<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No.1)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
JULY 1, 1999
------------
Date of Report (Date of earliest event reported)
ANTHONY CRANE RENTAL L.P.
-------------------------
(Exact name of registrant as specified in its charter)
PENNSYLVANIA
------------
(State or other jurisdiction of incorporation or organization)
25-1739175
----------
(Commission file number) (IRS Employer Identification No.)
1165 CAMP HOLLOW ROAD
WEST MIFFLIN, PA 15122
-----------------------
(Address of principal executive offices)
(412) 469-3700
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name or former address, if changed since last report)
<PAGE>
The following amends and restates in its entirety, Item 7 of Anthony Crane
Rental, L.P.'s (the "Company") Form 8-K dated July 1, 1999 and filed on July 15,
1999 (the "Form 8-K") pursuant to which the Company announced the acquisition of
substantially all assets and assumption of substantially all liabilities and
obligations relating to the operations of Carlisle Construction Co., Inc. and
its subsidiaries ("Carlisle").
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired
Audited financial statements of Carlisle as of and for the years ended
December 31, 1998 and 1997 and the nine-month period ended December
31, 1996 and the independent auditors' report thereon, are attached
hereto as Exhibit 99.1.
Unaudited condensed interim financial statements of Carlisle as of
June 30, 1999 and for the six months ended June 30, 1999 and 1998 are
attached hereto as Exhibit 99.2.
(b) Pro forma financial information
Pro forma consolidated financial information giving effect to the
Carlisle acquisition is attached hereto as Exhibit 99.3
(c) Exhibits
The exhibits listed below are filed herewith except as indicated.
2.01 Asset Purchase Agreement by and among Carlisle Equipment Group,
L.P., the Sellers Listed on the Schedule Of Sellers and the
Current Owners and the Other Parties Set Forth Herein, dated
June 30, 1999, previously filed.
99.1 Audited financial statements of Carlisle as of and for the years
ended December 31, 1998 and 1997 and the nine-month period ended
December 31, 1996, and the independent auditor's report thereon,
filed herewith.
99.2 Unaudited condensed interim financial statements of Carlisle as
of June 30, 1999 and for the six months ended June 30, 1999 and
1998, filed herewith.
99.3 Pro forma financial information filed herewith.
<PAGE>
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.
ANTHONY CRANE RENTAL, L.P.
/s/ David W. Mahokey
Date: September 13, 1999 By:----------------------------------------
David W. Mahokey
President and Chief Operating Officer
<PAGE>
EXHIBIT 99.1
CARLISLE CONSTRUCTION CO., INC.
AND CARLISLE INVESTMENTS, INC.
COMBINED FINANCIAL STATEMENTS
AS OF
DECEMBER 31, 1998, 1997 AND 1996
TOGETHER WITH
AUDITORS' REPORT
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To the Board of Directors of
Carlisle Construction Co.:
We have audited the accompanying combined balance sheets of CARLISLE
CONSTRUCTION CO., INC. and Carlisle Investments, Inc. (Kentucky corporations) as
of December 31, 1998 and 1997, and the related combined statements of income,
stockholders' equity and cash flows for the years then ended and the nine month
period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Carlisle
Construction Co., Inc. and Carlisle Investments, Inc. as of December 31, 1998
and 1997, and the results of their operations and their cash flows for the years
then ended and the nine month period ended December 31, 1996 in conformity with
generally accepted accounting principles.
Cincinnati, Ohio,
February 19, 1999, except for Note 11,
as to which the date is August 25, 1999
/s/ ARTHUR ANDERSEN, LLP
---------------------------
<PAGE>
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Combined Balance Sheets
As of December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash (Note 4) $ 1,308,469 $ 4,855,206
Marketable securities 3,014,558 2,718,160
Receivables (Note 4)
Trade, net of allowance for doubtful accounts of
$728,000 and $1,099,000 at December 31 1998
and 1997, respectively 14,777,003 11,161,657
Affiliate (Note 6) 23,743 341,499
Costs and estimated earnings in excess of billings
on uncompleted construction contracts 368,977 469,932
Equipment held for sale (Notes 2 and 4) 4,489,199 4,813,161
Parts and work-in-process inventory (Note 4) 4,055,143 3,323,553
Prepaid expenses and other 756,041 436,878
------------ ------------
Total current assets 28,793,133 28,120,046
------------ ------------
RENTAL EQUIPMENT (Note 4):
Cost 126,133,763 111,809,286
Less - Accumulated depreciation (48,180,699) (43,427,080)
------------ ------------
77,953,064 68,382,206
------------ ------------
PROPERTY AND EQUIPMENT (Note 4):
Land and improvements 2,758,567 2,638,610
Buildings and improvements 7,461,111 6,815,311
Machinery and equipment 22,634,353 18,569,265
Furniture and fixtures 1,058,758 916,755
------------ ------------
33,912,789 28,939,941
Less - Accumulated depreciation (15,149,278) (13,354,124)
------------ ------------
18,763,511 15,585,817
------------ ------------
OTHER ASSETS:
Cash surrender value-Officers' life insurance, net
(face value of approximately $2,500,000) 2,406,829 1,950,316
Goodwill, net of accumulated amortization of $23,203
at December 31, 1998 (Note 9) 2,065,032 -
Development properties and other (Note 8) 6,342,611 4,068,975
------------ ------------
10,814,472 6,019,291
------------ ------------
$136,324,180 $118,107,360
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt (Note 4) $ 10,477,215 $ 9,803,001
Notes payable, equipment held for sale, non-interest
bearing to 2% over prime 619,437 599,495
Accounts payable 3,020,791 3,274,661
Billings in excess of costs and estimated earnings
on uncompleted construction contracts 1,394,799 832,068
Accrued liabilities:
Interest 493,646 390,765
Wages and benefits 1,351,688 1,003,043
Taxes, other than income 1,076,615 1,070,443
Development reserves (Note 8) - 3,441,011
Other 2,663,137 1,146,265
Accrued distributions to stockholders (Note 3) - 714,500
------------ ------------
Total current liabilities 21,097,328 22,275,252
------------ ------------
LONG-TERM DEBT, net of current portion
(Note 4) 67,123,627 55,449,822
------------ ------------
OTHER LIABILITIES 1,586,681 1,380,663
------------ ------------
DEFERRED INCOME TAXES (Note 3) 2,775,212 2,796,212
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 2)
STOCKHOLDERS' EQUITY (Notes 1 and 3):
Common stock and member units, 40,000 shares
issued and outstanding and 600 member units
issued and outstanding, stated at 1,073,590 1,073,590
Paid-in capital 160,627 159,627
Retained earnings 41,750,680 34,405,735
Accumulated other comprehensive income 756,435 566,459
------------ ------------
Total stockholders' equity 43,741,332 36,205,411
------------ ------------
$136,324,180 $118,107,360
============ ============
</TABLE>
The accompanying notes to combined financial statements are an integral
part of these combined balance sheets.
<PAGE>
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Combined Statements of Income
<TABLE>
<CAPTION>
For the Nine
Month Period
For the Years Ended Ended
December 31, December 31,
-----------------------------------
1998 1997 1996
---------------- ---------------- ---------------
<S> <C> <C> <C>
REVENUES:
Equipment rentals $47,341,518 $47,035,888 $32,450,761
Equipment sales 19,861,730 24,421,936 16,987,278
Parts and service 8,979,109 8,867,650 6,504,215
Construction contracts 17,058,014 16,973,861 10,551,540
------------ ------------ ------------
Total revenues 93,240,371 97,299,335 66,493,794
------------ ------------ ------------
DIRECT COSTS:
Equipment rentals 17,553,818 19,121,783 13,602,088
Cost of equipment sold 14,568,234 16,979,805 13,440,366
Cost of parts and services 7,982,973 7,867,321 5,839,605
Construction contracts 11,082,630 11,997,272 7,757,721
Depreciation 12,687,155 11,166,938 7,295,128
------------ ------------ ------------
Total direct costs 63,874,810 67,133,119 47,934,908
------------ ------------ ------------
Gross profit 29,365,561 30,166,216 18,558,886
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES 10,823,676 9,797,368 7,096,865
LOSS FROM DEVELOPMENT ACTIVITIES (Note 8) 4,073,297 5,532,493 99,033
------------ ------------ ------------
Income from operations 14,468,588 14,836,355 11,362,988
OTHER INCOME (EXPENSE):
Interest expense (5,222,749) (4,255,216) (2,847,031)
Interest income 182,887 84,938 18,114
Loss from joint venture activities (Note 7) - (338,996) (311,685)
Other, net 157,548 261,322 24,807
------------ ------------ ------------
Income before benefit for income taxes 9,586,274 10,588,403 8,247,193
BENEFIT FOR INCOME TAXES (Note 3) - - (5,703,742)
------------ ------------ ------------
Net income $ 9,586,274 $10,588,403 $13,950,935
============ ============ ============
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these combined statements.
<PAGE>
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Combined Statements of Stockholders' Equity
For the Years Ended December 31, 1998 and 1997
And the Nine Month Period Ended December 31, 1996
<TABLE>
<CAPTION>
Common Accumulated
Stock and Other Total
Comprehensive Member Paid-in Retained Comprehensive Stockholders'
Income Units Capital Earnings Income Equity
--------------- ------------- ------------ -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, March 31, 1996 $1,073,590 $134,627 $16,125,998 $ - $17,334,215
Net income (Note 3) $13,950,935 - - 13,950,935 - 13,950,935
Other comprehensive income - - - - - -
-------------
Comprehensive income $13,950,935
=============
Capital contribution - 17,000 - - 17,000
Distributions to stockholders
(Note 3) - - (2,400,000) - (2,400,000)
------------ ----------- ------------ ------------ ------------
BALANCE, December 31, 1996 1,073,590 151,627 27,676,933 - 28,902,150
Net income (Note 3) $10,588,403 - - 10,588,403 - 10,588,403
Other comprehensive income-
unrealized appreciation on
marketable securities 566,459 - - - 566,459 566,459
-------------
Comprehensive income $11,154,862
=============
Capital contribution - 8,000 - - 8,000
Distributions to stockholders
(Note 3) - - (3,859,601) - (3,859,601)
------------ ----------- ------------ ------------ ------------
BALANCE, December 31, 1997 1,073,590 159,627 34,405,735 566,459 36,205,411
Net income (Note 3) $ 9,586,274 - - 9,586,274 - 9,586,274
Other comprehensive income-
unrealized appreciation on
marketable securities 189,976 - - - 189,976 189,976
-------------
Comprehensive income $ 9,776,250
=============
Capital contribution - 1,000 - - 1,000
Distributions to stockholders
(Note 3) - - (2,241,329) - (2,241,329)
------------ ----------- ------------ ------------ ------------
BALANCE, December 31, 1998 $1,073,590 $160,627 $41,750,680 $756,435 $43,741,332
============ =========== ============ ============ ============
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these combined statements.
<PAGE>
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Combined Statements of Cash Flows
<TABLE>
<CAPTION>
For the Nine
Month Period
For the Years Ended December 31, Ended
--------------------------------
1998 1997 December 31, 1996
------------- ------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,586,274 $ 10,588,403 $ 13,950,935
Non-cash items included in net income-
Depreciation and amortization 12,896,024 11,316,443 7,397,745
Deferred income taxes (21,000) (10) (5,974,599)
Loss from joint venture - 338,996 311,685
------------- ------------- -----------------
Cash flows provided by operations 22,461,298 22,243,832 15,685,766
Net decrease (increase) in certain components of
working capital (5,497,625) 4,231,143 (3,877,415)
Net increase in other liabilities 106,018 101,169 43,489
------------- ------------- -----------------
Net cash provided by operating activities 17,069,691 26,576,144 11,851,840
------------- ------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of leasing operation in Indianapolis (Note 9) (6,314,000) - -
Additions to property and equipment (27,029,750) (29,941,441) (22,298,803)
Sales/retirements of property and equipment, net 5,732,318 9,918,672 6,798,847
Sales (purchases) of equipment held for sale, net 323,962 (427,420) 539,713
Additions to development properties (2,557,021) (2,475,307) -
Increase in other assets, net (185,069) (356,810) (548,030)
Investment in joint venture - (230,500) (318,000)
------------- ------------- -----------------
Net cash used in investing activities (30,029,560) (23,512,806) (15,826,273)
------------- ------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt obligations 35,453,064 31,568,766 20,479,733
Payments of debt obligations (23,105,045) (24,427,424) (15,893,143)
Net borrowing/payments of notes payable, equipment held
for sale 19,942 (628,365) (116,010)
Capital contribution 1,000 8,000 17,000
Distributions to stockholders (2,955,829) (5,545,101) -
------------- ------------- -----------------
Net cash provided by financing activities 9,413,132 975,876 4,487,580
------------- ------------- -----------------
Net increase (decrease) in cash (3,546,737) 4,039,214 513,147
CASH, beginning of year 4,855,206 815,992 302,845
------------- ------------- -----------------
CASH, end of year $ 1,308,469 $ 4,855,206 $ 815,992
============= ============= =================
NET INCREASE (DECREASE) IN CERTAIN COMPONENTS OF WORKING
CAPITAL:
Marketable securities $ 106,422 $ 1,006,341 $ 509,379
Receivables 3,297,590 (70,057) 1,525,895
Costs and estimated earnings in excess of billings on
uncompleted construction contracts (100,955) 421,463 (305,794)
Parts and work-in-process inventory 717,825 174,808 445,868
Prepaid expenses and other 319,163 93,102 (161,559)
Accounts payable 253,870 (1,931,904) 2,530,431
Billings in excess of costs and estimated earnings on
uncompleted construction contracts (562,731) 27,669 (422,824)
Accrued income taxes - - (127,411)
Accrued liabilities 1,466,441 (3,952,565) (116,570)
------------- ------------- -----------------
Net increase (decrease) in certain
components of working capital $ 5,497,625 $ (4,231,143) $ 3,877,415
============= ============= =================
SUPPLEMENTAL DISCLOSURES:
Cash payments for taxes, net $ 21,000 $ 137,122 $ 23,426
============= ============= =================
Cash payments for interest $ 5,113,924 $ 4,419,194 $ 3,031,813
============= ============= =================
Liabilities assumed through acquisition of operating unit or
joint venture (Notes 7 and 9) $ 100,000 $ 3,752,000 $ -
============= ============= =================
Purchase of non-compete agreement $ - $ - $ 300,000
============= ============= =================
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these combined statements.
<PAGE>
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Notes to Combined Financial Statements
For the Years Ended December 31, 1998 and 1997
And the Nine Month Period Ended December 31, 1996
(1) Basis of Presentation-
---------------------
In March 1996, in contemplation of an S-Corporation election (Note 3),
Carlisle Enterprises, Inc. (Enterprises) was merged into its wholly-owned
subsidiary, Carlisle Construction Co., Inc. (Construction). Concurrent
with this merger, Carlisle Investments, Inc. (Investments), an
S-Corporation controlled by the majority shareholder of Enterprises, was
formed along with five limited liability companies (LLC's). The LLC's are
owned 99% by Construction and 1% by Investments. The five preexisting
subsidiaries of Enterprises were then merged into their respective newly
formed LLC's. As a result of the formation of Investments and the related
reorganization, Investments and Construction own and control all
companies which prior to March 31, 1996 were wholly-owned subsidiaries of
Enterprises. The reorganization did not result in any changes to the
preexisting carrying values of the enterprise's net assets, liabilities
and equity.
(2) Summary of Significant Accounting Policies-
------------------------------------------
(a) Principles of Combination--The accompanying financial statements
-------------------------
include the combined results of Construction and Investments (the
Company). All significant intercompany transactions and balances
have been eliminated in the accompanying combined financial
statements.
(b) Business Activities--The Company is principally engaged in the
-------------------
rental, sales and service of construction equipment, the
transportation of bulk cargo within inland rivers as well as
contracting for excavation, demolition and certain other
construction work. The Company conducts business primarily with
other companies associated with or involved in the construction,
energy and transportation industries. Terms of sale with these
customers are generally on open account and unsecured.
<PAGE>
-2-
(c) Percentage-of-Completion Method of Accounting for Construction
--------------------------------------------------------------
Contracts--The Company recognizes revenues under long-term
---------
excavation and construction contracts using the
percentage-of-completion method for financial reporting purposes.
The percentage-of-completion is determined by relating costs
incurred on work performed to the total estimated contract costs.
As some contracts extend over one or more years, revisions in
estimates during the course of the work are reflected in the
accounting period in which the facts which require the revision
become known. At the time a loss on a contract becomes known, the
entire amount of the estimated loss is recognized.
Operating expenses are charged to expense as incurred.
(d) Property and Equipment--The Company provides for depreciation of
----------------------
its property and equipment using the straight-line method for
financial reporting purposes.
The estimated lives of the various classes of assets are as
follows:
Years
----------
Land improvements 15 to 30
Buildings and improvements 2 to 40
Construction equipment:
Cranes and hoists 8 to 22
Excavation equipment and other 4 to 5
River equipment 4 to 20
Furniture and fixtures 4 to 8
Expenditures for repairs and maintenance of property and equipment
are charged to expense as incurred.
(e) Equipment Held for Sale--New and used equipment held for sale is
-----------------------
recorded at cost (net of applicable depreciation, if any) which is
less than the market value of the equipment. The components of
equipment held for sale at December 31, 1998 and 1997 are as
follows:
December 31, December 31,
1998 1997
------------ ------------
Cost $ 6,449,288 $ 6,445,707
Accumulated depreciation (1,960,089) (1,632,546)
------------ ------------
$ 4,489,199 $ 4,813,161
============ ============
<PAGE>
-3-
(f) Parts and Work-in-Process Inventory--Parts inventories are stated
-----------------------------------
at first in first out costs which are less than market. The
components of inventory at December 31, 1998 and 1997 are as
follows:
December 31, December 31,
1998 1997
------------ ------------
Stock parts held for sale $3,299,624 $3,073,598
Unbilled customer service work 100,312 100,312
Other work-in-progress 655,207 149,643
------------ ------------
$4,055,143 $3,323,553
============ ============
(g) Goodwill--Amortization of goodwill is determined using the
--------
straight-line method over an estimated life of 15 years.
(h) Advertising--The Company expenses advertising costs as incurred.
-----------
Advertising expense for the years ended December 31, 1998 and 1997
and the nine month period ended December 31, 1996 was
approximately $418,000, $484,000 and $318,000, respectively.
(i) Use of Estimates--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.
(j) Like-Kind Exchange--Commencing in 1996, the Company initiated a
------------------
program to sell/exchange assets through the utilization of a third
party intermediary. Accordingly, gains resulting from these
transactions are recognized for financial reporting purposes only
and approximated $2,854,000, $5,100,000 and $1,100,000 for the
years ended December 31, 1998 and 1997 and the nine month period
ended December 31, 1996, respectively.
(k) Cash--Cash includes operating cash, money market and common bank
----
accounts.
(l) Marketable Securities--Marketable securities consist primarily of
---------------------
domestic equity securities. The Company classifies all marketable
securities as available for sale. Accordingly, these securities
are recorded at market value as determined by published yearend
market quotes and unrealized holding gains and losses are included
as a separate component of stockholders' equity until realized.
Realized gains and losses are included in earnings upon the sale
of a marketable security and are calculated based upon the
proceeds received less the original cost. These net gains were
nominal for each of the years ended December 31, 1998 and 1997 and
the nine month period ended December 31, 1996.
<PAGE>
-4-
(m) Litigation--The Company is subject to various claims, lawsuits,
----------
and administrative proceedings arising in the ordinary course of
business. The Company believes that any liability that may be
finally determined will not have a material effect on its
financial position or results of operations.
(n) New Accounting Pronouncements--In 1998, the Company adopted
-----------------------------
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", which established standards for reporting
and displaying comprehensive income and its components in a
financial statement that is displayed with the same prominence as
other financial statements. The Company has chosen to disclose
comprehensive income, which encompasses net income and unrealized
appreciation on marketable securities, in the combined statements
of stockholders' equity.
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (SFAS 133). This statement established
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments imbedded in
other contracts) be recorded on the balance sheet as either an
asset or liability measured at its fair value. This statement
requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria
are met. SFAS 133 is effective for fiscal years beginning after
June 15, 1999. Upon adoption of this statement, the Company
anticipates no impact on its reported combined financial position,
results of operations, cash flows or related disclosures.
(o) Reclassifications--Certain reclassifications have been made to the
-----------------
prior years' financial statements to conform with the 1998
presentation.
(3) Income Taxes-
------------
Effective April 1, 1996, the Company elected for federal and state income
tax purposes to include its taxable income with that of its stockholders
(an S Corporation election). Accordingly, subsequent to March 31, 1996,
net income reported annually by the Company does not include a provision
for federal and state income tax which would otherwise be included in the
determination of net income.
<PAGE>
The benefit for income taxes includes the following components for the
nine month period ended December 31, 1996:
Taxes associated with S Corporation conversion:
Estimated built in gains tax associated
with the conversion to S Corporation status $ 2,691,633
Elimination of preexisting deferred income
taxes which will pass through to the stockholders (8,464,375)
Other 69,000
------------
$(5,703,742)
============
The deferred income taxes reflected in the accompanying combined balance
sheets represent estimated tax liabilities of the Company for certain
potential asset disposals subsequent to March 31, 1996. Given the built
in gains tax is applicable to certain asset disposals through March 31,
2006, revisions to the estimated tax liability will be reflected in the
accounting period in which the facts which require the revision become
known.
Deferred taxes associated with the Company's operations result from,
among others, different depreciation methods used for financial reporting
and tax purposes as well as differences in the reporting of certain
income and expense items. In the event that the S Corporation election is
terminated, federal and state deferred tax liabilities applicable to
these reporting differences would be reflected in the accompanying
financial statements.
The components of retained earnings at December 31, 1998 and 1997 are
summarized as follows:
1998 1997
----------- -----------
Deferred tax liability $17,675,296 $10,823,443
Unrestricted retained earnings 24,075,384 23,582,292
----------- -----------
$41,750,680 $34,405,735
=========== ===========
As of December 31, 1998 and 1997, the Company has paid and or accrued
distributions of $2,241,329 and $3,859,601, respectively to fund
estimated stockholder tax liabilities associated with the Company's 1998
and 1997 taxable income.
<PAGE>
-6-
(4) Long-Term Debt-
--------------
Long-term debt at December 31, 1998 and 1997 consists of the following:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
Revolving bank line of credit, $13,000,000 maximum, due March 2000 at
prime less 3/4%, secured by certain receivables, parts inventory,
equipment, compensating balances and a stockholder guarantee.
Average borrowings outstanding, average interest rates and maximum
borrowings were approximately $6,700,000, 7.7% and $11,000,000 for
1998, $5,200,000, 7.9% and $9,800,000 for 1997 and $580,000, 7.6%
and $8,300,000 for the nine month period ended December 31, 1996.(A) $ 7,615,449 $ 4,086,778
Term equipment loans with a bank, various fixed rates ranging from
7.25% to 8.08%, and variable rates from prime minus 1/2% to prime plus
1/4%, monthly principal payments based on five to eight year
amortizations through October 2005, secured by certain equipment,
compensating balances and a stockholder guarantee (A) 15,122,131 10,869,448
Note payable to commercial finance companies, interest at prime minus
1/2%, secured by equipment and a stockholder guarantee in the amount
of $2,000,000 payable in monthly installments based on a seven year
amortization through October 2004 (A) 11,492,177 13,490,907
Notes payable to finance companies, various rates ranging from a fixed
rate of 7.5% to 8.15%, secured by equipment, payable in monthly
installments based on five to eight year amortizations through July 2006
(A) 23,620,619 23,291,634
Notes payable to bank, variable interest at LIBOR plus 2.19%, secured
by equipment, payable in monthly installments based on a ten year
amortization through May 2008 (A) 4,857,416 -
Note payable to a bank, variable interest rate, adjustable annually
(7.88% at December 31, 1998), secured by real estate development and
certain equipment, payable in monthly installments of $27,155 with
remaining principal and accrued interest due September 2000 3,369,322 3,423,636
Note payable to former stockholder, fixed rate of 8.0%, due January 2000 - 340,000
</TABLE>
<PAGE>
-7-
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
Note payable to commercial finance company, variable rate (7.55% at
December 31, 1998), secured by aircraft, payable in monthly
installments of $43,242 with remaining principal and accrued
interest due April 2006 3,332,791 3,590,798
Capital lease obligations with equipment manufacturer, imputed interest
rates ranging from 4.5% to 8.3% (aggregate imputed interest of
approximately $864,000 at December 31, 1998), secured by equipment,
(net book value of approximately $6,318,000 at December 31, 1998)
payable in monthly installments based on five to seven year amortizations
through May 2003 6,795,779 4,695,346
Installment notes payable to auto leasing company, various rates,
secured by vehicles, payable in monthly installments based on three
to four year amortizations through November 2001 924,705 715,582
Other 470,453 748,694
----------------- -----------------
77,600,842 65,252,823
Less - current portion (10,477,215) (9,803,001)
----------------- -----------------
$67,123,627 $55,449,822
================= =================
</TABLE>
The carrying value of debt approximates fair market value. Principal
amounts due annually under long-term debt agreements are as follows:
Year
Ending December 31,
-------------------
1999 $10,477,215
2000 21,129,160
2001 10,845,296
2002 9,649,226
2003 9,168,358
Thereafter 16,331,587
-----------
$77,600,842
===========
(A) Provisions of these agreements require the maintenance of certain
financial ratios and other covenants.
(5) Employee Retirement Plans-
-------------------------
The Company has a profit sharing plan which covers substantially all of
its salaried and hourly employees not eligible for union pension
contributions. The Company matches employee contributions made (not to
exceed 3% of an employee's compensation). The Company may also make
contributions to the plan in each year as determined by the Board of
Directors. There were no such contributions in 1998, 1997 or 1996.
Matching contributions to the plan for the
<PAGE>
-8-
years ended December 31, 1998 and 1997 and the nine month period ended
December 31, 1996 were approximately $332,000, $313,000 and $226,000,
respectively. The plan provides for payments to eligible employees upon
retirement, disability or vested termination to be distributed in a lump
sum payment.
Certain of the entities are also contributors to the Teamsters and
Operating Engineers Benefit Funds which provide health and welfare
benefits, as well as payments to union employees upon retirement or
disability. Contributions to the plans are based on the number of hours
worked for operating engineers and on a standard weekly amount for
Teamsters. Such contributions aggregated approximately $1,577,000,
$1,675,000 and $1,116,000 for the years ended December 31, 1998 and 1997
and the nine month period ended December 31, 1996, respectively.
The Company provides a deferred compensation plan for certain of its
employees. Deferred compensation expense approximated $233,000, $208,000
and $278,000 for the years ended December 31, 1998 and 1997 and the nine
month period ended December 31, 1996, respectively.
(6) Transactions with Related Parties-
---------------------------------
The Company is related to certain affiliated entities through common
ownership. Transactions with these affiliates during the periods ended
December 31, 1998, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
For the Nine Month
For the Years Ended Period Ended
December 31, December 31,
------------------------------
1998 1997 1996
------------ ----------- ------------------
<S> <C> <C> <C>
Purchases of affiliated company construction
services $816,000 $ 274,000 $ 161,000
======== =========== ===========
Rental of affiliated companies' marine
equipment and other $219,000 $ 216,000 $ 162,000
======== =========== ===========
Operating expenses (i.e., primarily common
general and administrative expenses)
charged to an affiliate $100,000 $ 107,000 $ 87,000
======== =========== ===========
Purchases by affiliates of excavation services
and equipment rentals $553,000 $ 4,138,000 $ 1,225,000
======== =========== ===========
</TABLE>
<PAGE>
-9-
(7) Investment in Joint Venture-
----------------------------
Commencing in March 1996, the Company was a 50% partner in a joint venture
formed to acquire and maintain a corporate aircraft. Prior to October 31,
1997, the Company accounted for its investment in the joint venture using
the equity method of accounting.
On October 31, 1997, the Company acquired the remaining 50% interest in
the joint venture. The acquisition was accounted for using the purchase
method of accounting. Accordingly, the net assets of the joint venture
have been recorded in the combined financial statements of the Company at
their estimated fair market value at the acquisition date. The following
summarizes the components of the purchase price and the related allocation
to assets acquired:
<TABLE>
<S> <C>
Components of Purchase Price:
Carrying value of original 50% ownership interest $ 193,000
Cash paid at closing 426,000
Liabilities assumed at closing 3,752,000
----------
$4,371,000
==========
Allocation of Purchase Price to Assets Acquired:
Cash $ 118,000
Accounts receivable 16,000
Aircraft 4,224,000
Other assets 13,000
----------
$4,371,000
==========
</TABLE>
The Company's proportionate share of the joint venture's net loss for the
periods prior to acquisition are included in loss from joint venture
activities in the accompanying combined statements of income.
(8) Development Activities-
----------------------
During 1998 and 1997, the Company invested approximately $9,720,000 and
$5,300,000, respectively, in a real estate development project in Northern
Kentucky. In December 1998, the project, as originally designed, was
abandoned.
<PAGE>
-10-
In conjunction with this project, the Company acquired certain land,
rental properties, and other tangible development assets. The costs
associated with these purchases are included at their estimated net
realizable values in the "development properties and other" caption of the
accompanying combined balance sheets as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
-------------------- ---------------
<S> <C> <C>
Cost of properties available for rent, net of accumulated
depreciation of $52,243 and $5,565 at December 31, 1998 and
1997, respectively $5,169,929 $ 657,602
Cost of properties held for sale or development and other tangible
development costs, net of an asset impairment reserve of
approximately $2,946,000 at December 31, 1998 473,222 2,475,307
------------------- ---------------
$5,643,151 $ 3,132,909
=================== ===============
</TABLE>
For the years ended December 31, 1998 and 1997, the Company expensed
approximately $3,930,000 and $5,400,000, respectively, related to this
development project. These expenses, which are included in loss from
development activities in the accompanying combined statements of income,
consist primarily of architectural, planning and design costs, a provision
to establish asset impairment reserves against certain properties and
other tangible development costs. Revisions to the valuation allowances,
if any, will be recorded in the period in which the facts which require
the revision become known.
(9) Acquisition-
-----------
On November 4, 1998, the Company purchased certain assets and assumed
certain liabilities of a crane and equipment leasing operation located in
Indianapolis, Indiana. The acquisition was accounted for using the
purchase method of accounting. Accordingly, the results of operations of
the acquired operation subsequent to the date of purchase are included in
the accompanying financial statements. The following summarizes the
components of the purchase price and the related allocation to assets
acquired:
Cash paid at closing $6,314,000
Liabilities assumed 100,000
----------
$6,414,000
==========
Estimated fair value of assets acquired:
Machinery and equipment $4,212,000
Parts inventory and other assets 113,765
Goodwill 2,088,235
----------
$6,414,000
==========
<PAGE>
-11-
(10) Segment Data-
------------
The Company operates in four business segments consisting of construction
equipment rentals and services, inland marine rentals and services,
excavation contracting and equipment sales, parts and service. The
following summarizes selected information relative to the Company's
business segments (000's omitted):
<TABLE>
<CAPTION>
Equipment
Construction Marine Excavation Sales, Parts
Rentals Rentals Contracting and Service Other /(1)/ Combined
------------ -------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1998
----
Revenues $ 47,536 $4,744 $17,452 $38,756 $(15,248) $ 93,240
Gross profit 16,160 1,908 5,834 5,464 - 29,366
Operating income 6,745 1,269 4,594 1,861 - 14,469
Assets 125,066 4,131 5,474 29,615 (27,962) 136,324
Capital expenditures 17,194 685 - 9,151 - 27,030
Depreciation 7,061 326 5 5,295 - 12,687
1997
----
Revenues $ 51,302 $4,930 $17,369 $38,818 $(15,120) $97,299
Gross profit 18,187 1,530 4,802 5,647 - 30,166
Operating income 8,064 817 3,945 2,010 - 14,836
Assets 110,470 3,692 4,397 26,700 (27,152) 118,107
Capital expenditures 21,115 527 11 8,288 - 29,941
Depreciation 6,017 330 5 4,815 - 11,167
1996 (Nine Months)
------------------
Revenues $ 33,878 $4,413 $11,194 $28,921 $(11,912) $66,494
Gross profit 9,543 1,996 2,740 4,280 - 18,559
Operating income 6,211 1,500 2,135 1,517 - 11,363
Assets 77,876 3,933 3,538 27,439 (16,400) 96,386
Capital expenditures 11,812 34 14 10,439 - 22,299
Depreciation 3,900 254 2 3,139 - 7,295
</TABLE>
(1) Represents the elimination of intercompany transactions and balances.
(11) Subsequent Event-
----------------
Effective as of July 1, 1999 the Company sold substantially all of its
assets to Carlisle Equipment Group, L.P., a wholly-owned subsidiary of
Anthony Crane Rental, L.P. for cash, a partnership interest and
the transfer of certain liabilities.
<PAGE>
EXHIBIT 99.2
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Combined Balance Sheets
As of June 30, 1999
<TABLE>
<CAPTION>
June 30,
1999
-------------
(Unaudited)
<S> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 230,425
Marketable securities 3,653,792
Receivables
Trade, net of allowance for doubtful accounts of
$468,000 and $728,000 at June 30, 1999 and
December 31 1998, respectively 15,327,640
Affiliate -
Costs and estimated earnings in excess of billings
on uncompleted construction contracts 393,569
Equipment held for sale 4,511,318
Parts and work-in-process inventory 3,537,434
Prepaid expenses and other 457,567
---------------
Total current assets 28,111,745
---------------
RENTAL EQUIPMENT:
Cost 133,262,706
Less - Accumulated depreciation (51,481,749)
---------------
81,780,957
---------------
PROPERTY AND EQUIPMENT:
Land and improvements 2,679,012
Buildings and improvements 7,185,720
Machinery and equipment 18,956,099
Furniture and fixtures 864,491
---------------
29,685,322
Less- Accumulated depreciation (14,836,475)
---------------
14,848,847
---------------
OTHER ASSETS:
Cash surrender value-Officers' life insurance, net
(face value of approximately $2,500,000) 2,708,147
Goodwill, net of accumulated amortization of $92,810
and $23,203 at June 30, 1999 and December 31,
1998, respectively 1,995,425
Development properties and other 6,299,654
---------------
11,003,226
---------------
$ 135,744,775
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 10,338,656
Notes payable, equipment held for sale, non-interest
bearing to 2% over prime -
Accounts payable 3,317,608
Billings in excess of costs and estimated earnings
on uncompleted construction contracts 1,252,852
Accrued liabilities:
Interest 541,497
Wages and benefits 1,540,189
Taxes, other than income 1,334,618
Other 617,793
Accrued distributions to stockholders (Note 3) -
--------------
Total current liabilities 18,943,213
--------------
LONG-TERM DEBT, net of current portion 62,436,966
--------------
OTHER LIABILITIES 1,729,458
--------------
DEFERRED INCOME TAXES (Note 3) 2,775,212
--------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (Notes 1 and 3):
Common stock and member units, stated at 1,073,590
Paid-in capital 160,627
Retained earnings 47,652,297
Accumulated other comprehensive income 973,412
--------------
Total stockholders' equity 49,859,926
--------------
$ 135,744,775
==============
</TABLE>
The accompanying notes to combined financial statements are an integral part of
these balance sheets.
<PAGE>
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Combined Statements of Income
For the Six Month Periods Ended June 30, 1999 and 1998
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
REVENUES:
Equipment rentals $29,674,512 $19,937,525
Equipment sales 6,499,172 13,067,519
Parts and service 4,436,778 4,385,599
Construction contracts 8,970,516 4,204,312
----------- -----------
Total revenues 49,580,978 41,594,955
----------- -----------
DIRECT COSTS:
Equipment rentals 12,038,976 7,492,901
Cost of equipment sold 4,571,001 10,108,502
Cost of parts and services 3,776,258 3,939,845
Construction contracts 6,240,039 3,600,391
Depreciation 7,139,993 6,070,023
----------- -----------
Total direct costs 33,766,267 31,211,662
----------- -----------
GROSS PROFIT 15,814,711 10,383,293
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES 5,750,804 5,324,141
LOSS FROM DEVELOPMENT ACTIVITIES 26,654 1,717,762
----------- -----------
Income from operations 10,037,253 3,341,390
OTHER INCOME (EXPENSE):
Interest expense (2,596,456) (2,496,319)
Interest income 62,453 135,190
Other, net 20,371 102,615
----------- -----------
Net income (Note 3) $ 7,523,621 $ 1,082,876
=========== ===========
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
<PAGE>
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Combined Statements of Cash Flows
For the Six Month Periods Ended June 30, 1999 and 1998
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
------------------------------------
1999 1998
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,523,621 $ 1,082,876
Non-cash items included in net income-
Depreciation and amortization 7,379,892 6,082,576
Deferred income taxes - (21,000)
--------------- --------------
Cash flows provided by operations 14,903,513 7,144,452
Net decrease (increase) in certain components of working capital (1,553,679) (1,648,529)
Net increase in other liabilities 142,777 8,210
--------------- ---------------
Net cash provided by operating activities 13,492,611 5,504,133
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (8,808,997) (13,570,914)
Sales/retirements of property and equipment, net 1,631,271 3,269,242
Sales (purchases) of equipment held for sale, net (22,119) (341,941)
Additions to development properties (32,000) (2,563,620)
Increase in other assets, net (272,150) (187,454)
-------------- --------------
Net cash used in investing activities (7,503,995) (13,394,687)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt obligations 2,582,750 13,254,470
Payments of debt obligations (7,407,970) (5,864,437)
Net borrowing/payments of notes payable, equipment held for sale (619,437) 329,930
Capital contribution - 1,000
Distributions to stockholders (1,622,003) (746,180)
-------------- --------------
Net cash provided by financing activities (7,066,660) 6,974,783
-------------- --------------
Net increase (decrease) in cash (1,078,044) (915,771)
CASH, beginning of year 1,308,469 4,855,206
-------------- --------------
CASH, end of year $ 230,425 $ 3,939,435
============== ==============
NET INCREASE (DECREASE) IN CERTAIN COMPONENTS OF
WORKING CAPITAL:
Marketable securities $ 422,257 $ 104,943
Receivables 526,894 195,949
Costs and estimated earnings in excess of billings on uncompleted
construction contracts 24,592 (124,652)
Parts and work-in-process inventory (517,709) 685,764
Prepaid expenses and other (298,474) 147,902
Accounts payable (296,817) (1,698,921)
Billings in excess of costs and estimated earnings on uncompleted
construction contracts 141,947 (810,736)
Accrued liabilities 1,550,989 3,148,280
-------------- --------------
Net increase (decrease) in certain components of working $ 1,553,679 $ 1,648,529
capital ============== ===============
SUPPLEMENTAL DISCLOSURES:
Cash payments for taxes, net $ - $ 10,500
============== ===============
Cash payments for interest $ 2,548,605 $ 2,496,278
============== ===============
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
<PAGE>
Carlisle Construction Co., Inc. and Carlisle Investments, Inc.
Notes to Combined Financial Statements
For the Six Month Periods Ended June 30, 1999 and 1998
(UNAUDITED)
(1) Basis of Presentation-
---------------------
In March 1996, in contemplation of an S-Corporation election (Note 3),
Carlisle Enterprises, Inc. (Enterprises) was merged into its wholly-owned
subsidiary, Carlisle Construction Co., Inc. (Construction). Concurrent with
this merger, Carlisle Investments, Inc. (Investments), an S-Corporation
controlled by the majority shareholder of Enterprises, was formed along
with five limited liability companies (LLC's). The LLC's are owned 99% by
Construction and 1% by Investments. The five preexisting subsidiaries of
Enterprises were then merged into their respective newly formed LLC's. As a
result of the formation of Investments and the related reorganization,
Investments and Construction own and control all companies which prior to
March 31, 1996 were wholly-owned subsidiaries of Enterprises. The
reorganization did not result in any changes to the preexisting carrying
values of the enterprise's net assets, liabilities and equity.
(2) Summary of Significant Accounting Policies-
------------------------------------------
(a) Principles of Combination--The accompanying financial statements
-------------------------
include the combined results of Construction and Investments (the
Company). All significant intercompany transactions and balances have
been eliminated in the accompanying financial statements.
(b) Business Activities--The Company is principally engaged in the rental,
-------------------
sales and service of construction equipment, the transportation of
bulk cargo within inland rivers as well as contracting for excavation,
demolition and certain other construction work. The Company conducts
business primarily with other companies associated with or involved in
the construction, energy and transportation industries. Terms of sale
with these customers are generally on open account and unsecured.
<PAGE>
-2-
(c) Percentage-of-Completion Method of Accounting for Construction
--------------------------------------------------------------
Contracts--The Company recognizes revenues under long-term excavation
---------
and construction contracts using the percentage-of-completion method
for financial reporting purposes. The percentage-of-completion is
determined by relating costs incurred on work performed to the total
estimated contract costs. As some contracts extend over one or more
years, revisions in estimates during the course of the work are
reflected in the accounting period in which the facts which require
the revision become known. At the time a loss on a contract becomes
known, the entire amount of the estimated loss is recognized.
Operating expenses are charged to expense as incurred.
(d) Property and Equipment--The Company provides for depreciation of its
----------------------
property and equipment using the straight-line method for financial
reporting purposes.
The estimated lives of the various classes of assets are as follows:
Years
-----
Land improvements 15 to 30
Buildings and improvements 2 to 40
Construction equipment:
Cranes and hoists 8 to 22
Excavation equipment and other 4 to 5
River equipment 4 to 20
Furniture and fixtures 4 to 8
Expenditures for repairs and maintenance of property and equipment are
charged to expense as incurred.
(e) Equipment Held for Sale--New and used equipment held for sale is
-----------------------
recorded at cost (net of applicable depreciation, if any) which is
less than the market value of the equipment. The components of
equipment held for sale at June 30, 1999 are as follows:
June 30, 1999
-------------
Cost $ 6,769,034
Accumulated depreciation (2,257,716)
------------
$ 4,511,318
============
<PAGE>
-3-
(f) Parts and Work-in-Process Inventory--Parts inventories are stated at
-----------------------------------
first in first out costs which are less than market.
(g) Goodwill--Amortization of goodwill is determined using the
--------
straight-line method over an estimated life of 15 years.
(h) Advertising--The Company expenses advertising costs as incurred.
-----------
(i) Use of Estimates--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.
(j) Like-Kind Exchange--Commencing in 1996, the Company initiated a
------------------
program to sell/exchange assets through the utilization of a third
party intermediary. Gains resulting from these transactions are
recognized for financial reporting purposes only.
(k) Cash--Cash includes operating cash, money market and common bank
----
accounts.
(l) Marketable Securities--Marketable securities consist primarily of
---------------------
domestic equity securities. The Company classifies all marketable
securities as available for sale. Accordingly, these securities are
recorded at market value as determined by published yearend market
quotes and unrealized holding gains and losses are included as a
separate component of stockholders' equity until realized. Realized
gains and losses are included in earnings upon the sale of a
marketable security and are calculated based upon the proceeds
received less the original cost.
(m) Litigation--The Company is subject to various claims, lawsuits, and
----------
administrative proceedings arising in the ordinary course of business.
The Company believes that any liability that may be finally determined
will not have a material effect on its financial position or results
of operations.
(n) New Accounting Pronouncements--In 1998, the Company adopted Statement
-----------------------------
of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income", which established standards for reporting and displaying
comprehensive income and its components in a financial statement that
is displayed with the same prominence as other financial statements.
The Company has chosen to disclose comprehensive income, which
encompasses net income and unrealized appreciation on marketable
securities, in the combined statements of stockholders' equity.
<PAGE>
-4-
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133). This statement established accounting and
reporting standards requiring that every derivative instrument
(including certain derivative instruments imbedded in other contracts)
be recorded on the balance sheet as either an asset or liability
measured at its fair value. This statement requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. SFAS 133 is effective for
fiscal years beginning after June 15, 1999. Upon adoption of this
statement, the Company anticipates no impact on its reported
consolidated financial position, results of operations, cash flows or
related discourses.
(o) Reclassifications--Certain reclassifications have been made to the
-----------------
prior years' financial statements to conform with the 1998
presentation.
(p) Interim Financial Statements--The accompanying interim financial
----------------------------
statements have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, certain
information and footnotes required by generally accepted accounting
principles for complete financial statements have been omitted.
The information contained herein reflect all normal and recurring
adjustments which, in the opinion of management, are necessary for the
six month periods ended June 30, 1999 and 1998.
(3) Income Taxes-
------------
Effective April 1, 1996, the Company elected for federal and state income
tax purposes to include its taxable income with that of its stockholders
(an S Corporation election). Accordingly, subsequent to March 31, 1996, net
income reported annually by the Company does not include a provision for
federal and state income tax which would otherwise be included in the
determination of net income.
The deferred income taxes reflected in the accompanying combined balance
sheets represent estimated tax liabilities of the Company for certain
potential asset disposals subsequent to March 31, 1996. Given the built in
gains tax is applicable to certain asset disposals through March 31, 2006,
revisions to the estimated tax liability will be reflected in the
accounting period in which the facts which require the revision become
known.
Deferred taxes associated with the Company's operations result from, among
others, different depreciation methods used for financial reporting and tax
purposes as well as differences in the reporting of certain income and
expense
<PAGE>
-5-
items. In the event that the S Corporation election is terminated, federal
and state deferred tax liabilities applicable to these reporting
differences would be reflected in the accompanying financial statements.
(4) Development Activities-
----------------------
During 1998 and 1997, the Company invested approximately $9,720,000 and
$5,300,000, respectively, in a real estate development project in Northern
Kentucky. In December 1998, the project, as originally designed, was
abandoned.
In conjunction with this project, the Company acquired certain land, rental
properties, and other tangible development assets. The costs associated
with these purchases are included at their estimated net realizable values
in the "development properties and other" caption of the accompanying
combined balance sheets as follows:
<TABLE>
<CAPTION>
June 30, 1999
--------------
<S> <C>
Cost of properties available for rent, net $ 5,648,210
Cost of properties held for sale or development and
other tangible development costs, net 548,585
------------
$ 6,196,795
============
</TABLE>
For the periods ended June 30, 1999 and 1998, the Company expensed
approximately $27,000 and $1,718,000, respectively, related to this
development project. These expenses, which are included in loss from
development activities in the accompanying combined statements of income,
consist primarily of architectural, planning and design costs, a provision
to establish asset impairment reserves against certain properties and other
tangible development costs. Revisions to the valuation allowances, if any,
will be recorded in the period in which the facts which require the
revision become known.
(5) Acquisition-
-----------
On November 4, 1998, the Company purchased certain assets and assumed
certain liabilities of a crane and equipment leasing operation located in
Indianapolis, Indiana. The acquisition was accounted for using the purchase
method of accounting.
<PAGE>
-6-
(6) Segment Data-
------------
The Company operates in four business segments consisting of construction
equipment rentals and services, inland marine rentals and services,
excavation contracting and equipment sales, parts and service. The
following summarizes selected information relative to the Company's
business segments (000's omitted):
<TABLE>
<CAPTION>
Equipment
Sales, Parts
Construction Marine Excavation and
Rentals Rentals Contracting Service Other/(1)/ Combined
--------- -------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Six Months
----------
Ended June 30,
--------------
1999
----
Revenues $ 30,579 $ 2,257 $ 10,142 $ 17,015 $(10,412) $ 49,581
Gross profit 9,974 912 2,969 1,960 - 15,815
Operating
income 6,927 641 2,240 229 - 10,037
Assets 124,536 4,217 6,276 28,923 (28,207) 135,745
Capital
expenditures 5,750 - - 3,059 - 8,809
Depreciation 4,034 162 3 2,941 - 7,140
Six Months
----------
Ended June 30,
--------------
1998
----
Revenues $ 21,278 $ 1,925 $ 4,319 $ 20,130 $ (6,057) $ 41,595
Gross profit 7,066 734 520 2,063 - 10,383
Operating
income 2,796 364 (61) 242 - 3,341
Assets 109,750 4,303 3,417 30,891 (22,491) 125,870
Capital
expenditures 7,186 608 - 5,777 - 13,571
Depreciation 3,400 171 2 2,497 - 6,070
</TABLE>
(1) Represents the elimination of intercompany transactions and balances.
(7) Subsequent Event-
----------------
Effective as of July 1, 1999 the Company sold substantially all of its
assets to Carlisle Equipment Group, L.P., a wholly-owned subsidiary of
Anthony Crane Rental, L.P. for cash, a partnership interest and
transfer of certain liabilities.
<PAGE>
EXHIBIT 99.3
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information of Anthony Crane
Rental, L.P. (ACR) has been prepared to give effect to the acquisition of
substantially all assets and assumption of substantially all liabilities and
obligations relating to the operations of Carlisle Construction Co., Inc and
its subsidiaries (Carlisle) as more fully discussed below.
The Carlisle Acquisition was accounted for using the purchase method of
accounting pursuant to which the purchase price at closing was allocated to the
tangible and intangible assets and liabilities assumed based on their estimated
fair values. The purchase price allocations are preliminary. Final allocations
will be made based upon valuations and other studies that have not been
completed but are not expected to differ significantly from those presented
herein. See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
The pro forma adjustments presented are based upon available information
and include certain assumptions and adjustments that ACR believes are reasonable
under the circumstances. These adjustments are directly attributable to the
transaction referenced above and are expected to have a continuing impact on
ACR's business, results of operations and financial condition.
The historical condensed consolidated balance sheet of ACR as of June 30,
1999 and the historical condensed consolidated statement of operations of ACR
for the six months ended June 30, 1999 were derived from the unaudited interim
condensed consolidated financial statements of ACR included in its Quarterly
Report on Form-10-Q for the quarterly period ended June 30, 1999. The historical
condensed consolidated statement of operations of ACR for the year ended
December 31, 1998 was derived from the audited consolidated financial statements
of ACR included in its Annual Report on Form 10-K.
The unaudited pro forma condensed consolidated balance sheet of ACR as of
June 30, 1999 gives effect to the Carlisle Acquisition as if it occurred on June
30, 1999. The unaudited pro forma condensed consolidated statements of
operations of ACR for the six month period ended June 30, 1999 and the year
ended December 31, 1998 gives effect to Carlisle Acquisition as if it occurred
on January 1, 1998.
The unaudited pro forma financial information and related notes are
provided for informational purposes only and do not necessarily reflect (i) the
results of operations or financial condition of ACR that would have actually
resulted had the events referred to above or in the notes to the unaudited pro
forma financial information been consummated as of the dates indicated and are
not intended to project ACR's financial condition or results of operations for
any future period.
<PAGE>
The unaudited pro forma financial information should be read in conjunction
with ACR's Annual Report on Form 10-K for the year ended December 31, 1998 and
with ACR's Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1999.
<PAGE>
ANTHONY CRANE RENTAL, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
Carlisle Crane Anthony Crane
Anthony Crane Carlisle Crane Pro Forma Rental, L.P.
Rental, L.P. Historical Adjustments Pro Forma
------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $ 7,436 $ 230 $ - $ 7,666
Marketable securities - 3,654 (3,654) (1) -
Trade accounts receivable, net 37,063 15,328 - 52,391
Costs and estimated earnings in excess
of billings of uncompleted construction contracts - 394 - 394
Equipment held for sale - 4,511 280 (3) 4,791
Parts and work-in-process inventory - 3,537 220 (3) 3,757
Other receivables 3,561 - - 3,561
Prepaid expenses and deposits 1,261 458 (41) (1) 1,678
------------- -------------- ------------ -------------
Total current assets 49,321 28,112 (3,195) 74,238
Property and rental equipment, net 426,641 96,630 (10,553) (1) (4) 512,718
-
Intangible assets, net 5,213 1,995 (1,995) (1) 82,564
77,351 (2)
Debt issuance costs, net 16,075 - 12,500 (5) 28,575
Other assets 640 9,008 (8,929) (1) 719
------------- -------------- ------------ -------------
$ 497,890 $ 135,745 $ 65,179 $ 698,814
============= ============== ============ =============
Liabilities and partners' capital:
Current liabilities:
Cash overdraft $ 2,789 $ - $ - 2,789
Accounts payable, trade 27,994 3,318 - 31,312
Billings in excess of costs and estimated
earnings on uncompleted construction contracts - 1,253 - 1,253
Accrued interest 9,497 541 (533) (1) (6) 9,505
Accrued wages and employee benefits 3,040 1,540 - 4,580
Accrued taxes, other than income taxes 4,560 1,335 - 5,895
Other accrued liabilities 1,179 618 (351) (1) 1,446
Current portion of long term debt 4,858 10,339 (336) (1) 4,858
(10,003) (6)
------------- -------------- ------------ -------------
Total current liabilities 53,917 18,944 (11,223) 61,638
Long term debt, less current portion 437,000 62,437 (6,185) (1) 609,845
(55,380) (6)
171,973 (6)
Long term obligation under capital lease 750 - - 750
Other non-current liabilities 2,285 4,504 (2,876) (1) 2,643
(1,270) (1)
------------- -------------- ------------ -------------
Total liabilities 493,952 85,885 95,039 674,876
------------- -------------- ------------ -------------
Partners' capital
Preferred stock - - 20,000 (6) 20,000
Capital 3,938 49,860 (49,860) (7) 3,938
------------- -------------- ------------ -------------
Total partners' capital 3,938 49,860 (29,860) 23,938
------------- -------------- ------------ -------------
$ 497,890 $ 135,745 $ 65,179 $ 698,814
============= ============== ============ =============
</TABLE>
See accompanying notes.
<PAGE>
ANTHONY CRANE RENTAL, L.P.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(dollars in thousands)
The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect
to the following unaudited pro forma adjustments:
(1) Adjustments have been made to omit excluded assets/liabilities as defined
in the Carlisle purchase and sale agreement as follows:
<TABLE>
<S> <C>
Marketable securities.......................................... $ (3,654)
Receivables relating to Ft. Thomas Plaza ($4) and Other ($37).. (41)
Net book value of the airplane ($3,310), net book value of
land, building and improvements ($7,224) and net book
value of automobiles ($19)................................ (10,553)
Goodwill, net.................................................. (1,995)
CSV officers' life insurance ($2,708), development property
($5,648), property for sale ($549) and other ($24)........ (8,929)
Current portion of debt........................................ 336
Accrued interest............................................... 11
Other accrued liabilities...................................... 351
Reserve for aircraft repairs................................... 101
Long term debt of Ft. Thomas Plaza ($3,271) and Airplane
($2,914).................................................. 6,185
Deferred income taxes.......................................... 2,775
Phantom stock.................................................. 1,270
--------
$(14,143)
========
</TABLE>
(2) Reflects management's preliminary allocation of purchase price for Carlisle
in accordance with the purchase method of accounting as follows:
<TABLE>
<S> <C>
Purchase Price:
Purchase price consideration - cash....................... $165,000
Plus: cash at December 31, 1998........................... 1,308
Plus: marketable securities at December 31, 1998.......... 3,015
Less: estimated net asset value and other purchase price
adjustments, net..................................... (150)
Less: real estate value as agreed to by parties........... (8,000)
Less: marketable securities at June 30, 1999.............. (3,654)
--------
Purchase price - cash..................................... 157,519
Purchase price consideration - preferred stock............ 20,000
Estimated fees and expenses............................... 3,000
--------
Total $180,519
========
Allocated as follows:
Existing book value of Carlisle (See Note 7).............. $ 49,860
Less: excluded assets, net of excluded liabilities (See
Note 1).............................................. (14,143)
Plus: long term debt, including current portion to be
paid off by seller (See Note 6)...................... 66,951
--------
Adjusted book value of Carlisle........................... 102,668
Estimated increase in parts and work-in-process inventory
to fair market value (See Note 3).................... 500
Increase in goodwill...................................... 77,351
--------
Total $180,519
========
</TABLE>
<PAGE>
ANTHONY CRANE RENTAL, L.P.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(dollars in thousands)
(3) Represents the estimated write-up in fair market value of parts and
work-in-process inventory and equipment held for sale in connection with
the purchase price allocation. The fair market value was estimated by
management by applying an 11% gross margin to the book value ($8,048) and
using 5% for selling costs.
(4) The purchaser and seller estimated fair market value of property and
equipment in connection with the purchase price allocation to approximate
book value in light of significant recent purchases thereby resulting in no
write-up to book value.
(5) Represents debt issuance costs incurred ($12,500) in connection with the
new financing obtained for the acquisitions.
(6) Represents the repayment of Carlisle's indebtedness under the existing
credit agreement ($66,079), the assumption of capital leases ($872),
the inccurance of new debt in the amount of $171,973 ($156,473 for purchase
consideration and $15,500 for debt issuance costs ($12,500) and acquisition
related fees ($3,000)), and preferred stock issued in the amount of
$20,000, which together were used to finance the transaction.
(7) Represents the elimination of Carlisle's historical net assets in
connection with purchase accounting.
<PAGE>
ANTHONY CRANE RENTAL, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTHS ENDED JUNE 30, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
Carlisle Crane Anthony Crane
Anthony Crane Carlisle Crane Pro Forma Rental, L.P.
Rental, L.P. Historical Adjustments Pro Forma
------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals $ 99,761 $ 29,674 $ - $ 129,435
Equipment sales 10,513 6,499 - 17,012
Construction contracts - 8,971 - 8,971
Parts and service - 4,437 - 4,437
-------------- -------------- ------------ -------------
Total revenues 110,274 49,581 - 159,855
-------------- -------------- ------------ -------------
Cost of revenues:
Direct operating expenses 50,779 12,039 - 62,818
Cost of equipment sales 8,915 4,571 - 13,486
Construction contracts - 6,240 - 6,240
Costs of part sold and services - 3,776 - 3,776
Depreciation 12,647 7,140 (2,836) (1) 16,951
-------------- -------------- ------------ -------------
Total cost of revenues 72,341 33,766 (2,836) 103,271
-------------- -------------- ------------ -------------
Gross profit 37,933 15,815 2,836 56,584
Selling, general and administrative expenses 17,874 5,778 (50) (2) 23,602
Depreciation and amortization 3,395 - 1,933 (3) 5,328
-------------- -------------- ------------ -------------
Income from operations 16,664 10,037 953 27,654
Interest expense 18,475 2,533 9,029 (4) 30,037
Other (income) expense (189) (20) - (209)
-------------- -------------- ------------ -------------
Income before taxes and extraordinary item (1,622) 7,524 (8,076) (2,174)
Provision (benefit) for taxes 101 - - 101
-------------- -------------- ------------ -------------
Income before extraordinary item (1,723) 7,524 (8,076) (2,275)
-------------- -------------- ------------ -------------
Extraordinary item - - - -
-------------- -------------- ------------ -------------
Net income (loss) $ (1,723) $ 7,524 $ (8,076) $ (2,275)
-------------- -------------- ------------ -------------
</TABLE>
See accompanying notes.
<PAGE>
ANTHONY CRANE RENTAL, L.P.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(dollars in thousands)
The Unaudited Pro Forma Condensed Consolidated Statement of Income gives
effect to the following unaudited pro forma adjustments:
(1) Represents a depreciation adjustment resulting from conforming Carlisle's
depreciation policy with ACR'S, utilizing an assumed weighted average life
of 10 years. The pro forma adjustment is calculated as follows:
<TABLE>
<S> <C>
Historical property and equipment, net...................... $ 96,630
Less excluded assets........................................ (10,553)
--------
Depreciable asset base.................................... 86,077
--------
Six months depreciation (weighted average life of 10 years). 4,304
Less historical depreciation and amortization............... (7,140)
--------
Pro forma depreciation adjustment........................... $ (2,836)
========
</TABLE>
(2) Reflects the estimated cost savings related to selling, general and
administrative activities from either removal of private company expenses
or management's post-acquisition plans as they relate to Carlisle as
described below:
<TABLE>
<S> <C>
Legal and accounting expense directly allocable to shareholder and other non-
recurring, non-rental business projects...................................... $ 248
Expenses relating to officers' life insurance. The insurance policies will
not be acquired as part of the deal.......................................... 46
Cost reductions arising from the elimination of the corporate aircraft ($126)
that will not be acquired, and will be substituted with commercial airline
travel (estimated $50)....................................................... 76
As part of the transaction, certain real estate was retained by the seller.
Annual rent with respect to this property which will be incurred amounts to
$640 annually................................................................ (320)
------
$ 50
======
</TABLE>
(3) Represents the amortization of goodwill of $77,351 for Carlisle using an
estimated twenty year amortization period ($3,867/year).
(4) Addition to aggregate pro forma interest expense is summarized as follows:
<TABLE>
<S> <C>
Elimination of the combined historical interest expense............... $(21,008)
--------
Interest on borrowings under the credit agreement (annual amount
multiplied by 50%):
Revolver (8.24% on $161,000)....................................... 6,633
First priority term loan (8.9% on $250,000)........................ 11,125
Second priority term loan (7.72% on $50,000)....................... 1,930
Senior Subordinated Notes (10.375% on $155,000) (5 months) (a)........ 8,041
--------
Gross cash interest expense........................................... 27,729
Amortization of debt issuance costs - ACR historical.................. 1,266
Incremental amortization of debt issuance costs ($12,500/average 6
year life)......................................................... 1,042
--------
Aggregate interest on acquisition debt requirements................... 30,037
--------
Net increase.......................................................... $ 9,029
========
</TABLE>
<PAGE>
ANTHONY CRANE RENTAL, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(dollars in thousands)
<TABLE>
<CAPTION>
Carlisle Crane Anthony Crane
Anthony Crane Carlisle Crane Pro Forma Rental, L.P.
Rental, L.P. Historical Adjustments Pro Forma
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals $ 183,684 $ 47,341 $ - $ 231,025
Equipment sales 22,975 19,862 - 42,837
Construction contracts - 17,058 - 17,058
Parts and service - 8,979 - 8,979
------------- ------------- ------------ -------------
Total revenues 206,659 93,240 - 299,899
------------- ------------- ------------ -------------
Cost of revenues:
Direct operating expenses 90,203 17,554 - 107,757
Cost of equipment sales 18,920 14,568 - 33,488
Construction contracts - 11,083 - 11,083
Costs of part sold and services - 7,983 - 7,983
Depreciation 20,426 12,687 (4,102)(1) 29,011
------------- ------------- ------------ -------------
Total cost of revenues 129,549 63,875 (4,102) 189,322
------------- ------------- ------------ -------------
Gross profit 77,110 29,365 4,102 110,577
Selling, general and administrative expenses 34,176 14,897 229 (2) 45,229
(4,073)(5)
Depreciation and amortization 6,358 - 3,867 (3) 10,225
------------- ------------- ------------ -------------
Income from operations 36,576 14,468 4,079 55,123
Interest expense 26,161 5,040 17,176 (4) 48,377
Other (income) expense (104) (158) - (262)
------------- ------------- ------------ -------------
Income before taxes and extraordinary item 10,519 9,586 (13,097) 7,008
Provision (benefit) for taxes 220 - - 220
------------- ------------- ------------ -------------
Income before extraordinary item 10,299 9,586 (13,097) 6,788
------------- ------------- ------------ -------------
Extraordinary item 15,811 - - 15,811
------------- ------------- ------------ -------------
Net income (loss) $ (5,512) $ 9,586 $ (13,097) $ (9,023)
============= ============= ============ =============
</TABLE>
See accompanying notes.
<PAGE>
ANTHONY CRANE RENTAL, L.P.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(dollars in thousands)
The Unaudited Pro Forma Condensed Consolidated Statement of Operations
gives effect to the following unaudited pro forma adjustments:
(1) Represents a depreciation adjustment resulting from conforming Carlisle's
depreciation policy with ACR's, utilizing an assumed weighted average life
of 10 years. The pro forma adjustment is calculated as follows:
<TABLE>
<S> <C>
Historical property and equipment, net................... $ 96,717
Less excluded assets..................................... (10,863)
---------
Depreciable asset base................................. 85,854
---------
Annual depreciation (weighted average life of 10 years).. 8,585
Less historical depreciation and amortization............ (12,687)
---------
Pro forma depreciation adjustment........................ $ (4,102)
=========
</TABLE>
(2) Reflects the estimated cost savings related to selling, general and
administrative activities from either removal of private company expenses
or management's post-acquisition plans as they relate to Carlisle as
described below:
<TABLE>
<S> <C>
Legal and accounting expense directly allocable to shareholder and other non-
recurring, non-rental business projects.................................... $ 115
Expenses relating to officers' life insurance. The insurance polices will
not be acquired as part of the deal........................................ 93
Cost reductions arising from the elimination of the corporate aircraft ($303)
that will not be acquired, and will be substituted with commercial airline
travel (estimated $ 100)................................................... 203
As part to the transaction, certain real estate was retained by the seller.
Annual rent with respect to this property which will be incurred amounts to
$ 640 annually............................................................. (640)
-------
$ 229
=======
</TABLE>
(3) Represents the amortization of goodwill of $77,351 for Carlisle using an
estimated twenty year amortization period ($3,867/year).
(4) Addition to aggregate pro forma interest expense is summarized as follows:
<TABLE>
<S> <C>
Elimination of the combined historical interest expense................. $ (31,201)
---------
Interest on borrowing under the credit agreement:
Revolver (8.24% on $161,000).......................................... 13,266
First priority term loan (8.9% on $250,000)........................... 22,250
Second priority term loan (7.72% on $50,000).......................... 3,860
Senior Subordinated Notes (10.375% on $155,000)(5 months) (a)........... 6,700
---------
Gross cash interest expense............................................. 46,076
Amortization of debt issuance costs - ACR historical.................... 1,259
Incremental amortization of debt issuance costs ($12,500/average 6 year
life)................................................................. 1,042
---------
Aggregate interest on acquisition debt requirements..................... 48,377
---------
Net increase............................................................ $ 17,176
=========
</TABLE>
(a) Represents interest for the five months ended December 31, 1998
because the Notes were incurred on July 31, 1998 in connection
with the Recapitalization.
<PAGE>
ANTHONY CRANE RENTAL, L.P.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(dollars in thousands)
(5) Elimination of expenses related to Carlisle properties held for development
but not acquired as part of the transaction.