SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-KA
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 13, 1994
CLARK EQUIPMENT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-5646 38-0425350
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification Number)
100 North Michigan Street
P. O. Box 7008
South Bend, Indiana
(Address of principal 46634
executive offices) (Zip Code)
Registrant's telephone number (219) 239-0100
including area code
Total Number of Pages: 24
Exhibit Index at Page: 23
-1-<PAGE>
<PAGE>
On May 13, 1994, Registrant acquired all of the outstanding capital stock
of Blaw-Knox Construction Equipment Corporation ("Blaw-Knox"). On May 27,
1994, Registrant filed a Current Report on Form 8-K which described this
acquisition. At the time of filing this Form 8-K, it was impracticable to
file the financial statements and pro forma financial information required
by Item 7. Registrant is now filing this Form 8-KA in order to file these
financial statements and pro forma financial information.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements and pro forma financial information are
hereby filed as a part of this report:
(1) Attached on pages 3 to 18 are combined audited financial statements
of Blaw-Knox for the year ended December 31, 1993 and unaudited
combined financial statements for the first quarters ended March 31,
1994 and 1993.
(2) Attached on page 19 is a pro forma balance sheet which combines the
balance sheet of Blaw-Knox with the consolidated balance sheet of
Registrant at March 31, 1994. In this presentation, the consolidated
balance sheet of Registrant reflects the sale by the Registrant of
9,174,194 shares of stock of Clark Automotive Products Corporation
which was completed on May 13, 1994. Pro forma financial information
reflecting the impacts of this sale was included in a Form 8-K filed
by Registrant on May 27, 1994.
(3) A description of pro forma adjustments is included on page 20.
Certain additional adjustments may be made in the final purchase
price allocation of Blaw-Knox, however, these are not expected to be
material in relation to the pro forma information presented herein.
Additionally, goodwill will be different than the amount reflected since
net assets as of the acquisition date are different than at
March 31, 1994.
(4) Pro forma income statements combining the results of Registrant and
Blaw-Knox for the year ended December 31, 1993 and the quarter ended
March 31, 1994, along with a description of pro forma adjustments,
are included on pages 21 and 22, respectively. The income statements
of Registrant included in this pro forma presentation reflect the
operations of Clark Automotive Products Corporation as a discontinued
operation. Since the business of Blaw-Knox is seasonal, the results
for the quarter ended March 31, 1994 are not necessarily indicative
of the results for the full year 1994.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CLARK EQUIPMENT COMPANY
/s/ John J. Moran, Jr.
John J. Moran, Jr.
Assistant Secretary
Date: July 27, 1994
-2-
<PAGE>
<PAGE>
Blaw-Knox Construction
Equipment Group
(A business unit of White Consolidated Industries, Inc.)
Combined Financial Statements
December 31, 1993
- 3 -
<PAGE>
<PAGE>
Report of Independent Accountants
Stockholders and Board of Directors
Clark Equipment Company
South Bend, Indiana
In our opinion, the accompanying combined balance sheet and the related
combined statements of operations and of cash flows present fairly, in
all material respects, the financial position of the Blaw-Knox
Construction Equipment Group (see Note 1) as of December 31, 1993, and
the results of its operations and its cash flows for the year then ended
in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for the opinion expressed
above.
As discussed in the Notes to the Combined Financial Statements, effective
January 1, 1993, the Company changed its method of accounting for
postretirement health care and life insurance benefits by adopting FAS No.
106, "Employers' Accounting for Postretirement Benefits Other than
Pensions."
/s/ Price Waterhouse
Price Waterhouse
South Bend, Indiana
July 12, 1994
- 4 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
COMBINED BALANCE SHEET
Amounts in thousands
December 31, March 31,
1993 1994
(unaudited)
ASSETS:
Current assets:
Cash $ 242 $ 33
Accounts receivable, less allowances of
$309 and $248, respectively 20,876 29,556
Inventories (Note 2) 21,706 22,933
Deferred tax assets (Notes 2 and 5) 1,208 1,176
Other current assets 496 708
Total current assets 44,528 54,406
Deferred tax assets (Notes 2 and 5) 1,701 2,007
Property, plant and equipment, net (Note 2) 11,315 11,082
Other non-current assets 437 1,061
Goodwill (Note 2) 106,779 105,951
Total assets $ 164,760 $ 174,507
LIABILITIES AND PARENT COMPANY INVESTMENT:
Current liabilities:
Notes payable (Note 6) $ 9,674 $ 10,110
Accounts payable and accrued liabilities
(Notes 2 and 3) 8,799 9,730
Accrued pension obligation (Note 7) 312 390
Accrued postretirement benefits (Notes 2 and 8) 90 90
Total current liabilities 18,875 20,320
Accrued pension obligation (Note 7) 2,323 3,454
Accrued postretirement benefits (Notes 2 and 8) 4,038 4,126
Commitments and contingencies (Note 12)
Total liabilities 25,236 27,900
Cumulative translation adjustment 2,126 (83)
Parent company investment (Note 11) 137,398 146,690
Total liabilities and parent
company investment $ 164,760 $ 174,507
See Notes to Combined Financial Statements
- 5 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
COMBINED STATEMENT OF OPERATIONS
Amounts in thousands
Year ended Three months ended
December 31, March 31,
1993 1993 1994
(unaudited)
NET SALES $ 87,994 $ 23,003 $ 26,273
OPERATING COSTS AND EXPENSES:
Cost of goods sold 61,220 16,545 17,136
Selling, general and
administrative expenses 11,879 3,224 3,156
Goodwill amortization 3,311 828 828
Operating income 11,584 2,406 5,153
Other expense (income), net 108 (15) 18
Interest expense 727 226 157
Pre-tax income from operations 10,749 2,195 4,978
Provision for income taxes 5,445 1,171 2,249
Income from operations before effect
of changes in accounting principle 5,304 1,024 2,729
Effect of accounting changes:
Postretirement benefits (2,792) (2,792)
Net income (loss) $ 2,512 $ (1,768) $ 2,729
See Notes to Combined Financial Statements
- 6 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
COMBINED STATEMENT OF CASH FLOWS
Amounts in thousands
Year ended Three months ended
December 31, March 31,
1993 1993 1994
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,512 $(1,768) $ 2,729
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating
activities:
Effect of accounting change 2,792 2,792
Depreciation 2,098 488 512
Goodwill amortization 3,311 828 828
(Increase) in receivables and
other current assets (5,786) (8,757) (8,885)
Decrease (increase) in inventory (138) 1,173 (1,217)
Increase in payables and accruals 1,784 1,678 1,009
(Increase) in deferred
income tax assets (924) (399) (274)
Decrease (increase) in other
non-current assets 32 (624)
Increase in other long-term
liabilities 518 134 1,218
Net cash provided (used) in
operating activities 6,199 (3,831) (4,704)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties (1,465) (140) (374)
Sales of properties 571 194 103
Net cash (used) provided by
investing activities (894) 54 (271)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in notes payable (826) (1,134) 417
(Increase) decrease in advances to
parent company (4,278) 4,905 4,358
Net cash (used) provided by
financing activities (5,104) 3,771 4,775
Effect of Exchange Rate Changes on Cash: 12 12 (9)
Increase (decrease) in cash 213 6 (209)
Cash at beginning of year 29 29 242
Cash at end of year $ 242 $ 35 $ 33
See Notes to Combined Financial Statements
- 7 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
1. Description of Reporting Entity:
Blaw-Knox Construction Equipment Group, hereinafter referred to as
the Company or Blaw-Knox, includes the operations of Blaw-Knox
Construction Equipment Corporation, Inc., a direct wholly-owned
subsidiary of White Consolidated Industries, Inc. (WCI) located in
Mattoon, Illinois and Blaw-Knox Construction Equipment Limited, an
indirect wholly-owned United States (U.S.) branch operation of
WCI, located in Rochester, United Kingdom. WCI is a wholly-owned
subsidiary of Electrolux A.B. of Sweden (Electrolux) as a result
of the stock acquisition of WCI by Electrolux in March 1986.
The Company is engaged in the design, manufacture, and sale of
asphalt paving equipment.
On May 13, 1994, Clark Equipment Company completed the acquisition
of the common stock of Blaw-Knox Construction Equipment
Corporation, Inc. and certain assets and liabilities of Blaw-Knox
Construction Equipment Limited. The combined purchase price was
approximately $144 million, subject to an adjustment based upon
the ending net equity of the acquired operations as of the closing
date.
2. Summary of Significant Accounting Policies:
Basis of Combination - The financial statements have been prepared
in accordance with generally accepted accounting principles in the
U.S.. All intercompany balances and transactions have been
eliminated. All allocable costs of the business have been
reflected in the combined financial statements of the Company.
Quarterly Financial Data - The accompanying combined financial
data as of March 31, 1994 and for the three months ended March 31,
1993 and March 31, 1994, are unaudited; however, in the opinion of
the Company, this data reflects all adjustments, consisting only
of normal recurring adjustments, necessary for a fair statement of
the financial position, results of operations and cash flows for
the respective periods. Due to the seasonal nature of the
Company's business, the results of operations for the three months
ended March 31, 1993 and 1994 are not necessarily indicative of
the results to be expected for a full year period.
Accounting principles followed in preparing the financial
statements are as follows:
Currency Translation - The financial statements of operations
outside of the United States are translated into U.S. dollar
equivalents in accordance with Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation" (FAS No. 52).
Foreign currency impacts included in "other expense (income), net"
within the Statement of Operations are negligible.
Revenue Recognition - The Company's policy is to recognize revenue
at the time of shipment.
- 8 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
Cash and Cash Flows - The Company's cash balances are maintained at
minimal levels in connection with WCI's consolidated treasury
management. Cash flows from operating activities were reduced by cash
paid for interest of $644,000 in 1993. Blaw-Knox's operations are
included in the consolidated U.S. tax return of WCI and taxes payable
are recorded as a component of the Parent company investment account.
Furthermore, as a result of recent operating losses in the U.K., no
income taxes have been paid relative to the U.K. operations.
Fair Value of Financial Instruments - The Company estimates the fair
value of all financial instruments where the face value differs from
the fair value based upon quoted amounts or the use of current rates
available for similar financial instruments. As of December 31, 1993,
the fair value of all financial instruments approximated the book
values reflected within the financial statements.
Inventories - Domestic inventories are valued at the lower of cost or
market using the last-in, first-out (LIFO) method. Inventories owned
by the U.K. branch are valued on the first-in, first-out (FIFO)
method. Inventory valued on LIFO approximated 76% and 75% of total
inventories at December 31, 1993 and March 31, 1994, respectively.
Inventory balances consist of the following:
Amounts in thousands
December 31, March 31,
1993 1994
(unaudited)
Raw materials $ 4,318 $ 4,180
Work in process and finished goods 22,444 23,744
Valuation allowances (1,265) (1,200)
Inventories at current 25,497 26,724
Excess of current cost over LIFO cost (3,791) (3,791)
Total inventories $ 21,706 $ 22,933
Properties - Properties are carried at cost. Expenditures for
maintenance and repairs are charged to expense as incurred.
Expenditures for major renewals and betterments are capitalized.
Properties are generally depreciated using the straight-line method
of depreciation. Depreciable lives for major property captions
range as follows:
Land improvements 10-40 years
Machinery and equipment 3-20 years
Buildings and improvements 10-40 years
In conjunction with the March 1986 acquisition of WCI by
Electrolux, the Company's properties at that date were adjusted to
their fair values in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations" (APB No.16). The
resulting increase in properties, as determined by WCI management,
has been pushed down to the Company and is reflected in these
financial statements.
- 9 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
Properties at December 31, 1993 consist of the following:
Amounts in thousands
December 31,
1993
Land $ 1,421
Land improvements 3,286
Buildings 6,051
Machinery and equipment 21,048
Total 31,806
Accumulated depreciation (20,491)
Property, plant and equipment, net $ 11,315
Goodwill - The goodwill reflected by the Company for all
periods presented represents a push-down of a portion of the
total goodwill related to the stock acquisition of WCI and
its subsidiaries by Electrolux in March 1986. The goodwill
pushed down to the Company, all of which was assigned to the
U.S. operations, had an original value of $132.4 million.
This allocation was determined by WCI management based upon
the estimated fair value of the Company at the time of the
acquisition, reduced by the net fair value of the other
identifiable acquired assets and liabilities of the Company.
Goodwill is being amortized on a straight-line basis over a
period of 40 years. Goodwill at December 31, 1993, is net of
accumulated amortization of $25.6 million.
Costs and Expenses - Provisions are made currently for the
estimated future costs that will be incurred under product
warranties presently in force.
For years prior to 1993, the cost of health care and life
insurance postretirement benefit costs were charged against
income in the year benefits were provided. Effective
January 1, 1993, the Company adopted the provisions of FAS
No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions." This Statement was adopted on an
immediate recognition basis giving full effect to the net of
tax Accumulated Postretirement Benefit Obligation (APBO) of
$2.8 million at the time of adoption. The impact of this
adoption has been reflected in the 1993 financial statements
as a cumulative effect of a change in accounting principle.
Upon adoption of this Statement, the costs of providing such
benefits are accrued as earned. Annual expense represents a
combination of the service and interest cost provisions of
the annual accrual, the amortization of actuarial gains and
losses and prior service cost, along with the actual benefits
provided for active employees. The Company is self-insured
with respect to health care and life insurance benefits,
subject to a formula driven aggregate stop loss limitation
which approximated $4 million in 1993.
Income Taxes - The operations of the Company are included in
the consolidated U.S. tax return of WCI. U.S. income taxes
are determined on a separate entity basis and taxes payable
are recorded as a component of the Parent company investment
account. The U.K. operations are also taxed in the U.K.,
however, from a U.S. tax perspective credits are allowed for
any income taxes paid in the U.K..
- 10 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
The Company accounts for income taxes under FAS No. 109,
"Accounting for Income Taxes", which requires use of the
liability method to account for deferred income taxes. Under
FAS No. 109, deferred taxes are provided on the temporary
differences between the financial reporting and income tax
bases of the Company's assets and liabilities using enacted
tax rates expected to be in effect when the temporary
differences reverse.
New Pronouncements - In November 1992, the Financial
Accounting Standards Board issued FAS No. 112, "Employers'
Accounting for Postemployment Benefits". This pronouncement
established accounting and reporting for the estimated cost
of benefits provided by an employer to former or inactive
employees after employment but before retirement. Generally,
the Company has accounted for such benefits on an accrual
basis. The Company was required to adopt the provisions of
FAS No. 112 in the first quarter of 1994. The impact of
adoption did not materially effect the Company's financial
position or results of operations.
3. Accrued Liabilities:
Accounts payable and accrued liabilities at December 31,
1993, include the following:
Amounts in thousands
December 31,
1993
Trade payables $ 4,444
Accrued compensation 1,583
Product warranty accruals 1,002
Self-insurance accruals 912
Other 858
Total $ 8,799
4. Supplementary Information:
Following is a summary of supplementary information:
Amounts in thousands
December 31,
1993
Maintenance and repairs $ 2,135
Rents 211
Research and development costs 906
Advertising 1,207
- 11 -<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
5. Income Taxes:
Following is a segregation of U.S. and foreign pre-tax income
(loss):
Amounts in thousands
December 31,
1993
United States $ 13,724
Foreign (2,975)
Total $ 10,749
Following is a summary of the elements of the provision for income
taxes for the year ended December 31, 1993:
Amounts in thousands
December 31,
1993
Current income taxes:
U.S. Federal $ 5,329
State 1,180
Total current 6,509
Prepaid income taxes:
U.S. Federal (871)
State (193)
(1,064)
Total tax provision $ 5,445
In regards to the Company's foreign operations, such
operations are operated as a U.S.. branch and are fully
taxable in the U.S. As such, the losses generated by the
Company's foreign operations in recent years are available
and have been used to offset earnings in the U.S.. In periods
of future profitability, foreign taxes will also be assessed
in the U.K., subject to available operating loss
carryforwards, with offsetting credits available in the U.S.
to the degree foreign taxes are paid.
- 12 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
A summary of the temporary differences comprising deferred
income tax assets as of December 31, 1993 is as follows:
Amounts in thousands
December 31,
1993
Deferred tax liabilities:
Fixed assets $ 891
Inventories 274
Other 299
Gross deferred tax liabilities 1,464
Deferred tax assets:
Postretirement benefits (1,692)
Pensions (901)
Other employee benefit accruals (329)
Self-insurance accruals (373)
Product warranty accruals (411)
Other accruals (667)
Gross deferred tax assets (4,373)
Net deferred tax assets $ (2,909)
A reconciliation of the net effective tax rate to the U.S.
statutory federal income tax rate for the year ended December
31, 1993 is as follows:
1993
U.S. Federal statutory tax rate 34.0%
Increase in rate resulting from:
Non-deductible goodwill amortization 10.5
State taxes 6.1
Other-net 0.1
Net effective tax rate 50.7%
6. Debt Obligations:
As a normal part of its business, the U.K. operation routinely
enters into note and other financing arrangements with U.K. banks
to satisfy working capital and operating needs. The outstanding
borrowings reflected at December 31, 1993 relate to a bank
overdraft facility with Barclays Bank plc (Barclays) under which
the U.K. may borrow up to ten million Pounds (approximately $14.8
million at the December 31, 1993 exchange rate). The borrowings
are fully guaranteed by Electrolux and are subject to interest at a
rate of 2% over Barclays borrowing rate ("base rate"). This
favorable rate is influenced by the guarantee of Electrolux.
- 13 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
7. Pension Benefits:
In the U.S., the Company has a non-contributory defined benefit
pension plan covering all employees who are covered under the Basic
Union Agreement between the Company and the United Auto Workers of
America Union, Local 916 (Hourly Plan). The Hourly Plan provides
monthly benefits to retirees based upon a flat rate and years of
service provisions. Normal retirement is age 65, with early
retirement options available beginning at age 60 with ten years of
credited service.
The components of U.S. pension expense for the Hourly Plan, in
accordance with the provisions of FAS No. 87, are as follows for
the year ended December 31, 1993:
Amounts in thousands
December 31,
1993
Service cost $ 151
Interest cost 531
Actual return on plan assets (665)
Net amortization and deferrals 289
Net periodic pension expense $ 306
The following table reconciles the funded status of the
Company's Hourly Plan to the liabilities recognized for such
plan, along with the Company's U.K. pension plan, as
reflected on the balance sheet as of December 31, 1993:
Amounts in thousands
December 31,
1993
Accumulated vested benefit obligation,
including non-vested benefit
obligations of $411,000 $ 7,222
Projected benefit obligation 7,222
Plan assets at fair value (5,482)
Unrecognized prior service cost (437)
Unrecognized net loss from past experience
different from that assumed (1,076)
Adjustment to recognize
minimum liability 1,513
Accrued pension liability - U.S. 1,740
Accrued pension liability - U.K. 895
Total $ 2,635
The discount rate used to determine the projected benefit
obligation of the Hourly Plan as of December 31, 1993 was
7.6%. The average expected rate of return on plan assets for
the plan was 9.5%.
- 14 -
<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
The Company's non-bargaining U.S. employees participate in a
WCI sponsored non-contributory defined benefit pension plan
(Salaried Plan). The Salaried Plan provides retirees with
monthly benefits determined based upon years of credited
service and final average compensation. Normal retirement is
age 65, with various early retirement options available. For
purposes of these financial statements, the Salaried Plan is
being accounted for as a multi-employer plan consistent with
the guidance in FAS No. 87. Annual pension expense incurred
by the Company relative to this plan for the year ended
December 31, 1993 was $244,000. The non-bargaining U.S.
employees also participate in a WCI sponsored defined
contribution 401(k) plan. Expense related to this plan was
$127,000 for the year ended December 31, 1993.
The Company's U.K. employees are covered by a contributory
defined benefit pension plan. Annual pension expense related
to the plan approximated $211,000 for the year ended December
31, 1993. This plan is not required to report to
governmental agencies pursuant to ERISA, and does not
otherwise determine the actuarial value of accumulated
benefits or net assets available for benefits.
8. Postretirement Health Care and Life Insurance Benefits
The Company provides certain health care and life insurance
benefits for retired hourly employees covered under the Basic
Union Agreement between the Company and the United Auto
Workers of America Union, Local 916 (Hourly Plan). The
coverage is provided on a non-contributory basis for retirees
age 65 and older, with Company contributions subject to an
annual cap for employees retiring prior to 1993. The annual
cap is not applicable to employees who retired in 1993.
Prior to January 1, 1993, the postretirement benefit costs of
this plan were charged to expense in the year benefits were
provided. Effective January 1, 1993, the Company changed its
method of accounting for such benefits and adopted the
provisions of FAS No. 106. In adopting this Statement, the
Company recorded the entire amount of the APBO of $3.7
million as a cumulative effect of a change in accounting
principle. The APBO represents the present value of
estimated future benefits payable to current and future
retirees of the Company under the plan. A deferred tax asset
was recognized with respect to the APBO in the amount of $1.5
million at the time of adoption reducing the cumulative
effect of the accounting change for the Hourly Plan to $2.2
million.
The Company does not fund its postretirement benefit plan.
The following table presents a reconciliation of the APBO to
the liability for such costs recognized in the Company's
balance sheet as of December 31, 1993, for the Hourly Plan:
Amounts in thousands
December 31,
1993
Accumulated postretirement benefit obligation:
Retirees $ 2,508
Fully eligible participants 710
Other active participants 1,039
Total APBO 4,257
Unrecognized net loss (129)
Accrued postretirement benefit cost $ 4,128
- 15 -<PAGE>
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
In measuring the projected APBO as of December 31, 1993,
medical inflation trend rates were assumed to be initially
9.5%, trending downward to 5.5% by 2002. The weighted
average discount rate used in the valuation was 7.6%. If the
health care cost trend were to be increased by 1%, the APBO
would increase by approximately $410,000 and the annual
postretirement benefit expense would increase by
approximately $68,000.
Net periodic postretirement benefit expense for the year
ended December 31, 1993, was comprised of the following
components:
Amounts in thousands
December 31,
1993
Service cost $ 166
Interest cost on APBO 309
Net periodic postretirement benefit expense $ 475
The Company's non-bargaining U.S. employees participate in a
WCI sponsored postretirement benefit plan (Salaried Plan).
Coverage for salaried retirees is provided on a contributory
basis with the Company picking up all amounts in excess of
the contributions for retirees prior to April 1987. For
retirees after April 1987, Company contributions are limited
to a percentage of the total cost of the plan and/or annual
caps, with retirees being fully responsible for any
additional costs of coverage. The accounting for this WCI
sponsored plan is similar to that of the Hourly Plan above in
that prior to 1993 the costs associated with the Salaried
Plan were accounted for in the year in which benefits were
provided. The provisions of FAS No. 106 were adopted
effective January 1, 1993.
For purposes of these financial statements, the Salaried Plan
is being accounted for as a multi-employer plan consistent
with the guidance in FAS No. 106. In adopting this Statement
effective January 1, 1993, the Company recorded the entire
amount of the APBO of $914,000, net of a deferred tax benefit
of $366,000, as a cumulative effect of a change in accounting
principle. Annual postretirement benefit expense incurred by
the Company relative to this plan for the year ended December
31, 1993 was $185,000.
9. Business Segment Information:
The Company operates in one industry segment. It's business
is the design, manufacture and sale of asphalt paving
equipment.
- 16 -
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
From a geographic perspective, all products are sourced from
either the U.S. or U.K.. A breakdown of the Company's sales,
operating income and identifiable assets by geographic
segment is as follows:
Amounts in thousands
December 31,
1993
Sales:
U.S. $ 74,372
U.K. 15,089
Eliminations (1,467)
Total net sales $ 87,994
Operating income (loss):
U.S. $ 13,752
U.K. (2,168)
Total operating income $ 11,584
Identifiable assets:
U.S. $152,629
U.K. 12,323
Eliminations (192)
Total identifiable assets $164,760
There was no single dealer or customer from which at least
10% of total revenue was derived during 1993. Export sales
of U.S. manufactured products and parts sold to customers and
dealers located outside the U.S. were $7.9 million in 1993.
Sales to the U.S. government were insignificant in 1993.
10. Concentration of Credit Risk:
Substantially all of the Company's sales and receivables are
to Company authorized dealers throughout the world. To help
the Company ensure it collects on its accounts receivable,
the Company perfects a security interest in and generally
finances all machinery sold to its dealers. Dealers are
required to remit payment within 30 days of selling the
equipment to the retail customer, regardless of whether the
invoice is due under the original terms of sale.
Additionally, for sales of equipment to dealers and
customers outside the U.S. and U.K., letters of credit are
generally obtained.
11. Parent Company Investment:
Parent company investment, as presented on the balance
sheet, represents the net of WCI's contributed capital, the
retained earnings of the Company and net advances made
between the Company and WCI. A reconciliation of such
investment as of December 31, 1993, is as follows:
- 17 -
<PAGE>
BLAW-KNOX CONSTRUCTION EQUIPMENT GROUP
(a business unit of White Consolidated Industries, Inc.)
NOTES TO COMBINED FINANCIAL STATEMENTS
Amounts in thousands
December 31, March 31,
1993 1994
(unaudited)
Parent company investment -
beginning of year $ 138,981 $ 137,398
Net income 2,512 2,729
Change in outstanding advances
to Parent company (4,278) 4,358
Effect of exchange rates (365) 2,205
Adoption of FAS No. 106 Salaried Plan 548
Parent company investment - end of year $ 137,398 $ 146,690
No interest is included in these financial statements
relative to the advances to and from WCI as reflected in
Parent company investment.
12. Contingencies:
The Company is self-insured with respect to workers'
compensation claims, subject to a per occurrence stop loss
limit of $500,000 for all policy years except 1988 in which
the limitation was $1 million per occurrence. As of
December 31, 1993, there were 83 outstanding workers'
compensation claims with recorded accruals of $289,000. It
is the Company's policy to estimate and accrue losses for
known and incurred but not reported workers' compensation
claims.
The Company has been named as a defendant in various product
liability claims. At December 31, 1993, there was one such
claim outstanding for which the Company had recorded an
accrual of $185,000. This accrual relates only to accidents
occurring prior to April 1, 1987. The Company was self-
insured during this period, subject to per occurrence and
aggregate stop loss limitations. For periods subsequent to
April 1, 1987, the Company is fully insured through a
captive insurance subsidiary of WCI under which the Company
incurred insurance premiums of $344,000 in 1993.
The Company is also subject to various legal proceedings in
the normal conduct of its business. In the opinion of
management, adequate provision for such matters has been
made through either insurance coverage or accruals, or the
ultimate costs will not materially affect the combined
financial position and results of operations of the Company.
- 18 -
<PAGE>
<PAGE>
<TABLE>
CLARK EQUIPMENT COMPANY
PRO-FORMA BALANCE SHEET
MARCH 31, 1994
(In Millions)
<CAPTION>
Blaw-Knox
Clark as Assets Acquired
Reported and Liabilities Pro-forma Adjustments
Current Assets: (A) Assumed Debit Credit Adjusted
<S> <C> <C> <C> <C> <C>
Cash and equivalents $342.7 $ - $ - $144.3 (1) $198.4
Accounts and notes receivable 86.4 29.6 - - 116.0
Inventories 80.2 22.9 3.8 (5) - 106.9
Investment in discontinued operations 6.5 - - - 6.5
Deferred tax assets - net 27.9 1.2 0.4 (8) 0.6 (2) 28.9
Other current assets 4.7 0.7 - 0.1 (2) 5.3
Total Current Assets 548.4 54.4 4.2 145.0 462.0
Investment and advances - associated
companies 135.2 - 144.3 (1) 144.3 (4) 135.2
Deferred tax assets - net 101.0 2.0 1.2 (8) - 104.2
Property, plant and equipment - net 161.9 11.1 2.5 (6) 0.1 (2) 175.4
Assets held for sale 8.7 - - - 8.7
Goodwill 68.8 105.9 92.9 (4) 105.9 (3) 160.8
- - 4.8 (7) 3.8 (5)
- - 0.6 (8) 2.5 (6)
Other assets 41.8 1.1 - - 42.9
Total Assets $1,065.8 $174.5 $250.5 $401.6 $1,089.2
Current Liabilities:
Notes payable $27.7 $10.1 $10.1 (2) $ - 27.7
Accounts payable and accruals 134.7 10.2 1.4 (2) 1.8 (7) 145.3
Other current liabilities 31.8 - - 1.5 (8) 33.3
Current portion of long-term debt 9.8 - - - 9.8
Total Current Liabilities 204.0 20.3 11.5 3.3 216.1
Long-term borrowings 204.6 - - - 204.6
Other non-current liabilities 92.9 3.5 - 3.0 (7) 100.1
0.7 (8)
Accrued postretirement benefits 234.7 4.1 - - 238.8
Total Liabilities 736.2 27.9 11.5 7.0 759.6
Stockholder's Equity:
Capital stock 323.7 146.6 105.9 (3) 10.7 (2) 323.7
51.4 (4)
Retained earnings 151.2 151.2
Cumulative translation account (64.5) (64.5)
Treasury stock (49.5) (49.5)
LESOP shares (31.3) (31.3)
Total Stockholder's Equity 329.6 146.6 157.3 10.7 329.6
Total Liabilities and Equity $1,065.8 $174.5 $168.8 $17.7 $1,089.2
<FN>
(A) Clark's balance sheet "as reported" reflects the pro-forma adjustments resulting from
the sale of Clark Automotive Products Corporation which was completed on May 13, 1994.
This pro-forma balance sheet is included in a Form 8-K filed on May 13, 1994.
</TABLE>
- 19 -
<PAGE>
<PAGE>
Explanation of pro-forma adjustments
(1) Adjustment reflects estimated purchase price of Blaw-Knox.
(2) Adjustment to eliminate assets not acquired and liabilities not assumed.
(3) Adjustment eliminates the historic basis Blaw-Knox goodwill.
(4) Adjustment eliminates Clark's investment in Blaw-Knox.
(5) Adjustment to write-up inventory to current value.
(6) Adjustment to reflect revaluation of fixed assets.
(7) Adjustment to reflect reserves for acquisition costs and expected
restructuring of manufacturing operations.
(8) Adjustment to reflect tax impacts of the above adjustments.
-20-<PAGE>
<PAGE>
<TABLE>
CLARK EQUIPMENT COMPANY
PRO-FORMA INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1993
(In millions, except earnings per share)
<CAPTION>
Clark Pro-forma
as Reported Blaw-Knox Pro-forma Adjustments Income
(A) Historic Debit Credit Statement
<S> <C> <C> <C> <C> <C>
Net sales $692.0 $88.0 $ - $ - $780.0
Operating Costs and Expenses:
Cost of goods sold 555.0 61.2 0.1 (3) - 616.3
Selling, general and administrative
expenses 102.7 11.9 - - 114.6
Goodwill amortization 2.1 3.3 2.4 (2) 3.3 (1) 4.5
Total Costs and Expenses 659.8 76.4 2.5 3.3 735.4
Operating income 32.2 11.6 2.5 3.3 44.6
Other Income and Expense:
Other income (expense) - net 15.0 (0.1) 3.6 (5) - 11.3
Interest expense (21.4) (0.7) - 0.7 (4) (21.4)
Pre-tax income from
consolidated operations 25.8 10.8 6.1 4.0 34.5
Provision for income taxes 4.2 5.5 - 0.1 (6) 9.6
Income from consolidated operations 21.6 5.3 6.1 4.1 24.9
Equity income in net income of
associated companies 7.8 - - - 7.8
Income from Continuing Operations $29.4 $5.3 $6.1 $4.1 $32.7
Income per share $1.69 $1.88
Average number of shares 17.421 17.421
<FN>
(A) Represents Clark financial statements adjusted to reflect the sale of Clark Automotive Products Corporation
on May 13, 1994. These financial statements have been included in a Form 8-K filed on May 27, 1994.
Description of pro-forma adjustments
(1) Represents the reversal of goodwill amortization included in the historic financial statements.
(2) Represents amortization of goodwill resulting from Clark's acquisition of Blaw-Knox.
This is being amortized on a straight line basis over a forty year period.
(3) Represents additional depreciation resulting from the write-up of fixed assets to estimated fair market value.
(4) Represents reversal of interest expense in the historic accounts of Blaw-Knox.
(5) Represents lost interest income as a result of use of cash to purchase Blaw-Knox.
(6) Represents tax impacts related to above adjustments.
</TABLE>
-21-
<PAGE>
<PAGE>
<TABLE>
CLARK EQUIPMENT COMPANY
PRO-FORMA INCOME STATEMENT
QUARTER ENDED MARCH 31, 1994
(In millions, except earnings per share)
<CAPTION>
Pro-forma
Clark Blaw-Knox Pro-forma Adjustments Income
as Reported Historic Debit Credit Statement
<S> <C> <C> <C> <C> <C>
Net sales $205.1 $26.3 $ - $ - $231.4
Operating Costs and Expenses:
Cost of goods sold 161.6 17.2 - - 178.8
Selling, general and administrative
expenses 25.5 3.2 - - 28.7
Goodwill amortization 0.5 0.8 0.6 (2) 0.8 (1) 1.1
Total Costs and Expenses 187.6 21.2 0.6 0.8 208.6
Operating income 17.5 5.1 0.6 0.8 22.8
Other Income and Expense:
Other income - net 7.1 - 1.0 (4) - 6.1
Interest expense (5.6) (0.2) - 0.2 (3) (5.6)
Pre-tax income from
consolidated operations 19.0 4.9 1.6 1.0 23.3
Provision for income taxes 6.7 2.2 - 0.1 (5) 8.8
Income from consolidated operations 12.3 2.7 1.6 1.1 14.5
Equity income in net income of
associated companies 13.2 - - - 13.2
Income from Continuing Operations $25.5 $2.7 $1.6 $1.1 $27.7
Income per share $1.46 $1.58
Average number of shares 17.449 17.449
<FN>
Description of pro-forma adjustments
(1) Represents the reversal of goodwill amortization included in the historic financial statements.
(2) Represents amortization of goodwill resulting from Clark's acquisition of Blaw-Knox.
This is being amortized on a straight line basis over a forty year period.
(3) Represents reversal of interest expense in the historic accounts of Blaw-Knox.
(4) Represents lost interest income as a result of use of cash to purchase Blaw-Knox.
(5) Represents tax impacts related to above adjustments.
</TABLE>
-22-
<PAGE>
<PAGE>
EXHIBIT LIST AND INDEX
Filed Herewith Unless
Exhibit Description Otherwise Indicated
(23) Consent of Price Waterhouse Page 24
-23-
<PAGE>
<PAGE>
Exhibit (23)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Clark Equipment Company
Registration Statements on Form S-3 (No. 33-60062) and Form S-8
(Nos. 33-44275, 33-36188, 33-28226, 33-13081, 2-99369, 2-77136,
2-67529, 2-61096, 2-53948, 2-39610, 2-24730, 2-17758 and 2-16146)
of our report dated July 12, 1994 relating to the combined
financial statements of the Blaw-Knox Construction Equipment
Group, which appears in the Current Report on Form 8-KA of Clark
Equipment Company dated July 27, 1994.
/s/ Price Waterhouse
Price Waterhouse
South Bend, Indiana
July 27, 1994
- 24 -
