UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-Q
For the period ended March 31, 1998
Commission file number 000-24019
United Road Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-3278455
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8 Automation Lane, Albany, New York 12205
(Address of principal executive offices) (Zip Code)
(518) 446-0140
(Registrant's telephone number, including area code)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ ] Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of Each Class Shares Outstanding at June 9, 1998
Common Stock, $ .001 par value 12,788,477
"SAFE HARBOR" STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
The statements under Management's Discussion and Analysis of Financial Condition
and Results of Operations, and the other statements in this Form 10-Q which are
not historical facts, are forward looking statements. These forward looking
statements involve risks and uncertainties that could render them materially
different, including, but not limited to, general economic conditions, changes
in applicable regulations, including but not limited to various federal, state
and local laws and regulations regarding equipment, driver certification,
training and recordkeeping and workplace safety, the loss of significant
customers and contracts, risks related to the Company's acquisition strategy and
its ability to integrate acquired companies, changes in the level of demand for
towing and transport services, price changes in response to competitive factors,
seasonal variations and the timing of expenditures for new equipment and the
disposition of used equipment. The Company does not intend to update these
forward looking statements.
UNITED ROAD SERVICES, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
INDEX
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1 Financial Statements
Balance Sheets as of March 31, 1998 and December 31, 1997 1
Statement of Operations for the Three Months Ended March 31, 1998 2
Statement of Cash Flows for the Three Months Ended March 31, 1998 3
Notes to Financial Statements 4
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
PART II - OTHER INFORMATION
ITEM 2 Changes in Securities and Use of Proceeds
ITEM 6 Exhibits and Reports on Form 8-K
SIGNATURES
UNITED ROAD SERVICES, INC.
<TABLE>
Balance Sheets
<CAPTION>
December 31, March 31,
ASSETS 1997 1998
<S> <C> <C>
(Unaudited)
Current assets:
Cash and cash equivalents $49,987 $65,352
Prepaid expenses - 2,790
Total current assets 49,987 68,142
Property and equipment:
Computer and related equipment - 354,472
Furniture and fixtures - 33,810
- 388,282
Accumulated depreciation - (1,691)
Property and equipment, net - 386,591
Deferred offering costs - 793,248
Deferred acquisition costs - 473,250
Deferred financing costs - 30,000
Deferred income taxes - 153,333
Total assets $49,987 $1,904,564
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Payable to related parties $91,874 201,506
Accounts payable 62,077 1,303,713
Total current liabilities 153,951 1,505,219
Stockholders' equity:
Common stock, $.001 par value. Authorized
35,000,000 common shares and 5,000,000
preferred shares; issued and outstanding
2,604,000 and 2,822,736 shares at
December 31, 1997 and March 31, 1998,
respectively 2,604 2,823
Additional paid-in capital 67,396 802,177
Accumulated deficit (173,964) (405,655)
Total stockholders' equity 103,964 399,345
Total liabilities and stockholders'
equity $49,987 $1,904,564
See accompanying notes to financial statements.
</TABLE>
UNITED ROAD SERVICES, INC.
<TABLE>
Statement of Operations
Three Months Ended March 31, 1998
(Unaudited)
<CAPTION>
<S> <C>
Revenue $ -
Selling, general and administrative expenses 389,622
Loss from operations (389,622)
Other income:
Interest income 4,598
Loss before income taxes (385,024)
Income tax benefit 153,333
Net loss $ (231,691)
Per share amounts:
Basic earnings (loss) $ (.08)
Diluted earnings (loss) $ (.08)
See accompanying notes to financial statements.
</TABLE>
UNITED ROAD SERVICES, INC.
<TABLE>
Statement of Cash Flows
Three Months Ended March 31, 1998
(Unaudited)
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss $(231,691)
Adjustments to reconcile net loss to net
cash provided by operating
activities:
Depreciation 1,691
Deferred income taxes
(153,333)
Increase in prepaid expenses (2,790)
Increase in accounts payable
1,241,636
Increase in amounts payable to related parties 109,632
Net cash provided by operating activities 965,145
Cash flows from investing activities:
Payments for acquisition costs
(473,250)
Purchase of property and equipment
(388,282)
Net cash used in investing activities
(861,532)
Cash flows from financing activities:
Proceeds from issuance of stock 735,000
Payments for offering costs
(793,248)
Payments for financing costs
(30,000)
Net cash used in financing activities
(88,248)
Net increase in cash and cash equivalents 15,365
Cash and cash equivalents at beginning of period 49,987
Cash and cash equivalents at end of period $ 65,352
Supplemental disclosures of cash flows information:
Cash paid during the period for:
Interest $ -
Income taxes $ -
See accompanying notes to financial statements.
</TABLE>
UNITED ROAD SERVICES, INC.
Notes to Unaudited Financial Statements
March 31, 1998
(1) Description of Business and Summary of Significant Accounting Policies
(a) Interim Financial Statements
The interim financial information included in these financial statements
is unaudited but reflects all adjustments (consisting of only normal
recurring accruals) which are, in the opinion of management, necessary
for a fair presentation of the results for the interim period presented.
Results of operations for the three months ended March 31, 1998 are not
necessarily indicative of results to be expected for the year ending
December 31, 1998.
(b) Description of Business
United Road Services, Inc. (formerly Towing America, Inc.), a Delaware
corporation, was formed in July 1997 to become a leading national
provider of motor vehicle and equipment towing and transport services.
United Road Services, Inc. intends to acquire eight businesses, (the
"Acquisitions"), seven of which are to close simultaneously with the
consummation of an initial public offering ("Offering") of its common
stock and one which is expected to close after the Offering. Subsequent
to the Offering, United Road Services, Inc. intends to continue to
acquire similar companies to expand its national operations.
All of United Road Services, Inc.'s activities to date relate to the
Offering and the Acquisitions. As of March 31, 1998, United Road
Services, Inc. had not yet conducted any operations relative to its
ultimate intended purpose. United Road Services, Inc. is dependent upon
the Offering to execute the pending Acquisitions. United Road Services,
Inc. has an absence of a combined operating history and future success
is dependent upon a number of factors which include, among others, the
ability to integrate operations, reliance on the identification and
integration of satisfactory acquisition candidates, reliance on
acquisition financing, the ability to manage growth and attract and
retain quality management.
(c) Income Taxes
From July 25, 1997 (inception) to December 31, 1997, United Road
Services, Inc. elected to file federal and State income tax returns
under S-corporation provisions. As such, earnings or losses flow
through to the stockholder level. Accordingly, no income tax expense or
benefit has been recorded by United Road Services, Inc. as of December
31, 1997.
Effective January 1, 1998, United Road Services, Inc. elected to file
federal and State income tax returns under C-corporation provisions. As
a result of United Road Services, Inc. losses for the three month period
ended March 31, 1998 and in consideration of anticipated profits
resulting from operations subsequent to the Acquisitions, a tax benefit
has been recorded at March 31, 1998 at the effective tax rate expected
by United Road Services, Inc. for the year ending December 31, 1998.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Financial Statements, Continued
(1) - CONTINUED
(D)USE OF ESTIMATES
Management of United Road Services, Inc. has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these unaudited
interim financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(e) Per Share Amounts
Basic earnings per share is computed by dividing income (loss) available
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that shared in the earnings of
the entity (such as stock options).
The following table provides calculations of both basic and diluted
earnings per share:
Three months ended March 31, 1998
Weighted Per
Net average share
loss shares amounts
Basic $ (231,691) 2,822,736 $ (.08)
Diluted $ (231,691) 2,822,736 $ (.08)
The impact of the United Road Services, Inc. options described in note 2
at March 31, 1998 has not been included in the disclosure of earnings
per share as the effect would be antidilutive.
(f) Impact of Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of
general purpose financial statements. SFAS No. 130 requires 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 in equal prominence with the other financial
statements. United Road Services, Inc. adopted SFAS No. 130 during the
period ended March 31, 1998, however the adoption of SFAS No. 130 did
not have any effect on the reporting and display of financial position,
results of operations or cash flows of United Road Services, Inc. There
is no difference in the three months ended March 31, 1998 between net
income (loss) and comprehensive income.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Financial Statements, Continued
(1) - CONTINUED
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 established
standards for the way public companies are to report information about
operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in
interim financial reports issued to shareholders. SFAS No. 131 focuses
on a "management approach" concept as the basis for identifying
reportable segments. The management approach is based on the way that
management organizes the segments within the enterprise for making
operating decisions and assessing performance. United Road Services,
Inc. continues to evaluate the provisions of SFAS No. 131.
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use." SOP
98-1 requires that certain costs related to the development or purchase
of internal-use software be capitalized and amortized over the estimated
useful life of the software. SOP 98-1 also requires that costs related
to the preliminary project stage and post-implementation/operations
stage of an internal-use computer software development project be
expensed as incurred. United Road Services, Inc. adopted SOP 98-1 as of
January 1, 1998. However due to the initial stages of United Road
Services, Inc.'s operations, there was no effect on the financial
position or results of operations during the three months ended March
31, 1998.
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-5, "Reporting on the Costs
of Start-up Activities." SOP 98-5 requires the expensing of certain
costs such as pre-operating expenses and organizational costs associated
with the company's start-up activities. The effect of adoption is
required to be accounted for as a cumulative change in accounting
principle. United Road Services, Inc. adopted SOP 98-5 as of January 1,
1998. However due to the initial stages of United Road Services, Inc.'s
operations all start-up costs have been expensed during the three months
ended March 31, 1998.
(2) Stockholder's Equity
United Road Services, Inc. effected a 100-for-one stock split on December
18, 1997 for each share of common stock of United Road Services, Inc.
("Common Stock") then outstanding. In addition United Road Services, Inc.
increased the authorized shares of Common Stock to 1,000,000 shares with a
$.001 par value. Subsequently, and pursuant to an amended and restated
certificate of incorporation of United Road Services, Inc., filed on
February 23, 1998, the authorized number of shares have been increased to
40,000,000 (35,000,000 common shares and 5,000,000 preferred shares). Also,
on February 23, 1998, United Road Services, Inc. effected a 3.72 for 1 stock
split for all outstanding shares of Common Stock. Common Stock has been
retroactively reflected in the balance sheets.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Financial Statements, Continued
(2) - CONTINUED
On December 18, 1997, United Road Services, Inc. authorized the issuance of
188,976 shares pursuant to the terms and conditions of a subscription
agreement. At December 31, 1997, United Road Services, Inc. had obtained
subscription agreements to purchase all authorized shares of Common Stock.
These shares were issued and fully paid on January 1, 1998 for $3.36 per
share.
In January 1998, United Road Services, Inc. issued 29,760 shares of Common
Stock to a member of the board of directors for a purchase price of $3.36
per share. In addition, options to purchase 215,000 shares of Common Stock
were issued during January and February 1998 to several employees of United
Road Services, Inc. and outside consultants. Stock options were issued at
a price of $9.00 per share and vest over a three-year period.
(3) Related Party Transactions
United Road Services, Inc. is indebted to two of the primary stockholders
under unsecured notes, bearing interest at 8.5% per annum. The notes and
unpaid interest are included in payable to related parties in the
accompanying balance sheets.
(4) Subsequent Events
(a) United Road Services, Inc. effected a successful initial public
offering on May 1, 1998.
(b) United Road Services, Inc. has signed definitive agreements to acquire
seven companies (Founding Companies) to be effective simultaneously
with the Offering and one company, Keystone Towing, Inc., to be
acquired after the Offering. The companies to be acquired are:
Northland Auto Transporters, Inc. and Northland Fleet Leasing, Inc.
Falcon Towing and Auto Delivery, Inc.,
Smith-Christensen Enterprises, Inc. and subsidiary ("City Towing, Inc."
d/b/a Quality Towing)
Caron Auto Works, Inc. and Caron Auto Brokers, Inc.
Absolute Towing and Transporting, Inc.
ASC Transportation Services and subsidiary ("Auto Service Center" d/b/a
ASC Truck Service)
Milne Tow Service
Keystone Towing, Inc.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Financial Statements, Continued
(4) - CONTINUED
The aggregate consideration to acquire the Founding Companies is
approximately $27.8 million in cash and 2,375,741 in shares of Common
Stock. Additionally, upon consummation of the Keystone Towing, Inc.
acquisition, the sole stockholder of Keystone Towing, Inc. will
receive cash consideration of $4.5 million and 377,624 shares of
Common Stock. In addition, United Road Services, Inc. will be
obligated to make certain earn-out payments to the stockholders of
each Founding Company, and Keystone Towing, Inc., that achieves
specified net revenue targets.
On May 6, 1998, United Road Services, Inc. effectively acquired the
Founding Companies as a result of the successful completion of the
Offering, as described in note 1(b).
(c) United Road Services, Inc. has received a commitment for a revolving
line of credit of $50 million. The funding is intended to be used for
acquisitions, capital expenditures and for general corporate purposes.
(d) Concurrently with the Acquisitions, United Road Services, Inc. may
enter into an agreement with the stockholders to lease the building in
United Road Services, Inc.'s operation for negotiated amounts and
terms.
(e) Prior to the Acquisitions, several Founding Companies and Keystone
Towing, Inc. intend to make distributions of certain net assets not to
exceed approximately $930,000.
(f) 1998, United Road Services, Inc. signed definitive agreements to
acquire all the outstanding common stock of 5-L Corporation ("5-L"),
and ADP Transport, Inc. ("ADP"), both Wyoming Corporations, in
exchange for an aggregate of approximately $6.0 million, consisting of
approximately $2.5 million in cash and 212,023 shares of Common Stock.
5-L's primary business is transporting vehicles throughout the United
States. ADP's primary business is guaranteeing vehicle leases. In
connection with these acquisitions, the Company entered into
employment agreements with certain members of 5-L and ADP management.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information should be read in conjunction with the unaudited
financial statements and notes thereto included in Item 1 of this Quarterly
Report.
Cautionary Statements
From time to time, in written reports and oral statements, management may
discuss their expectations regarding United Road Services, Inc.'s future
performance. These "forward-looking statements" are based on currently
available competitive, financial and economic data and management's operating
plans. They are also inherently uncertain, and investors must recognize that
events could turn out to be significantly different from what management
expects.
Overview
United Road Services, Inc. ("United Road") was formed in July 1997 to become a
leading national provider of motor vehicle and equipment towing and transport
services. Simultaneously with its initial public offering of Common Stock (the
"Offering") in May 1998, United Road acquired (the "Acquisitions") seven motor
vehicle and equipment towing and transport services companies (the "Founding
Companies") and is now one of the largest providers of these services in the
United States. The Founding Companies have been in business for periods ranging
from ten to 48 years and operate an aggregate of 15 facilities located in six
states. United Road has a definitive agreement to acquire an eighth company,
Keystone Towing, Inc. ("Keystone") and expects to complete the Keystone
acquisition upon municipal approval of a contract assignment. In addition, on
June 10, 1998, United Road entered into definitive agreements to acquire 5-L
Corporation and ADP Transport, Inc. See "- Liquidity and Capital Resources."
United Road offers a broad range of towing and transport services, including
towing, impounding and storing motor vehicles, conducting lien sales and
auctions of abandoned vehicles and transporting new and used vehicles and heavy
construction equipment. United Road derives revenue from towing and transport
services based on distance, time or fixed charges and from related impounding
and storage fees. In the event that impounded vehicles are not claimed by their
owners within prescribed time periods, United Road is paid from the proceeds of
lien sales or auctions. United Road's customers include commercial entities,
such as automobile leasing companies, insurance companies, automobile auction
companies, automobile dealers, repair shops and fleet operators; law enforcement
agencies such as police, sheriff and highway patrol departments; and individual
motorists.
Results of Operations - Three Months Ended March 31, 1998
Selling, general and administrative expenses incurred during the three months
ended March 31, 1998 are the result of establishing the corporate operations and
support to effect the Offering. Such selling, general and administrative
expenses consist primarily of corporate officer salaries, operating lease costs
associated with the corporate office and other general operating expenses such
as clerical, communications and operating supplies.
An income tax benefit was recorded by United Road because management believes
that such losses will be recoverable through the generation of taxable income
resulting from operations subsequent to the Acquisitions as described in note 4
of the quarterly financial information included herein. The income tax benefit
has been recorded at the effective tax rate expected by United Road for the year
ending December 31, 1998.
Liquidity and Capital Resources
At March 31, 1998, working capital deficiency was $1,437,077. Since inception,
United Road has incurred certain costs associated with the Offering, the
Acquisitions and costs related to obtaining a commitment for a revolving line of
credit of $50 million. United Road met its cash needs during the first quarter
of 1998 primarily through capital provided by its initial investors and through
management of trade credit made available by the vendors and service providers
assisting in the initial public offering process.
United Road completed its initial public offering of 6,600,000 shares of Common
Stock (7,590,000 shares upon exercise of the underwriters' over-allotment
option) in May 1998. The net proceeds available to United Road from the
Offering of $78.3 million ($90.3 million upon exercise of the underwriters'
over-allotment option) were used to pay the cash portion of the purchase price
of the Acquisitions, as described in notes 1(b) and 4 of the quarterly financial
information included herein, expenses incurred in connection with the
Acquisitions, and repayment of certain indebtedness assumed as part of the
Acquisitions.
United Road has obtained a commitment for credit facility from a group of
financial institutions, for which Bank of America will act as agent, enabling
United Road to borrow up to $50 million on a revolving basis (the "Credit
Facility"). The Credit Facility terminates three years from closing, at which
time all outstanding indebtedness will be due. Borrowings under the Credit
Facility accrue interest, at United Road's option, at either (a) the Base Rate
(which is equal to the greater of (i) the Federal Funds Rate plus 0.5% and (ii)
Bank of America's reference rate), or (b) the Eurodollar Rate (which is equal to
Bank of America's reserve adjusted eurodollar rate plus a margin ranging from
1.5% to 2.5% per annum). The Credit Facility requires United Road to comply
with various loan covenants including (i) maintenance of certain financial
ratios, (ii) restrictions on additional indebtedness, and (iii) restrictions on
liens, guarantees, advances and dividends. The Credit Facility is subject to
customary drawing conditions. To the extent United Road draws down the Credit
Facility to finance capital expenditures, the Company's interest expense for
future periods will increase.
United Road's near-term principal sources of cash are (i) net proceeds from the
Offering and (ii) availability to borrow under the Credit Facility. The
remaining net proceeds of the Offering, together with the Credit Facility, will
be used for future acquisitions, capital expenditures, refinancing of
outstanding debt and for general corporate purposes, and should enable United
Road to fund its day-to-day working capital requirements in the near term.
United Road has selected and is in the process of implementing systems that will
enable it to centralize its accounting and financial reporting activities at its
headquarters in Albany, New York. In addition, management intends to explore
the development of a national dispatch system for its transport operations.
Management estimates that it will make expenditures of approximately $2.0
million (including costs incurred to date which have not been material) in order
to install an integrated information system. The vendors of the information
software have informed management that the system will be year 2000 compliant.
Although United Road expects that it will be required to upgrade and expand this
system in the future , management cannot quantify such expenditures at this
time.
The Founding Companies spent an aggregate of $2.4 million on purchases of
property and equipment, which includes towing and transport vehicles, during the
three months ended March 31, 1998. United Road expects to make capital
expenditures of an additional $2.3 million during the remainder of 1998.
Sources of liquidity to meet these demands are expected to be generated from
earnings and related cash flow.
On June 10, 1998, United Road entered into definitive agreements to acquire all
the outstanding common stock of 5-L Corporation ("5-L"), and ADP Transport, Inc.
("ADP"), both Wyoming Corporations, in exchange for an aggregate of
approximately $6.0 million, consisting of approximately $2.5 million in cash
and 212,023 shares of United Road Common Stock. 5-L's primary business is
transporting vehicles throughout the United States. ADP's primary business
is guaranteeing vehicle leases.
United Road intends to pursue additional acquisition opportunities and expects
to fund future acquisitions through the issuance of additional Common Stock,
borrowings under the Credit Facility, and cash flow from operations.
General Economic Conditions and Inflation
United Road's future operating results may be adversely affected by (i) changes
in general economic conditions, including various federal, state and local laws
and regulations regarding equipment, driver certification, training and
recordkeeping and workplace safety, (ii) the loss of significant customers or
contracts, (iii) success in integrating acquired companies and future
acquisitions, (iv) price changes in response to competitive factors, (v)
seasonal variations, and (vi) the timing of expenditures for new equipment and
the disposition of used equipment. Although United Road cannot accurately
anticipate the effect of inflation on its operations, management believes that
inflation has not had, and is not likely in the foreseeable future to have, a
material impact on its results of operations.
Part II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Recent Sales of Unregistered Securities
In January 1998, the Company issued an aggregate of 218,736 shares of
Common Stock to private investors, all of whom were accredited investors,
for cash consideration of $735,000. Such shares were issued pursuant to
Subscription Agreements between the Company and each of the investors.
The sales of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act or Regulation D promulgated thereunder as transactions by
an issuer not involving a public offering. The recipients of securities
in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were
attached to the share certificates issued in such transactions.
Certain Information Concerning the Company's Initial Public Offering.
Set forth below is certain information concerning the Company's
initial public offering (the "Offering").
1. Prior to commencing the Offering, the Company filed a registration
statement (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission"), pursuant to the Act, in order to register
6,325,000 shares of Common Stock. The Commission file number assigned to
the Registration Statement was 333-46925. The Registration Statement was
declared effective by the Commission on April 30, 1998. A Registration
Statement filed under Rule 462(b) of the Act (the "Rule 462(b)
Registration Statement") registered an additional 1,265,000 shares of
Common Stock.
2. The Offering commenced on April 14, 1998 and was completed on May
6, 1998.
3. The underwriters for the Offering were Donaldson, Lufkin &
Jenrette Securities Corporation; Credit Suisse First Boston and
BancAmerica Robertson Stephens.
4. The Registration Statement set forth a "Proposed Maximum Aggregate
Offering Price" of $82,225,000. The Rule 462(b) Registration Statement
set forth a "Proposed Maximum Aggregate Offering Price" of $16,445,000.
5. The Company sold in the Offering an aggregate of 7,590,000 shares
of Common Stock (including 990,000 shares sold pursuant to exercise of
the Underwriters' over-allotment option) at an initial public offering
price of $13.00 per share. The aggregate public offering price of the
shares sold in the Offering (including the shares sold pursuant to
exercise of the underwriters' over-allotment option) was $98,670,000.
6. During the period from April 30, 1998 (the effective date of the
Registration Statement) through May 31, 1998, the total expenses paid by
the Company related to the Offering (determined on a cash basis) were
$7.4 million. Such expenses consisted of the following:
a. $6.9 million paid to the underwriters in respect of the
underwriting discount and commission; and
b. $490,000 of other expenses.
7. None of the payments described in paragraph 6 above represented a
direct or indirect payment to (i) directors, officers or general partners
of the Company or to their associates, (ii) persons owning 10% or more of
any class of equity securities of the Company or (iii) affiliates of the
Company.
8. After deducting the payments described in paragraph 6 above, the
amount of Offering proceeds that remained was $91.3 million. The Company
used $33.1 million of such proceeds as follows:
a. $27.8 million to pay the cash portion of the purchase price of the
seven acquisitions consummated simultaneously with the Offering, $12.3
million of which was paid directly or indirectly to persons who are now
directors or officers of the Company. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources"; and
b. $5.3 million to repay certain indebtedness assumed as part of such
acquisitions.
As of May 31, 1998, the balance of such proceeds was invested in
temporary investments consisting of short-term securities.
Item 5. Other Information
Recent Developments
On June 10, 1998, United Road Services, Inc. signed definitive
agreements to acquire all the outstanding common stock of 5-L
Corporation ("5-L"), and ADP Transport, Inc. ("ADP"), both Wyoming
Corporations, in exchange for an aggregate of approximately $6.0
million, consisting of approximately $2.5 million in cash and
212,023 shares of Common Stock. 5-L's primary business is
transporting vehicles throughout the United States. ADP's
primary business is guaranteeing vehicle leases. In
connection with these acquisitions, the Company entered into
employment agreements with certain members of 5-L and ADP management.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
Number Description of Documents
2.1 Agreement and Plan of Reorganization dated as February 23,
1998, by and among the Company, Northland Auto
Transporters, Inc. and the Stockholders named therein
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-46925)).
2.2 Agreement and Plan of Reorganization dated as of February
23, 1998, by and among the Company, Northland Fleet
Leasing, Inc. and the Stockholders named therein
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-46925)).
2.3 Agreement and Plan Reorganization dated as of February 23,
1998, by and among the Company, Falcon Towing and Auto
Delivery, Inc. and the Stockholder named therein
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-46925)).
2.4 Agreement and Plan of Reorganization dated as of February
23, 1998, by and among the Company, Smith-Christensen
Enterprises, Inc. and City Towing, Inc. and the
Stockholders named therein (incorporated by reference to
the same-numbered Exhibit to the Company's Registration
Statement on Form S-1 (Registration No. 333-46925)).
2.5 Agreement and Plan of Reorganization dated as of February
23, 1998, by and among the Company, Caron Auto Works, Inc.
and the Stockholders named therein (incorporated by
reference to the same-numbered Exhibit to the Company's
Registration Statement on Form S-1 (Registration No. 333-
46925)).
2.6 Agreement and Plan of Reorganization dated as of February
23, 1998, by and among the Company, Caron Auto Brokers,
Inc. and the Stockholders named therein (incorporated by
reference to the same-numbered Exhibit to the Company's
Registration Statement on Form S-1 (Registration No. 333-
46925)).
2.7 Agreement and Plan of Reorganization dated as of February
23, 1998, by and among the Company, Absolute Towing and
Transporting, Inc. and the Stockholder named therein
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-46925)).
2.8 Agreement and Plan of Reorganization dated as of February
23, 1998, by and among the Company, Keystone Towing, Inc.
and the Stockholders named therein (incorporated by
reference to the same-numbered Exhibit to the Company's
Registration Statement on Form S-1 (Registration No. 333-
46925)).
2.9 Agreement and Plan of Reorganization dated as of February
23, 1998, by and among the Company, ASC Transportation
Services, Auto Service Center and the Stockholders named
therein (incorporated by reference to the same-numbered
Exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-46925)).
2.10 Agreement and Plan of Reorganization dated as of February
23, 1998, by and among the Company, Silver State Tow &
Recovery, Inc. and the Stockholders named therein
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-46925)).
2.11 Amendment Number One to Agreement and Plan of
Reorganization dated as of February 23, 1998, by and among
the Company, Keystone Towing, Inc. and the Stockholder
named therein (incorporated by reference to the same-
numbered Exhibit to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 333-
46925)).
3.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to the same-numbered
Exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-46925)).
3.2 Amended and Restated Bylaws of the Company (incorporated
by reference to the same-numbered Exhibit to the Company's
Registration Statement on Form S-1 (Registration
No. 333-46925)).
4.1 Specimen Common Stock Certificate (incorporated by
reference to the same-numbered Exhibit to Amendment No. 3
to the Company's Form S-1 Registration Statement
(Registration No. 333-46925)).
10.1 United Road Services, Inc. 1998 Stock Option Plan
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-46925)).
10.2 Stock Purchase and Restriction Agreement between the
Company and Edward T. Sheehan (incorporated by reference to
the same-numbered Exhibit to the Company's Registration
Statement on Form S-1 (Registration No. 333-46925)).
10.3 Executive Employment Agreement between the Company and
Edward T. Sheehan (incorporated by reference to the same-
numbered Exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-46925)).
10.4 Resignation letter from Mark McKinney in favor of the
Company (incorporated by reference to the same-numbered
Exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-56603)).
10.5 Resignation letter from Ross Berner in favor of the Company
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-56603)).
10.6 Executive Employment Agreement between the Company and
Allan D. Pass (incorporated by reference to the same-
numbered Exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-46925)).
10.7 Executive Employment Agreement between the Company and
Donald J. Marr (incorporated by reference to the same-
numbered Exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-46925)).
10.8 Executive Employment Agreement between the Company and
Edward Morawski (incorporated by reference to the same-
numbered Exhibit to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No. 333-
46925)).
10.9 Consulting Agreement between the Company and Todd Q. Smart
(incorporated by reference to the same-numbered Exhibit to
Amendment No. 1 to the Company's Form S-1 Registration
Statement (Registration No. 333-46925)).
10.10 Credit Agreement dated as of May 8, 1998 among United Road
Services, Inc., various financial institutions and Bank of
America National Trust and Savings Association, as Agent
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-56603)).
10.11 Amended and Restated Executive Employment Agreement, dated
as of May 1, 1998, between the Company and Donald J. Marr
(incorporated by reference to the same-numbered Exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 333-56603)).
10.12 [Reserved]
10.13 Form of Registration Rights Agreement between the Company
and Stockholders named therein (incorporated by reference
to the same-numbered Exhibit to Amendment No. 1 to the
Company's Form S-1 Registration Statement (Registration No.
333-46925)).
10.14 Form of Indemnification Agreement between the Company and
each of the Company's executive officers and directors
(incorporated by reference to the same-numbered Exhibit to
Amendment No. 2 to the Company's Form S-1 Registration
Statement (Registration No. 333-46925)).
10.15 Lease between the Company and Edward Morawski (incorporated
by reference to the same-numbered Exhibit to Amendment No.
1 to the Company's Form S-1 Registration Statement
(Registration No. 333-46925)).
10.16 Lease between the Company and Exodus Holdings LLC
(incorporated by reference to the same-numbered Exhibit to
Amendment No. 1 to the Company's Form S-1 Registration
Statement (Registration No. 333-46925)).
27.1 Financial Data Schedule
SIGNATURES
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 thereunto duly authorized.
UNITED ROAD SERVICES, INC.
Registrant
Date June 15, 1998 /s/ Edward T. Sheehan
Edward T. Sheehan
Chairman and Chief Executive Officer
Date June 15, 1998 /s/ Donald P. Marr
Donald P. Marr
Chief Financial Officer
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 65,352
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 68,142
<PP&E> 388,282
<DEPRECIATION> 1,691
<TOTAL-ASSETS> 1,904,564
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0
0
<COMMON> 2,823
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,904,564
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 389,622
<OTHER-EXPENSES> (4,598)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (385,024)
<INCOME-TAX> (153,333)
<INCOME-CONTINUING> (231,691)
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<NET-INCOME> (231,691)
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