<PAGE> 1
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO CURRENT REPORT ON FORM 8-K
ON
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): DECEMBER 2, 1997
EVI, INC.
(Exact name of registrant as specified in charter)
<TABLE>
<C> <C> <C>
DELAWARE 1-13086 04-2515019
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
5 POST OAK PARK, SUITE 1760,
HOUSTON, TEXAS 77027-3415
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (713) 297-8400
================================================================================
Exhibit Index Appears on Page 46
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The following are the consolidated financial statements of Trico
Industries, Inc. ("Trico") and the combined financial statements of BMW Monarch
(Lloydminster) Ltd. and BMW Pump Inc. (collectively, "BMW"), the businesses
acquired by EVI, Inc. (the "Company"), for the periods specified in Rule 3-05(b)
of Regulation S-X.
2
<PAGE> 3
TRICO INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1996 AND 1995
AND SEPTEMBER 30, 1997 (UNAUDITED) . . . . . . . . . . . . . . . . . . . . . 5
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) . . . . . . . . . . . . . . . . . . 6
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY FOR THE
YEARS ENDED DECEMBER 31, 1996 AND 1995 AND THE NINE
MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) . . . . . . . . . . . . . . . . 7
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) . . . . . . . . . . . . . . . . . . 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
3
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Trico Industries, Inc.
We have audited the accompanying consolidated balance sheets of Trico
Industries, Inc. and Subsidiary at December 31, 1996 and 1995 and the related
consolidated statements of operations, stockholder's equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. 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 Trico
Industries, Inc. at December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
San Antonio, Texas
January 15, 1998
4
<PAGE> 5
TRICO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1995 1997
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
(Unaudited)
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 1,560 $ 1,807 $ 693
Accounts Receivable, Net of Allowance
for Losses of $286 in 1996 and
$276 in 1995 and $306 at
September 30, 1997 11,711 11,057 10,813
Inventories 21,363 21,050 24,091
Deferred Taxes 2,168 2,224 2,818
Income Taxes Receivable - - 1,391
Other current assets 362 478 448
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 37,164 36,616 40,254
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 1,414 1,519 1,414
Buildings and Other Property 10,877 10,720 10,595
Machinery and Equipment 31,467 33,694 28,734
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
43,758 45,933 40,743
Less: Accumulated Depreciation (27,595) (27,213) (26,554)
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
16,163 18,720 14,189
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
DUE FROM PACCAR INC 12,829 10,036 12,271
PROPERTY HELD FOR SALE 2,411 2,715 435
GOODWILL, NET OF ACCUMULATED
AMORTIZATION OF $5,435 IN 1996 AND
$4,785 IN 1995, AND $5,925 AT
SEPTEMBER 30, 1997 10,071 10,721 9,581
INVESTMENT IN BMW MONARCH 3,350 1,863 4,063
DEFERRED INCOME TAXES 829 1,487 -
PENSION COSTS - INTANGIBLE 290 655 290
OTHER ASSETS 164 227 95
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
$83,271 $83,040 $81,178
=========================================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current Maturities of Long-Term Debt $ 30 $ 30 $ 30
Accounts Payable 2,631 3,443 2,755
Accrued Salaries, Bonus and Benefits 1,051 1,044 626
Current Tax Liability 1,460 1,211 -
Accrued Insurance 1,458 1,701 1,595
Other Accrued Liabilities 2,457 2,164 1,543
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 9,087 9,593 6,549
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 9,008 9,045 8,979
ENVIRONMENTAL REMEDIATION RESERVE 9,900 8,600 7,800
DEFERRED INCOME TAXES - - 1,366
BENEFIT PLANS LIABILITY 3,274 3,435 3,885
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common Stock No Par Value, Authorized
20,000,000 Shares, 10,000,000 Shares
Issued and Outstanding 65,342 65,342 65,342
Additional Paid-in Capital 2,462 1,678 3,110
Accumulated Deficit (15,895) (14,734) (15,920)
Cumulative Foreign Currency Translation 93 81 67
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 52,002 52,367 52,599
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------------------
$83,271 $83,040 $81,178
=========================================================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
5
<PAGE> 6
TRICO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
<TABLE>
<CAPTION>
NINE
YEAR ENDED MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------
1996 1995 1997 1996
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES $72,100 $78,359 $51,459 $51,040
COSTS AND EXPENSES:
Cost of sales 50,664 54,579 36,423 35,979
Selling, general and
administrative 20,881 22,239 15,346 15,255
Provision for environmental remediation 1,300 5,800 (2,100) 1,300
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------
72,845 82,618 49,669 52,534
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (745) (4,259) 1,790 (1,494)
OTHER INCOME (EXPENSE):
Equity in earnings of BMW Monarch 1,490 985 832 1,211
Interest expense (634) (619) (493) (459)
Provision for estimated losses on
property held for sale (200) (800) (538) (200)
Other income (expense), net (62) (168) (57) (361)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------
594 (602) (256) 191
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (151) (4,861) 1,534 (1,303)
INCOME TAX EXPENSE (BENEFIT) 321 (1,419) 797 (191)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $(472) $(3,442) $ 737 $ (1,112)
=========================================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
6
<PAGE> 7
TRICO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(Thousands of Dollars)
<TABLE>
<CAPTION>
CUMULATIVE
ADDITIONAL FOREIGN
COMMON PAID-IN ACCUMULATED CURRENCY
STOCK CAPITAL DEFICIT TRANSLATION TOTAL
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1994 $ 65,342 $ 989 $ (10,608) $ 80 $ 55,803
Capital Contribution - Noncash - 689 - - 689
Net Loss - - (3,442) - (3,442)
Foreign currency translation - - - 1 1
Dividends - - (684) - (684)
--------------------------------------------------------------------
Balances at December 31, 1995 65,342 1,678 (14,734) 81 52,367
Capital Contribution - Noncash - 784 - - 784
Net Loss - - (472) - (472)
Foreign currency translation - - - 12 12
Dividends - - (689) - (689)
--------------------------------------------------------------------
Balances at December 31, 1996 65,342 2,462 (15,895) 93 52,002
Capital Contribution - Noncash (Unaudited) - 648 - - 648
Net Income (Unaudited) - - 737 - 737
Foreign currency translation (Unaudited) - - - (26) (26)
Dividends (Unaudited) - - (762) - (762)
--------------------------------------------------------------------
Balances at September 30, 1997 (Unaudited) $ 65,342 $ 3,110 $ (15,920) $ 67 $ 52,599
====================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
7
<PAGE> 8
TRICO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1996 1995 1997 1996
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (472) $ (3,442) $ 737 $(1,112)
Items included in net income (loss) not
affecting cash:
Depreciation 2,866 3,051 2,061 2,253
Goodwill amortization 650 655 490 487
Deferred income tax provision 714 229 1,546 483
Provision for environmental remediation 1,300 5,800 (2,100) 1,300
Provision for losses on property held
for sale 200 800 538 200
PACCAR administrative charge converted
to capital 784 689 648 591
Equity in earnings of BMW Monarch (1,490) (985) (832) (1,211)
Change in operating assets and liabilities:
Accounts Receivable (654) 655 898 1,312
Inventories (313) 535 (2,728) (1,415)
Due from PACCAR Inc (2,793) 1,647 558 (2,507)
Accounts payable and accrued expenses (506) (5,504) (2,539) (579)
Benefit plans 204 203 611 124
Other 191 343 (1,434) 105
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------- -----------------------------
Net Cash Provided by (Used in) Operating
Activities 681 4,676 (1,546) 31
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (758) (3,575) (466) (698)
Proceeds from sale of assets 553 527 1,817 176
Other 3 209 119 97
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------- -----------------------------
Net Cash (Used in) Provided by
Investing Activities (202) (2,839) 1,470 (425)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to PACCAR (689) (684) (762) (689)
Principal payments of long-term debt (37) (34) (29) (26)
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (726) (718) (791) (715)
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (247) 1,119 (867) (1,109)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,807 688 1,560 1,807
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $1,560 $ 1,807 $ 693 $ 698
======================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
8
<PAGE> 9
TRICO INDUSTRIES, INC.
YEARS ENDED
DECEMBER 31, 1996 AND 1995
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Dollars)
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTE A--SUMMARY OF ACCOUNTING POLICIES
Nature of Operations: Trico Industries, Inc. (the "Company" or "Trico"), a
wholly owned subsidiary of PACCAR Inc ("PACCAR" or "Parent"), is a manufacturer
and supplier of oilfield equipment. The Company's headquarters and primary
warehouse facility are located in San Marcos, Texas.
Due to the nature of the Company's business, customers are concentrated in the
geographic areas where exploration and/or production of oil and natural gas is
conducted in the United States and certain foreign countries.
In 1987 the Company was acquired by PACCAR for consideration of $65,342. The
acquisition was accounted for as a purchase. The accompanying financial
statements reflect the fair values of the Company's assets and liabilities at
the date of acquisition. The purchase cost became the Company's stockholder's
equity as of the date of purchase. The valuation process resulted in excess of
cost over the net assets acquired, goodwill, of approximately $14,000.
Retained earnings (deficit) represents net income (loss) since the acquisition
date.
The accompanying unaudited interim consolidated financial statements include
all adjustments, consisting of only normal recurring adjustments, that, in the
opinion of management, are necessary to present fairly the financial position
as of September 30, 1997 and the results of operations and cash flows for the
nine months ended September 30, 1996 and 1997. The results for the nine months
ended September 30, 1997 are not necessarily indicative of the results to be
expected for the full year. Information as of September 30, 1997 and for the
nine months ended September 30, 1996 and 1997 are unaudited.
Principles of Consolidation: The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary.
Investments in affiliated companies owned 20% or more are accounted for on the
equity method. All significant intercompany accounts and transactions are
eliminated in consolidation.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Inventories: Inventories are stated at the lower of cost or market. Cost of all
inventories is determined principally by the last-in, first-out (LIFO) method.
Goodwill: Goodwill is amortized on a straight-line basis over periods of 15 and
25 years. Amortization expense totaled $650 in 1996 and $655 in 1995.
9
<PAGE> 10
\
TRICO INDUSTRIES, INC.
YEARS ENDED
DECEMBER 31, 1996 AND 1995
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Dollars)
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTE A--SUMMARY OF ACCOUNTING POLICIES (continued)
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Depreciation of plant and equipment is computed principally by the
straight-line method based upon the estimated useful lives of the various
classes of assets which range as follows:
Machinery and Equipment 5-12 years
Buildings 30-40 years
Repairs and maintenance are expensed as incurred.
Property Held for Sale: Property held for sale is stated at the lower of
carrying amount or estimated fair value less costs to sell.
Environmental Remediation Cost: Expenditures that relate to current operations
are expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations and which do not contribute to
current or future revenue generation are expensed. Liabilities are accrued when
it is probable the Company will be obligated to pay amounts for environmental
site evaluation, remediation or related costs, and such amounts can be
reasonably estimated. Accruals are adjusted as further information develops or
circumstances change. Cost of future expenditures for environmental
remediation obligations are not discounted to their present values.
Revenue Recognition: Sales of oilfield equipment and related aftermarket parts
are recorded by the Company when products are shipped to dealers or customers.
Service revenues are recognized when services are performed.
Income Taxes: The Company's operations are included in the consolidated federal
income tax return of its Parent. The Company's income tax provision is
determined on a separate company basis. Any taxes (benefit) allocated to the
Company are payable to (by) the Parent.
<TABLE>
NOTE B--INVENTORIES
1996 1995
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Inventories at first-in, first-out (FIFO) cost:
Finished products $20,069 $18,304
Work in process 3,401 3,485
Work in process and raw materials 1,609 2,384
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------
25,079 24,173
Less excess of FIFO cost over LIFO (3,716) (3,123)
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------
$21,363 $21,050
======================================================================================================================
</TABLE>
10
<PAGE> 11
TRICO INDUSTRIES, INC.
YEARS ENDED
DECEMBER 31, 1996 AND 1995
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Dollars)
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTE C--LEASES
Trico leases various office space under operating leases. Additionally,
operating leases exist for copier equipment. Leases expire at various dates
through the year 2018. Annual minimum rental payments due under operating
leases for the five years beginning January 1, 1997, are $293, $282, $228, $132
and $73 with $783 minimum rental payments thereafter.
Total rental expenses under all leases for the two years ended December 31,
1996 and 1995, were $1,010 and $880, respectively.
NOTE D--INVESTMENT IN AFFILIATE
The Company owns a 30 percent investment in BMW Monarch (Lloydminster) Ltd.
(BMW Monarch), incorporated under the laws of the Province of Alberta, Canada,
which is primarily engaged in the supply and services of oilfield equipment.
The Company's results of operations for the years ended December 31, 1996 and
1995 include its equity share in the income of BMW Monarch for the years ended
March 31, 1996 and 1995, respectively. Summary financial information for BMW
Monarch as of March 31, 1997 and 1996 and for the years then ended is
summarized below:
<TABLE>
<CAPTION>
March 31,
Assets 1997 1996
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 38,741 $ 18,286
Advance to affiliated company 2,204 1,847
Property, plant and equipment 2,724 1,589
Other 121 -
----------------------------------
Total assets $ 43,790 $ 21,722
==================================
Liabilities and Equity
- - - - - - - - - - - - - - - ----------------------
Current liabilities $ 32,287 $ 15,342
Long-term debt 340 12
Other liabilities 213 177
Equity 10,950 6,191
----------------------------------
Total Liabilities and Equity $ 43,790 $ 21,722
==================================
</TABLE>
11
<PAGE> 12
TRICO INDUSTRIES, INC.
YEARS ENDED
DECEMBER 31, 1996 AND 1995
- - - - - - - - - - - - - - - ------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Dollars)
- - - - - - - - - - - - - - - ------------------------------------------------------------------------------
NOTE D--INVESTMENT IN AFFILIATE (continued)
<TABLE>
<CAPTION>
Year Ended March 31
1997 1996
------------------------
Operations
----------
<S> <C> <C>
Sales $101,449 $62,315
Gross profit 18,988 12,038
Net income 4,957 2,498
</TABLE>
NOTE E--PROPERTY HELD FOR SALE
Trico owns a number of properties that are being held for sale. Trico has
estimated the market values of such properties and has adjusted the carrying
amounts of such properties to the estimated net realizable values. During the
years ended December 31, 1996 and 1995, Trico recorded charges to income of
approximately $200 and $800, respectively, representing adjustments to the
carrying values.
NOTE F--BORROWINGS
<TABLE>
<CAPTION>
1996 1995
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial revenue bonds,
floating rate $8,882 $8,910
Capital lease obligations 156 165
Less current portions (30) (30)
- - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------
$9,008 $9,045
====================================================================================================
</TABLE>
The interest rate on the industrial revenue bonds is floating and was 3.1% and
5.1% at December 31, 1996 and 1995, respectively. Bond contract terms require
interest only payments to maturity, occurring in December 2002. The fair value
of the revenue bonds is equal to the carrying value for both 1996 and 1995.
Interest expense was $632 in 1996 and $592 in 1995, which included $213 in 1996
and $154 in 1995 that was paid to PACCAR relating to a carrying charge on the
Company's inventory.
Annual maturities for long-term debt including industrial revenue bonds and
capital leases for the five years beginning January 1, 1997 are $30, $44, $47,
$50 and $36, and $8,831 thereafter.
NOTE G--COMMITMENTS AND CONTINGENCIES
Trico is involved in various stages of investigations and cleanup actions
related to environmental matters. In certain of these matters, Trico has been
designated as a potentially responsible party by the U.S. Environmental
Protection Agency or by a state-level environmental agency. Trico has conducted
an environmental study of all its properties and has accrued its best estimate
of its obligation at December 31, 1996, which is $9,900 and which is included
in long-term liabilities. Trico could incur additional obligations of up to
approximately $1,000. It is possible that Trico's recorded estimate of its
obligation may change in the near term.
12
<PAGE> 13
TRICO INDUSTRIES, INC.
YEARS ENDED
DECEMBER 31, 1996 AND 1995
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Dollars)
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTE G--COMMITMENTS AND CONTINGENCIES (continued)
During the years ended December 31, 1996 and 1995, Trico recorded expenses
related to environmental matters of $1,300 and $5,800, respectively.
At both December 31, 1996 and 1995, Trico had standby letters of credit
outstanding totaling $9,167. Other performance- related letters of credit were
outstanding at December 31, 1996 and 1995 totaling $1,157 and $947,
respectively.
Trico is a defendant in various legal proceedings, and in addition, there are
various other contingent liabilities arising in the normal course of business.
After consultation with legal counsel, management does not anticipate that
disposition of these proceedings and contingent liabilities will have a
material effect on its financial position or results of operations.
NOTE H--BENEFIT PLANS
Defined benefit retirement plan:
Trico has a defined benefit retirement plan which covers a majority of its
employees. Benefits under the plan are generally based on employee's highest
compensation levels and total years of service. Trico's policy is to fund its
plan based on legal requirements, tax considerations, and investment
opportunities.
The assumptions used in determining actuarial present value of plan benefit
obligations:
<TABLE>
<CAPTION>
1996 1995
- - - - - - - - - - - - - - - -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Discount Rate 7.50% 7.50%
Rate of increase in future compensation levels 4.75% 5.75%
Assumed long-term rate of return on plan assets 8.00% 8.00%
=====================================================================================================
Components of pension expense:
Interest cost $ 911 $ 950
Service cost 419 466
Return on assets (1,762) (2,493)
Net amortization and deferrals 681 1,580
- - - - - - - - - - - - - - - -----------------------------------------------------------------------------------------------------
Net pension expense $ 249 $ 503
=====================================================================================================
Funded Status at December 31:
Vested benefit obligation $12,613 $12,885
Accumulated benefit obligation 12,754 13,056
=====================================================================================================
</TABLE>
13
<PAGE> 14
TRICO INDUSTRIES, INC.
YEARS ENDED
DECEMBER 31, 1996 AND 1995
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Dollars)
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTE H--BENEFIT PLANS (continued)
<TABLE>
<CAPTION>
1996 1995
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Plan assets at fair value $ 14,256 $ 13,467
Projected benefit obligation (12,918) (13,437)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
Excess of plan assets 1,338 30
Unrecognized net asset (134) (155)
Unrecognized net experience gain (2,328) (759)
Unrecognized prior service cost (18) (20)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
Pension liability $(1,142) $ (904)
=====================================================================================================================
</TABLE>
Supplemental retirement plan:
Trico has an unfunded supplemental retirement plan for employees whose benefits
under the qualified salaried retirement plan are reduced because of
compensation deferral elections or limitations under federal laws. Pension
expense for this plan was $153 in 1996 and $232 in 1995. At December 31, 1996
and 1995, the projected benefit obligation for this plan was $897 and $1,422,
respectively. The accumulated benefit obligation of $819 in 1996 and $1,304 in
1995 has been recognized as a liability in the balance sheet and is equal to
the amount of vested benefits. The assumptions used in determining actuarial
present value of the supplemental plan benefit obligations are the same as
those used for the defined benefit retirement plan above.
Additionally, Trico is liable for future benefits payable to various employees
who retired prior to its acquisition by PACCAR. These benefits are in addition
to benefits being received under the above plans. This liability is unfunded.
As of December 31, 1996 and 1995, the Company has an accrual of approximately
$750 and $700, respectively, included in benefit plans liability.
Postretirement medical insurance plan:
Trico, through PACCAR, had an unfunded postretirement medical insurance plan
covering its employees, which reimburses retirees for approximately 50% of
their medical cost from retirement. Retiree expense related to this plan of
approximately $107 and $99 in 1996 and 1995, respectively, was paid to PACCAR.
The unfunded accrued postretirement benefits were approximately $613 and $477
at December 31, 1996 and 1995, respectively.
14
<PAGE> 15
TRICO INDUSTRIES, INC.
YEARS ENDED
DECEMBER 31, 1996 AND 1995
- - - - - - - - - - - - - - - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Dollars)
- - - - - - - - - - - - - - - --------------------------------------------------------------------------------
NOTE I--INCOME TAXES
<TABLE>
<CAPTION>
1996 1995
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income (loss) before income taxes:
Domestic $ 402 $(4,736)
Foreign (553) (125)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
$(151) $(4,861)
=====================================================================================================================
Provision for income taxes:
Current provision (benefit):
Federal $(383) $(1,516)
Foreign - -
State (10) (132)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
(393) (1,648)
Deferred provision:
Federal and State 714 229
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
$321 $(1,419)
=====================================================================================================================
Reconciliation of statutory U.S. tax to actual provision:
Statutory rate 35% 35%
Statutory tax $ (53) $(1,701)
Effect of:
State income taxes 22 (81)
Goodwill 188 178
Valuation allowance on foreign tax loss carryforward 194 44
Other (30) 141
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
$ 321 $(1,419)
=====================================================================================================================
Components of deferred tax assets (liabilities):
Assets:
Foreign operating losses $ 238 $ 44
Accrued liabilities and reserves 7,996 7,711
Valuation allowance (238) (44)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
7,996 7,711
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
Liabilities:
Investment in BMW Monarch (1,257) (707)
Property and equipment (2,061) (2,010)
Inventory (465) (310)
Other (1,216) (973)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
(4,999) (4,000)
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
Net deferred tax asset $ 2,997 $3,711
- - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
TRICO INDUSTRIES, INC.
YEARS ENDED
DECEMBER 31, 1996 AND 1995
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Dollars)
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------
NOTE I--INCOME TAXES (continued)
<TABLE>
<CAPTION>
1996 1995
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------
<S> <C> <C>
Classification of deferred tax assets and liabilities:
Deferred taxes and other current assets $2,168 $2,224
Deferred income tax and other 829 1,487
- - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------
Net deferred tax asset $2,997 $3,711
=================================================================================================
</TABLE>
Cash paid for income taxes was approximately $640 in 1996 and $1,300 in 1995.
NOTE J--RELATED PARTY TRANSACTIONS
PACCAR charges the Company for certain administrative services it provides.
These costs are charged to the Company based upon the Company's specific use of
the services and PACCAR's cost. Management considers these charges reasonable
and not significantly different from the costs that would be incurred if the
Company were on a stand-alone basis. Fees for such administrative services of
$784 and $689 for 1996 and 1995, respectively, were charged to the Company. In
lieu of payment, PACCAR recognizes these administrative services as an
additional investment in the Company. The Company expenses such charges and
records the investment as an increase to equity. The Company pays a dividend to
PACCAR for its capital invested in the prior year. Cash dividends of $689 and
$684 were declared in 1996 and 1995, respectively. During the years 1996 and
1995, the Company sold certain products to related entities totaling
approximately $3,500 and $7,900, respectively. The Company participates with
PACCAR for the self-insurance of its general, product, and property liabilities,
as well as workers' compensation. During the years 1996 and 1995, the Company
expensed approximately $625 and $967, respectively, related to such
self-insurance.
NOTE K--SUBSEQUENT EVENT
Effective December 2, 1997, EVI, Inc. purchased all the outstanding shares of
common stock of Trico.
16
<PAGE> 17
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT
17
<PAGE> 18
AUDITORS' REPORT
To EVI, Inc.:
We have audited the combined balance sheets of BMW Monarch (Lloydminster) Ltd.
and BMW Pump Inc. as at March 31, 1997 and 1996 and the combined statements of
income, shareholders' equity and cash flows for the years then ended. These
combined financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in Canada, which are substantially consistent with generally accepted auditing
standards in the United States of America. 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 combined financial statements present fairly, in all
material respects, the combined financial position of BMW Monarch (Lloydminster)
Ltd. and BMW Pump Inc. as at March 31, 1997 and 1996 and the combined results of
their operations and their cash flows for the years then ended in accordance
with generally accepted accounting principles in the United States of America.
Calgary, Alberta, Canada /s/ ARTHUR ANDERSON & CO.
December 31, 1997 Chartered Accountants
18
<PAGE> 19
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED BALANCE SHEETS
AS AT MARCH 31, 1997 AND 1996
(United States Dollars)
<TABLE>
<CAPTION>
ASSETS
1997 1996
---- ----
<S> <C> <C>
Current:
Cash $ 3,766,445 $ 581,891
Accounts receivable, net of allowance for doubtful
accounts of $279,980 (1996 - $361,252) 33,331,848 15,236,788
Inventories, net of reserve for obsolescence of
$644,380 (1996 - $571,202) 13,091,513 8,970,756
Prepaid expenses 109,689 51,007
------------ ------------
50,299,495 24,840,442
------------ ------------
Investment in equity investee -- 78,115
------------ ------------
Property, plant and equipment:
Land and buildings 2,276,579 1,305,951
Machinery and equipment 2,270,289 1,495,100
Vehicles 1,515,394 1,073,999
------------ ------------
6,062,262 3,875,050
Less: accumulated depreciation 1,720,608 1,260,521
------------ ------------
4,341,654 2,614,529
------------ ------------
$ 54,641,149 $ 27,533,086
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Short-term borrowings $ 9,108,170 $ 1,569,582
Accounts payable and accrued liabilities 19,143,095 11,662,109
Income taxes payable 3,557,772 1,782,936
Bonuses and management fees payable to shareholders 3,802,730 2,862,924
Current portion of long-term debt 332,748 347,028
------------ ------------
35,944,515 18,224,579
Long-term debt 340,335 394,440
Shareholder's loan payable to Trico Industries, Inc. 104,610 106,557
Shareholders' loans - other 33,532 34,155
Deferred income taxes 108,350 70,635
------------ ------------
36,531,342 18,830,366
------------ ------------
Shareholders' equity:
Capital stock 34,047 34,047
Retained earnings 18,470,178 8,738,564
Cumulative translation adjustment (394,418) (69,891)
------------ ------------
18,109,807 8,702,720
------------ ------------
$ 54,641,149 $ 27,533,086
============ ============
</TABLE>
Notes to combined financial statements are an integral part
of these combined financial statements
19
<PAGE> 20
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
(United States Dollars)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Sales $ 107,474,934 $ 65,183,307
------------- -------------
Costs and expenses:
Cost of sales 77,604,370 49,067,185
Selling, general and administrative 9,622,470 7,059,011
Bonuses to shareholders 3,553,723 2,535,527
Management fees to Trico Industries, Inc. 330,664 330,154
------------- -------------
91,111,227 58,991,877
------------- -------------
Operating income 16,363,707 6,191,430
------------- -------------
Other income (expense):
Interest expense (475,841) (393,457)
Rental income 524,234 492,667
Gain (loss) on sale of property, plant and equipment (6,109) 3,034
Writedown of investment in equity investee (85,362) --
Share of loss of equity investee -- (68,844)
------------- -------------
(43,078) 33,400
------------- -------------
Income before provision for income taxes 16,320,629 6,224,830
Provision for income taxes 6,589,015 2,744,545
------------- -------------
Net income $ 9,731,614 $ 3,480,285
============= =============
</TABLE>
Notes to combined financial statements are an integral part
of these combined financial statements
20
<PAGE> 21
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
(United States Dollars)
<TABLE>
<CAPTION>
Cumulative
Foreign
Common Shares Currency Total
-------------------------- Retained Translation Shareholders'
Number $ Earnings Adjustment Equity
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1995 6,120 $ 34,047 $ 5,258,279 $ (229,242) $ 5,063,084
Net Income -- -- 3,480,285 -- 3,480,285
Foreign Currency Translation
Adjustment -- -- -- 159,351 159,351
--------- ------------ ------------ ------------ ------------
Balance at March 31, 1996 6,120 $ 34,047 8,738,564 (69,891) 8,702,720
Net Income -- -- 9,731,614 -- 9,731,614
Foreign Currency Translation
Adjustment -- -- -- (324,527) (324,527)
--------- ------------ ------------ ------------ ------------
Balance at March 31, 1997 6,120 $ 34,047 $ 18,470,178 $ (394,418) $ 18,109,807
========= ============ ============ ============ ============
</TABLE>
Notes to combined financial statements are an integral part
of these combined financial statements
21
<PAGE> 22
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
(United States Dollars)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9,731,614 $ 3,480,285
Adjustments to reconcile net income to net cash
Provided (used) by operations:
Depreciation and amortization 633,249 457,708
(Gain) loss on sale of property, plant and equipment 6,109 (3,034)
Writedown of investment in equity investee 85,362 --
Share of loss from equity investee -- 68,844
Writedown of goodwill -- 17,902
Deferred income taxes 39,681 70,433
Change in other operating assets and liabilities (see Note 7) (12,435,634) (174,611)
------------ ------------
Net cash provided (used) by operating activities (1,939,619) 3,917,527
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (2,672,578) (1,293,909)
Proceeds from sale of property, plant and equipment 227,611 270,646
Investment in equity investee (7,348) (73,368)
------------ ------------
Net cash used by investing activities (2,452,315) (1,096,631)
------------ ------------
Cash flows from financing activities:
Proceeds from short-term borrowings, net 7,698,179 (2,117,806)
Proceeds from long-term financing 721,232 324,408
Repayment of long-term financing (777,015) (355,089)
Repayment of shareholder loans, net -- (92,179)
------------ ------------
Net cash provided (used) by financing activities 7,642,396 (2,240,666)
------------ ------------
Effect of translation adjustment on cash (65,908) 1,661
------------ ------------
Increase in cash during the year 3,184,554 581,891
Cash at beginning of year 581,891 --
------------ ------------
Cash at end of year $ 3,766,445 $ 581,891
============ ============
</TABLE>
Notes to combined financial statements are an integral part
of these combined financial statements
22
<PAGE> 23
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
(United States Dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of combination and basis of presentation
These combined financial statements include the accounts of BMW Monarch
(Lloydminster) Ltd. and BMW Pump Inc. (collectively, "the Companies").
The accounts of the Companies have been combined on the basis that they
have significant common ownership, and as they largely operate as an
integrated economic entity. All significant intercompany accounts and
transactions have been eliminated in combination.
These combined financial statements are presented in accordance with
generally accepted accounting principles in the United States of
America and have been translated into United States dollars. The
functional currency of the Companies is Canadian dollars.
Nature of operations
The Companies are incorporated under the laws of the Province of
Alberta, Canada and are primarily engaged in the manufacture, sale and
service of oilfield equipment.
Inventories
Inventories are valued using the first-in, first-out ("FIFO") method
and are stated at the lower of cost or market.
Property, plant and equipment
Property, plant and equipment are recorded at cost less accumulated
depreciation. Depreciation is computed using the following methods and
rates:
<TABLE>
<S> <C>
Buildings 5% declining-balance
Vehicles 15% to 30% declining-balance
Machinery and equipment 20% to 30% declining-balance
</TABLE>
The Companies' long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of
any assets may not be recoverable. In performing the review for
recoverability, the Companies estimate the future cash flows expected
to result from the use of the asset and its eventual disposition. If
the sum of the expected future cash flows (undiscounted and without
interest charges) is less than the carrying amount of the asset, an
impairment loss is recognized.
23
<PAGE> 24
Foreign currency translation
These combined financial statements are stated in United States
dollars. Results of operations have been translated using the average
exchange rate during the year. Assets and liabilities have been
translated using the rate in effect at the balance sheet date and the
resulting translation adjustments are included as a separate component
of shareholders' equity.
Revenue recognition
The Companies recognize product revenue as the products are shipped.
Service revenue is recognized as the services are performed.
Accounting for income taxes
Under Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" ("SFAS No. 109"), deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities, and their respective tax bases.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities 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.
Major customers and credit risk
Substantially all of the Companies' customers are engaged in the energy
industry. This concentration of customers may impact the Companies'
overall exposure to credit risk, either positively or negatively, in
that customers may be similarly affected by changes in economic and
industry conditions. The Companies perform ongoing credit evaluations
of their customers and do not generally require collateral in support
of their trade receivables. The Companies maintain reserves for
potential credit losses, and actual losses have historically been
within the Companies' expectations.
In 1997 and 1996, the Companies' largest customer accounted for
approximately 12% (1996 - 10%) of combined sales of the Companies. The
Companies had no other customers that accounted for greater than 10% of
their combined sales.
2. INVENTORIES
Inventories by category are as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Raw materials and components $ 5,272,386 $ 4,102,381
Finished goods 7,819,127 4,868,375
--------------- --------------
$ 13,091,513 $ 8,970,756
=============== ==============
</TABLE>
Finished goods inventories include the cost of materials, labour and
overhead.
24
<PAGE> 25
3. SHORT-TERM BORROWINGS AND LINES OF CREDIT
The Companies' short-term borrowings at March 31, 1997 and 1996
consisted of demand operating loan facilities with a lending
institution (see Note 10). As of March 31, 1997 and 1996, the Companies
had available to them credit facilities providing for up to $14,500,000
in borrowings of which $9,108,170 was outstanding at March 31, 1997.
Borrowings under these facilities are subject to certain requirements
relating to the Companies' accounts receivable and inventory.
Borrowings bear interest at variable rates and are secured by a general
security agreement. These facilities contain covenants relating to
working capital and debt to equity. These facilities also impose
limitations on the Companies' use of funds for capital expenditures.
As at March 31, 1997 and 1996, the Companies' short term borrowings
consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Payable to banks under lines of credit, interest of
5.25% at March 31, 1997, repayable on demand $ 9,108,170 $ 1,569,582
Weighted average interest rate on short-term borrowings
outstanding during the year 5.9% 8.7%
Average borrowings during the year $ 4,655,950 $ 2,280,102
Maximum outstanding during the year $ 9,206,377 $ 3,589,159
</TABLE>
4. LONG-TERM DEBT
The Company's long-term debt at March 31, 1997 and 1996 consisted of
the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Loan repayable in monthly installments over not more than $ 294,934 $ 285,095
18 months, at prime (4.75% at March 31, 1997) plus 1%,
collateralized by specific equipment.
Loan for commercial property construction. Repayable in 378,149 -
interest only payments at prime plus 1.5% until July 1, 1997.
Blended payments of principal repayment and interest are required over
a ten year period commencing July 5, 1997. Collateralized by specific
land and building and assignment of fire insurance.
Loan repayable in monthly installments of $7,463 plus - 456,373
interest at prime plus 1.5%, collateralized by specific vehicles,
land, buildings and equipment.
----------- -----------
673,083 741,468
Less current portion: (332,748) (347,028)
----------- -----------
$ 340,335 $ 394,440
=========== ===========
</TABLE>
25
<PAGE> 26
The following is a summary of scheduled debt maturities by year:
<TABLE>
<S> <C>
1998 $ 332,748
1999 37,815
2000 37,815
2001 37,815
2002 37,815
Thereafter 189,075
-----------
$ 673,083
===========
</TABLE>
The carrying amount of the long-term debt as at March 31, 1997 and 1996
approximates its fair value.
5. CAPITAL STOCK
<TABLE>
<S> <C>
Authorized:
BMW Monarch (Lloydminster) Ltd.
Unlimited number of Class A common voting shares
Unlimited number of Class B common voting shares
Unlimited number of Class C redeemable preferred non-voting shares
Unlimited number of Class D redeemable preferred non-voting shares
Unlimited number of Class E redeemable preferred non-voting shares
BMW Pump Inc.
Unlimited number of Class A common voting shares
Unlimited number of Class B common voting shares
Unlimited number of Class C redeemable preferred non-voting shares
Unlimited number of Class D redeemable convertible non-participating non-voting shares
Unlimited number of Class E non-participating redeemable voting shares
</TABLE>
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Issued and outstanding:
BMW Monarch (Lloydminster) Ltd.
100 Class A common shares $ 29,745 $ 29,745
BMW Pump Inc.
6,020 Class A common shares 4,302 4,302
---------- ----------
$ 34,047 $ 34,047
========== ==========
</TABLE>
There were no changes to authorized or issued capital stock during the
years ended March 31, 1997 and 1996.
Effective April 1, 1997, BMW Pump Inc. and certain of its corporate
shareholders were amalgamated pursuant to the Alberta Business
Corporations Act. The amalgamation had no impact on the Companies'
combined financial position or combined reported results of operations
as at March 31, 1997 and 1996.
26
<PAGE> 27
6. INCOME TAXES
The Companies' provisions for income taxes for the years ended March
31, 1997 and 1996 are comprised as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Current $ 6,549,334 $ 2,674,112
Deferred 39,681 70,433
------------- --------------
$ 6,589,015 $ 2,744,545
============= ==============
</TABLE>
The difference between the tax provision at the statutory federal and
provincial combined tax rate and the tax provision attributable to
income before income taxes for the years ended March 31, 1997 and 1996,
in the accompanying Combined Statements of Income is as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Canadian statutory federal and provincial income tax rate 44.6% 44.6%
Effect of manufacturing and processing income tax reduction (4.5) (4.5)
Effect of non-deductible expenses and other 0.3 0.3
Effect of reassessment of investment tax credits from
prior years -- 3.7
----- -----
40.4% 44.1%
===== =====
</TABLE>
Deferred tax assets and liabilities are recognized for the estimated
future tax effects of temporary differences between the tax basis of an
asset or liability and its reported amount in the financial statements.
The measurement of deferred tax assets and liabilities is based on
enacted tax laws and rates currently in effect. Generally, deferred tax
assets and liabilities are classified as current or noncurrent
according to the classification of the related assets or liability for
financial reporting purposes. The net deferred tax asset (liability)
comprises:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Reserves $ (37,836) $ (28,410)
Deferred tax liabilities:
Property and equipment 146,186 99,045
----------- ----------
Net deferred tax liability $ 108,350 $ 70,635
=========== ==========
</TABLE>
7. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the years ended March 31, 1997 and 1996 for interest
and income taxes was as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Interest paid $ 484,456 $ 396,105
Income taxes paid $ 4,774,497 $ 927,367
</TABLE>
27
<PAGE> 28
The change in cash flows arising from other operating assets and
liabilities is comprised of the following (increases) decreases:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Accounts receivable $ (18,691,358) $ (5,369,190)
Inventories (4,358,820) (1,713,590)
Prepaid expenses (60,646) (14,467)
Accounts payable and accrued liabilities 7,827,214 3,554,273
Income taxes payable 1,838,687 1,740,693
Bonuses payable to shareholders 1,009,289 1,627,670
---------------- --------------
$ (12,435,634) $ (174,611)
================ ==============
</TABLE>
8. LEASE COMMITMENTS
The Companies are committed under operating leases on leased premises
for future minimum rentals as follows:
<TABLE>
<S> <C>
1998 $ 229,373
1999 216,340
2000 213,730
2001 208,396
2002 207,712
-------------
$ 1,075,551
</TABLE>
Lease expense incurred by the Companies' for the years ended March 31,
1997 and 1996 was $177,222 and $142,601 respectively.
9. RELATED PARTY TRANSACTIONS
During 1997, in the normal course of business, BMW Pump Inc. purchased
raw materials of $6,433,465 (1996 - $3,826,205) from a company
controlled by a shareholder.
10. SUBSEQUENT EVENTS
Effective December 3, 1997, EVI, Inc. acquired, directly or indirectly,
all the outstanding shares of the Companies.
On December 3, 1997, all amounts owing by the Companies under the
credit facilities were settled and the credit facilities were
discontinued. EVI Oil Tools Canada Ltd., a subsidiary of EVI, Inc., has
stated its intention to finance future cash needs if they arise.
28
<PAGE> 29
11. Condensed Combining Financial Statements
Condensed Combining Balance Sheets
<TABLE>
<CAPTION>
As at March 31, 1997
---------------------------------------------------------------------------
BMW
BMW Monarch Pump Inc. Elimination
(Lloydminster) Ltd. and other Entries Total
------------------- ------------- -------------- --------------
Assets
<S> <C> <C> <C> <C>
Current assets $ 40,945,640 $ 17,497,885 $ (8,144,030) $ 50,299,495
Investment in affiliated company 120,611 --- (120,611) ---
Net property, plant and equipment 2,724,427 1,617,227 --- 4,341,654
------------- ------------- -------------- -------------
$ 43,790,678 $ 19,115,112 $ (8,264,641) $ 54,641,149
============= ============= ============== =============
Liabilities and shareholders' equity
Current liabilities $ 32,287,057 $ 11,801,488 $ (8,144,030) $ 35,944,515
Long term liabilities 553,295 154,107 (120,575) 586,827
Shareholders' equity 10,950,326 7,159,517 (36) 18,109,807
------------- ------------- -------------- -------------
$ 43,790,678 $ 19,115,112 $ (8,264,641) $ 54,641,149
============= ============= ============== =============
</TABLE>
<TABLE>
<CAPTION>
As at March 31, 1996
---------------------------------------------------------------------------
BMW Monarch BMW Elimination
(Lloydminster) Ltd. Pump Inc. Entries Total
------------------- ------------- -------------- --------------
Assets
<S> <C> <C> <C> <C>
Current assets $ 20,133,360 $ 9,172,759 $ (4,465,677) $ 24,840,442
Investment in equity investee --- 78,115 --- 78,115
Net property, plant and equipment 1,588,553 1,025,976 --- 2,614,529
------------- ------------- -------------- -------------
---
$ 21,721,913 $ 10,276,850 $ (4,465,677) $ 27,533,086
============= ============= ============== =============
Liabilities and shareholders' equity
Current liabilities $ 15,341,686 $ 7,348,570 $ (4,465,677) $ 18,224,579
Long term liabilities 189,393 416,394 --- 605,787
Shareholders' equity 6,190,834 2,511,886 --- 8,702,720
------------- ------------- -------------- -------------
$ 21,721,913 $ 10,276,850 $ (4,465,677) $ 27,533,086
============= ============= ============== =============
</TABLE>
29
<PAGE> 30
Condensed Combining Statements of Earnings
<TABLE>
<CAPTION>
For the year ended March 31, 1997
---------------------------------------------------------------------------
BMW Monarch BMW Elimination
(Lloydminster) Ltd. Pump Inc. Entries Total
------------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Sales $ 101,449,448 $ 35,155,690 $ (29,130,204) $ 107,474,934
Costs and expenses 92,881,223 27,360,208 (29,130,204) 91,111,227
------------- ------------- -------------- -------------
Operating income 8,568,225 7,795,482 --- 16,363,707
Other income (expense) 108,627 (151,705) --- (43,078)
------------- ------------- -------------- -------------
Income before provision for income
taxes 8,676,852 7,643,777 --- 16,320,629
Provision for income taxes 3,720,081 2,868,934 --- 6,589,015
------------- ------------- -------------- -------------
Net income $ 4,956,771 $ 4,774,843 $ --- $ 9,731,614
============= ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
For year ended March 31, 1996
---------------------------------------------------------------------------
BMW Monarch BMW Elimination
(Lloydminster) Ltd. Pump Inc. Entries Total
------------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Sales $ 62,315,413 $ 19,604,595 $ (16,736,701) $ 65,183,307
Costs and expenses 58,077,754 17,650,824 (16,736,701) 58,991,877
------------- ------------- ------------- --------------
Operating income 4,237,659 1,953,771 --- 6,191,430
Other income (expense) 192,981 (159,581) --- 33,400
------------- ------------- ------------- --------------
Income before provision for income
taxes 4,430,640 1,794,190 --- 6,224,830
Provision for income taxes 1,932,382 812,163 --- 2,744,545
------------- ------------- ------------- --------------
Net income $ 2,498,258 $ 982,027 $ --- $ 3,480,285
============= ============= ============= ==============
</TABLE>
30
<PAGE> 31
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
31
<PAGE> 32
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED CONDENSED BALANCE SHEETS
AS AT SEPTEMBER 30, 1997 AND MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
September 30, March 31,
1997 1997
---- ----
(United States Dollars)
<S> <C> <C>
Current:
Cash $ 79,670 $ 3,766,445
Accounts receivable, net of allowance for doubtful
accounts of $275,085 and $279,980 respectively 43,413,669 33,331,848
Inventories, net of reserve for obsolescence of $524,360
and $644,380 respectively 16,907,246 13,091,513
Prepaid expenses 99,468 109,689
------------ ------------
60,500,053 50,299,495
------------ ------------
Investment in equity investee -- --
------------ ------------
Property, plant and equipment:
Land and buildings 2,864,772 2,276,579
Machinery and equipment 2,682,452 2,270,289
Vehicles 1,599,825 1,515,394
------------ ------------
7,147,049 6,062,262
Less: accumulated depreciation 1,952,979 1,720,608
------------ ------------
5,194,070 4,341,654
------------ ------------
$ 65,694,123 $ 54,641,149
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Short-term borrowings $ 9,425,933 $ 9,108,170
Accounts payable and accrued liabilities 23,104,564 19,143,095
Income taxes payable 2,173,615 3,557,772
Bonuses payable to shareholders 4,040,258 3,802,730
Shareholders' loans - others 464,352 --
Shareholder's loan payable to Trico Industries, Inc. 243,300 --
Current portion of long-term debt 108,609 332,748
------------ ------------
39,560,631 35,944,515
Long-term debt 1,402,309 340,335
Shareholders' loan - others -- 33,532
Shareholder's loan payable to Trico Industries, Inc. -- 104,610
Deferred income taxes 132,832 108,350
------------ ------------
41,095,772 36,531,342
------------ ------------
Shareholders' equity:
Capital stock 34,047 34,047
Retained earnings 24,894,985 18,470,178
Cumulative translation adjustment (330,681) (394,418)
------------ ------------
24,598,351 18,109,807
------------ ------------
$ 65,694,123 $ 54,641,149
============ ============
</TABLE>
Notes to combined condensed financial statements are an
integral part of these combined condensed financial statements.
32
<PAGE> 33
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
-------------------------------
1997 1996
---- ----
(United States Dollars)
<S> <C> <C>
Sales $ 69,725,479 $ 42,774,488
------------ ------------
Costs and expenses:
Cost of sales 48,641,695 30,529,691
Operating and administrative 6,348,520 3,787,199
Bonuses to shareholders 4,027,427 1,273,505
Management fees to Trico Industries, Inc. -- 157,439
------------ ------------
59,017,642 35,747,834
------------ ------------
Operating income 10,707,837 7,026,654
------------ ------------
Other income (expense):
Interest expense and other (257,933) (235,356)
Gain on disposal of investment in equity investee 150,578 --
------------ ------------
(107,355) (235,356)
------------ ------------
Income before provision for income taxes 10,600,482 6,791,298
Provision for income taxes 4,175,675 2,740,000
------------ ------------
Net income $ 6,424,807 $ 4,051,298
============ ============
</TABLE>
Notes to combined condensed financial statements are an
integral part of these combined condensed financial statements.
33
<PAGE> 34
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
--------------------------------
1997 1996
---- ----
(United States Dollars)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,424,807 $ 4,051,298
Adjustments to reconcile net income to net cash:
Depreciation and amortization 618,948 228,935
Loss on sale of capital assets -- 8,918
Gain on disposal of investment in equity investee (150,578) --
Deferred income taxes 24,147 20,146
Change in other operating assets and liabilities (10,989,626) (11,182,564)
------------ ------------
Net cash used by operating activities (4,072,302) (6,873,267)
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (1,458,317) (656,175)
Proceeds from sale of property, plant and equipment -- 135,577
Proceeds from sale of investment in equity investee 150,578 --
------------ ------------
Net cash used by investing activities (1,307,739) (520,598)
------------ ------------
Cash flows from financing activities:
Proceeds from short-term borrowings, net 295,060 6,512,959
Proceeds from (repayment of) long-term financing, net 833,571 (464,037)
Proceeds from shareholder loans, net 567,374 766,549
------------ ------------
Net cash provided by financing activities 1,696,005 6,815,471
------------ ------------
Effect of translation adjustment on cash (2,739) (3,497)
------------ ------------
Increase (decrease) in cash during the period (3,686,775) (581,891)
Cash at beginning of period 3,766,445 581,891
------------ ------------
Cash at end of period $ 79,670 $ --
============ ============
Supplemental cash flow information:
Interest paid $ 234,322 $ 265,697
Income taxes paid $ 5,535,608 $ 3,111,884
</TABLE>
Notes to combined condensed financial statements are an
integral part of these combined condensed financial statements.
34
<PAGE> 35
BMW MONARCH (LLOYDMINSTER) LTD. AND BMW PUMP INC.
NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
UNAUDITED
(United States Dollars)
1. GENERAL
The unaudited combined condensed financial statements have been
prepared by BMW Monarch (Lloydminster) Ltd. and BMW Pump Inc. (the
"Companies"). These combined condensed financial statements reflect all
adjustments which the Companies consider necessary for the fair
presentation of the combined condensed financial statements for the
interim periods presented. Although the Companies believe that the
disclosures in these combined condensed financial statements are
adequate to make the interim information presented not misleading,
certain information relating to the Companies' organization and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles has been
condensed or omitted. The results of operations for the six month
periods ended September 30, 1997 and 1996 are not necessarily
indicative of the results expected for the full year.
Basis of presentation
These combined condensed financial statements are presented using
generally accepted accounting principles in the United States of
America and have been translated into United States dollars. The
functional currency of the Companies is Canadian dollars.
2. INVENTORIES
Inventories by category are as follows:
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
---- ----
<S> <C> <C>
Raw materials and components $ 7,701,473 $ 5,272,386
Finished goods 9,205,773 7,819,127
--------------- --------------
$ 16,907,246 $ 13,091,513
=============== ==============
</TABLE>
35
<PAGE> 36
3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities by category are as follows:
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
---- ----
<S> <C> <C>
Accounts payable $ 21,502,257 $ 16,337,104
Accrued liabilities 1,602,307 2,805,991
--------------- --------------
$ 23,104,564 $ 19,143,095
=============== ==============
</TABLE>
4. CAPITAL STOCK
<TABLE>
<S> <C>
Authorized:
BMW Monarch (Lloydminster) Ltd.
Unlimited number of Class A common voting shares
Unlimited number of Class B common voting shares
Unlimited number of Class C redeemable preferred non-voting shares
Unlimited number of Class D redeemable preferred non-voting shares
Unlimited number of Class E redeemable preferred non-voting shares
BMW Pump Inc.
Unlimited number of Class A common voting shares
Unlimited number of Class B common voting shares
Unlimited number of Class C redeemable preferred non-voting shares
Unlimited number of Class D redeemable convertible non-participating non-voting shares
Unlimited number of Class E non-participating redeemable voting shares
</TABLE>
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
---- ----
<S> <C> <C>
Issued:
BMW Monarch (Lloydminster) Ltd.
100 Class A common shares $ 29,745 $ 29,745
BMW Pump Inc.
6,020 Class A common shares 4,302 4,302
---------- ----------
$ 34,047 $ 34,047
========== ==========
</TABLE>
Effective April 1, 1997, BMW Pump Inc. and certain of its corporate
shareholders were amalgamated pursuant to the Alberta Business
Corporations Act. The amalgamation had no impact on the number of
authorized or issued shares or stated capital stock of BMW Pump Inc. as
at September 30, 1997.
36
<PAGE> 37
5. SUBSEQUENT EVENTS
Effective December 3, 1997, EVI, Inc. acquired, directly or indirectly,
all the outstanding shares of the Companies.
In connection with EVI, Inc.'s acquisition of all the outstanding
shares of the Companies, compensation related bonuses of approximately
$3,870,000 were declared payable to certain non-shareholder employees.
On December 3, 1997, all amounts owing by the Companies under the
credit facilities were settled and the credit facilities were
discontinued. EVI Oil Tools Canada Ltd., a subsidiary of EVI, Inc., has
stated its intention to finance future cash needs if they arise.
37
<PAGE> 38
(b) Pro Forma Financial Information.
The following is the pro forma financial information required pursuant to
Article 11 of Regulation S-X for the periods indicated relating to the Company's
acquisitions of Trico and BMW.
The following pro forma financial information is based on the historical
financial data of BMW and Trico and does not give effect to all purchase
accounting adjustments relating to the BMW and Trico acquisitions. The Company
is currently reviewing the acquired assets and liabilities of BMW and Trico and
any additional adjustments will be based on the results of such post-closing
review and analysis by the Company.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth certain summary pro forma condensed
consolidated financial data of the Company. The unaudited Pro Forma Condensed
Consolidated Statements of Income give effect to (i) the acquisition by the
Company of Tubular Corporation of America ("TCA") on August 5, 1996, (ii) the
acquisition by the Company on May 1, 1997, of GulfMark International, Inc. and
its assets as of the date of acquisition ("GulfMark Retained Assets"), (iii) the
issuance and sale of the Company's 5% Convertible Subordinated Preferred
Equivalent Debentures due 2027 (the "Debentures"), (iv) the acceptance and
payment by the Company on December 15, 1997, for $119,980,000 principal amount
of the Company's outstanding 10 1/4% Senior Notes due 2004 and 10 1/4% Senior
Notes due 2004, Series B (collectively, the "Notes") validly tendered by the
holders of the Notes pursuant to a cash tender offer and consent solicitation of
the Company (the "Tender Offer"), (v) the Company's acquisition of Trico on
December 2, 1997, and (vi) the Company's acquisition of BMW on December 3, 1997,
as if these transactions had occurred on January 1, 1996. The unaudited Pro
Forma Condensed Consolidated Balance Sheet gives effect to the issuance and sale
of the Debentures, the acquisition of the Notes pursuant to the Tender
Offer and the Company's acquisitions of Trico and BMW as if these transactions
had occurred on September 30, 1997. The following summary pro forma condensed
consolidated financial data and related notes thereto have been restated to
reflect the Company's May 1997 two-for-one stock split. The pro forma
information set forth below is not necessarily indicative of the results that
actually would have been achieved had such transactions been consummated as of
the dates reflected or that may be achieved in the future. The pro forma
information does not give effect to various smaller acquisitions effected by the
Company during 1997. This information should be read in conjunction with the
Company's Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in its Annual Report on Form 10-K for the year
ended December 31, 1996, as amended, and Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, and the Company's, TCA's, GulfMark Retained
Assets', Trico's and BMW's financial statements and related notes thereto, all
of which are included herein or incorporated herein by reference.
38
<PAGE> 39
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
BMW PUMP/ --------------------------------------------------
BMW MONARCH BMW PUMP/
EVI TRICO COMBINED DEBENTURE SENIOR NOTES BMW MONARCH EVI
HISTORICAL HISTORICAL HISTORICAL OFFERING TENDER TRICO COMBINED PRO FORMA
---------- ---------- ---------- --------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..... $ 16,926 $ 693 $ 80 $390,600 (a) $(131,244)(b) $(105,524)(c) $(107,151)(d) $ 64,380
Accounts receivable, net...... 188,204 10,813 43,414 -- -- 168 (e) -- 242,599
Inventories................... 243,617 24,091 16,907 -- -- -- -- 284,615
Prepaid expenses and other.... 36,966 4,657 99 397 (f) (446)(g) (1,344)(e) -- 40,329
-------- -------- ------- -------- --------- --------- --------- ----------
Total current assets.... 485,713 40,254 60,500 390,997 (131,690) (106,700) (107,151) 631,923
-------- -------- ------- -------- --------- --------- --------- ----------
Property, plant and equipment,
net......................... 277,648 14,189 5,194 -- -- (155)(e) -- 296,876
Goodwill, net................. 193,017 9,581 -- -- -- 63,152 (h) 67,368 (h) 333,118
Due from PACCAR INC........... -- 12,271 -- -- -- (12,271)(e) -- --
Investment in BMW Monarch..... -- 4,063 -- -- -- (4,063)(i) -- --
Other assets.................. 34,883 820 -- 11,503 (f) (3,005)(g) (246)(e) -- 43,955
-------- -------- ------- -------- --------- --------- --------- ----------
$991,261 $ 81,178 $65,694 $402,500 $(134,695) $ (60,283) $ (39,783) $1,305,872
======== ======== ======= ======== ========= ========= ========= ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings,
primarily under revolving
lines of credit............ $ 32,396 $ -- $ 9,426 $ -- $ -- $ -- $ (9,426)(j) $ 32,396
Current maturities of
long-term debt.............. 12,166 30 109 -- -- -- (109)(j) 12,196
Accounts payable.............. 119,302 2,755 21,502 -- -- -- -- 143,559
Other accrued liabilities..... 91,188 3,764 8,524 -- (5,705)(k) 500 (l) (4,248)(m) 94,023
-------- -------- ------- -------- --------- --------- --------- ----------
Total current
liabilities........... 255,052 6,549 39,561 -- (5,705) 500 (13,783) 282,174
-------- -------- ------- -------- --------- --------- --------- ----------
Long-term debt................ 164,995 8,979 1,402 402,500 (a) (119,980)(b) (279)(e) (1,402)(j) 456,215
Deferred income taxes, net.... 38,453 1,366 133 -- -- (105)(e) -- 39,847
Other liabilities............. 23,959 11,685 -- -- -- (7,800)(e) -- 27,844
Stockholders' Equity:
Common stock.................. 51,852 65,342 34 -- -- (65,342)(n) (34)(n) 51,852
Capital in excess of par...... 405,492 3,110 -- -- -- (3,110)(n) -- 405,492
Retained earnings............. 213,759 (15,920) 24,895 -- (9,010)(o) 15,920 (n) (24,895)(n) 204,749
Foreign currency translation
adjustment.................. (10,057) 67 (331) -- -- (67)(n) 331 (n) (10,057)
Treasury stock, at cost....... (152,244) -- -- -- -- -- -- (152,244)
-------- -------- ------- -------- --------- --------- --------- ----------
Total stockholders'
equity................ 508,802 52,599 24,598 -- (9,010) (52,599) (24,598) 499,792
-------- -------- ------- -------- --------- --------- --------- ----------
$991,261 $ 81,178 $65,694 $402,500 $(134,695) $ (60,283) $ (39,783) $1,305,872
======== ======== ======= ======== ========= ========= ========= ==========
</TABLE>
39
<PAGE> 40
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
BMW PUMP/
BMW
TCA MONARCH
HISTORICAL COMBINED
FOR THE GULFMARK HISTORICAL
SIX MONTHS RETAINED FOR THE TWELVE
EVI ENDED ASSETS TRICO MONTHS ENDED
HISTORICAL JUNE 30, 1996(p) HISTORICAL HISTORICAL MARCH 31, 1997(q)
---------- ------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES....................... $478,020 $28,260 $6,994 $72,100 $107,475
-------- ------- ------ ------- --------
Costs and expenses:
Cost of sales................ 373,509 24,381 3,922 51,964 77,604
Selling, general and
administrative attributable
to segments................ 51,885 1,006 2,068 20,881 9,622
Bonuses to shareholders...... -- -- -- -- 3,554
Management fees to Trico..... -- -- -- -- 331
Corporate general and
administrative............. 6,339 -- -- -- --
-------- ------- ------ ------- --------
431,733 25,387 5,990 72,845 91,111
-------- ------- ------ ------- --------
Operating income............... 46,287 2,873 1,004 (745) 16,364
-------- ------- ------ ------- --------
OTHER INCOME (EXPENSE):
Interest expense............. (16,454) (602) -- (634) (476)
Interest income.............. 2,163 -- -- -- --
Equity in income of BMW
Monarch.................... -- -- -- 1,490 --
Other income (expense),
net........................ (450) (742) 6,264 (262) 433
-------- ------- ------ ------- --------
(14,741) (1,344) 6,264 594 (43)
-------- ------- ------ ------- --------
Income (loss) before income
taxes........................ 31,546 1,529 7,268 (151) 16,321
Provision (benefit) for income
taxes........................ 7,041 34 2,472 321 6,589
-------- ------- ------ ------- --------
Income (loss) from continuing
operations................... $ 24,505 $ 1,495 $4,796 $ (472) $ 9,732
======== ======= ====== ======= ========
Earnings per share from
continuing operations........ $ 0.60
========
Weighted average shares
outstanding.................. 40,706
========
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------------------------------------------------------------
SENIOR BMW PUMP/
GULFMARK DEBENTURE NOTES BMW MONARCH EVI
TCA MERGER OFFERING TENDER TRICO COMBINED PRO FORMA
------ -------- --------- ------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES....................... $ -- $ -- $ -- $ -- $ -- $ -- $692,849
------ ------- -------- ------- ------- ------- --------
Costs and expenses:
Cost of sales................ 579(r) -- -- -- (1,300)(s) -- 530,659
Selling, general and
administrative attributable
to segments................ 197(t) -- -- -- 1,818 (t) 1,684 (t) 89,161
Bonuses to shareholders...... -- -- -- -- -- (3,554)(u) --
Management fees to Trico..... -- -- -- -- -- (331)(v) --
Corporate general and
administrative............. -- -- -- -- -- -- 6,339
------ ------- -------- ------- ------- ------- --------
776 -- -- -- 518 (2,201) 626,159
------ ------- -------- ------- ------- ------- --------
Operating income............... (776) -- -- -- (518) 2,201 66,690
------ ------- -------- ------- ------- ------- --------
OTHER INCOME (EXPENSE):
Interest expense............. 602(w) -- (20,520)(x) 12,746(y) -- 476 (z) (24,862)
Interest income.............. -- -- -- -- -- -- 2,163
Equity in income of BMW
Monarch.................... -- -- -- -- (1,490)(aa) -- --
Other income (expense),
net........................ 875(bb) (6,264)(cc) -- -- 200 (dd) -- 54
------ ------- -------- ------- ------- ------- --------
1,477 (6,264) (20,520) 12,746 (1,290) 476 (22,645)
------ ------- -------- ------- ------- ------- --------
Income (loss) before income
taxes........................ 701 (6,264) (20,520) 12,746 (1,808) 2,677 44,045
Provision (benefit) for income
taxes........................ 245(ee) (2,192)(ee) (7,182)(ee) 4,461(ee) (633)(ee) 937 (ee) 12,093
------ ------- -------- ------- ------- ------- --------
Income (loss) from continuing
operations................... $ 456 $(4,072) $(13,338) $ 8,285 $(1,175) $ 1,740 $ 31,952
====== ======= ======== ======= ======= ======= ========
Earnings per share from
continuing operations........ $ 0.77
========
Weighted average shares
outstanding.................. 41,298 (ff)
========
</TABLE>
40
<PAGE> 41
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
GULFMARK
RETAINED ASSETS
HISTORICAL FOR THE BMW PUMP/
THREE MONTHS BMW MONARCH
EVI ENDED TRICO COMBINED
CONSOLIDATED MARCH 31, 1997(gg) HISTORICAL HISTORICAL(q)
------------ ------------------ ---------- -----------
<S> <C> <C> <C> <C>
REVENUES........................... $612,868 $ 818 $51,459 $103,847
-------- ------ ------- --------
Costs and expenses:
Cost of sales.................... 453,001 678 34,323 73,591
Selling, general and
administrative attributable to
segments....................... 62,324 688 15,346 10,571
Bonuses to shareholders.......... -- -- -- 4,763
Management fees to Trico......... -- -- -- 116
Corporate general and
administrative................. 5,396 -- -- --
-------- ------ ------- --------
520,721 1,366 49,669 89,041
-------- ------ ------- --------
OPERATING INCOME................... 92,147 (548) 1,790 14,806
-------- ------ ------- --------
Other income (expense):
Interest expense................. (13,080) -- (493) (337)
Interest income.................. 3,824 -- -- --
Gain on sale of marketable
securities..................... 3,352 -- -- --
Equity in income of BMW
Monarch........................ -- -- 832 --
Other income (expense), net...... 852 -- (595) 65
-------- ------ ------- --------
(5,052) -- (256) (272)
-------- ------ ------- --------
Income (loss) before income
taxes............................ 87,095 (548) 1,534 14,534
Provision (benefit) for income
taxes............................ 30,594 100 797 5,748
-------- ------ ------- --------
Income (loss) from continuing
operations....................... $ 56,501 $ (648) $ 737 $ 8,786
======== ====== ======= ========
Earnings per share from continuing
operations....................... $ 1.23
========
Weighted average shares
outstanding...................... 45,961
========
<CAPTION>
PRO FORMA ADJUSTMENTS
--------------------------------------------
SENIOR BMW PUMP/
DEBENTURE NOTES BMW MONARCH EVI
OFFERING OFFERING TRICO COMBINED PRO FORMA
--------- -------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES........................... $ -- $ -- $ -- $ -- $768,992
-------- ------ ------- ------- --------
Costs and expenses:
Cost of sales.................... -- -- 2,100 (s) -- 563,693
Selling, general and
administrative attributable to
segments....................... -- -- 1,364 (t) 1,263 (t) 91,556
Bonuses to shareholders.......... -- -- -- (4,763)(u) --
Management fees to Trico......... -- -- -- (116)(v) --
Corporate general and
administrative................. -- -- -- -- 5,396
-------- ------ ------- ------- --------
-- -- 3,464 (3,616) 660,645
-------- ------ ------- ------- --------
OPERATING INCOME................... -- -- (3,464) 3,616 108,347
-------- ------ ------- ------- --------
Other income (expense):
Interest expense................. (15,391)(x) 9,560(y) -- 373 (z) (19,368)
Interest income.................. -- -- -- -- 3,824
Gain on sale of marketable
securities..................... -- -- -- -- 3,352
Equity in income of BMW
Monarch........................ -- -- (832)(aa) -- --
Other income (expense), net...... -- -- 538 (dd) -- 860
-------- ------ ------- ------- --------
(15,391) 9,560 (294) 373 (11,332)
-------- ------ ------- ------- --------
Income (loss) before income
taxes............................ (15,391) 9,560 (3,758) 3,989 97,015
Provision (benefit) for income
taxes............................ (5,387)(ee) 3,346(ee) (1,315)(ee) 1,396 (ee) 35,279
-------- ------ ------- ------- --------
Income (loss) from continuing
operations....................... $(10,004) $6,214 $(2,443) $ 2,593 $ 61,736
======== ====== ======= ======= ========
Earnings per share from continuing
operations....................... $ 1.34
========
Weighted average shares
outstanding...................... 45,961(ff)
========
</TABLE>
41
<PAGE> 42
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
The following notes set forth the assumptions used in preparing the
unaudited pro forma financial statements. The pro forma adjustments are based on
estimates made by the Company's management using information currently
available.
PRO FORMA ADJUSTMENTS
The adjustments to the accompanying unaudited pro forma condensed
consolidated balance sheets are described below:
(a) To reflect the sale of the $402.5 million principal amount of the
Debentures and the payment of approximately $11.9 million of related debt
issuance costs.
(b) To reflect repayment of the $119.98 million principal amount of
the Notes at a cost of approximately $131.2 million.
(c) To reflect the purchase of Trico for total cash consideration of
approximately $105 million and to eliminate cash accounts of approximately
$0.5 million retained by PACCAR INC (the "Seller") at the date of
acquisition.
(d) To reflect the purchase of BMW for total cash consideration of
approximately $91.5 million ($130 million Canadian Dollars) and to record
the reduction of BMW's indebtedness of approximately $15.7 million.
(e) To eliminate assets and liabilities retained by the Seller as well
as amounts due from the Seller at the date of acquisition. Assets and
liabilities retained by the Seller primarily consist of $1.3 million of
income taxes receivable and $7.8 million of environmental remediation
reserves.
(f) To capitalize approximately $11.9 million of debt issuance costs
related to the Debentures.
(g) To reflect the write-off of approximately $3.5 million of debt
issuance costs related to the initial issuance of the Notes.
(h) To record the estimated excess of cost over fair value of net
tangible assets to be acquired.
(i) To eliminate Trico's investment in BMW Monarch (Lloydminster) Ltd.
("BMW Monarch").
(j) To record the reduction of indebtedness of BMW upon acquisition
by the Company.
(k) To reflect the payment of approximately $0.5 million of accrued
interest related to the Notes, the accrual of $0.4 million of charges
related to the tender of the Notes, and to record the tax benefit of
approximately $5.6 million resulting from the extraordinary charge related
to the repayment of the Notes.
(l) To record the accrual of costs related to the acquisition of
Trico.
(m) To record the assumed reduction of amounts payable to Trico of
approximately $0.2 million, bonuses payable to BMW shareholders of
approximately $4.0 million, and other shareholder loans payable of $0.5
million and to record the accrual of $0.5 million of costs related to the
acquisition of BMW.
(n) To eliminate the historical stockholders' equity of Trico and BMW.
(o) To reflect the extraordinary charge of approximately $9.0 million,
net of taxes, for the repayment of the Notes.
42
<PAGE> 43
The adjustments to the accompanying unaudited pro forma condensed
consolidated statements of income are described below:
(p) Reflects the results of TCA, which was acquired on August 5, 1996,
from January 1, 1996, through June 30, 1996. Actual results of TCA are
included in EVI's historical results from August 5, 1996.
(q) The historical fiscal year end of BMW is March 31, therefore the
three months ended March 31, 1997 have been included in the pro forma
statement of income for both the twelve months ended December 31, 1996 and
the nine months ended September 30, 1997. For the three months ended March
31, 1997 historical revenues and net income of BMW were approximately $34.1
million and $2.4 million, respectively.
(r) Reflects an increase in depreciation expense associated with the
assets of TCA, which were acquired on August 5, 1996 as a result of the
$11.6 million fair value increase of property, plant, and equipment through
the purchase price allocation. Such increase in property, plant, and
equipment is being depreciated over an average life of ten years.
(s) To eliminate the provision for environmental remediation, the
liability for which is retained by the Seller.
(t) To record amortization expense relating to the estimated excess of
cost over fair value of tangible assets acquired in connection with the
acquisition. Such excess of cost over fair value of net tangible assets
acquired is being amortized over 40 years.
(u) To eliminate bonuses paid to the shareholders of BMW that would
not have been paid by the Company.
(v) To eliminate management fees paid to Trico by BMW Monarch.
(w) To reduce TCA's interest expense to reflect the Company's
retirement of TCA's $7.7 million debt outstanding at the date of
acquisition.
(x) To adjust interest expense for the Debentures at the rate of 5%
per annum and to record amortization expense of related debt issuance costs
of the life of the Debentures.
(y) To reduce interest expense and amortization of debt issuance costs
to reflect the repayment of the Notes.
(z) To reduce interest expense to reflect the retirement of BMW's
$15.7 million of indebtedness.
(aa) To eliminate the Trico's equity income from BMW Monarch.
(bb) To eliminate certain expenses incurred by TCA relating to the
Company's acquisition of TCA. These expenses relate to amounts paid to an
investment banking firm which represented TCA in the Company's acquisition
of TCA.
(cc) To eliminate approximately $6.3 million of gain recorded in the
GulfMark Retained Assets with respect to the sale by GulfMark of 600,000
shares of the Company's Common Stock in July 1996. The net proceeds from
this sale were not received by the Company nor included in the GulfMark
Retained Assets at the time of the acquisition of GulfMark by the Company.
(dd) To eliminate the provision for estimated losses on property held
for sale as the property was retained by the Seller.
(ee) To record the income tax provision (benefit) related to the
effect of the pro forma adjustments at the statutory rate.
(ff) Pro forma weighted average shares outstanding reflect the average
number of common shares outstanding for the period. The effect of the sale
of the Debentures of fully-diluted earnings per share is anti-dilutive. At
December 31, 1996, historical and pro forma shares of Common Stock
outstanding,
43
<PAGE> 44
restated for the effect of the May 1997 two-for-one stock split, are
45,657,842. At September 30, 1997, historical and pro forma shares of
Common Stock outstanding are 47,063,887.
(gg) Reflects the results of the GulfMark Retained Assets, which were
acquired on May 1, 1997, from January 1, 1997, through March 31, 1997.
Actual results of the GulfMark Retained Assets are included in EVI's
historical results from May 1, 1997.
(c) Exhibits.
<TABLE>
<C> <S>
23.1 -- Consent of Ernst & Young LLP with respect to the
consolidated financial statements of Trico Industries,
Inc.
23.2 -- Consent of Arthur Andersen & Co. with respect to the
combined financial statements of BMW Monarch
(Lloydminster) Ltd. and BMW Pump Inc.
</TABLE>
44
<PAGE> 45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EVI, INC.
/s/ JAMES G. KILEY
------------------------------------
James G. Kiley
Vice President and Chief Financial
Officer
Dated: February 13, 1998
45
<PAGE> 46
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER EXHIBIT
------ -------
<C> <S>
23.1 -- Consent of Ernst & Young LLP with respect to the
consolidated financial statements of Trico
Industries, Inc.
23.2 -- Consent of Arthur Andersen & Co. with respect to the
combined financial statements of BMW Monarch
(Lloydminster) Ltd. and BMW Pump Inc.
</TABLE>
46
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
File Nos. 33-31662, 33-56384, 33-56386, 33-65790, 33-64349, 333-13531,
333-24133, 333-39587, 333-44345 and 333-45207 of EVI, Inc. of our report dated
January 15, 1998, with respect to the consolidated financial statements of Trico
Industries, Inc. for the years ended December 31, 1995 and 1996 included in EVI,
Inc.'s Amendment No. 1 to the Form 8-K dated December 2, 1997 on Form 8-K/A.
/s/ ERNST & YOUNG LLP
San Antonio, Texas
February 11, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent chartered accountants, we hereby consent to the
incorporation by reference of our report dated December 31, 1997 on the
combined financial statements of BMW Monarch (Lloydminster) Ltd. and BMW Pump
Inc. included in EVI, Inc.'s Amendment No. 1 to Form 8-K on Form 8-K/A dated
December 2, 1997, into EVI, Inc.'s filed Registration Statement File
Nos. 33-31662, 33-56384, 33-56386, 33-65790, 33-64349, 333-13531, 333-24133,
333-39587, 333-44345 and 333-45207.
/s/ ARTHUR ANDERSEN & CO
CHARTERED ACCOUNTANTS
Calgary, Alberta, Canada
February 13, 1998
