HORRIGAN AMERICAN, INC.
Supplement dated June 16, 1994
to
Prospectus dated April 29, 1994
Acquisition of American Capital Leasing Corporation
On June 1, 1994, the Company, through a wholly-owned subsidiary, purchased
all of the capital stock of American Capital Leasing Corporation ("ACL"),
whose principal business consists of financing and leasing equipment.
The Company intends to operate the acquired business as a separate subsidiary.
The Company has retained all five employees of ACL.
The Company paid the estimated purchase price of $3,936,000 in cash on
June 1, 1994. The final purchase price is to be determined by a post-closing
audit within 90 days, based principally on the book value of the common stock
multiplied by a factor of 109.5%, less a credit on account of ACL's deferred
tax liability. The Company funded the purchase price and refinanced all
outstanding debt of ACL ($7,000,000) by borrowing under one of its existing
long-term credit lines. ACL's two shareholders have agreed not to compete
with the Company in the business of equipment leasing and equipment financing
for a period of two years.
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HORRIGAN AMERICAN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
AND
CONDENSED STATEMENTS OF OPERATIONS
The attached pro forma financial information gives effect to the acquisition
of ACL by the Company. The pro forma consolidated condensed balance sheet
reflects the fair value of the assets acquired and the debt incurred to fund
the acquisition as of March 31, 1994. The pro forma consolidated condensed
statements of operations for the year ended December 31, 1993 and for the
three months ended March 31, 1994 reflect the operations of the combined
entities as though the acquisition had been made at the beginning of the
period presented. The pro forma consolidated condensed balance sheet and
statements of operations should be read in conjunction with the historical
consolidated financial statements and notes thereto of the Company and ACL as
of and for the year ended December 31, 1993 and the three months ended March
31, 1994.
The pro forma financial information does not purport to be indicative of the
actual results of operations that would have occurred if the acquisition had
been consummated on the date indicated or that may be obtained in the future.
Adjustments in anticipation of cost savings through consolidation of the
Company and ACL are not included.
The pro forma adjustments reflected in the pro forma balance sheet include
adjustments to record the assets acquired at estimated fair value; to record
the incremental borrowings to fund the purchase; to eliminate ACL's historical
stockholders' equity; and to record ACL's deferred tax liability. It is
anticipated that no goodwill will result from this transaction. The pro forma
balance sheet and the statements of operations do not reflect the two year
covenant not to compete since it was estimated to have a nominal value.
The pro forma adjustments reflected in the pro forma statements of operations
include adjustments to amortize the premium on the acquired net investment in
finance receivables; to record the interest incurred on funds borrowed to fund
the purchase and to refinance all outstanding debt of ACL, and to remove ACL's
historical interest expense; and to apply Horrigan's estimated incremental
income tax rate.
ACL operated at an estimated pre-tax profit of $304,000 for the five months
ended May 31, 1994. In addition, ACL will record a pre-tax charge of
approximately $400,000 for an expense accrual in conjunction with this
transaction. This adjustment is not reflected in the following pro formas
because it is considered to be non-recurring.
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HORRIGAN AMERICAN, INC. and SUBSIDIARIES
Unaudited Pro Forma Consolidated Condensed Balance Sheet
March 31, 1994
(In thousands)
<TABLE>
<CAPTION>
Company ACL Pro Forma
Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Cash 1,685 45 0 1,730
Net investment in finance receivables 121,076 11,961 761 (a) 133,798
Property under operating leases 31,377 0 0 31,377
Other assets 8,650 71 0 8,721
---------- ---------- ----------- ---------
162,788 12,077 761 175,626
========== ========== =========== =========
Short-term borrowings 16,535 6,800 (6,800) (b) 16,535
Long-term debt
Recourse 92,468 0 10,936 (b) 103,404
Nonrecourse 18,303 0 0 18,303
Other liabilities 6,379 1,192 710 (d) 8,281
---------- ---------- ----------- ---------
133,685 7,992 4,846 146,523
---------- ---------- ----------- ---------
Minority interest 236 0 0 236
Stockholders' equity 28,867 4,085 (4,085)(c) 28,867
---------- ---------- ----------- ---------
162,788 12,077 761 175,626
========== ========== =========== =========
<FN>
(a) Recorded the finance receivables acquired at estimated fair value.
(b) The Company borrowed $10,936,000 at a rate of 7.3% to fund the purchase and to refinance all outstanding debt of ACL.
(c) ACL's historical stockholder's equity is eliminated and has been replaced by debt.
(d) Recorded the estimated deferred income taxes payable, due to the conversion from an S corporation to a C corporation.
</TABLE>
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HORRIGAN AMERICAN, INC. and SUBSIDIARIES
Unaudited Pro Forma Consolidated Condensed
Statement Of Operations
Year ended December 31, 1993
($ In thousands, except per share data)
<TABLE>
<CAPTION>
Company ACL Pro Forma
Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Finance Revenues:
Commercial leasing and financing revenue 17,401 1,899 (312)(a) 18,988
Interest expense 6,511 455 307 (b) 7,273
---------- ---------- ----------- ---------
Finance revenue margin 10,890 1,444 (619) 11,715
Provision for possible lease and loan losses 1,573 122 0 1,695
---------- ---------- ----------- ---------
Finance revenues after provision for
possible lease and loan losses 9,317 1,322 (619) 10,020
---------- ---------- ----------- ---------
Net operating lease revenues 2,017 0 0 2,017
Total other operating revenues 2,575 27 0 2,602
Operating expenses:
Salaries and employees benefits (4,566) (237) 0 (4,803)
Other expenses (4,265) (265) 0 (4,530)
---------- ---------- ----------- ---------
Earnings (loss) before income taxes
and minority interest 5,078 847 (619) 5,306
Provision for income taxes 1,900 0 87 (c) 1,987
---------- ---------- ---------- ---------
Earnings (loss) before minority interest 3,178 847 (706) 3,319
Minority interest income (131) 0 0 (131)
---------- ---------- ---------- ---------
Net earnings (loss) 3,047 847 (706) 3,188
========== ========== ========== =========
Net earnings per common share 0.92 0.97
========== =========
Weighted number of shares outstanding 3,278,159 3,278,159
========== =========
<FN>
(a) The finance receivables acquired were valued at their estimated fair values as of May 31, 1994.
The resulting premium is being amortized against finance revenue over the remaining life of the portfolio to produce a
constant yield to maturity.
(b) The debt to fund the purchase of the capital stock of ACL and to pay-off all of the outstanding debt as of June 1, 1994 has
been borrowed under one of the Company's existing credit lines at a rate of 7.3%.
ACL's historical interest expense has been removed and replaced with estimated interest expense under the new funding terms
using average balances outstanding for the period.
(c) The pro forma adjustment to the provision for income taxes is calculated using an estimated incremental income tax rate of
38%.
</TABLE>
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HORRIGAN AMERICAN, INC. and SUBSIDIARIES
Unaudited Pro Forma Consolidated Condensed
Statement Of Operations
Three months ended March 31, 1994
($ In thousands, except per share data)
<TABLE>
<CAPTION>
Company ACL Pro Forma
Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Finance Revenues:
Commercial leasing and financing revenue 4,226 479 (78)(a) 4,627
Interest expense 1,447 105 85 (b) 1,637
---------- ---------- ----------- ---------
Finance revenue margin 2,779 374 (163) 2,990
Provision for possible lease and loan losses 188 23 0 211
---------- ---------- ----------- ---------
Finance revenues after provision for
possible lease and loan losses 2,591 351 (163) 2,779
---------- ---------- ----------- ---------
Net operating lease revenues 346 0 0 346
Total other operating revenues 572 15 0 587
Operating expenses:
Salaries and employees benefits (1,202) (77) 0 (1,279)
Other expenses (1,013) (72) 0 (1,085)
---------- ---------- ----------- ---------
Earnings (loss) before income taxes
and minority interest 1,294 217 (163) 1,348
Provision for income taxes 485 0 21 (c) 506
---------- ---------- ---------- ---------
Earnings (loss) before minority interest 809 217 (184) 842
Minority interest income (29) 0 0 (29)
---------- ---------- ---------- ---------
Net earnings (loss) 780 217 (184) 813
========== ========== ========== =========
Net earnings per common share 0.25 0.26
========== =========
Weighted number of shares outstanding 3,113,814 3,113,814
========== =========
<FN>
(a) The finance receivables acquired were valued at their estimated fair values as of May 31, 1994.
The resulting premium is being amortized against finance revenue over the remaining life of the portfolio to produce a
constant yield to maturity.
(b) The debt to fund the purchase of the capital stock of ACL and to pay-off all of the outstanding debt as of June 1, 1994 has
been borrowed under one of the Company's existing credit lines at a rate of 7.3%.
ACL's historical interest expense has been removed and replaced with estimated interest expense under the new funding terms
using average balances outstanding for the period.
(c) The pro forma adjustment to the provision for income taxes is calculated using an estimated incremental income tax rate of
38%.
</TABLE>
