SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 13, 1995
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
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 13, 1995, Registrant acquired 9,461,810 shares of Club Car, Inc.
("Club Car"), representing approximately 99% of the outstanding shares, for
a cash price of $25 per share pursuant to a tender offer initiated by the
Company on February 8, 1995. Club Car is one of the leading manufacturers
of golf cars and utility vehicles in the world and had sales in fiscal 1994
of approximately $186 million. On March 17, 1995, Registrant completed a
merger of Club Car with another wholly-owned subsidiary of Registrant.
Upon consummation of the merger, Club Car became a wholly-owned subsidiary
of the Registrant and the shareholders of Club Car who did not tender their
shares became entitled to receive $25 per share. The total purchase price
for Club Car was approximately $242.6 million after taking into account
amounts paid with respect to certain outstanding stock options, tax
benefits related to those stock options and certain transaction expenses.
Included among the assets acquired by Registrant (indirectly through the
acquisition of the shares of Club Car) are (1) a plant in Martinez, Georgia
at which golf cars and utility vehicles are manufactured; (2) machinery,
equipment, tools, dies and fixtures used in the manufacture of golf cars
and utility vehicles; (3) finished goods, raw materials, work in process
and other inventory; (4) certain trademarks, patents and other intellectual
property; and (5) receivables and contract rights. It is Registrant's
current intention to continue to use these assets in the manufacture of
golf cars and utility vehicles.
The funds used to consummate the acquisition came from Registrant's
available cash with the exception of $85 million which was borrowed by
Registrant pursuant to its Master Credit Agreement dated April 6, 1994. Of
the amount borrowed pursuant to the Master Credit Agreement, $25 million
was borrowed from Royal Bank of Canada, $25 million from NationsBank, $20
million from Comerica Bank and $15 million from Union Bank of Switzerland.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
The following financial statements and pro forma financial information are
hereby filed as a part of this report:
(1) Audited Consolidated Balance Sheets of Club Car as of the fiscal years
ended September 25,1994 and September 26, 1993 and audited Consolidated
Statements of Income, Consolidated Statements of Cash Flows and
Consolidated Statements of Stockholders' Equity (Deficit) for the fiscal
years ended September 25, 1994, September 26, 1993 and September 27, 1992
are attached as pages 4 through 17.
(2) The Unaudited Condensed Consolidated Balance Sheets, Statements of
Operations and Statements of Cash Flows of Club Car for the three
months ended December 25, 1994 and December 26, 1993 are attached as
pages 18 through 22.
(3) A pro forma Balance Sheet which combines the Balance Sheet of Club Car
with the Balance Sheet of Registrant as of December 31, 1994, along
with a description of the pro forma adjustments, is attached as page
24.
(4) A pro forma Income Statement which combines the results of Club Car
with the results of Registrant for the year ended December 31, 1994,
along with a description of the pro forma adjustments, is attached as
page 25.
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Exhibits
See attached Exhibit Index.
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: March 28, 1995
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<CAPTION>
CLUB CAR, INC.
Consolidated Balance Sheets
September 25, 1994 and September 26, 1993, respectively
(In thousands, except share information)
1994 1993
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 16,181 $14,429
Trade accounts receivable, less allowance
for doubtful accounts of $700 and $902 28,380 21,064
Inventories 15,956 15,708
Other current assets 1,084 1,215
Total current assets 61,601 52,416
Property on operating leases at cost,
less accumulated depreciation of $646 and $412 5,888 4,646
Property, plant and equipment, at cost:
Land and improvements 1,865 1,597
Buildings and improvements 6,565 5,751
Machinery, equipment and tooling 11,824 9,989
Construction in progress 656 749
20,910 18,086
Less accumulated depreciation (7,474) (5,904)
Net property, plant and equipment 13,436 12,182
Goodwill, less accumulated amortization
of $6,589 and $5,459 38,595 39,725
Other assets 1,647 3,247
$121,167 $112,216
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable $ 9,795 $ 10,487
Accrued liabilities 8,873 14,915
Income taxes payable 649 -
Current maturities of long-term debt 6,177 185
Total current liabilities 25,494 25,587
Long-term debt 35,927 83,905
Other liabilities 3,448 3,002
Deferred income taxes 1,229 -
Commitments and contingencies (Note H)
Stockholders' equity (deficit):
Preferred stock - no shares issued - -
Common stock, $.01 par value; 20,000,000 shares
authorized; 9,166,357 and 5,803,498 shares issued;
9,066,206 and 5,703,347 shares outstanding 92 57
Additional paid-in capital 64,347 11,135
Retained earnings 2,365 102
Other (11,735) (11,572)
Total stockholders' equity (deficit) 55,069 (278)
$121,167 $112,216
<FN>
The accompanying notes are an integral part of these financial statements.
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<CAPTION>
CLUB CAR, INC.
Consolidated Statements of Income
September 25, 1994, September 26, 1993 and September 27, 1992, respectively
(In thousands, except share information)
1994 1993 1992
<S> <C> <C> <C>
Net sales $186,108 $158,476 $137,129
Cost of sales 135,801 116,034 100,228
Selling, general and
administrative expenses 28,969 26,295 20,891
Amortization of goodwill 1,130 1,130 1,130
Operating income 20,208 15,017 14,880
Interest expense, net 4,592 12,718 12,370
Income before provision for income taxes
and extraordinary item 15,616 2,299 2,510
Provision for income taxes 6,374 1,415 1,558
Income before extraordinary item 9,242 884 952
Extraordinary loss on early retirements
of debt, net of tax benefits of $4,270 (6,979) - -
Net income $ 2,263 $ 884 $ 952
Primary and fully diluted income (loss)
per common share:
Income before extraordinary item $ 1.01 $ .15 $ .16
Extraordinary loss - debt retirements (.76) - -
Net income per share $ .25 $ .15 $ .16
Weighted average shares outstanding:
Primary 9,185,515 6,038,083 5,936,162
Fully diluted 9,193,167 6,094,402 5,973,374
<FN>
The accompanying notes are an integral part of these financial statements.
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<CAPTION>
CLUB CAR, INC.
Consolidated Statements of Cash Flows
September 25, 1994, September 26, 1993 and September 27, 1992, respectively
(In thousands)
1994 1993 1992
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 2,263 $ 884 $ 952
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss on early retirements of debt 11,249 - -
Depreciation and amortization 3,752 3,557 3,355
Amortization of debt discount and
deferred loan costs 473 470 2,234
Deferred income taxes (199) 206 105
Deferred compensation 384 1,634 135
Changes in current assets and liabilities:
Trade receivables (7,316) (2,254) (2,383)
Inventories (248) (2,242) (86)
Accounts payable (692) 2,669 2,871
Accrued liabilities (4,924) 810 3,740
Income taxes payable 1,300 - -
Other, net 287 (157) (151)
Net cash provided by operating activities 6,329 5,577 10,772
Cash Flows from Investing Activities:
Property on operating leases additions, net (2,116) (1,396) (1,097)
Property, plant and equipment additions, net (3,110) (2,058) (2,692)
Other (138) (287) 20
Net cash used in investing activities (5,364) (3,741) (3,769)
Cash Flows from Financing Activities:
Long-term debt retirements (83,985) (176) (168)
Long-term debt additions 42,000 - 261
Debt refinancing costs (10,000) - -
Purchase of treasury stock - (139) (289)
Issuance of common stock 52,772 - -
Net cash provided by (used in) financing activities 787 (315) (196)
Net increase in cash and cash equivalents 1,752 1,521 6,807
Balance, beginning of period 14,429 12,908 6,101
Balance, end of period $16,181 $14,429 $12,908
Total interest paid during period $10,310 $12,405 $ 8,684
Total income taxes paid during period, net $ 1,524 $ 1,357 $ 746
<FN>
The accompanying notes are an integral part of these financial statements.
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CLUB CAR, INC.
Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
Additional Predecessor Treasury
Shares Common Paid-in Retained Basis Translation Stock,
Common Treasury Stock Capital Earnings Adjustment Adjustment at cost
(In thousands, except share information) (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 29, 1991 5,752,320 33,880 $57 $10,768 $(1,734) $(11,053) $ - $ (61)
Net income - - - - 952 - - -
Common stock issued in
connection with ESOP 51,178 - - 367 - - - -
Purchase of treasury stock - 51,525 - - - - - (289)
Balance at September 27, 1992 5,803,498 85,405 57 11,135 (782) (11,053) - (350)
Net income - - - - 884 - - -
Purchase of treasury stock - 14,746 - - - - - (139)
Foreign currency adjustment - - - - - - (30) -
Balance at September 26, 1993 5,803,498 100,151 57 11,135 102 (11,053) (30) (489)
Net income - - - - 2,263 - - -
Initial public offering 3,318,750 - 35 52,643 - - - -
Common stock issued in
connection with ESOP 27,143 - - 475 - - - -
Common stock issued in
connection with the exercise
of stock options 16,966 - - 94 - - - -
Foreign currency adjustment - - - - - - (163) -
Balance at September 25, 1994 9,166,357 100,151 $ 92 $64,347 $ 2,365 $(11,053) $ (193) $(489)
<FN>
The accompanying notes are an integral part of these financial statements.
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Notes to Consolidated Financial Statements
A. Summary of Business and Significant Accounting Policies General
The Company designs, engineers, manufactures, markets, leases and services
electric and gasoline golf cars for recreational use. The Company also
produces a variety of off-road utility vehicles to carry people and
materials in golf, commercial and industrial applications. The Company's
fiscal year is comprised of the 52- or 53-week period ending on the last
Sunday in September. Fiscal years 1994, 1993 and 1992 were comprised of 52
weeks each ending on September 25, 26 and 27, respectively.
Consolidation
The consolidated financial statements include the accounts of Club Car,
Inc. and its wholly owned subsidiary (the "Company"). All material
intercompany profits, transactions and balances have been eliminated.
Cash and Cash Equivalents
The Company considers all short-term investments purchased with an original
maturity of three months or less to be cash equivalents. The carrying
values of cash and cash equivalents are reasonable estimates of their fair
value given the short maturities of these investments.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment, including property on operating leases, is
stated at cost, less accumulated depreciation. Depreciation is provided
using primarily the straight-line method over the estimated useful lives
of the assets as follows:
Land improvements 15 years
Buildings and improvements 8-45 years
Machinery, equipment and tooling 3-10 years
Property on operating leases 5 years
At the time properties are retired, the cost and related accumulated
depreciation are removed from the accounts and any gain or loss is
credited or charged to income. Maintenance and repairs are expensed as
incurred.
Goodwill
Goodwill is stated at cost less accumulated amortization and is amortized
using the straight-line method over 40 years. The Company periodically
reviews the value assigned to goodwill to determine if it has been other
than temporarily impaired by adverse conditions affecting the Company.
Management is of the opinion that there has been no diminution in the
value assigned to goodwill.
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Income Taxes
The Company adopted Statement of Financial Accounting Standards No. 109
("SFAS 109"), "Accounting for Income Taxes," effective September 27, 1993.
Under SFAS 109, deferred income taxes are determined based on the
difference between financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the years in which such
differences are expected to reverse. The Company elected the prospective
method of adoption allowable under SFAS 109 instead of restating prior
period results. No cumulative effect from adopting SFAS 109 was recorded in
the Company's results of operations because it was insignificant. Prior to
September 27, 1993, deferred income taxes were provided in accordance with
Accounting Principles Board Opinion No. 11.
Other Liabilities
The Company has deferred compensation plans involving certain of its
officers under which the Company has agreed to pay certain monthly amounts,
as defined, subsequent to death, disability or retirement. The present
value of such payments is being charged to expense over the employees'
service periods. For the fiscal years ended September 1994, 1993 and 1992,
the Company recorded expenses of $384,000, $1,679,000 and $181,000,
respectively, under the plans. These liabilities are included in Other
Liabilities in the accompanying balance sheets.
Revenues
The Company recognizes revenue on sales when the related
product has been shipped and title has passed to the customer. For the
fiscal years ended September 1994, 1993 and 1992, approximately 12.3%, 9.5%
and 8.8%, respectively, of the Company's new vehicle net sales were to
foreign customers.
Earnings Per Share
Earnings per share amounts are computed based upon the weighted average
common and equivalent shares outstanding during the respective fiscal year.
Presentation
Certain prior year amounts have been reclassified to conform with the
current year presentation.
B. Inventories
Inventories determined using the LIFO method approximated inventories
determined using the first-in, first-out method. Inventories consist of the
following:
Fiscal year end
(In thousands) 1994 1993
Raw materials $ 5,861 $ 6,349
Work in process 990 1,014
Finished goods 9,105 8,345
$15,956 $15,708
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C. Accrued Liabilities
Accrued liabilities consist of the following:
Fiscal year end
(In thousands) 1994 1993
Incentive compensation $ 2,496 $ 2,972
Sales commissions 1,724 1,487
Interest 19 5,972
Other 4,634 4,484
$ 8,873 $14,915
D. Indebtedness
Long-term debt consists of the following:
Fiscal year end
(In thousands) 1994 1993
Term loan $ 42,000 $ -
Senior Notes - 83,800
Other 104 290
42,104 84,090
Less current maturities of
long-term debt (6,177) (185)
$ 35,927 $ 83,905
Senior Notes Due 1999 and Old Credit Facility
In April 1989, in connection with the Acquisition (see Note F), the Company
issued Senior Notes with an aggregate principal amount of $83.8 million.
Additionally, the Company obtained a $22 million credit facility (the "Old
Credit Facility").
In October 1993, the net proceeds from the sale of the Company's common
stock (the "Offering") of approximately $53 million, along with borrowings
of $21 million under a new credit facility (the "New Credit Facility")
described below, were used to repurchase, pursuant to a cash tender offer,
$63.9 million principal amount of the Senior Notes plus accrued interest of
$.7 million, and to pay a tender offer premium and related fees
approximating $6.4 million. On April 1, 1994, the day the balance of the
Senior Notes first became redeemable, the Company repurchased the remaining
$19.9 million of 14.5% Senior Notes, at a redemption price of 105.44% of
the principal amount thereof plus accrued interest for an aggregate price
of $22.4 million. The repurchase was funded with a term loan borrowing of
$21 million and other short-term borrowings under the New Credit Facility.
The aggregate prepayment premium and related costs of $5.9 million, net of
tax benefits, pertaining to the early retirement of Senior Notes has been
recorded as an extraordinary loss for the year ended September 25, 1994.
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D. Indebtedness (continued)
New Credit Facility
Concurrently with the Offering, the Company terminated the Old Credit
Facility and established the New Credit Facility with a group of banks
which provides for term loan borrowings of $42 million (the "Term Loan
Facility") and revolving borrowings up to $30 million (the "Revolving
Credit Facility"). Borrowings under the Term Loan Facility were permitted
solely to fund repurchases of outstanding Senior Notes and to pay related
fees, premiums and expenses and may not be reborrowed once repaid. The
Revolving Credit Facility may be utilized for the same purposes as the Term
Loan Facility and for working capital and general corporate requirements,
with up to $7.5 million of the Revolving Credit Facility available for the
issuance of letters of credit.
Effective September 23, 1994, the New Credit Facility was amended (the
"Amendment") to provide for a reduction of 1/2 of 1% in the base rate and
3/4 of 1% in the Eurodollar Rate (the "Eurodollar Rate"), as defined.
Accordingly, interest on the amounts outstanding under the New Credit
Facility will be payable, generally at the Company's option, at a rate per
annum equal to (a) the higher of (i) the Federal Reserve reported
certificate of deposit rate and (ii) the prime rate (in either case, the
"Base Rate") or (b) the reserve adjusted Eurodollar Rate plus 3/4 of 1%.
Also, the Eurodollar Rate will be reduced by an additional 1/8 of 1% when
the amount outstanding under the Term Loan Facility is less than $30
million.
Due to significant changes to the New Credit Facility as a result of the
Amendment, the Company recorded an extraordinary charge of $1.1 million,
net of tax benefits for the accelerated amortization of the deferred loan
costs incurred with this facility.
Effective with the Amendment, borrowings became unsecured under the New
Credit Facility. The New Credit Facility contains certain restrictive
covenants including limitations on consolidation, merger and the sale or
acquisition of assets outside the ordinary course of business, incurrence
of liens, incurrence of indebtedness, annual capital expenditures and lease
payments, advances, investments and loans, dividends and other restricted
payments in respect of capital stock and transactions with affiliates;
required maintenance of consolidated net worth and fixed charge coverage
ratios; required levels of minimum earnings before interest, taxes,
depreciation and amortization; and limits on the amount of leverage
incurred.
The New Credit Facility expires in October 1999. The Term Loan Facility
requires principal reductions as follows: $6 million in fiscal 1995, $7
million in fiscal 1996, $8 million in fiscal 1997, $9 million in fiscal
1998, $10 million in fiscal 1999, and $2 million in fiscal 2000. The New
Credit Facility also requires prepayment of principal outstanding under the
Term Loan Facility if certain levels of excess cash flow are attained by
the Company.
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D. Indebtedness (continued)
Mandatory prepayments of amounts outstanding under the Term Loan Facility
(and commitment reductions in the Revolving Credit Facility after all
amounts due under the Term Loan Facility have been repaid) will be required
in amounts equal to proceeds from certain asset sales, debt issuances and
other events, as defined. The Revolving Credit Facility requires that during
each fiscal year there shall be a period of 45 consecutive days in which no
loans are outstanding under that facility. Under the Amendment, fees associated
with the New Credit Facility were reduced 1/8% resulting in an unused commitment
fee of 3/8% (with a further reduction to 1/4% when the principal amount of the
Term Loan declines to $30 million) and letter of credit and other fees of 1% per
annum on the average amount available to be drawn under each letter of
credit, both payable quarterly in arrears.
As of September 25, 1994, the Company had (i) $42 million of Term Loan
borrowings outstanding under the New Credit Facility, (ii) approximately
$1.5 million of outstanding letters of credit (which reduced the amount of
borrowings available under the Revolving Credit Facility) and (iii)
availability to borrow approximately $28.5 million under the Revolving
Credit Facility. The carrying amount of Term Loan borrowings approximates
its fair value given the variable rate of interest charged on the
borrowings.
E. Leases
The Company leases golf cars and utility vehicles to customers under
operating lease agreements expiring at various dates to the year 2000.
Minimum future lease payments receivable as of September 25, 1994 are as
follows (in thousands):
Fiscal Year:
1995 $ 972
1996 654
1997 436
1998 305
1999 and thereafter 274
The Company is the lessee of office and warehouse space, vehicles and
equipment. At September 25, 1994, minimum future lease commitments under
noncancelable operating leases with initial or remaining lease terms of
more than one year are as follows (in thousands):
Fiscal Year:
1995 $1,578
1996 966
1997 801
1998 648
1999 and thereafter 688
Total rent expense was approximately $2,943,000, $2,557,000 and $2,105,000,
for the fiscal years ended September 1994, 1993 and 1992, respectively.
F. Stockholders' Equity
Common Stock
On October 18, 1993, the Company sold 3,318,750 shares of its common stock
in the Offering.
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Predecessor Basis Adjustment
The Company merged with a predecessor corporation in November 1988 pursuant
to an acquisition and merger agreement ("the Acquisition"). The Acquisition
was accounted for using the purchase method of accounting. The equity
interests of management shareholders of the predecessor who retained a
continuing ownership interest in the Company were valued at predecessor
basis rather than fair value. Accordingly, the new basis of reporting for
the Company's net assets using fair values at the date of the Acquisition
was reduced by $11.1 million to reflect the carry-over basis of management
shareholders and is reflected as a reduction of stockholders' equity.
Employee Stock Ownership Plan
The Company sponsors a qualified Employee Stock Ownership Plan ("ESOP")
which covers substantially all of its employees. Contributions are at the
discretion of the Board of Directors. For fiscal years ended September
1994, 1993 and 1992 expenses under this plan were $425,000, $475,000 and
$425,000, respectively.
Stock Options
In fiscal year 1990, stockholders approved an incentive stock option plan
(the "1989 Incentive Stock Option Plan") that provides for granting key
employees options to purchase up to 504,000 shares of common stock.
Exercise prices for the options represent the fair market value at the date
of grant. Options vest over a three-year period beginning two years from
the date of grant and must be exercised within six years from the date of
grant.
In fiscal year 1993, stockholders approved a new stock option plan (the
"1992 Stock Option Plan") containing terms similar to the Company's 1989
Incentive Stock Option Plan. Under the 1992 Stock Option Plan, options for
a total of 560,000 shares of common stock may be granted to key employees
of the Company. In September 1993, the 1992 Stock Option Plan was amended
and restated by the stockholders to increase the total number of shares for
which options may be granted to 1,120,000 shares.
The following summarizes the stock option transactions under the 1989
Incentive Stock Option Plan and the 1992 Stock Option Plan for the fiscal
years ended September 1992, 1993 and 1994:
Option Price
Shares Per Share
Options outstanding
September 29, 1991: 504,000 $ 4.23 to $ 6.69
Cancelled (2,799) $ 4.23
Options outstanding
September 27, 1992: 501,201 $ 4.23 to $ 6.69
Granted 84,000 $ 9.39
Cancelled (19,600) $ 4.23 to $ 6.69
Options outstanding
September 26, 1993: 565,601 $ 4.23 to $ 9.39
Granted 593,900 $15.31 to $17.50
Exercised (16,966) $ 4.23 to $ 9.39
Cancelled (8,385) $ 4.23 to $ 6.69
Options outstanding
September 25, 1994: 1,134,150 $ 4.23 to $17.50
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Preferred Stock
On September 22, 1993, the Board of Directors declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of
common stock payable to the stockholders of record on September 24, 1993.
Each Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $1.00 per share, of the Company at a price of $75.00 per one
one-thousandth of a preferred share, subject to adjustment. In the event
that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Right. In the event
that any person or group of affiliated or associated persons becomes an
Acquiring Person, proper provision will be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter have the right to receive upon
exercise that number of shares of common stock having a market value of two
times the exercise price of the Right.
G. Income Taxes
The provision for income taxes includes:
Fiscal year
(In thousands) 1994 1993 1992
Current tax expense:
Federal $ 5,523 $ 1,271 $ 1,235
State 1,050 239 218
6,573 1,510 1,453
Deferred tax expense (benefit):
Federal (168) (80) 90
State (31) (15) 15
(199) (95) 105
$ 6,374 $ 1,415 $ 1,558
The Company's effective tax rates differ from statutory rates as follows:
Fiscal year 1994 1993 1992
Federal statutory rate 34.0% 34.0% 34.0%
State income taxes, net
of federal benefit 4.3 6.4 6.5
Nondeductible amortization 2.5 16.7 15.3
Other - 4.4 6.3
40.8% 61.5% 62.1%
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Deferred tax assets and liabilities at September 25, 1994 consist of net
noncurrent deferred tax liabilities of $1.2 million and net current
deferred tax assets of $.9 million. No valuation allowance is required.
Principal components of deferred taxes, as aggregated under SFAS 109, are
as follows:
September 25, 1994 and September 27, 1993, respectively
(In thousands) 1994 1993
Deferred tax liabilities:
Depreciation $ 1,647 $ 1,589
Inventory 816 1,024
Other 442 180
2,905 2,793
Deferred tax assets:
Deferred compensation (1,365) (1,102)
Accrued expenses (923) (882)
Allowances for doubtful accounts (273) (352)
Other (7) (7)
(2,568) (2,343)
Net deferred tax liabilities $ 337 $ 450
In the years prior to fiscal 1994, deferred income taxes arose from the
recognition of certain income and expenses for tax purposes in years
different from those in which such items are recognized in the financial
statements. A summary of the significant components of the deferred tax
provision for fiscal 1993 and fiscal 1992 is as follows:
Fiscal year end
(In thousands) 1993 1992
Inventory $ 171 $ (3)
Deferred compensation (627) (42)
Depreciation 423 349
Accrued expenses (44) (162)
Other (18) (37)
$ (95) $ 105
H. Commitments and Contingencies
To assist distributors in obtaining financing for the purchase of its
vehicles, the Company enters into agreements with various distributors and
financing institutions whereby the Company guarantees varying amounts of
the distributors' purchase debt obligations. The Company also sells
vehicles directly to a financing institution which leases the vehicles
directly to retail customers. The Company's obligation under these
guarantees becomes effective in the case of default in payments or certain
other defined conditions by the distributor and/or retail customers. As of
September 25, 1994, the Company was contingently liable for financing
obligations totaling approximately $4.2 million. In addition, as of
September 25, 1994, the Company has guaranteed residual values of vehicles
(upon termination of the leases to retail customers) in the aggregate
amount of approximately $19.0 million.
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<PAGE>
The Company is committed under three one-year contracts with suppliers
expiring in December 1994, October 1995 and December 1995, respectively, to
purchase a minimum of approximately $2.0 million, $2.5 million and $3.0
million in aluminum extrusions under each contract, respectively. The
Company expects to make the minimum purchases over the contract periods in
the normal course of meeting its production requirements.
In fiscal 1992, the Company entered into a contract with a supplier to
purchase 100% of its supply requirements for electric motors through July
1994. The Company purchased approximately $5.2 million and $4.4 million of
electric motors under this contract during fiscal years 1994 and 1993,
respectively.
In fiscal 1992, the Company entered into a contract with a supplier to
purchase 100% of its supply requirements for molded thermoplastic front and
rear bodies through July 1996. The Company purchased approximately $5.2
million and $4.9 million of molded thermoplastic front and rear bodies
during fiscal years 1994 and 1993, respectively.
In fiscal 1993, the Company entered into a contract to purchase 100% of its
supply requirements for electric batteries through July 1995. The Company
purchased approximately $6.1 million and $5.2 million of batteries under
this contract during 1994 and 1993, respectively.
The Company is from time to time involved in various litigation, primarily
product liability claims. The Company believes that none of the litigation
in which it is currently involved is material to its financial position,
liquidity or results of operations. The Company has maintained, since 1978,
product liability insurance coverage in varying amounts with no deductible.
I. Related-Party Transactions
The Company had an agreement with Kelso & Company ("Kelso"), a related
party, pursuant to which the Company paid Kelso an annual fee of $90,000
for providing planning and advisory services. Effective with the Offering
in October 1993, such agreement was terminated. At such time, the Company
paid Kelso a one-time fee of $300,000 in connection with the termination of
such agreement and for financial and advisory services rendered in
connection with the Offering and related refinancing.
-16-
<PAGE>
<PAGE>
To the Stockholders of Club Car, Inc.:
We have audited the accompanying consolidated balance sheets of Club Car,
Inc. and subsidiary as of September 25, 1994 and September 26, 1993 and the
related consolidated statements of income, stockholders' equity (deficit),
and cash flows for the fiscal years ended September 25, 1994, September 26,
1993, and September 27, 1992. These consolidated financial statements are
the responsibility of the management of Club Car, Inc. Our responsibility
is to express an opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Club Car, Inc. and subsidiary as of September 25, 1994 and
September 26, 1993 and the results of their operations and their cash flows
for the fiscal years ended September 25, 1994, September 26, 1993, and
September 27, 1992 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
November 4, 1994
-17-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CLUB CAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS December 25, 1994 September 25, 1994
(Unaudited) (*)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . $10,544 $16,181
Accounts and notes receivable, net 26,678 28,380
Inventories . . . . . . . . . . . . 20,627 15,956
Other current assets. . . . . . . . 2,129 1,084
Total current assets . . . . . . 59,978 61,601
PROPERTY ON OPERATING LEASES, net . . . 5,471 5,888
PROPERTY, PLANT AND EQUIPMENT, net. . . 14,777 13,436
GOODWILL, net . . . . . . . . . . . . . 38,313 38,595
OTHER 2,660 1,647
$121,199 $121,167
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable. . . . . . . . . . $ 13,592 $ 9,795
Accrued liabilities . . . . . . . . 5,731 8,873
Income taxes payable. . . . . . . . 775 649
Current maturities of long-term debt 5,552 6,177
Total current liabilities. . . . 25,650 25,494
LONG-TERM DEBT. . . . . . . . . . . . . 34,536 35,927
OTHER LIABILITIES . . . . . . . . . . . 4,905 4,677
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock . . . . . . . . . . . 92 92
Additional paid-in capital. . . . . 64,356 64,347
Retained earnings . . . . . . . . . 3,449 2,365
Other . . . . . . . . . . . . . . . (11,789) (11,735)
Total stockholders' equity . . . 56,108 55,069
$121,199 $121,167
<FN>
(*) Condensed from audited consolidated financial statements
The accompanying notes are an integral part of these condensed consolidated financial
statements.
-18-
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CLUB CAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except for Per Share Data)
Three Months Ended
December 25, 1994 December 26, 1993
<S> <C> <C>
Net sales $ 38,397 $ 32,662
Cost of sales 28,240 23,972
Selling, general and administrative expenses 7,548 6,488
Amortization of goodwill 282 282
Operating income 2,327 1,920
Interest expense, net 406 1,839
Income before provision for income taxes
and extraordinary item 1,921 81
Provision for income taxes 837 186
Income (loss) before extraordinary item 1,084 (105)
Extraordinary loss on early retirement
of debt, net of income tax benefit of $3,023 --- 4,941
Net income (loss) . . . . . . . . . . . $ 1,084 $( 5,046)
Primary and fully diluted income
(loss) per common share:
Before extraordinary item . . . . . . . $ 0.12 $ (0.01)
Extraordinary loss - debt retirement. . --- (0.61)
Net income (loss) per common share. . . $ 0.12 $ (0.62)
Weighted average common shares:
Primary 9,413,775 8,173,657
Fully diluted 9,418,604 8,173,657
<FN>
The accompanying notes are an integral part of these condensed consolidated financial
statements.
-19-
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CLUB CAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Three Months Ended
December 25,1994 December 26,1993
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss) . . . . . . . . . $ 1,084 $ (5,046)
Adjustments to reconcile net
income/(loss) to net cash used in
operating activities:
Loss on early retirement of debt. . - 4,941
Depreciation and amortization . . . 910 933
Deferred compensation . . . . . . . 85 94
Changes in current assets and liabilities:
Trade receivables . . . . . . . . . 1,702 (1,312)
Inventories . . . . . . . . . . . . (4,671) (4,791)
Accounts payable. . . . . . . . . . 3,797 301
Accrued liabilities . . . . . . . . (3,142) (9,960)
Income taxes payable. . . . . . . . 126 32
Other, net. . . . . . . . . . . . . (1,102) (860)
Net cash used in operating activities (1,211) (15,668)
Cash flows from investing activities:
Property on operating leases. . . . 284 128
Property, plant and equipment
additions, net. . . . . . . . . . . (1,821) (607)
Other . . . . . . . . . . . . . . (898) 761
Net cash provided by (used in)
investing activities. . . . . . (2,435) 282
Cash flows from financing activities:
Long-term debt retirements. . . . . (2,000) (64,058)
Long-term debt additions. . . . . . - 21,000
Debt refinancing costs. . . . . . . - (8,730)
Issuance of common stock. . . . . . 9 53,239
Net cash provided by (used in)
financing activities. . . . . . . (1,991) 1,451
DECREASE IN CASH EQUIVALENTS. . . . (5,637) (13,935)
Balance, beginning of period. . . . . . 16,181 14,429
Balance, end of period. . . . . . . . . $ 10,544 $ 494
Interest paid during period . . . . . . $ 331 $ 6,804
Income taxes paid (refunded)
during period, net . . . . . . . . . $ 712 $ (46)
<FN>
The accompanying notes are an integral part of these condensed consolidated financial
statements.
-20-
</TABLE>
<PAGE>
CLUB CAR, INC.
Notes to Condensed Consolidated Financial Statements
DECEMBER 25, 1994
(UNAUDITED)
A. A SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. It is suggested that these condensed consolidated
financial statements be read in conjunction with the financial statements and
the notes thereto included in the Annual Report on Form 10-K of Club Car,
Inc. (the "Company") for the fiscal year ended September 25, 1994
(File No. 0-22452).
The accompanying unaudited condensed consolidated financial statements
include, in the opinion of management, all adjustments, which are of a
normal recurring nature, necessary for a fair presentation for the periods
presented. Results presented for the three month periods ended
December 25, 1994 are not necessarily indicative of results that may be
expected for the full fiscal year.
EARNINGS PER COMMON SHARE
Earnings per share amounts are computed based upon the weighted average
common and equivalent shares outstanding during the period.
PRESENTATION
Certain prior year amounts have been reclassified to conform with the current
year presentation.
B. INVENTORIES
Inventories consist of the following (in thousands):
As of As of
December 25, September 25,
1994 1994
Raw materials . . . $ 8,495 $ 5,861
Work-in-process . . 1,764 990
Finished goods. . . 10,368 9,105
$20,627 $15,956
-21-
<PAGE>
C. INDEBTEDNESS
Long-term debt consists of the following (in thousands):
As of As of
December 25, September 25,
1994 1994
Term loan . . . . . 40,000 $42,000
Other . . . . . . . 88 104
40,088 42,104
Less current maturities
of long-term debt . (5,552) (6,177)
$34,536 $35,927
D. STOCKHOLDERS' EQUITY
As of December 25, 1994, the Company's common stock, at $.01 par value per
share, was comprised of 20,000,000 authorized shares, 9,167,757 issued shares,
and 9,067,606 outstanding shares.
E. COMMITMENTS AND CONTINGENCIES
The Company guarantees certain debt of distributors and retail customers.
Under the most significant of these guarantees, the Company's obligation is
limited to a maximum of $1 million per year. In addition, as of December 25,
1994, the Company had guaranteed residual values of golf cars (upon
termination of leases to retail customers) in the aggregate amount of
approximately $18.6 million.
The Company is from time to time involved in various litigation, primarily
product liability claims. The Company believes that none of the litigation in
which it is currently involved is material to its financial position,
liquidity or results of operations. The Company has maintained, since 1978,
product liability insurance coverage in varying amounts with no deductible.
-22-
<PAGE>
<PAGE>
Pro-Forma Financial Information
On March 13, 1995, Clark Equipment Company ("Clark") acquired approximately
99% of the outstanding shares of Club Car, Inc. pursuant to a tender offer.
On March 17, 1995, Club Car,Inc. was merged with another wholly owned
subsidiary of Clark, whereupon it became a wholly-owned subsidiary of Clark.
Set forth on the next two pages are (1) a pro-forma Balance Sheet which
combines the Balance Sheet of Club Car, Inc. with the Balance Sheet of Clark,
as of December 31,1994 and (2) a proforma Income Statement which combines the
results of Club Car, Inc. with the results of Clark for the year ended
December 31, 1994.
-23-
<PAGE>
<PAGE>
<TABLE>
CLARK EQUIPMENT COMPANY
PRO-FORMA BALANCE SHEET
DECEMBER 31, 1994
(Dollars in Millons)
<CAPTION>
Clark Pro-Form
Equipment Club Car, Pro-Forma Adjustments Balance
Assets: Company Inc. Debits Credits Sheet
<S> <C> <C> <C> <C> <C>
Cash $ 228.6 $10.6 $ 142.6 (1) $ 96.6
Accounts Receivable 109.6 26.7 136.3
Inventories 123.7 20.6 $ 0.7 (4) 145.0
Deferred Taxes - Net 24.4 24.4
Other Current Assets 8.8 2.1 10.9
Total Current Assets 495.1 60.0 0.7 142.6 413.2
Investments and Advances -
Associated Companies 12.6 12.6
Investment in Discontinued
Operations - VME Group N.V. 195.9 195.9
Deferred Tax Assets - Net 100.4 100.4
Property, Plant & Equipment- Net 181.1 20.2 7.4 (3) 208.7
Goodwill 167.3 38.3 186.5 (2) 7.4 (3) 387.0
0.2 (5) 0.7 (4)
2.8 (6)
Other Assets 41.5 2.7 0.2 (5) 44.0
Investment in Club Car, Inc. 242.6 (1) 242.6 (2)
Total Assets $1,193.9 $ 121.2 $ 440.2 $ 393.5 $1,361.8
Liabilities and Stockholders' Equity
Current Liabilities:
Notes Payable $ 11.9 $ 11.9
Accounts Payable and Accruals 158.7 $ 20.1 178.8
Accrued Postretirement Benefits 21.1 21.1
Deferred Income Taxes 0.7 $ 0.3 (6) 1.0
Current Installments of
Long Term Debt 12.2 5.6 17.8
Total Current Liabilities 204.6 25.7 0.3 230.6
Long-Term Borrowings 193.3 34.5 100.0 (1) 327.8
Other Non-Current Liabilities 94.0 4.9 98.9
Accrued Postretirement Benefits 241.8 241.8
Deferred Income Taxes 8.0 2.5 (6) 10.5
Total Liabilities 741.7 65.1 102.8 909.6
Stockholders' Equity 452.2 56.1 $ 56.1 (2) 452.2
Total Liabilities
and Equity $1,193.9 $ 121.2 $ 56.1 $ 102.8 $ 1,361.8
<FN>
Legend:
(1) Represents entry to reflect cash and debt used to acquire the stock and pay
estimated transaction fees. Purchase price assumes a tax benefit of approximately
$5 million related to the exercise of stock options.
(2) Represents entry to eliminate Clark's investment in Club Car, Inc. and establish the
initial additional goodwill.
(3) Represents estimate to write-up fixed assets to fair value.
(4) Represents estimate to write-up inventory to replacement value.
(5) Represents write-off of debt issue costs related to Club Car, Inc.'s term loan. This
was written off because it is believed that this loan will be repaid before maturity.
(6) To reflect deferred taxes on the entries 2-5 above.
-24-
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CLARK EQUIPMENT COMPANY
PRO-FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
(Dollars in Millons)
<CAPTION>
Clark Pro-Forma
Equipment Club Car Pro-Forma Adjustments Income
Company Inc. Debits Credits Statement
<S> <C> <C> <C> <C> <C>
Net Sales $ 946.6 $191.8 $ 1,138.4
Cost of Goods Sold 744.0 140.1 $ 1.1 (1) 885.2
Selling, General and
Administrative Expense 107.7 30.0 137.7
Amortization of Goodwill 3.5 1.1 4.4 (2) 9.0
Operating Income 91.4 20.6 5.5 106.5
Other Income - Net 20.7 4.6 (3) 16.1
Interest Expense (20.0) (3.2) (4.5)(4) (27.7)
Pre-Tax Income from
Continuing Operations 92.1 17.4 14.6 94.9
Provision for Income Taxes 29.3 7.0 $ 2.6 (5) 33.7
Income from Continuing
Operations $ 62.8 $ 10.4 $ 14.6 $ 2.6 $ 61.2
E.P.S. $ 3.61 $ 3.52
Average Shares Outstanding
( In Millions) 17.4 17.4
<FN>
Legend:
(1) Entry to reflect additional depreciation related to the write-up of fixed
assets to fair market value.
(2) Entry to reflect additional goodwill amortization as a result of the acquisition
based on a forty year amortization period using the straight line method.
(3) Entry to reflect lost interest income on cash assumed to be used for the acquisition.
(4) Entry to reflect interest expense on assumed borrowings for the acquisition.
(5) Assumed tax benefit relating to entries 1, 3 and 4 above.
-25-
</TABLE>
<PAGE>
<PAGE>
EXHIBITS LIST AND INDEX
Exhibit Filed Herewith Unless
Number Description Otherwise Indicated
(2) Agreement and Plan of Incorporated by reference
Merger dated as of to Exhibit (C) (1) to the
February 3, 1995 by and Registrant's Schedule
among Clark Equipment 14D-1 and Schedule 13D
Company, Clark Acqui- dated February 8, 1995
sition Sub, Inc. and
Club Car, Inc.
(23) Consent of Arthur Andersen -
LLP
-26-
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated November 4, 1994 related to the financial
statements of Club Car, Inc. included in this Form 8-K, into Clark Equipment
Company's previously filed Registration Statement File Nos. 2-16146, 2-17758,
2-24730, 2-39610, 2-53948, 2-61096, 2-67529, 2-77136, 2-99369, 33-13081,
33-28226, 33-36188, 33-44275, 33-56607, 33-56609, 33-56611, and 33-60062.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 24,1995
