<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20649
------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 16(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARCH 11, 1997
------------------
Date of Report
(Date of earliest event reported)
CASCADE CORPORATION
--------------------------------------------------
(Exact name of registrant as specified in its charter)
OREGON 2-23666 93-0136592
----------------- --------------------- -------------------
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
2020 S.W. 4th
Portland, Oregon 97201
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(Address of principal executive offices, including zip code)
(503) 227-0024
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(Registrant's telephone number, including area code)
<PAGE>
The undersigned registrant hereby amends the following items of its Current
Report on Form 8-K dated March 11, 1997, and filed March 26, 1997, as set forth
in the pages attached hereto:
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Kenhar Corporation
(1) Auditors' Report
(2) Consolidated Balance Sheets as of February 28, 1997 and
April 30, 1996.
(3) Consolidated Statements of Operations - Ten Months Ended
February 28, 1997 and Year Ended April 30, 1996.
(4) Consolidated Statements of Shareholders' Equity - Ten
Months Ended February 28, 1997 and Year Ended April 30,
1996.
(5) Consolidated Statements of Cash Flows - Ten Months Ended
February 28, 1997 and Year Ended April 30, 1996.
(b) Pro Forma Financial Information (unaudited) to reflect the
registrant's acquisition of Kenhar Corporation.
(1) Condensed Combined Pro Forma Balance Sheet.
(2) Condensed Combined Pro Forma Statement of Operations.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on it behalf by the
undersigned, thereunto duly authorized.
Cascade Corporation
By: s/g James P. Miller
------------------------
James P. Miller
Executive Vice President,
Secretary & Treasurer
<PAGE>
Kenhar Corporation
Financial Statements
Table of Contents
- --------------------------------------------------------------------------------
Page
Auditors' Report 1
Auditors' Report to the Director KPMG Peat Marwick Thorne 2
Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Shareholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Cascade Corporation
Pro Forma Financial Statements
Table of Contents
- -------------------------------------------------------------------------------
Financial Statements
Combined Pro Forma Balance Sheet 20
Combined Pro Forma Statement of Operations 21
Notes to Pro Forma Financial Statements 22
<PAGE>
AUDITORS' REPORT
To the Director of
Kenhar Corporation
We have audited the consolidated balance sheet of Kenhar Corporation as of
February 28, 1997 and the consolidated statements of operations, shareholders'
equity and cash flows for the ten month period ended February 28, 1997. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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.
In our opinion, these 1997 consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company as of
February 28, 1997 and the results of its operations and cash flows for the ten
month period ended February 28, 1997 in accordance with accounting principles
generally accepted in the United States.
PRICE WATERHOUSE
Chartered Accountants
Kitchener, Canada
May 14, 1997
-1-
<PAGE>
AUDITORS' REPORT TO THE DIRECTORS
To the Director of
Kenhar Corporation
We have audited the consolidated balance sheet of Kenhar Corporation as of April
30, 1996 and the consolidated statements of operations, shareholders' equity and
cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards
in Canada and in the United States. Those standards require that we plan and
perform an audit to obtain reasonable assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at April 30, 1996
and the results of its operations and cash flows for the year then ended in
accordance with generally accepted accounting principles in the United States.
KPMG Peat Marwick Thorne
Chartered Accountants
Waterloo, Canada
June 28, 1996
-2-
<PAGE>
KENHAR CORPORATION
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEBRUARY 28, APRIL 30,
1997 1996
------------ ------------
(U.S. DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,247 $ 2,399
Accounts receivable, less allowance for doubtful accounts
of $100 and $93 13,725 12,853
Receivable from joint venture 772 1,611
Inventories, at cost which is lower than market (Note 2) 8,563 8,112
Deferred income taxes (Note 3) 68 68
Prepaid expenses 303 216
--------- ---------
Total current assets 24,678 25,259
Property, plant and equipment, at cost less accumulated depreciation (Note 4) 19,194 17,967
Investment in joint venture company, at equity basis of accounting (Note 5) 543 556
Goodwill (Notes 1 and 10) 6,449 5,455
Deferred income taxes (Note 3) 523 842
Other 1,063 765
--------- ---------
Total assets $ 52,450 $ 50,844
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings (Note 6) $ 3,611 $ 6,970
Current portion of long-term debt (Note 6) 810 1,392
Accounts payable 6,330 6,364
Accrued payroll and payroll taxes 1,215 1,561
Income taxes payable 2,304 1,145
Other accrued expenses 1,318 704
--------- ---------
Total current liabilities 15,588 18,136
Long-term debt (Note 6) 30,943 7,357
Deferred income taxes (Note 3) 371 580
Other liabilities 2,566 1,996
--------- ---------
Total liabilities 49,468 28,069
--------- ---------
Commitments (Note 11)
Shareholders' equity:
Common shares, no par value, unlimited authorised shares,
convertible into Class IV shares, 18,855 shares issued (1996 - none) 2,944 -
Common shares, Class I, II and III (Note 7) - 5,036
Additional paid-in capital 394 394
Retained earnings (deficit) (360) 17,121
Cumulative foreign currency translation adjustments 4 224
--------- ---------
2,982 22,775
--------- ---------
Total liabilities and shareholders' equity $ 52,450 $ 50,844
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-3-
<PAGE>
KENHAR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
TEN MONTHS
ENDED YEAR ENDED
FEBRUARY 28, APRIL 30,
1997 1996
------------ -----------
(U.S. DOLLARS IN THOUSANDS)
Net sales $ 65,952 $ 80,308
---------- ----------
Operating expenses:
Cost of goods sold 47,325 58,512
Depreciation and amortization 2,838 2,790
Selling and administrative expenses 8,534 8,996
---------- ----------
58,697 70,298
---------- ----------
Operating income 7,255 10,010
Interest expense 2,422 1,695
Other expense, net 269 248
Equity in income of joint venture (55) (194)
---------- ----------
Income before income taxes 4,619 8,261
---------- ----------
Income taxes (Note 3) 2,063 3,404
---------- ----------
Net income $ 2,556 $ 4,857
---------- ----------
---------- ----------
The accompanying notes are an integral part of these consolidated financial
statements.
-4-
<PAGE>
KENHAR CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
TEN MONTHS
ENDED YEAR ENDED
FEBRUARY 28, APRIL 30,
1997 1996
------------ ------------
(U.S. DOLLARS IN THOUSANDS)
Common shares:
Beginning balance $ - $ -
Shares issued 2,944 -
---------- ----------
2,944 -
---------- ----------
Class I, II, and III common shares:
Beginning balance 5,036 5,036
Refund of capital (2,092) -
Shares exchanged (2,944) -
---------- ----------
- 5,036
---------- ----------
Additional paid-in capital 394 394
---------- ----------
Retained earnings (deficit):
Retained earnings, beginning balance 17,121 13,023
Net income 2,556 4,857
Dividends (20,037) (759)
---------- ----------
Retained (deficit) earnings, ending balance (360) 17,121
---------- ----------
Cumulative foreign currency translation adjustments:
Beginning balance 224 887
Adjustments (220) (663)
---------- ----------
4 224
---------- ----------
Total shareholders' equity $ 2,982 $ 22,775
---------- ----------
---------- ----------
The accompanying notes are an integral part of these consolidated financial
statements.
-5-
<PAGE>
KENHAR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED
FEBRUARY 28, APRIL 30,
1997 1996
------------ -----------
(U.S. DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,556 $ 4,857
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,838 2,790
Loss (gain) on disposal of property and equipment (53) 226
Deferred income taxes (804) (297)
Equity in income of joint venture (55) (194)
Changes in operating assets and liabilities:
Accounts receivable 1,054 535
Receivable from joint venture company 839 (545)
Inventories 585 (623)
Income taxes 1,159 113
Prepaid expenses (59) 9
Other assets 72 (756)
Accounts payable and accrued expenses (1,435) (1,983)
Other liabilities 168 (176)
---------- ----------
Net cash provided by operating activities 6,865 3,956
---------- ----------
Cash flows from investing activities:
Acquisition of property, plant and equipment (1,509) (4,223)
Business acquisitions, net of cash acquired (2,803) -
Dividends receivable from joint venture 62 -
Proceeds from sale of property, plant and equipment 218 441
---------- ----------
Net cash used in investing activities (4,032) (3,782)
---------- ----------
Cash flows from financing activities:
Increases in short-term borrowings 43,145 13,480
Repayments of short-term borrowings (47,063) (7,460)
Proceeds from issuance of long-term debt 25,791 4,392
Principal payments on long-term debt (3,748) (8,653)
Refund of capital (2,092) -
Dividends paid (20,037) (759)
---------- ----------
Net cash (used) provided by financing activities (4,004) 1,000
---------- ----------
Effect of exchange rate changes 19 189
---------- ----------
Increase (decrease) in cash (1,152) 1,363
Cash at beginning of year 2,399 1,036
---------- ----------
Cash at end of year $ 1,247 $ 2,399
---------- ----------
---------- ----------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest 3,513 1,755
Income taxes 1,918 2,262
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-6-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. SUMMARY OF OPERATIONS AND PRINCIPAL ACCOUNTING POLICIES
SUMMARY OF OPERATIONS
Headquartered in Guelph, Ontario, Kenhar Corporation (the Company)
manufactures and distributes forks for use on lift trucks and other mobile
material handling equipment. The Company has manufacturing facilities in
Canada, the United Kingdom, France, Italy, South Korea and the U.S.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of 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. The Company's most significant
estimates are included in income taxes (Note 3).
CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its greater than 50% owned affiliates, including those of the
businesses acquired in the current year (Note 10). Intercompany balances
and transactions have been eliminated. Investments in 50% or less owned
unconsolidated affiliates are accounted for by the equity method.
INVENTORIES
Inventories are valued at the lower of cost (computed on the first-in,
first-out method) or market.
DEPRECIATION AND AMORTIZATION
Property, plant and equipment are stated at cost. Depreciation is provided
on the straight-line basis to estimated salvage values using the following
annual rates:
Land improvements 7%
Buildings 2.5% to 5.0%
Manufacturing machinery and equipment 10% to 33.3%
Leasehold improvements over the term of the leases
Goodwill consists of the cost of acquired businesses in excess of the fair
value of net identifiable assets acquired. Goodwill is being amortized on
a straight-line basis up to a maximum of twenty-five years. Accumulated
amortization was $2,678 and $2,305 at February 28, 1997 and April 30, 1996,
respectively.
FOREIGN CURRENCY TRANSLATION
The Company translated the balance sheets of its foreign subsidiaries using
fiscal year-end exchange rates. The statements of operations are
translated using the average exchange rates for the fiscal year. The
effects of such translations are included in shareholders' equity as
"cumulative foreign currency translation adjustments".
-7-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. SUMMARY OF OPERATIONS AND PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Income taxes are accounted for in accordance with SFAS 109, "Accounting for
Income Taxes." Deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory tax
rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities.
CONCENTRATION OF CREDIT RISK
The Company performs ongoing credit evaluations of its customers' financial
condition and generally does not require collateral. The Company maintains
allowances for potential losses, and such losses have been within
management's expectations. No single customer accounted for more than 10%
of the accounts receivable balance as at February 28, 1997 and April 30,
1996.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts of certain of the Company's financial instruments
including cash, accounts receivable, accounts payable, accrued expenses and
other liabilities approximate fair value due to their short maturities.
Long-term debt balances, generally at current market interest rates,
approximate fair value. Foreign currency activities are not identified as
hedges. Forward foreign currency exchange contracts are valued at their
settlement rates which reflect their fair value.
The Company is exposed to credit-related losses in the event of
non-performance by counterparties to derivative financial instruments, but
does not expect any counterparties to fail to meet their obligations. The
Company deals with only highly rated counterparties, normally major
financial institutions. The credit risk exposure of derivative financial
instruments is represented by the fair value of contracts with a positive
fair value at the reporting date. The credit risk amount represents the
maximum amount that would be at risk if the counterparties failed
completely to perform under the contracts.
During 1997, the Company entered into an interest rate swap agreement,
covering debt with a total amount of $22,000 outstanding, to manage its
exposure to interest rate changes. This swap, currently outstanding and
expiring May 1999, changes the floating interest rate exposure to a fixed
interest rate exposure. Interest rate differentials under the interest
rate swap agreement are recognized over the life of the contracts as
interest expense. The notional amounts and maturities of interest rate
swap agreements match those of the underlying debt. At February 28, 1997,
off-balance-sheet exposure under the interest rate swap agreement was not
material.
RECOVERABILITY OF LONG-LIVED ASSETS
The Company reviews the receivable from and investment in joint venture
company and goodwill annually for impairment, or whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable.
An impaired asset is written down to its estimated fair value based on the
best information available; the Company generally measures estimated fair
value by discounting estimated future cash flows.
-8-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. SUMMARY OF OPERATIONS AND PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
RECOVERABILITY OF LONG-LIVED ASSETS (CONTINUED)
Considerable management judgement is necessary to estimate discounted
future cash flows. Accordingly, actual results could vary significantly
from such estimates. As of February 28, 1997 and April 30, 1996, the
Company believes that there are no significantly impaired long-lived assets.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128 "Earnings per Share"
("SFAS 128") and Statement of Financial Accounting Standards No. 129,
"Disclosure of Information about Capital Structure" ("SFAS 129") which are
effective for fiscal years ending after December 15, 1997. The Company
believes the implementation of these statements will not have a material
effect on its results of operations or financial statement disclosures.
2. INVENTORIES
FEBRUARY 28, APRIL 30,
1997 1996
------------ -----------
Raw materials $ 3,281 $ 3,559
Work in process 897 845
Finished goods 4,385 3,708
--------- ---------
$ 8,563 $ 8,112
--------- ---------
--------- ---------
3. INCOME TAXES
Income before taxes was as follows:
TEN MONTHS
ENDED YEAR ENDED
FEBRUARY 28, APRIL 30,
1997 1996
------------ -----------
Canada $ 1,778 $ 4,919
Foreign - United States 2,525 2,667
Foreign - other 316 675
--------- ---------
$ 4,619 $ 8,261
--------- ---------
--------- ---------
-9-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
3. INCOME TAXES (CONTINUED)
Taxes charged (credited) against operations were as follows:
TEN MONTHS
ENDED YEAR ENDED
FEBRUARY 28, APRIL 30,
1997 1996
------------ ------------
Current
Federal and provincial $ 1,018 $ 1,875
Foreign - United States 665 1,120
Foreign - other 478 202
--------- ---------
2,161 3,197
--------- ---------
Deferred
Federal and provincial (36) 201
Foreign - United States - (44)
Foreign - other (62) 50
--------- ---------
(98) 207
--------- ---------
$ 2,063 $ 3,404
--------- ---------
--------- ---------
The federal rate reconciles to the effective rate as follows:
TEN MONTHS
ENDED YEAR ENDED
FEBRUARY 28, APRIL 30,
1997 1996
------------ ------------
Federal statutory rate - Canada 44.3% 44.3%
Manufacturing and processing rate reduction (8.7) (8.7)
Effect of foreign tax rates 9.2 0.8
Non-deductible expenses 5.4 2.5
Other (5.5) 2.3
--------- ---------
Effective income tax rate 44.7% 41.2%
--------- ---------
--------- ---------
The manufacturing and processing rate reduction is a rate applicable to
manufacturing companies operating in Canada.
-10-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
3. INCOME TAXES (CONTINUED)
The deferred tax liabilities (assets) recorded on the consolidated balance
sheets are comprised of the following:
FEBRUARY 28, APRIL 30,
1997 1996
------------ -----------
Accruals not deductible until paid $ (68) $ (68)
-------- --------
Current deferred tax asset $ (68) $ (68)
-------- --------
-------- --------
Depreciation $ 371 $ 580
-------- --------
Deferred tax liabilities $ 371 $ 580
-------- --------
-------- --------
Operating losses carried forward $ (523) $ (812)
Other - (30)
-------- --------
Long-term deferred tax asset $ (523) $ (842)
-------- --------
-------- --------
The Company and certain subsidiaries have non-expiring income tax losses
available to reduce future years' income for tax purposes in the amount of
$1,586.
-11-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
4. PROPERTY, PLANT AND EQUIPMENT
FEBRUARY 28, APRIL 30,
1997 1996
------------ ------------
Land $ 987 $ 1,106
Buildings and leasehold improvements 11,456 9,732
Machinery and equipment 22,502 20,351
--------- ---------
34,945 31,189
Accumulated depreciation (15,751) (13,222)
--------- ---------
$ 19,194 $ 17,967
--------- ---------
--------- ---------
5. INVESTMENT IN JOINT VENTURE COMPANY
The Company owns 50% of the shares of the joint venture company, Kenhar
Korea Products Company. Information about the assets, liabilities,
revenues and expenses of the joint venture is as follows:
1997 1996
--------- ---------
Current assets $ 1,802 $ 2,268
Long-term assets 186 222
Current liabilities 648 1,368
Long-term liabilities 254 -
Sales 3,998 4,920
Expenses, excluding income taxes 3,686 4,470
Net income 222 520
Subsequent to year-end, the Company acquired an additional 25% of the joint
venture company for $391.
-12-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
<TABLE>
<CAPTION>
FEBRUARY 28, APRIL 30,
1997 1996
----------- ----------
<S> <C> <C>
Short-Term Borrowings
Revolving term loan (LIBOR plus 1.75%) $ 2,870 $ 5,515
Other borrowings 741 1,455
--------- ---------
$ 3,611 $ 6,970
--------- ---------
--------- ---------
Long-Term Debt
Revolving term loan, interest at LIBOR plus 1.75%,
repayment terms and maturity noted below $ 28,766 $ 3,460
8.25% Mortgage, monthly blended instalments of
$18, maturing May 1, 1999, secured by
certain property and plant 1,247 1,300
Term loan, interest payable at LIBOR plus 1%,
to be converted to revolving credit facility
subsequent to year end (1996 - U.K. ,585) - 880
Term loan, interest payable at LIBOR rate plus 3%,
quarterly instalments of ,23, maturing
June 2000 (1997 - U.K., 322; 1996 - U.K., 391) 524 588
Other loans at various rates and maturity dates 1,216 1,121
Industrial Development Revenue Bond
interest of U.S. prime rate plus 2%, monthly
instalments of $38 - 1,400
--------- ---------
31,753 8,749
Current portion of long-term debt (810) (1,392)
--------- ---------
$ 30,943 $ 7,357
--------- ---------
--------- ---------
</TABLE>
Maturities of long-term debt for the years February 28, 1998 through
February 28, 2002 and thereafter, respectively, are: $810, $3,280, $5,036,
$4,513, $5,169, and $12,945.
The Company and its wholly-owned subsidiaries entered into agreements with
The Toronto-Dominion Bank which provide for an operating line of credit of
up to $11,000 (Cdn $15,000) and a revolving term loan facility of up
to $33,000 (Cdn $45,000). The Company has the
-13-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT (CONTINUED)
option of borrowing under these facilities in various currencies. At
February 28, 1997 and April 30, 1996, respectively, $8,130 (Cdn $11,074)
and $5,485 (Cdn $7,489) of the short-term facility and $4,234 (Cdn
$5,650) and $28,660 (Cdn $39,089) of the long-term facility were unused.
Amounts borrowed under the long-term facility convert to a five year term
loan one year after drawdown. The commitment fees are one quarter of one
percent of the unused portion of the long-term facility. The term loans
are repayable as follows:
1st anniversary following conversion 10.0%
2nd anniversary following conversion 12.5%
3rd anniversary following conversion 15.0%
4th anniversary following conversion 17.5%
5th anniversary following conversion 20.0% plus a 25.0%
final payment
The loans are secured by general security agreements from the Company and
each wholly-owned subsidiary and a pledge of shares of one subsidiary
company.
In addition, the Company must meet certain financial covenants relating to
the current ratio and interest and debt service coverage ratios. The
Company was in compliance with these ratios at February 28, 1997 and April
30, 1996.
The Company refinanced a portion of its long-term debt under the short-term
facility on May 1 and April 28, 1996. As a result of refinancing the
existing long-term debt, deferred financing costs of $50 and $74 were
expensed in 1997 and 1996. Included in cash at April 30, 1996 was $1,400
designated for the liquidation of the Industrial Development Revenue Bond.
Average interest rates on short-term borrowings were 6.7% and 7.7% at
February 28, 1997 and April 30, 1996, respectively.
7. CAPITAL STOCK
The following shares are authorized, of which there are none issued:
Class IV shares, non-voting, no par value, unlimited authorized
Class B, non-participating, voting, no par value, unlimited
authorized, retractable at $0.01 per share.
-14-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
7. CAPITAL STOCK (CONTINUED)
The following shares were converted to common shares and the class of
shares were cancelled on May 6, 1996:
<TABLE>
<CAPTION>
FEBRUARY 28, APRIL 30,
1997 1996
----------- -----------
<S> <C> <C>
Class I common shares, no par value, unlimited
authorized, convertible into either Class III or
IV shares (1996 - 14,756 shares issued) $ - $ 1,314
Class II common shares, no par value, unlimited
authorized, convertible into either Class III or
IV shares (1996 - 955 shares issued) - 868
Class III common shares, no par value, unlimited
authorized, convertible into Class IV shares
(1996 - 3,144 shares issued) - 2,854
--------- ---------
$ - $ 5,036
--------- ---------
--------- ---------
</TABLE>
8. INFORMATION ABOUT OPERATIONS
The Company, operating in a single industry segment, designs, manufactures
and markets equipment used in materials handling applications. Sales to
the single largest customer were 11.6% and 15.0% of consolidated sales
during the ten months ended February 28, 1997 and during the year ended
April 30, 1996, respectively. Transfers between geographic areas are
primarily accounted for at cost plus 10%. Information about the Company's
operations in different geographic areas is shown below:
<TABLE>
<CAPTION>
TEN MONTHS ENDED FEBRUARY 28, 1997
---------------------------------------------------------------------
NORTH
AMERICA EUROPE OTHER ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 42,706 $ 19,321 $ 3,925 $ - $ 65,952
Transfers between areas 529 - - (529) -
---------- ---------- ---------- ---------- ----------
Total sales $ 43,235 $ 19,321 $ 3,925 $ (529) $ 65,952
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Operating income $ 6,088 $ 874 $ 293 $ - $ 7,255
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Depreciation and
amortization expense $ 1,649 $ 1,189 $ - $ - $ 2,838
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Equity in income of
joint venture $ - $ - $ 55 $ - $ 55
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net income $ 2,363 $ (100) $ 293 $ - $ 2,556
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Identifiable assets $ 25,122 $ 26,046 $ 1,282 $ - $ 52,450
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Capital expenditures $ 551 $ 958 $ - $ - $ 1,509
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
-15-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
8. INFORMATION ABOUT OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1996
---------------------------------------------------------------------
NORTH
AMERICA EUROPE OTHER ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 55,079 $ 21,240 $ 3,989 $ - $ 80,308
Transfers between areas 1,173 1 - (1,174) -
---------- ---------- ---------- ---------- ----------
Total sales $ 56,252 $ 21,241 $ 3,989 $ (1,174) $ 80,308
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Operating income $ 9,049 $ 662 $ 299 $ - $ 10,010
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Depreciation and
amortization expense $ 1,700 $ 1,090 $ - $ - $ 2,790
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Equity in income of
joint venture $ - $ - $ 194 $ - $ 194
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net income $ 4,629 $ (71) $ 299 $ - $ 4,857
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Identifiable assets $ 27,971 $ 21,175 $ 1,698 $ - $ 50,844
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Capital expenditures $ 2,427 $ 1,796 $ - $ - $ 4,223
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
9. RELATED PARTY TRANSACTIONS
During the year, sales of semi-finished products to the joint venture
company, Kenhar Korea Products Company, amounted to $3,498 (1996 - $3,875).
10. ACQUISITIONS
Effective July 1 and November 1, 1996, the Company acquired 60% of the
shares of Nuova SAR s.r.l. and all of the operating assets of Iron Works
Inc. Nuova SAR is a manufacturer of material handling equipment, located
in Brescia, Italy, and Iron Works is a distributor of material handling
equipment in Northeastern USA.
The acquisitions have been accounted for by the purchase method and these
consolidated financial statements include the results of operations of
these businesses from the dates of acquisition.
-16-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
10. ACQUISITIONS (CONTINUED)
Details of the acquisitions are as follows:
Net assets acquired at assigned values:
Current assets (including cash of $50) $ 3,106
Property, plant and equipment 1,910
Other assets 470
Goodwill 1,642
---------
7,128
Current liabilities (including bank indebtedness
of $686) (2,683)
Long-term debt and other liabilities (690)
Minority interest in net assets (302)
---------
(3,675)
---------
$ 3,453
---------
---------
Consideration paid:
Cash $ 2,853
Notes payable 600
---------
$ 3,453
---------
---------
Goodwill acquired in connection with the transactions is being amortized on
a straight-line basis over 25 and 10 years, respectively.
Pro forma financial statements disclosing the results of operations as
though the companies had combined at the beginning of 1997 and 1996 have
not been presented as the acquisitions have not materially impacted the
consolidated results.
11. COMMITMENTS
The Company is committed to payments under operating leases for equipment
and buildings and rent through 2002 in the amount of approximately $1,323.
Annual payments are: 1998 - $569; 1999 - $312; 2000 - $202; 2001 - $140;
and 2002 - $100.
-17-
<PAGE>
KENHAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN MONTHS ENDED FEBRUARY 28, 1997 AND YEAR ENDED APRIL 30, 1996
(U.S. DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
12. FOREIGN CURRENCY ACTIVITIES
The Company enters into forward foreign exchange contracts to manage
exposure to currency rate fluctuations related primarily to its future net
cash flows of U.S. dollars from operations. The purpose of the Company's
foreign exchange activities is to minimize the effect of exchange rate
fluctuations on business decisions and the resulting uncertainty on future
financial results. At February 28, 1997, the Company was committed to a
series of monthly forward exchange contracts in the amount of U.S. $6,500
at an average rate of 1.3450 with maturity dates from March 5, 1997 to
August 27, 1997. The premiums paid to acquire these contracts are being
amortized on a straight-line basis to the settlement date. At February 28,
1997 and April 30, 1996, respectively, accrued forward foreign exchange
gains (losses) were ($91) and $88 and have been included in the
accompanying consolidated statement of operations.
13. DEFERRED COMPENSATION
The Company has deferred contribution plans covering certain employees.
Contributions to the plans totalling $310 and $234 in 1996 and 1997,
respectively, have been recorded as an expense for the year. The Company
also maintains deferred benefit plans covering certain employees, however
the plans are not material to the Company's financial statements.
14. SUBSEQUENT EVENT
On March 11, 1997, the shareholders of the Company sold all their shares of
the Company to Cascade Corporation. These financial statements do not reflect
the effects of this transaction.
-18-
<PAGE>
CASCADE CORPORATION
PRO FORMA FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The unaudited pro forma combined financial statements are provided as required
by Regulation S-X of the Securities and Exchange Commission relative to the
acquisition of Kenhar Corporation.
On March 11, 1997, Cascade Corporation (the Company) acquired all of the
outstanding common stock of Kenhar Corporation (Kenhar). The total acquisition
cost was $71.9 million and included 1,100,000 exchangeable preference shares of
Cascade Canada stock exchangeable share for share into 1,100,000 shares of
Cascade Corporation common stock.
Although reporting is not required due to the size of such acquisitions, the
Company has included in the pro forma financial statements, financial
information of Industrial Tires Limited (ITL), White Systems Pty., and EML
Industry AB (collectively "1996 Acquisitions") and Hyco-Cascade acquired in
February 1997. The total acquisition of Hyco-Cascade was $12.2 million and
included 225,000 shares of Cascade Corporation common stock. All of the above
acquisitions were accounted for as purchases.
The following pro forma condensed combined balance sheet presents the unaudited
combined balances of the Company, Kenhar and Hyco-Cascade as if the acquisition
occurred as of the balance sheet date.
The following pro forma condensed combined statement of operations for the year
ended January 31, 1997 presents the results of operations of the combined
entities assuming that all the acquisitions had been completed as of the
beginning of the period. The revenues have not been adjusted to consider any
benefit that may have occurred from the combination of the operations. Expenses
have not been reduced to reflect any operational efficiencies that may result
from the combination of the entities.
These pro forma statements include all material adjustments necessary to restate
the historical results to accommodate these assumptions. However, the pro forma
combined balances are not necessarily indicative of the operating results or
financial position which would have resulted had the acquisitions actually
occurred on the dates indicated. These pro forma statements should be read in
conjunction with the historical financial statements and accompanying notes of
Cascade Corporation.
-19-
<PAGE>
CASCADE CORPORATION
COMBINED PRO FORMA BALANCE SHEET (NOTE 1)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASCADE
CORPORATION KENHAR HYCO
JANUARY 31, FEBRUARY 28, JANUARY 31, PRO FORMA
1997 1997 1997 ADJUSTMENTS COMBINED
------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 15,642 $ 1,247 $ 1 $ (1,205)(6) $ 15,685
Accounts receivable 43,469 13,725 3,061 (1,007)(5) 59,248
Receivable from joint venture - 772 - - 772
Inventories 36,002 8,563 4,252 522 (2) 49,339
Deferred income taxes 1,496 68 - 148 (2) 1,712
Prepaid expenses 2,020 303 111 - 2,434
------------- ------------- ------------- ------------- -------------
Total current assets 98,629 24,678 7,425 (1,542) 129,190
Property, plant and equipment 81,393 19,194 1,342 4,832 (2) 106,761
Deferred income taxes 1,139 523 - - 1,662
Investments and other assets - 1,606 - - 1,606
Goodwill and intangibles 18,332 6,449 187 73,922 (2) 98,890
------------- ------------- ------------- ------------- -------------
Total assets $ 199,493 $ 52,450 $ 8,954 $ 77,212 $ 338,109
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Current liabilities:
Notes payable to bank $ 29,846 $ 3,611 $ - $ 63,170 (6) $ 96,627
Current portion of long-term debt 2,264 810 - - 3,074
Accounts payable 21,373 6,330 4,552 - 32,255
Accrued payroll and taxes 4,222 1,215 329 - 5,766
Other accrued expenses 8,174 3,622 177 561 (2) 12,534
------------- ------------- ------------- ------------- -------------
Total current liabilities 65,879 15,588 5,058 63,731 150,256
Long-term debt 12,810 30,943 2,070 (1,007)(5) 44,816
Deferred income taxes 5,151 371 - - 5,522
Accrued environmental expenditures 8,913 - - - 8,913
Other liabilities 3,033 2,566 - - 5,599
------------- ------------- ------------- ------------- -------------
Total liabilities 95,786 49,468 7,128 62,724 215,106
------------- ------------- ------------- ------------- -------------
Mandatorily redeemable convertible
preferred stock 4,950 - - - 4,950
------------- ------------- ------------- ------------- -------------
Shareholders' equity:
Preferred stock - - - 15,640 (4)(6) 15,640
Common stock 6,024 2,944 4 (2,948)(1) 6,024
Additional paid-in capital - 394 - 2,857 (1),(6) 3,251
Retained earnings 94,561 (360) 1,799 (1,439)(1) 94,561
Cumulative translation adjustment (1,142) 4 23 (27)(1) (1,142)
Treasury stock (686) - - 405 (6) (281)
------------- ------------- ------------- ------------- -------------
Total shareholders' equity 98,757 2,982 1,826 14,488 118,053
------------- ------------- ------------- ------------- -------------
Total liabilities and
shareholders' equity $ 199,493 $ 52,450 $ 8,954 $ 77,212 $ 338,109
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of this pro forma statement.
-20-
<PAGE>
CASCADE CORPORATION
COMBINED PRO FORMA STATEMENT OF OPERATIONS (NOTE 2)
FOR THE YEAR ENDED JANUARY 31, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASCADE 1996 PRO FORMA
CORPORATION KENHAR HYCO ACQUISITIONS ADJUSTMENTS COMBINED
------------- ------------ -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 218,485 $ 80,629 $ 22,142 $ 40,821 $ (3,809)(e) $ 358,268
------------- ------------ -------------- ------------- -------------- -------------
Operating expenses:
Cost of goods sold 143,080 57,425 13,419 29,778 (3,809)(e) 239,893
Depreciation and
amortization 10,280 3,252 151 1,267 5,327 (a),(b) 20,277
Selling and
administrative 40,275 9,636 9,247 8,794 - 67,952
------------- ------------ -------------- ------------- -------------- -------------
193,635 70,313 22,817 39,839 1,518 328,122
------------- ------------ -------------- ------------- -------------- -------------
Operating income (loss) 24,850 10,316 (675) 982 (5,327) 30,146
Interest expense 876 2,864 173 748 5,179 (c) 9,840
Interest income (1,076) - - - - (1,076)
Equity in income of
joint venture - (135) - - - (135)
Other expenses, net 65 357 (596) 79 - (95)
------------- ------------ -------------- ------------- -------------- -------------
Income (loss) before income
taxes 24,985 7,230 (252) 155 (10,506) 21,612
Income taxes 7,565 3,293 - 192 (3,054)(d) 7,996
------------- ------------ -------------- ------------- -------------- -------------
Net income (loss) $ 17,420 $ 3,937 $ (252) $ (37) $ (7,452) $ 13,616
------------- ------------ -------------- ------------- -------------- -------------
------------- ------------ -------------- ------------- -------------- -------------
Net income per share $ 1.48 $ 1.01
------------- -------------
------------- -------------
Weighted average shares
outstanding 11,796,677 13,422,501(f)
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of this pro forma statement.
-21-
<PAGE>
CASCADE CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The pro forma combined balance sheet and statement of operations present the
audited balances of Cascade Corporation (the Company) as of and for the year
ended January 31, 1997 and the balances of Kenhar Corporation (Kenhar) as of
February 28, 1997 and for the twelve month period ended January 31, 1997, the
unaudited balances of Industrial Tires Ltd. (ITL), White Systems Pty., and
EML Industry AB (collectively known as "1996 Acquisitions") for the period
February 1, 1996 to each respective acquisition date, and Hyco-Cascade (Hyco)
as of and for the twelve month period ended January 31, 1997. The results of
operations for the 1996 Acquisitions for the period from the acquisition date
through January 31, 1997 are included in the Company's results of operations
for the year ended January 31, 1997. The pro forma combined balances are
not necessarily indicative of balances which would have resulted had the
acquisitions actually occurred on the dates indicated.
NOTE 1
The combined pro forma balance sheet has been prepared to reflect the
acquisition of Kenhar and Hyco by the Company as of January 31, 1997. The
aggregate purchase price for the Kenhar acquisition was approximately $71.9
million and includes $55.9 million in borrowings and approximately $15.6
million in exchangeable preference shares of Cascade Canada stock,
exchangeable share for share into Cascade Corporation common stock. The
aggregate acquisition cost of the Hyco acquisition was approximately $12.2
million which consisted of $1.2 million, $3.6 million and $7.2 million in
cash, stock and debt. As part of the Hyco acquisition agreement, if certain
of Hyco's sales reach specified targets over each of the next two years
additional consideration totalling $1.5 million will be paid. No pro forma
balance sheet information is reflected for the 1996 Acquisitions as such
balances are included in the Company's January 31, 1997 balance sheet.
The following adjustments are reflected in the combined pro forma balance
sheet as of January 31, 1997 (in thousands):
1) The elimination of the historical shareholders' equity accounts of Kenhar
and Hyco.
2) Net assets acquired of Kenhar and Hyco at estimated fair value at
acquisition date and related acquisition expenses.
3) Recognition of the excess of acquisition costs of $84.1 million over the
fair value of net assets acquired (intangibles) of $10.1 million.
4) The value of Cascade Corporation shares issued relative to the
acquisitions.
5) Elimination of intercompany accounts between Hyco and the Company.
6) Cash paid of $1,205,000, borrowings of $63,170,000, issuance of
convertible preferred stock of $15,640,000 and issuance of common stock
of $3,656,000 necessary to complete the acquisitions.
-22-
<PAGE>
CASCADE CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 2
The following adjustments are reflected in the combined pro forma statement of
operations for the year ended January 31, 1997 (in thousands):
a) Adjustment of $4.5 million for amortization of intangibles on a
straight line basis, using a life of approximately 20 years.
b) Additional annual depreciation of $827,000 resulting from increased
basis of property and equipment acquired and based on estimated useful
lives from 5 to 30 years.
c) Annual interest charges on $63.2 million of new acquisition related
borrowings and $18.4 million for borrowings relative to ITL at a
variable rate of 6.375%.
d) Reduction of federal income taxes relating to foregoing adjustments.
e) Elimination of sales from Kenhar to Cascade, ITL and Hyco, and related
cost of goods sold.
f) The weighted average shares outstanding assumes conversion of the
preferred stock and issuance of the common stock on February 1, 1996.
NOTE 3
The Company has used short-term borrowings to fund the acquisitions discussed
above but intends to secure long-term financing in 1997.
-23-
