<PAGE> 1
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SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20449
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) May 20, 1999
-----------------
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
------------------------------------------
(Exact Name of Registrant
as Specified in its Charter)
Delaware
----------------------------
(STATE OF OTHER JURISDICTION
OF INCORPORATION)
333-64513 65-0822351
- ------------------------ ---------------------------------
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
1815 Griffin Road, Suite 300, Dania, Florida 33004-2252
-----------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(954) 926-2000
------------------------------
(REGISTRANT'S TELEPHONE NUMBER
INCLUDING AREA CODE)
Not Applicable
-------------------------------
(FORMER NAME OR FORMER ADDRESS,
IF CHANGED SINCE LAST REPORT)
AMENDMENT NO. 1
Item 7 set forth below replaces in its entirety Item 7 set forth in
the Company's Current Report on Form 8-K dated May 20, 1999 filed
with the Securities and Exchange Commission on June 4, 1999.
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<PAGE> 2
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired
On May 20, 1999, Elsinore Acquisition Corporation ("EAC"), a
newly-created, wholly-owned subsidiary of Aircraft Service International Group,
Inc. (the "Company") acquired substantially all of the assets of Elsinore L.P.
("Elsinore"), which includes Elsinore's 23 operating units in 10 states, the
U.S. Virgin Islands and Puerto Rico providing a variety of ground handling,
fueling, aircraft cleaning, and other aviation services to major commercial
airlines. EAC will continue substantially the same business conducted by
Elsinore. The total consideration paid by EAC was approximately $6,299,000
(subject to post-closing adjustments), which amount includes $5 million in cash
and a promissory note in the principal amount of $899,372. On June 4, 1999, the
Company filed a Form 8-K dated May 20, 1999 relating to the acquisition of the
assets of Elsinore, excluding related financial statements and pro forma
information. The following statements of Elsinore are filed herewith on the
pages subsequent hereto.
Report of Independent Auditors;
Balance Sheet at December 31, 1998;
Statement of Operations for the Year Ended December 31, 1998;
Statement of Partner's Equity for the Year Ended December 31, 1998;
Statement of Cash Flow for the Year Ended December 31, 1998; and
Notes to Financial Statements for the Year Ended December 31, 1998
(b) Unaudited pro forma financial information
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended March 31, 1999 combines the individual financial statements of
the Company for the year ended March 31, 1999 and of Elsinore for the year
ended December 31, 1998 after giving effect to the pro forma adjustments
described in the Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
The unaudited pro forma information is based upon historical financial
information of the Company and of the acquired business giving effect to the
acquisition under the purchase method of accounting and the assumptions and
adjustments described in the accompanying Notes to Unaudited Pro Forma
Condensed Consolidated Financial Statements. The following unaudited pro forma
information does not purport to be indicative of the results which would
actually have been obtained had the acquisition been completed during the
period presented or which may be obtained in the future.
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<PAGE> 3
(c) Exhibits.
2.1 Asset Purchase Agreement dated May 20, 1999, by and among
Elsinore Acquisition Corporation and Elsinore, L.P., and with
respect to Article VIII and Section 9.8 only, Ranger
Aerospace Corporation, Aircraft Service International Group,
Inc., Air/Lyon, Inc., Air/Lyon Associates, LP, Elsinore
Aerospace Services, LP and Elsinore Services Corporation, and
with respect to Section 9.8 only, General William Lyon. (The
exhibits and schedules to the asset purchase agreement, as
described therein, have been omitted in accordance with Item
601(b)(2) of Regulation S-K. A copy of such exhibits and
schedules shall be furnished supplementally to the Securities
and Exchange Commission upon request (incorporated by
reference to the initial filing of this Form 8-K filed with
the Commission on June 4, 1999).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
Date: July 30, 1999 By: /s/ Michael A. Krane
------------------- -----------------------------------
Michael A. Krane
Vice President - Finance
(Principal Accounting and
Financial Officer)
3
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ELSINORE LP
Financial Statements
December 31, 1998
4
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Report of Independent Auditors
To the Partners
Elsinore LP
We have audited the accompanying balance sheet of Elsinore LP as of December
31, 1998, and the related statements of operations, partners' equity and cash
flows for the year then ended. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Elsinore LP 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.
/s/ ERNST & YOUNG LLP
--------------------------------
ERNST & YOUNG LLP
May 24, 1999
Orange County, California
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ELSINORE LP
Balance Sheet
December 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets
Cash $ 12,000
Accounts receivable, net of allowance of $13,000 (Note 4) 2,376,000
Notes receivable (Note 9) 26,000
Prepaid and other current assets 45,000
---------------
2,459,000
Property and equipment, less accumulated depreciation
of $1,149,000 (Note 5) 843,000
Goodwill, less accumulated amortization of $911,000 (Note 6) 1,200,000
Other assets 129,000
---------------
$ 4,631,000
===============
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses $ 1,388,000
Line of credit, current portion (Note 7) 1,842,000
Notes payable, current portion (Note 8) 9,000
---------------
3,239,000
Line of credit (Note 7) --
Notes payable (Note 8) 5,000
Amounts due to affiliates, net (Note 10) 957,000
---------------
4,201,000
Commitments and contingencies (Note 11)
Partners' equity 430,000
---------------
$ 4,631,000
===============
</TABLE>
See accompanying notes.
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ELSINORE LP
Statement of Operations
For the Year Ended December 31, 1998
REVENUES $ 13,974,000
COST OF SALES 12,666,000
----------------
1,308,000
GENERAL AND ADMINISTRATIVE EXPENSE (1,851,000)
DEPRECIATION (220,000)
INTEREST EXPENSE (223,000)
AMORTIZATION OF GOODWILL (106,000)
OTHER INCOME (EXPENSE) (52,000)
----------------
NET LOSS $ (1,144,000)
================
See accompanying notes.
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ELSINORE LP
Statement of Partners' Equity
For the Year Ended December 31, 1998
BALANCE - December 31, 1997 $ 1,574,000
Net loss (1,144,000)
---------------
BALANCE - December 31, 1998 $ 430,000
===============
See accompanying notes.
8
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ELSINORE LP
Statement of Cash Flows
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,144,000)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 326,000
Changes in operating assets and liabilities
Accounts receivable (155,000)
Notes receivable 39,000
Prepaid expenses and other current assets 101,000
Accounts payable and accrued expenses 161,000
---------------
Net cash used in operating activities (672,000)
---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment, net (276,000)
---------------
Net cash used in investing activities (276,000)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments of line of credit (17,000)
Increase in notes payable 14,000
Increase in amounts due to affiliates, net 941,000
---------------
Net cash provided by financing activities 938,000
---------------
NET DECREASE IN CASH (10,000)
CASH - beginning of year 22,000
===============
CASH - end of year $ 12,000
===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 209,000
===============
</TABLE>
See accompanying notes.
9
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ELSINORE LP
Notes to Financial Statements
December 31, 1998
1. ORGANIZATION
Elsinore LP, a California limited partnership ("ELP"), is headquartered in
Newport Beach, California, and provides airline ground services including
aircraft cleaning, ground handling and line maintenance at airports across the
U.S., the Virgin Islands and Puerto Rico.
ELP was formed on November 1, 1994 by Elsinore Aerospace Services, Inc. ("EAS,
Inc.") as the managing general partner and Elsinore Aerospace Services, L.P.
("EAS, L.P.") as the principal limited partner. On November 6, 1996, Elsinore
Services Corporation ("ESC") replaced EAS, Inc. as a partner and became the
managing general partner of ELP. On December 5, 1996, EAS, Inc. was sold to an
unaffiliated entity in connection with the sale of the Engineering Division.
ESC and EAS, L.P. are wholly owned, directly or indirectly, by General William
Lyon ("Lyon").
Profits are allocated first, to the extent by which previously allocated losses
exceed previously allocated profits and then, in proportion to the partners'
ownership interests. Losses are allocated to the extent of previously allocated
profits and then in proportion to ownership interests until the capital account
balances of the limited partners are zero. Any remaining losses are allocated
to the general partner.
2. SALE OF ELP'S OPERATIONS
On May 20, 1999, ELP sold substantially all of its operations and assets to
Elsinore Acquisition Corporation ("EAC"), a subsidiary of Aircraft Services
International Group ("ASIG"), which in turn is a subsidiary of Ranger Aerospace
Corporation. The sales price totaled $6,199,000 and consisted of $5,000,000 in
cash, a promissory note from ASIG of $899,000 and the assumption by ASIG of
certain liabilities totaling $300,000.
3. ACCOUNTING PRINCIPLES
Property and Equipment
Property and equipment is stated at cost and is depreciated on a straight-line
basis over the following estimated useful lives:
Equipment 7 years
Furniture and fixtures; trucks and automobiles 5 years
Computers 3 years
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3. ACCOUNTING PRINCIPLES (continued)
Property and Equipment (continued)
Leasehold improvements are amortized on a straight-line basis over the shorter
of their estimated useful lives or the related lease terms.
Revenue Recognition
Revenues are generally recognized as services are rendered. Losses, if any, are
recognized during the period in which they are determined.
Income Taxes
No provision for income taxes has been provided in ELP's financial statements
as its earnings and losses are reportable for tax purposes at the partner
level.
Concentration of Credit Risk and Significant Customers
The financial instruments which are potentially subject to concentrations of
credit risk are primarily accounts receivable. Accounts receivable arise
principally from transactions with commercial airlines and vendors to the
worldwide aviation industry. Credit exposure is limited through periodic
evaluations of the customers' credit standing. Approximately 60% of the
accounts receivable at December 31, 1998 and 63% of the revenues reported for
the year then ended resulted from transactions with Delta Airlines.
Fair Value of Financial Instruments
For those financial instruments for which it is practical to estimate value,
management believes that the carrying amounts of ELP's financial instruments
reasonably approximate their fair value as of December 31, 1998. Considerable
judgment is required in interpreting market data in order to develop estimates
of the fair value of ELP's financial instruments. Accordingly, the estimated
values are not necessarily indicative of the amounts that could be realized in
current market exchanges.
Use of Estimates
The preparation of ELP's financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of
December 31, 1998, and revenues and expenses for the year then ended. Actual
results could materially differ from those estimates in the near term.
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4. ACCOUNTS RECEIVABLE
Accounts receivable arise principally from the performance of services on
commercial aircraft and consist of the following at December 31, 1998:
Trade receivables $ 2,318,000
Unbilled receivables 71,000
---------------
2,389,000
Allowance for doubtful accounts (13,000)
---------------
$ 2,376,000
===============
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1998:
Equipment $ 1,563,000
Furniture and fixtures 39,000
Trucks and automobiles 318,000
Leasehold improvements 72,000
---------------
1,992,000
Accumulated depreciation (1,149,000)
---------------
$ 843,000
===============
6. GOODWILL
Goodwill represents the cost in excess of the fair value of the net assets of
businesses acquired and is generally amortized on a straight-line basis over 20
years. The carrying amount of goodwill is reviewed annually to determine if
facts and circumstances indicate that it may be impaired. If this review
indicates that goodwill will not be recoverable, as determined based on the
estimated undiscounted cash flows of ELP over the remaining amortization
period, the carrying amount of the goodwill would be reduced by the estimated
shortfall of undiscounted cash flows. Management believes future undiscounted
cash flows will equal or exceed the carrying value of goodwill as of December
31, 1998.
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7. LINE OF CREDIT
ELP obtained a line of credit from Coast Business Credit ("CBC"), a division of
Southern Pacific Thrift & Loan Association (the "CBC line of credit"), which
consists of three components: an accounts receivable line of credit, a term
loan and an equipment acquisition loan. The CBC line of credit matures on May
31, 1999 and is subject to a one-year automatic annual renewal provided ELP
pays an annual renewal fee. Accrued interest is payable monthly. The components
of the CBC line of credit consist of the following at December 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Accounts receivable line of credit with interest at prime plus 2.5% $ 1,356,000
Term loan with interest at prime plus 3.0% 296,000
Equipment acquisition loan with interest at prime plus 3.0% 190,000
===============
$ 1,842,000
===============
</TABLE>
As of December 31, 1998, ELP did not meet the minimum tangible net worth
requirement of the CBC line of credit, as defined in the Loan and Security
Agreement, of $450,000 and certain other collateral-based covenants. On May 20,
1999, ELP sold its assets to EAC (Note 2) and used the proceeds to repay the
CBC line of credit in full on May 24, 1999.
Interest incurred and expensed related to the line of credit totaled $223,000
for the year ended December 31, 1998. The weighted average cost of borrowing
under the line of credit was 12.12% for the year ended December 31, 1998. The
prime interest rate at December 31, 1998 was 7.75%.
8. NOTES PAYABLE
In June 1998, ELP issued two promissory notes totaling $18,000 to Wachovia Bank
for the acquisition of two trucks with a cost basis of $28,000. The notes bear
a fixed interest rate of 8.94% and mature on June 1, 2000. As of December 31,
1998, the balance on the notes is $14,000.
Interest incurred and expensed related to the notes payable totaled $1,000 for
the year ended December 31, 1998.
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8. NOTES PAYABLE (continued)
Notes payable have stated maturities as follows for the year ended December 31:
1999 $ 9,000
2000 5,000
===========
$ 14,000
===========
9. SOLD AND TERMINATED OPERATING ACTIVITIES
In 1997, the former President of ELP acquired ELP's Quality Management Division
and executed a promissory note payable to ELP for the outstanding amount of the
unpaid advances at that time which totaled $65,000. The note is secured by a
Pledge and Security Agreement, bears interest at prime plus 1.0% and matures on
June 15, 1999. As of December 31, 1998, the outstanding balance of the
promissory note is $26,000.
10. RELATED PARTY TRANSACTIONS
Amounts due to (from) affiliates consisted of the following at December 31,
1998:
Nature of Transaction Affiliate
- --------------------------------------------------------------
Notes payable and accrued interest Lyon $ 974,000
Unsecured advances payable Martin 26,000
Unsecured advances receivable Lyon (43,000)
--------------
$ 957,000
==============
During 1998, ELP issued four notes to Lyon totaling $950,000. The notes bear a
fixed interest rate of 9% and are payable on demand. As of December 31, 1998,
the balance on the notes, including principal and accrued interest, totals
$974,000.
ELP paid Martin Aviation ("Martin") rent totaling $7,000 during 1998. ELP's
rental expense from Martin for 1998 was $29,000.
ELP participates in an insurance program for essentially all of its insurance
needs, other than employee benefits, with companies affiliated through common
ownership.
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11. COMMITMENTS AND CONTINGENCIES
Various litigation matters arise during the ordinary course of business.
Management is of the opinion that the outcome of such litigation will not have
a material adverse effect on the financial position of ELP.
ELP has been named in a lawsuit brought by American International Airlines
("AIA"). Management is not able to determine the probability of the outcome of
this case and AIA has not specified the dollar amount of its damage claim.
Accordingly, an estimate of the potential liability associated with this matter
cannot be made at this time.
ELP has entered into certain operating lease agreements for office space, other
facilities and equipment. Rental expense under operating leases totaled
$269,000 for the year ended December 31, 1998. The future minimum annual rental
and lease payments under noncancelable leases are as follows:
Years ending December 31,
-------------------------
1999 $ 118,000
2000 116,000
2001 82,000
2002 47,000
2003 --
-------------
$ 363,000
=============
12. IMPACT OF YEAR 2000 (UNAUDITED)
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000 (the "Year 2000
Issue"). This could cause a system failure or miscalculations causing
disruptions of operations including, among other things, a temporary inability
to process transactions or engage in normal business activities.
In April 1999, the assets and certain liabilities of ELP were sold to EAC (Note
2). Accordingly, all operations and related computer functions were transferred
to EAC which will be responsible for addressing all Year 2000 Issues and
concerns.
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AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
UNAUDITED PRO FORMA FINANCIAL DATA
The following pro forma unaudited condensed consolidated financial statements
present the pro forma financial position at March 31, 1999 for Aircraft Service
International Group, Inc.(the "Company") and the pro forma results of
operations for the year then ended. These pro forma financial statements give
effect to the acquisition of substantially all of the assets and certain
liabilities of Elsinore L.P. ("Elsinore") as if such acquisition of Elsinore by
the Company had occurred as of April 1, 1998 for purposes of the Unaudited Pro
Forma Condensed Consolidated Statement of Operations, and as if such acquisition
had occurred as of March 31, 1999 for purposes of the Unaudited Pro Forma
Condensed Consolidated Balance Sheet.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended March 31, 1999 combines the individual financial statements of
operations of the Company for the year ended March 31, 1999 and of Elsinore for
the year ended December 31, 1998, after giving effect to the pro forma
adjustments described in the Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements. The Unaudited Pro Forma Condensed
Consolidated Balance Sheet as of March 31, 1999 combines the individual balance
sheets of the Company as of March 31, 1999 and of Elsinore as of December 31,
1998, after giving effect to the pro forma adjustments described in the Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements.
On May 20, 1999, Elsinore Acquisition Corporation ("EAC"), a newly-created,
wholly-owned subsidiary of the Company acquired substantially all of the assets
of Elsinore, which includes Elsinore's 23 operating units in 10 states, the
U.S. Virgin Islands and Puerto Rico providing a variety of ground handling,
fueling, aircraft cleaning, and other aviation services to major commercial
airlines. EAC will continue substantially the same business conducted by
Elsinore. The total consideration paid by EAC was approximately $6,299,000
(subject to post-closing adjustments), which amount includes $5 million in cash
and a promissory note in the principal amount of $899,372. The fair value of
the net assets acquired was approximately $2.1 million. The purchase price
exceeded the fair value of the net assets acquired by approximately $4.1
million, which amount will be amortized on a straight line basis over 20 years.
The acquisition was accounted for using the purchase method of accounting. The
purchase price allocation is based on preliminary data. In connection with the
Elsinore acquisition, the Company entered into a short-term promissory note
with the seller of Elsinore for $899,372, as noted above, and a five-year term
note with a bank for $5 million bearing interest at 8% and at a variable rate
above LIBOR or prime, respectively (collectively referred to as "New Debt").
The unaudited pro forma consolidated financial data and accompanying notes
should be read in conjunction with the financial statements and related notes
of Elsinore which are included herein, and the financial statements and the
related notes of the Company which are included in the Company's annual report
on Form 10-K filed on June 29, 1999. The Company believes that the assumptions
used in the following statements provide a reasonable basis on which to present
the pro forma financial data. The unaudited pro forma financial data is
provided for informational purposes only and should not be construed to be
indicative of the Company's financial condition or results of operations had
the acquisition and events above been consummated on the dates assumed and are
not intended to constitute projections with regards to the Company's financial
condition as of any future date or results of operations for any future period.
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AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended March 31, 1999
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
The Elsinore Pro Forma Pro
Company L.P. Adjustments Forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $ 123,441 $ 13,974 $ -- $ 137,415
Cost and expenses:
Operating expenses 99,035 12,666 (216)(B) 111,325
(160)(D)
Selling, general and administrative 8,865 1,851 (295)(C) 10,421
Amortization 2,545 106 (106)(A) 2,754
209 (E)
Depreciation 6,176 220 -- 6,396
--------- -------- ----- ---------
Total cost and expenses 116,621 14,843 (568) 130,896
--------- -------- ----- ---------
Operating income 6,820 (869) 568 6,519
Other income (expense), net (253) (52) -- (305)
Interest income 207 -- -- 207
Interest and other financial expense (11,281) (223) 223 (A) (11,753)
(472)(F)
--------- -------- ----- ---------
Income (loss) before income taxes and
extraordinary item (4,507) (1,144) 319 (5,332)
Income taxes 50 -- -- 50
--------- -------- ----- ---------
Income (loss) before extraordinary item $ (4,557) $ (1,144) $ 319 $ (5,382)
========= ======== ===== =========
Basic and diluted loss per share:
Before extraordinary item $ (45,570) $(53,820)
========= =========
Weighted average common shares
outstanding - basic and diluted 100 100
========= =========
</TABLE>
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AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1999
(Dollars in thousands)
<TABLE>
<CAPTION>
Elsinore Pro Forma
The Company L.P. Adjustments Pro Forma
------------ --------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 3,311 $ 12 $ -- $ 3,323
Accounts receivable, net of allowance 16,421 2,376 -- 18,797
Receivable from Viad 2,125 -- -- 2,125
Prepaid expenses 650 45 -- 695
Spare parts and supplies 2,095 -- -- 2,095
Notes receivable -- 26 (26) (G) --
--------- ------ ------- ---------
Total current assets 24,602 2,459 (26) 27,035
Property, plant and equipment, net
of accumulated depreciation 46,889 843 107 (H) 47,839
Goodwill, net of accumulated amortization 48,668 1,200 (1,200)(G) 52,843
4,175 (I)
Deferred financing costs, net of
accumulated amortization 3,205 -- -- 3,205
Investments in and advances to joint venture 224 -- -- 224
Other assets 166 129 -- 295
========= ====== ======= =========
Total assets $ 123,754 $4,631 $ 3,056 $ 131,441
========= ====== ======= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 5,082 $1,388 $ -- $ 6,470
Accrued expenses 12,850 -- 400 (J) 13,250
Customer deposits 3,488 -- -- 3,488
Current portion of note payable 57 9 (9)(G) 1,331
-- -- 1,274 (K) --
Line of credit, current portion -- 1,842 (1,842)(G) --
--------- ------ ------- ---------
Total current liabilities 21,477 3,239 (177) 24,539
Amounts due to affiliates, net -- 957 (957)(G) --
Notes payable 2,927 5 (5)(G) 7,552
-- -- 4,625 (K) --
Long-term debt 80,000 -- -- 80,000
--------- ------ ------- ---------
Total liabilities 104,404 4,201 3,486 112,091
Commitments
Partners' equity -- 430 (430)(G) --
Stockholder's equity:
Common stock, $0.01 par value; 1,000 shares
authorized; 100 shares issued and outstanding -- -- -- --
Paid-in capital 24,100 -- -- 24,100
Accumulated other comprehensive income 20 -- -- 20
Accumulated deficit (4,770) -- -- (4,770)
--------- ------ ------- ---------
Total stockholder's equity 19,350 -- -- 19,350
========= ====== ======= =========
Total liabilities and stockholder's equity $ 123,754 $4,631 $ 3,056 $ 131,441
========= ====== ======= =========
</TABLE>
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands)
(A) Reflects the elimination of amortization and interest expense associated
with Elsinore's goodwill and line of credit, respectively.
(B) Reflects the elimination of costs associated with Elsinore facilities and
operations not acquired by the Company. Also includes the elimination of
costs associated with certain Elsinore operational positions and
facilities that will be closed or eliminated as Elsinore's operations are
merged with the Company's. A detail of these costs are as follows:
<TABLE>
<CAPTION>
<S> <C>
Costs associated with Elsinore's maintenance facility in Dallas, TX $ 58
Costs associated with Elsinore's engineering division 59
Redundant operational positions and facilities to be eliminated 99
----
$216
====
</TABLE>
(C) Reflects a $230 reduction in compensation expense related to the
elimination of executives at Elsinore including the president, human
resource manager, human resources assistant and the president's
administrative assistant. Also included is a reduction of $65 in rent and
professional service expense as a result of the closing of Elsinore's
headquarters and the availability of professional service personnel
already in place at the Company.
(D) Reflects reduction of insurance expense based on savings projections
provided by the Company's insurance advisor. The projected savings were
based on the Company's historical safety record and economies of scale.
(E) Reflects twelve months of amortization due to the goodwill created as a
result of the acquisition of Elsinore. Goodwill is amortized over twenty
years.
(F) Reflects twelve months of interest expense related to the New Debt used to
finance the purchase of Elsinore.
19
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Dollars in thousands)
(G) Reflects assets and liabilities of Elsinore that were not acquired or
assumed by the Company, and the elimination of partners' equity.
(H) Reflects the re-valuation of property and equipment acquired to its
estimated fair market value.
(I) The estimated goodwill associated with the Elsinore purchase is as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Purchase price, including associated costs $6,299
Historical net book value of Elsinore at December 31, 1998 $ 430
Less assets not acquired:
Notes receivable (26)
Goodwill, net (1,200)
Plus liabilities not assumed:
Line of credit, current portion 1,842
Notes payable, current portion 9
Notes payable 5
Amounts due to affiliates 957
Plus increase in property and equipment due to re-valuation
to fair market value 107
-------
Adjusted net book value 2,124
------
Excess of purchase price over net assets acquired $4,175
======
</TABLE>
(J) Reflects estimated reorganization costs of $150 and acquisition costs of
$250 related to the Elsinore acquisition.
(K) Reflects New Debt incurred to finance the acquisition of Elsinore. The New
Debt includes a promissory note for $899 due in one year and a $5,000 term
note payable in quarterly installments over a five-year period.
20
