rental equipment sales.......... 13,289 2,007 -- 15,296
New equipment sales and other... 45,257 3,535 -- 48,792
-------- ------- ------- --------
Total revenues.................... 197,375 16,794 -- 214,169
-------- ------- ------- --------
Rental equipment expense:
Rental equipment depreciation... 27,660 2,685 (1,381)(a) 28,964
Cost of rental equipment sales.. 8,988 932 -- 9,920
Cost of new equipment sales..... 15,707 1,611 -- 17,318
Direct operating expenses....... 61,918 3,493 (72)(b) 65,339
-------- ------- ------- --------
Cost of revenues.................. 114,273 8,721 (1,453) 121,541
-------- ------- ------- --------
Gross profit...................... 83,102 8,073 1,453 92,628
-------- ------- ------- --------
Selling, general and
administrative expense........... 38,236 3,971 (91)(c) 42,320
Non-rental depreciation........... 7,573 440 570 (d) 8,379
-------- ------- ------- --------
Operating income.................. 37,293 3,662 974 41,929
-------- ------- ------- --------
Other income (expense), net....... 667 (230) -- 437
Interest income (expense), net.... (26,334) (65) (3,132)(e) (29,531)
-------- ------- ------- --------
Income before income taxes........ 11,626 3,367 (2,158) 12,835
Income taxes...................... 4,883 -- 508 (f) 5,391
-------- ------- ------- --------
Net income........................ $ 6,743 $ 3,367 $(2,666) $ 7,444
======== ======= ======= ========
Net income per common share:
Basic........................... $ 0.32(g)
========
Diluted......................... $ 0.29(g)
========
</TABLE>
4
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(a.) Reflects the impact on rental equipment depreciation resulting from the
application of the Company's depreciation policy rather than that of the
former owner. In addition, reflects the change in rental equipment
depreciation resulting from the write-up of rental equipment assets to
fair value arising from purchase accounting.
(b.) Reflects the decrease in rent expenses resulting from the Company's
current lease terms as compared to the lease terms entered into by the
former owners.
(c.) Reflects the decrease resulting from differentials between the
compensation levels of the former owners and the terms of the employment
agreements entered into between the Company and certain of the former
owners.
(d.) Reflects the amortization of goodwill calculated on a goodwill life of 40
years.
(e.) Reflects the increased interest expense at the Company's borrowing rate
on the indebtedness resulting from the purchase of The Plank Company LP.
(f.) Reflects the income tax rate that would have been in effect if the
companies had been combined and subject to a federal statutory rate of
34% and the applicable state statutory rate.
(g.) Pro forma earnings per share have been calculated as follows:
<TABLE>
<CAPTION>
Twelve Six
Months Months
Ended Ended
12/31/98 6/30/99
-------- -------
<S> <C> <C>
Income available to stockholders--basic.................... $13,914 $ 7,444
Plus: interest on convertible debenture, net of tax........ 202 348
------- -------
Income available to stockholders--diluted.................. $14,116 $ 7,792
======= =======
Weighted average shares outstanding........................ 19,772 24,123
Less: unvested stock..................................... 1,147 779
------- -------
Basic weighted average shares outstanding.................. 18,625 23,344
------- -------
Plus:
Unvested stock........................................... 1,147 779
Convertible debt......................................... 539 1,414
Preferred stock.......................................... -- 1,446
------- -------
Diluted weighted average shares............................ 20,311 26,983
======= =======
Basic EPS.................................................. $ 0.75 $ 0.32
======= =======
Diluted EPS................................................ $ 0.69 $ 0.29
======= =======
</TABLE>
5
