<PAGE>
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-K/A
(AMENDMENT NO. 1)
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File Number: 2-98277C
THE COLONEL'S INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-3262264
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
620 SOUTH PLATT ROAD, MILAN, MICHIGAN 48160
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 439-4200
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.01 Par Value
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X__ No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. __X__
<PAGE>
This Form 10-K/A (Amendment No. 1) is filed for the purposes of
correcting financial information contained in Appendix A and correcting Exhibit
23.1 to the registrant's Form 10-K as previously filed on March 31, 1997.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
THE COLONEL'S INTERNATIONAL, INC.
Dated: April 1, 1997 By: /S/ MICHAEL J. MCCLOSKEY
Michael J. McCloskey
Chief Executive Officer and Director
(Principal Executive Officer)
Dated: April 1, 1997 By: /S/ RICHARD S. SCHOENFELDT
Richard S. Schoenfeldt
Vice President-Finance and Chief
Financial Officer
(Principal Financial Officer)
3
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/MICHAEL J. MCCLOSKEY Chief Executive Officer, April 1, 1997
Michael J. McCloskey Vice-Chairman and Director
*/S/MARK D. STEVENS President and Director April 1, 1997
Mark D. Stevens
*/S/PATSY L. WILLIAMSON Chairperson of the Board April 1, 1997
Patsy L. Williamson and Director
*/S/JOHN M. DARCY Director April 1, 1997
John M. Darcy
*/S/J. DANIEL FRISINA Director April 1, 1997
J. Daniel Frisina
*/S/TED M. GANS Director April 1, 1997
Ted M. Gans
______________________ Director April __, 1997
Ben C. Parr
*/S/DONALD GORMAN Director April 1, 1997
Donald Gorman
*By /S/ MICHAEL J. MCCLOSKEY
Michael J. McCloskey
Attorney-in-fact
4
<PAGE>
APPENDIX A
5
<PAGE>
---------------------------------------------
THE COLONEL'S
INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1996, 1995 AND
1994, AND INDEPENDENT AUDITORS' REPORT
6
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
The Colonel's International, Inc.
Milan, Michigan
We have audited the accompanying consolidated balance sheets of The
Colonel's International, Inc. (the "Company") as of December 31, 1996 and
1995, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our 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, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
March 14, 1997
7
<PAGE>
THE COLONEL'S INTERNATIONAL, INC.
<TABLE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
- ---------------------------------------------------------------------------
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash $ 321,486 $ 634,290
Accounts receivable:
Trade (net of allowance for doubtful accounts of
$575,000 and $401,000 at December 31, 1996
and 1995, respectively) (Note 7) 3,605,281 2,292,112
Inventories (Notes 4 and 7) 8,347,663 6,805,906
Prepaid expenses 226,670 164,692
Notes receivable (Note 6) 542,401
Deferred taxes - current (Note 10) 1,045,000 917,000
Current portion of deferred compensation (Note 11) 52,000 52,000
Other 40,000 75,000
----------- -----------
Total current assets 13,638,100 11,483,401
PROPERTY, PLANT AND EQUIPMENT - Net
(Notes 5, 8 and 11) 27,028,350 20,876,669
OTHER ASSETS:
Notes receivable:
Related party (Notes 6 and 13) 250,000
Long-term portion of deferred compensation (Note 11) 236,787 266,163
Deposits 1,156,868 4,757,342
Goodwill 366,497 425,609
Other 183,693 184,802
----------- -----------
Total other assets 1,943,845 5,883,916
----------- -----------
TOTAL ASSETS (Note 8) $42,610,295 $38,243,986
=========== ===========
</TABLE>
See Notes to consolidated financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable (Note 7) $ 5,450,000 $ 4,180,000
Current portion of long-term obligations (Note 8) 3,868,733 5,424,455
Accounts payable - trade 3,532,752 2,938,494
Accrued expenses (Note 9) 2,561,361 2,431,074
Current portion of deferred compensation (Note 11) 52,000 52,000
Income taxes payable 1,195,000
----------- -----------
Total current liabilities 16,659,846 15,026,023
LONG-TERM OBLIGATIONS, NET OF CURRENT
PORTION (Note 8) 6,321,175 6,064,705
LONG-TERM PORTION OF DEFERRED
COMPENSATION (Note 11) 236,787 266,163
DEFERRED TAXES - LONG TERM (Note 10) 3,949,000 4,014,000
STOCKHOLDERS' EQUITY:
Common stock; 35,000,000 shares authorized at
$.01 par value, 24,177,805 shares issued and
outstanding (Note 3) 241,778 241,778
Additional paid-in capital 5,606,239 5,557,833
Retained earnings 9,595,470 7,073,484
----------- -----------
Total stockholders' equity 15,443,487 12,873,095
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $42,610,295 $38,243,986
=========== ===========
</TABLE>
See notes to consolidated financial statements.
9
<PAGE>
THE COLONEL'S INTERNATIONAL, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- ---------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
SALES (Note 13) $40,263,082 $28,503,726 $28,492,013
COST OF SALES (Note 13) 28,140,066 19,998,308 19,599,470
----------- ----------- -----------
GROSS PROFIT 12,123,016 8,505,418 8,892,543
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 6,931,713 3,534,648 5,101,270
PLANT CLOSING COSTS (Note 15) 1,389,368
----------- ----------- -----------
Income from operations 5,191,303 4,970,770 2,401,905
OTHER INCOME (EXPENSE):
Interest expense (1,214,400) (971,623) (785,969)
Interest income (Note 13) 71,730 119,628 106,773
Gain on insurance settlement (Note 14) 9,081,662
Rental income (Note 13) 60,000 71,000 73,000
Other (37,647) 5,699 10,343
----------- ----------- -----------
Other income (expense), net (1,120,317) (775,296) 8,485,809
----------- ----------- -----------
NET INCOME BEFORE INCOME TAXES 4,070,986 4,195,474 10,887,714
PROVISION FOR INCOME TAXES (Note 10) 1,549,000 2,333,000
----------- ----------- -----------
NET INCOME (1994 - Note 14) $ 2,521,986 $ 1,862,474 $10,887,714
EARNINGS PER SHARE (Note 2) $ 0.10
===========
PROFORMA EARNINGS PER SHARE (Note 2) $ 0.11
===========
</TABLE>
See notes to consolidated financial statements.
10
<PAGE>
THE COLONEL'S INTERNATIONAL, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COMMON STOCK ADDITIONAL NOTE
-------------------- PAID IN RECEIVABLE - RETAINED
SHARES AMOUNT CAPITAL STOCKHOLDERS EARNINGS TOTAL
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 6,021,000 $602,100 $1,244,511 $(3,000,000) $ 7,680,800 $ 6,527,411
Net income 10,887,714 10,887,714
Transactions with stockholders
(Note 13) 3,000,000 (6,927,171) (3,927,171)
---------- -------- ---------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1994 6,021,000 602,100 1,244,511 None 11,641,343 13,487,954
Net income 1,862,474 1,862,474
Transactions with stockholders
(Note 13) (6,430,333) (6,430,333)
Change in par value from
$.10 to $.01 (596,079) 596,079
Exchange of common shares to
affect merger (Note 3) 18,156,805 235,757 3,717,243 3,953,000
---------- -------- ---------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1995 24,177,805 241,778 5,557,833 7,073,484 12,873,095
Net income 2,521,986 2,521,986
Transactions with stockholders
(Note 13) 48,406 48,406
---------- -------- ---------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1996 24,177,805 $241,778 $5,606,239 None $ 9,595,470 $15,443,487
========== ======== ========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
11
<PAGE>
THE COLONEL'S INTERNATIONAL, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- ---------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 2,521,986 $ 1,862,474 $10,887,714
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 3,751,121 2,673,758 3,075,351
Deferred tax provision (193,000) 2,333,000
Provision for impairment of assets held for sale 1,109,368
(Gain) loss on sale of property, plant
and equipment (24,041) 22,573 1,584
Changes in assets and liabilities that provided
(used) cash, net of effects from the
1995 acquisition:
Accounts receivable:
Trade (1,313,169) 182,453 (875,598)
Related parties 173,400
Insurance 4,352,239 (53,036)
Inventories (1,541,757) (683,346) (2,457,547)
Prepaid expenses (61,978) 90,998 85,342
Accounts payable 594,258 71,600 (1,131,386)
Accrued expenses 130,287 (2,855,361) 24,414
Income taxes payable 1,195,000
----------- ----------- -----------
Net cash provided by operating activities 5,058,707 8,050,388 10,839,606
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, net of cash acquired 277,237
Expenditures for property, plant and equipment (3,214,198) (2,734,576) (5,905,381)
Proceeds from sale of property, plant and
equipment 99,326 8,964 2,802
Net change in deposits (principally for tooling
and equipment) (1,632,215) (1,540,845) 1,384,885
Additions to notes receivable - related party (1,243,291) (886,369)
Payments received on notes receivable -
related party 490,000 1,205,117 35,604
Payments received on notes receivable - other 302,401 237,209 237,663
Proceeds from sale of assets held for sale 35,000 275,000
----------- ----------- -----------
Net cash used in investing activities (3,919,686) (3,515,185) (5,130,796)
</TABLE>
12
<PAGE>
(continued)
THE COLONEL'S INTERNATIONAL, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- ---------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under notes payable $ 1,270,000 $(1,820,000)
Proceeds from long-term obligations 580,015 6,000,062
Principal payments on long-term debt (3,028,821) (2,956,790) $(5,993,777)
Principal payment on obligations under
capital leases (273,019) (126,218) (173,995)
Distributions paid to stockholders (5,162,253) (1,810,047)
----------- ----------- -----------
Net cash provided by (used in)
financing activities (1,451,825) (4,065,199) (7,977,819)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (312,804) 470,004 (2,269,009)
CASH, BEGINNING OF YEAR 634,290 164,286 2,433,295
----------- ----------- -----------
CASH, END OF YEAR $ 321,486 $ 634,290 $ 164,286
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION - Cash paid during
the year for interest $ 1,145,817 $ 910,706 $ 901,327
=========== =========== ===========
Cash paid during the year for income taxes $ 350,000
===========
SUPPLEMENTAL SCHEDULES OF
NONCASH FINANCING AND
INVESTING ACTIVITIES:
Property additions from issuance of capital leases $ 3,483,673 $ 2,689,007
=========== ===========
Increase in deposits from noncash interim financing $ 1,396,611 $ 2,087,061
=========== ===========
13
<PAGE>
Transfer of deposits to property, plant and equipment
relating to property placed in service $ 3,171,589
===========
Stockholder contribution of deposit on land $ 48,406
===========
Reclassification of note receivable as
stockholder distribution $ 1,482,024 $ 3,000,000
=========== ===========
Property received as payment on note
receivable $ 473,477
===========
Inventory received as payment on note
receivable $ 425,976
===========
Stockholder contribution of note receivable $ 213,944
===========
Note payable received on sale of property $ 60,000
===========
Assumption of mortgage $ 2,117,124
===========
</TABLE>
See notes to consolidated financial statements.
14
<PAGE>
THE COLONEL'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- ---------------------------------------------------------------------------
1. ORGANIZATION
The Colonel's International, Inc. ("CII") is a holding company for
three wholly-owned subsidiaries, The Colonel's, Inc. ("The
Colonel's"), The Colonel's Truck Accessories, Inc. ("CTA") and
Brainerd International Raceway, Inc. ("BIRI"). The Colonel's was
incorporated in Michigan in 1982 and principally designs, manufactures
and distributes plastic automotive bumper fascias and miscellaneous
reinforcement beams and brackets, as replacement collision parts to
the automotive aftermarket industry in North America. The Colonel's
manufactures its products using reaction injection molding and plastic
injection molding technology and sells its products through warehouses
and a network of distributors. CTA began operations on January 1,
1996, and was subsequently incorporated in Michigan in 1997. CTA
produces truck bed liners for sale to new vehicle dealers and the
automotive aftermarket. BIRI was incorporated in Minnesota in 1982
and operates a multi-purpose motor sports facility in Brainerd,
Minnesota. BIRI organizes and promotes various spectator events
relating to road and drag races.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The consolidated financial statements include the
accounts of CII and its subsidiaries, The Colonel's and BIRI, from the
date of acquisition. All significant intercompany accounts and
transactions have been eliminated.
INVENTORIES are stated at the lower of cost or market, cost determined
by the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT is stated at cost. Depreciation is
computed using the straight-line method over the estimated useful
lives of the assets as follows:
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Track 7 years
Buildings 15
Leasehold improvements 10-25
Equipment 5-10
Bleachers and fencing 5
Furniture and fixtures 3-10
Vehicles 3-7
Tooling 5-7
</TABLE>
Leasehold improvements are amortized over the shorter of the life of
the lease or their estimated useful life of 10-25 years.
Expenditures for major renewals and betterments that extend the useful
life of the related asset are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred. When
properties are retired or sold, the related cost and accumulated
depreciation are removed from the accounts and any gain or loss on
disposition is recognized.
REVENUE RECOGNITION - Sales and trade accounts receivable are
recognized at the time the product is shipped to customers.
GOODWILL - Goodwill is being amortized using the straight-line method
over 7 years.
ACCRUED LEGAL FEES - Anticipated legal and other professional fees are
accrued in the same period that the related matters are accrued.
ACCRUED ENVIRONMENTAL COSTS - CII accounts for environmental costs
when environmental assessments or remedial efforts are probable, and
the costs can be reasonably estimated. Generally, the timing of these
accruals coincide with the earlier of a feasibility study or CII's
commitment to a plan of action based on the known facts. Accruals are
recorded based on existing technology available, presently enacted
laws and regulations, and without giving effect to insurance proceeds.
Such accruals are not discounted. As assessments and cleanups
proceed, environmental accruals are periodically reviewed and adjusted
as additional information becomes available as to the nature or extent
of contamination, methods of remediation required, and other actions
by governmental agencies or private parties.
INCOME TAX - CII provides for deferred income taxes under the asset
and liability method, whereby deferred income taxes result from
temporary differences between the tax bases of assets and liabilities
and their reported amounts in the financial statements.
16
<PAGE>
Effective December 31, 1995, The Colonel's changed its tax status from
an S Corporation to a C Corporation for federal income tax purposes.
Prior to December 31, 1995, The Colonel's income was not taxable to
the company and was passed through to its shareholders.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of accounts
and notes receivable, accounts and notes payable and long-term debt
are a reasonable estimate of their fair value.
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 and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the operating period.
Actual results could differ from those estimates.
NET INCOME PER SHARE - Primary net income per share for 1996 was
computed by dividing net income by the weighted average common shares
outstanding (24,177,805) and the weighted average dilutive effect of
CII's incentive stock options (229) under the treasury stock method
(Note 12).
Pro forma net income per share for 1995 was computed by dividing net
income, adjusted to give effect to the change in tax status of The
Colonel's as if such change and the acquisition had occurred at the
beginning of the period, by the weighted average common shares
outstanding (24,177,805).
RECLASSIFICATIONS - Certain 1995 and 1994 amounts have been
reclassified to conform to the 1996 presentation.
3. BUSINESS COMBINATION
Effective December 31, 1995, CII completed its merger with The
Colonel's. CII issued 23,500,000 shares of its common stock in
exchange for all of the outstanding common stock of The Colonel's.
For accounting purposes, the acquisition has been treated as a
recapitalization of The Colonel's with The Colonel's as the acquirer
("reverse acquisition"). The historical financial statements prior to
December 31, 1995 are those of The Colonel's. In addition, the
weighted average common shares outstanding for purposes of calculating
the earnings per share have been retroactively restated to give effect
to the recapitalization.
The purchase price of $3,953,000 was allocated to the assets acquired
and liabilities assumed based on the estimated fair values at the date
of acquisition. The excess of the purchase price over the estimated
17
<PAGE>
fair values of the net assets acquired has been recorded as goodwill,
and is being amortized over 7 years. The estimated fair value of
assets acquired and liabilities assumed are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Cash $ 277,237
Property and equipment 4,682,400
Goodwill 425,609
Other 25,556
Accrued liabilities (83,810)
Accrued federal income tax (66,000)
Debt (543,992)
Deferred tax liability (764,000)
----------
Total $3,953,000
==========
</TABLE>
The following unaudited pro forma summary presents the consolidated
results of operations as if the acquisition had occurred at the
beginning of the period presented, giving effect to certain
adjustments for the amortization of goodwill and the effect of income
taxes. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of what would have
occurred had the acquisition been made at the beginning of the period
presented or of results that may occur in the future.
<TABLE>
<CAPTION>
(In Thousands) 1995 1994
---- ----
<S> <C> <C> <C>
Revenue $31,382 $30,942
======= =======
Income before taxes $ 4,385 $10,886
======= =======
Net income $ 2,915 $ 7,126
======= =======
Earnings per share (1994 - See
Note 14) $ 0.12 $ 0.29
======= =======
18
<PAGE>
4. INVENTORIES
Inventories at December 31 are summarized as follows:
</TABLE>
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C>
Finished products $7,213,704 $6,168,440
Raw materials 1,133,959 637,466
---------- ----------
Total inventories $8,347,663 $6,805,906
========== ==========
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31 is summarized by major
classifications as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land and improvements $ 3,619,717 $ 2,269,400
Track 1,533,760 1,537,800
Buildings 793,990 622,000
Leasehold improvements 707,076 707,076
Bleachers and fencing 731,886 432,200
Equipment (including equipment under
capital lease) 14,316,710 10,460,954
Transportation equipment (including equipment
under capital lease) 1,000,690 609,097
Furniture and fixtures 611,510 537,230
Tooling 23,229,532 19,658,447
------------ ------------
Total 46,544,871 36,834,204
Less accumulated depreciation and amortization (19,516,521) (15,957,535)
------------ ------------
Net property, plant and equipment $ 27,028,350 $ 20,876,669
============ ============
</TABLE>
Included above are trucks and equipment under capital leases with a
net book value of $6,112,653 and $2,666,598 at December 31, 1996 and
1995, respectively.
19
<PAGE>
6. NOTES RECEIVABLE
Notes receivable at December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Notes receivable from a company affiliated through common control,
due on demand, bearing interest at the prime rate, collateralized by
property and assets, paid in May 1996 $ 490,000
Notes receivable from customer, aggregate monthly installments of
$20,629 including interest at 7%, commencing February 1, 1993,
secured by shares of common stock of a company, paid in
July 1996 28,457
Mortgage receivable, monthly interest payments at 8% per annum,
principal due November 15, 1998, collateralized by land, paid in
March 1996 213,944
Land contract receivable, due in monthly installments of $650,
including interest at 9% per annum, collateralized by land, paid
in March 1996 60,000
---------
Total 792,401
Less current portion (542,401)
---------
Long-term $ 250,000
=========
</TABLE>
7. NOTES PAYABLE
Notes payable at December 31 consist of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C>
Line of credit with a bank, interest is due
monthly at the bank's prime rate (8.25%
at December 31, 1996) $4,450,000 $4,180,000
Bridge note payable to a bank, interest is
due monthly at the bank's prime rate
plus 1/2%, due May 1997 1,000,000
---------- ----------
Total $5,450,000 $4,180,000
========== ==========
</TABLE>
20
<PAGE>
CII's has a line of credit with a bank which provides for maximum
borrowings of $4,500,000, based upon eligible accounts receivable and
inventories. Remaining availability under the line at December 31,
1996 was $50,000. The line of credit expires May 1, 1997.
The above notes payable are with the same bank as the term note (Note
8) and are secured by the same collateral. The weighted average
interest rate on the notes payable were 8.31% and 8.81% in 1996 and
1995, respectively.
The bridge note payable from a bank represents amounts advanced to CII
for the purchase of land in Florida.
8. LONG-TERM OBLIGATIONS
Long-term obligations at December 31 consist of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C>
Term note payable to a bank, monthly principal
payments of $200,000 plus interest at the
bank's prime rate plus 1/2% (effective rate of
8.75% at December 31, 1996) through
November 1997 $ 2,600,000 $ 4,800,000
Mortgage payable to bank, interest at 9.25%,
payable in monthly installments of $52,000
through May 1998, and secured by
underlying property 796,908 1,326,825
Mortgage payable to a bank, interest at the bank's
prime rate plus 2% (effective rate of 10.25% at
December 31, 1996), annual principal payments
of $50,000 plus interest due quarterly, through
September 2004. Secured by underlying property 400,000 450,000
Capital lease obligations through December 2002;
monthly installments of $62,771 including
interest at rates between 7.5% and 8.75%,
collateralized by the related machinery and
equipment (see Note 11) 5,967,897 2,689,007
Bridge financing from a bank for future equipment
leases, interest due monthly at the bank's prime
rate (effective rate of 8.5% at December 31, 1995) 2,087,065
Vehicle financing 231,365
Other 193,738 136,263
----------- -----------
Total 10,189,908 11,489,160
Less current portion (3,868,733) (5,424,455)
----------- -----------
21
<PAGE>
Long-term $ 6,321,175 $ 6,064,705
=========== ===========
</TABLE>
The term note is part of a bank loan agreement that includes CII's
lines of credit (Note 7). This bank loan agreement is guaranteed by
certain stockholders of CII and collateralized by a first priority
security interest in substantially all CII's assets and all of CII's
issued and outstanding shares of common stock and contains certain
covenants which require CII to maintain minimum levels of net worth
and not to exceed certain debt ratios.
The bridge financing from a bank represents amounts advanced to CII
for the purchase of tooling and machinery that CII refinanced as
capital leases on a long-term basis.
The scheduled future repayments of long-term obligations at
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 $ 3,868,733
1998 1,382,272
1999 1,024,213
2000 1,036,610
2001 1,201,990
Thereafter 1,676,090
-----------
Total $10,189,908
===========
</TABLE>
9. ACCRUED EXPENSES
Accrued expenses at December 31 consist of the following:
22
<PAGE>
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C>
Accrued legal (Note 16) $1,136,516 $ 349,331
Accrued compensation for NuPar
(Note 16) 100,000 900,000
Accrued environmental costs
(Note 17) 598,717 598,717
Accrued taxes 417,165 276,619
Other 308,963 306,407
---------- ----------
Total $2,561,361 $2,431,074
========== ==========
</TABLE>
10. INCOME TAXES
Effective December 31, 1995, The Colonel's changed its tax status from
a non-taxable entity to a taxable entity. As a result of this change,
The Colonel's recorded a $2,333,000 provision to reflect the tax
consequences of the difference between the financial statements and
the tax bases of assets and liabilities at that date.
For the year ended December 31, 1996, the Colonel's provision for
income taxes consists of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
Current:
Federal $1,592,000
State 150,000
----------
Total current 1,742,000
Deferred:
Federal (182,000)
State (11,000)
----------
Total deferred (193,000)
----------
Total provision for income taxes $1,549,000
==========
</TABLE>
23
<PAGE>
The temporary difference which gives rise to deferred tax assets and
liabilities at December 31, including amounts acquired in the
acquisition (Note 3) are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C>
Current deferred tax assets (liabilities):
Allowance for doubtful accounts $ 213,000 $ 140,000
Inventory 115,000 124,300
Accrued legal 458,000 462,000
Accrued environmental cleanup 222,000 222,000
Other 37,000 (31,300)
----------- -----------
Total 1,045,000 917,000
Noncurrent deferred tax assets (liabilities):
Net operating loss carryforwards 367,000 433,000
Fixed assets (3,483,000) (3,494,000)
Other (372,000) (443,000)
----------- -----------
Total (3,488,000) (3,504,000)
Valuation allowance (461,000) (510,000)
----------- -----------
Total $(3,949,000) $(4,014,000)
=========== ===========
</TABLE>
The consolidated income tax provision differs from the amount computed
on pretax income using the U.S. statutory income tax rate for the year
ended December 31, 1996, for the following reasons:
<TABLE>
<CAPTION>
<S> <C> <C>
Federal income tax at statutory rate $1,385,000
State taxes 122,000
Other 42,000
----------
Provision for income taxes $1,549,000
==========
Effective tax rate 38%
==
</TABLE>
24
<PAGE>
At December 31, 1996, CII has net operating loss and net capital loss
carryforwards for tax purposes as follows:
<TABLE>
<CAPTION>
NET NET
OPERATING CAPITAL
EXPIRATION LOSS LOSS
DATE CARRYFORWARDS CARRYFORWARDS
<S> <C> <C> <C>
2004 $252,000
2005 599,000
2008 332,000 $275,000
</TABLE>
CII has put a valuation allowance on 100% of these amounts because
management believes it is more likely than not that the net operating
loss and net capital loss carryforwards will not be utilized due to
limitations in existing tax laws on their use.
25
<PAGE>
11. COMMITMENTS
CII leases trucks and equipment under capital leases (see Notes 5 and
8). CII also leases warehouse space under noncancelable operating
lease agreements. The warehouse leases require that CII pay the
taxes, insurance and maintenance expense related to the leased
property. Minimum future lease payments under noncancelable leases at
December 31, 1996 are summarized as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------ ------
<S> <C> <C> <C>
Years ending December 31:
1997 $1,202,605 $1,951,463
1998 1,202,605 1,536,194
1999 1,202,605 1,321,485
2000 1,202,605 1,097,129
2001 1,202,605 940,000
Thereafter 1,621,891 2,940,000
---------- ----------
Total 7,634,916 $9,786,271
Less amount representing interest 1,667,019 ==========
----------
Present value of minimum lease
payments 5,967,897
Less current maturities 753,257
----------
Long-term portion of capital lease obligations $5,214,640
==========
</TABLE>
Rent expense, including month to month rentals, was approximately
$1,364,000, $1,447,000 and $2,242,000 for the years ended December 31,
1996, 1995 and 1994, respectively. Included in rent expense are
amounts paid to the related parties of CII for rental of its principal
operating facilities (Note 13).
CII entered into a ten-year consulting agreement beginning January 1,
1994, with the former president of the Company. The agreement
guarantees him $52,000 per year. CII may terminate this agreement,
but is obligated to pay the remaining compensation due under the terms
of the agreement. CII recorded a liability and related deferred costs
for the remaining compensation due under the terms of the agreement
26
<PAGE>
based upon the net present value of such payments. The deferred cost
amount is being amortized to operations over the term of the
agreement.
CII has purchase commitments totaling $799,000 representing 6 tools to
be received in 1997.
12. STOCK OPTIONS
CII has an incentive stock option plan that provides for up to
3,000,000 shares of common stock options to key employees, executive
officers and outside directors, and also permits the grant or award of
restricted stock, stock appreciation rights or stock awards. The term
of the option cannot exceed 10 years from the grant date. The vesting
period for the options is 6 months.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "ACCOUNTING FOR STOCK-BASED
COMPENSATION" which was effective for CII beginning January 1, 1996.
Statement No. 123 encourages compensation cost to be measured based on
the fair value of the equity instrument awarded. In accordance with
this statement, CII has elected to continue the application of
Accounting Principles Board Opinion No. 25 which recognizes
compensation cost based on the intrinsic value of the equity
instrument award. If compensation costs had been determined in
accordance with Statement No. 123, net income and net income per share
would not have been significantly affected.
During 1996, CII granted options aggregating 1,000 shares to outside
directors at an option price of $5.50 per share and options
aggregating 1,050 shares at an option price of $6.50 per share. No
options were exercised during 1996. At December 31, 1996, 1,000
shares had vested.
13. RELATED PARTY TRANSACTIONS
The primary parties related to the CII are as follows:
- The majority stockholders, with whom various transactions are
made.
- 620 Platt Road, Inc. ("Platt"), a company affiliated through
common ownership, to which rental payments are made for the Milan
facility and the Owosso facility.
- The Colonel's Factory Outlet of Arkansas, Inc. ("Arkansas"), a
company affiliated through common ownership, with which various
27
<PAGE>
transactions are made, including sales and purchases of
inventory. This company was a related party through June of 1996.
- Williamson Buick - GMC, Inc. ("Williamson," formerly Blain Buick
- GMC, Inc.), a company affiliated through common ownership, from
which automobiles, parts, and service are purchased and sold, and
rental income is earned.
A summary of transactions with these related parties as of and for the
years ended December 31 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Majority Stockholder:
Short-term advances to stockholders $5,162,753 $ 13,802,190
Cash payments on short-term advances (500) (11,992,143)
Reduction of note receivable 1,482,024 3,000,000
Assumption of land contract receivable (213,944)
---------- ------------
Assumption of mortgage 2,117,124
Shareholder distributions 6,430,333 6,927,171
Rental expense 280,000
Platt - rental expense $1,000,000 840,000 840,000
Capital contribution 48,406
Arkansas:
Sales of inventory 346,000 309,500
Purchases of inventory 744,600 224,300
Inventory in satisfaction of note receivable 425,976
Property, plant and equipment in
satisfaction of note receivable 473,477
Cash in satisfaction of note receivable 1,000,000
Blain:
Purchases of automobiles, parts and service 280,310 73,500 147,000
Rental income 11,000 12,000
Interest income on note receivable 15,598 43,400 48,000
Sales of bedliners 51,198
</TABLE>
14. PLANT FIRE
In 1993, CII's leased facility in Owosso, Michigan which included its
headquarters, sales offices and the principal manufacturing and
warehouse facilities, was destroyed by a fire. The fire resulted in
28
<PAGE>
damaged inventory, equipment and other contents therein. In late
1993, CII relocated its principal operations and headquarters to
Milan, Michigan and is leasing a 350,000 square foot facility from a
company owned by certain stockholders of CII.
In 1994, total insurance proceeds for the replacement cost of lost
property, lost profits and other direct costs of the fire received was
approximately $31,000,000, of which approximately $6,630,000 was due
to a stockholder as indemnification of damages to the Owosso facility.
CII has recognized in other income a net gain of approximately
$9,082,000 and $9,043,000 in 1994 and 1993, respectively, which
represents the amount by which CII's insurance proceeds of $24,381,000
exceeded the sum of the net book value of the assets destroyed and the
liabilities resulting from the fire.
15. PLANT CLOSING
In 1994, CII closed its Florida facility. At December 31, 1994, CII
accrued estimated costs required to close the facility which include
approximately $1,034,000 for the write down of assets to their net
realizable value and $355,000 for costs of the storage, dismantling
and disposing of the equipment, and other related expenses.
16. LITIGATION
In connection with the acquisition of a facility in Florida (known as
"NuPar"), CII signed employment agreements with the former NuPar
shareholders for the three year period beginning December 1991. In
1994, the former NuPar shareholders filed a lawsuit against CII for
$1,800,000 claiming they had met the conditions of the agreements and
are therefore entitled to the payments thereunder. In July 1995, CII
settled these actions for $1.4 million, payable in installments
through January 1997, and with outstanding balance of $100,000 and
$900,000 at December 31, 1996 and 1995, respectively.
CII was both a defendant and counter-plaintiff in a suit filed
December 5, 1991, in the United States District Court, Eastern
District of Michigan, Flint, Michigan, in a private action seeking
damages under the federal anti-trust statutes. The Colonel's settled
this case for cash and merchandise deliverable through December 1997.
CII has been served with three lawsuits pertaining to a class action
suit arising from the production of bedliners. The suits allege that
the liners insulate a gas can when filled which may cause a static
charge that could result in a fire. Although the class action suit
targets bedliner manufacturers, CII believes that other organizations
such as service stations, can producers, and gas pump manufacturers
should be involved. CII has formed a coalition with the other
29
<PAGE>
bedliner manufactures to defend this class action suit. CII did
not produce liners at the time of the alleged incidents, but has
elected to participate in the class action.
CII has been served with a lawsuit filed in Federal District Court
Western District of Wisconsin by a competitor pertaining to a possible
infringement of their patent associated with their bedliner. CII has
recently received its patent from the U.S. Patent office and believes
that the patent was issued after the office's strict due diligence.
CII believes that it is not infringing upon the competitor's patent.
In addition, CII has filed a separate suit in Federal District Court
Eastern District of Michigan alleging the same competitor is
infringing on CII's bedliner patent.
CII is involved in various other legal proceedings which have arisen
in the normal course of its operations. CII has accrued its best
estimate of the cost of litigation based on known facts. It is
possible that this estimate may change in the near term as the
lawsuits progress. Although the final resolution of any such matters
could have a material effect on CII's operating results for the
particular reporting period in which an adjustment of the estimated
liability is recorded, CII believes that any resulting liability
should not materially affect its financial position.
17. ENVIRONMENTAL REMEDIATION
CII is responsible for the remediation of hazardous materials and
ground contamination located at the Owosso facility as a result of the
fire (see Note 14). In August 1993, the Michigan Department of
Natural Resources required that CII perform a complete hydrogeological
study of this site to determine the extent of the contamination. CII
plans to engage environmental consultants in the summer of 1997 to
determine the extent of the hazardous materials located at this site,
if any, and the cost of any remediation. CII has accrued its best
estimate of the cost of remediation based on known facts. It is
possible that this estimate may change in the near term as the project
progresses. Although the final resolution of any such matters could
have a material effect on CII's operating results for the particular
reporting period in which an adjustment of the estimated liability is
recorded, CII believes that any resulting liability should not
materially affect its financial position.
As part of the lease agreement with a related party for the Milan,
Michigan facility, CII is also responsible for the remediation of
hazardous material, up to an amount of $2,000,000, which existed at
this site prior to CII entering into the lease in June 1993. CII has
accrued for estimated remediation costs based on an environmental
study of the site. CII has accrued its best estimate of the cost of
30
<PAGE>
remediation based on known facts. It is possible that this estimate
may change in the near term as the project progresses. Although the
final resolution of any such matters could have a material effect on
CII's operating results for the particular reporting period in which
an adjustment of the estimated liability is recorded, CII believes
that any resulting liability should not materially affect its
financial position.
18. SEGMENTS OF BUSINESS
CII operates in two industry segments: manufacture of automotive
bumpers, bedliners and other miscellaneous reinforcement beams and
brackets at the two manufacturing plants in Michigan
("Manufacturing"), and operation of a multi-purpose motor sports
facility in Brainerd, Minnesota ("Raceway").
Financial information below is listed by industry segment. Historical
data prior to December 31, 1995 are those of The Colonel's. There are
no operating results of BIRI as of December 31, 1995 as the date of
acquisition was December 31, 1995. Operating profit is total revenues
less operating expenses and excludes interest expense and income
taxes. Identifiable assets are those assets identified with
operations in each industry segment.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUES:
Manufacturing $37,497,844 $28,503,726 $28,492,013
Raceway 2,765,238
----------- ----------- -----------
Total $40,263,082 $28,503,726 $28,492,013
=========== =========== ===========
OPERATING PROFIT:
Manufacturing $ 4,873,244 $ 4,970,770 $ 2,401,905
Raceway 318,059
----------- ----------- -----------
Total $ 5,191,303 $ 4,970,770 $ 2,401,905
=========== =========== ===========
IDENTIFIABLE ASSETS:
Manufacturing $37,048,830 $32,833,184 $31,529,883
Raceway 5,561,465 5,410,802
----------- ----------- -----------
31
<PAGE>
Total $42,610,295 $38,243,986 $31,529,883
=========== =========== ===========
</TABLE>
The Colonel's had sales of over 10% to one customer in 1996.
19. SUBSEQUENT EVENT
On March 20, 1997, CII entered into a letter of intent regarding
the acquisition of four new and one used car dealerships owned
and controlled by Patsy Lou Williamson, a related party through
common ownership. As contemplated in the letter of intent, CII
will purchase 100% of the stock of the dealerships and certain
related assets employed by the dealerships, but owned by the seller
and/or her affiliates, for a purchase price equal to $60 million less
any agreed upon indebtedness or other liabilities assumed by CII.
However, no definitive terms have been established by the parties,
and no party to the letter of intent is bound to buy or sell the
dealerships unless all appropriate parties have executed and
delivered a definitive agreement mutually acceptable to each party
and their counsel and, in the case of CII, to the independent
members of its Board of Directors.
20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following represents CII's quarterly results:
<TABLE>
<CAPTION>
1996
-----------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenues $9,900,074 $8,544,230 $11,210,682 $10,608,096
Gross profit 2,891,168 2,160,617 2,884,066 4,187,165
Net income 901,802 391,750 307,950 920,484
Net income per share $0.04 $0.02 $0.01 $0.03
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
1995
-----------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Sales $7,819,252 $6,831,901 $ 7,062,036 $ 6,790,537
Gross profit 2,567,592 2,276,186 1,586,113 2,075,525
Net income 1,345,324 1,055,696 409,065 (101,705)
Pro forma earnings per share $0.06 $0.04 $0.02 $0.00
</TABLE>
******
33
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders of
The Colonel's International, Inc.
Milan, Michigan
We have audited the consolidated financial statement of The Colonel's
International, Inc. (the "Company) as of December 31, 1996 and 1995, and
for each of the three years in the period ended December 31, 1996, and have
issued our report therein dated March 14, 1997; such report is included
elsewhere in this Form 10-K. Our audits also included the financial
statement schedule of The Colonel's International, Inc., listed in Item 14.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our
audits. In our opinion, based on our audits, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Deloitte & Touche LLP
March 14, 1997
34
<PAGE>
THE COLONEL'S INTERNATIONAL, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
-------------------- DEDUCTIONS-
CHARGED TO CHARGED WRITE-OFFS
BALANCE COSTS AND TO OTHER AND BALANCE
JANUARY 1 EXPENSES ACCOUNTS DISPOSALS DECEMBER 31
<S> <C> <C> <C> <C> <C>
DOUBTFUL ACCOUNTS RESERVES
For the year ended December 31:
1996 $401,200 $172,895 - $ (95) $574,000
1995 345,900 143,018 - (87,718) 401,200
1994 337,900 220,953 - (212,953) 345,900
INVENTORY RESERVES
For the year ended December 31:
1996 146,658 - - - 146,658
1995 - 146,658 - - 146,658
1994 - - - -
TAX VALUATION ALLOWANCE
For the year ended December 31:
1996 510,000 - - (49,000) 461,000
1995 - 510,000 - - 510,000
1994 - - - -
</TABLE>
35
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER
2.1 Agreement and Plan of Merger between The Colonel's, Inc. and
Brainerd Merger Corporation and joined in by Brainerd
International, Inc. Incorporated by reference from Exhibit A to
the Proxy Statement of Brainerd International, Inc. for the
Annual Meeting of Shareholders of Brainerd International, Inc.
held on November 21, 1995.
2.2 Agreement and Plan of Reorganization among Brainerd
International, Inc. and The Colonel's Holdings, Inc. Incorporated
by reference from Exhibit D to the Proxy Statement of Brainerd
International, Inc. for the Annual Meeting of Shareholders of
Brainerd International, Inc. held on November 21, 1995.
3.1 Articles of Incorporation of the Company, as amended.
Incorporated by reference from Exhibit E to the Proxy Statement
of Brainerd International, Inc. for the Annual Meeting of
Shareholders of Brainerd International, Inc. held on November 21,
1995.
3.2 Certificate of Amendment to the Articles of Incorporation
changing name from "The Colonel's Holdings, Inc." to "The
Colonel's International, Inc." Incorporated by reference from
Exhibit 3.2 to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1995.
3.3 Bylaws of the Company. Incorporated by reference from Exhibit F
to the Proxy Statement of Brainerd International, Inc. for the
Annual Meeting of Shareholders of Brainerd International, Inc.
held on November 21, 1995.
4.1 Articles of Incorporation. See Exhibit 3.1 above.
10.1 The Company's 1995 Long-Term Incentive Plan. Incorporated by
reference from Exhibit G to the Proxy Statement of Brainerd
International, Inc. for the Annual Meeting of Shareholders of
Brainerd International, Inc. held on November 21, 1995.
10.2 Incentive Stock Option Plan. Incorporated by reference from the
Annual Report on Form 10-K of Brainerd International Inc. for the
fiscal year ended December 31, 1987.
36
<PAGE>
10.3 Form of Non-Statutory Stock Option Agreement used under the
Incentive Stock Option Plan. Incorporated by reference from the
Annual Report on Form 10-K of Brainerd International Inc. for the
fiscal year ended December 31, 1987.
10.4 Form of Incentive Stock Option Agreement used under the Incentive
Stock Option Plan. Incorporated by reference from the Annual
Report on Form 10-K of Brainerd International Inc. for the fiscal
year ended December 31, 1987.
10.5 Office Lease Agreement dated January 23, 1991 between Brainerd
International, Inc. and Woodland Office Partnership.
Incorporated by reference from the Annual Report on Form 10-K of
Brainerd International Inc. for the fiscal year ended December
31, 1990.
10.6 Amendment dated December 11-12, 1991 to Office Lease Agreement
(see Exhibit 10(e) above) between Brainerd International, Inc.
and Woodland Office Partnership. Incorporated by reference from
Brainerd International, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1991.
10.7 $404,700 Promissory Note dated January 1, 1992, from Brainerd
International, Inc. payable to Gene Snow and James W. Littlejohn.
Incorporated by reference from Brainerd International, Inc.'s
Annual Report on Form 10-K for the fiscal year ended December 31,
1991.
10.8 Lease Agreement between Issuer and National Hot Rod Association,
Inc. consisting of March 17, 1984 Lease Agreement; April 28, 1986
letter extending term to 1991; March 12, 1987 Letter of
Amendment; and April 7, 1992 letter extending term to 1996 and
amending agreement. Incorporated by reference from Brainerd
International, Inc.'s Registration Statement on Form S-1
(Registration No. 33-055876).
10.9 November 8, 1988 Sponsorship Agreement between Champion Auto
Stores, Inc. and National Hot Rod Association, Inc. Incorporated
by reference from Brainerd International, Inc.'s Registration
Statement on Form S-1 (Registration No. 33-055876).
10.10 June 22, 1992 Title Rights Sponsorship Agreement between Champion
Auto Stores, Inc. and National Hot Rod Association, Inc.
Incorporated by reference from Brainerd International, Inc.'s
Registration Statement on Form S-1 (Registration No. 33-055876).
37
<PAGE>
10.11 February 16, 1994 Loan Agreement with American National Bank of
Brainerd; $550,000 Promissory Note; and $300,000 Line of Credit
Note. Incorporated by reference from Brainerd International,
Inc.'s Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1993.
10.12 December 21, 1993 Agreement among Issuer, Motor Stadium, Inc. and
Gene M. Snow providing for termination of March 23, 1993
Financing Agreement, dissolution of Motor Sports Stadium, Inc.
and grant of interest by Mr. Snow in potential future project.
Incorporated by reference from Brainerd International, Inc.'s
Annual Report on Form 10-KSB for the fiscal year ended December
31, 1993.
10.13 Amendment dated February 1, 1994 to Office Lease Agreement (See
Exhibits 10(e) and 10(f)). Incorporated by reference from
Brainerd International, Inc.'s Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1993.
10.14 September 1994 Stock Purchase Agreement among Gene M. Snow, James
W. Littlejohn and Donald J. Williamson. Incorporated by
reference from Brainerd International, Inc.'s Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1993.
10.15 December 1994 Letter of Intent between Issuer and The Colonel's,
Inc. Incorporated by reference from Brainerd International,
Inc.'s Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1993.
10.16 Addendum to Lease dated December 16, 1994. Incorporated by
reference from Brainerd International, Inc.'s Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1993.
10.17 Variable Rate-Installment Note ($6,000,000) between The Colonel's
and Comerica Bank dated April 14, 1995. Incorporated by reference
from Amendment No. 1 to Brainerd International, Inc.'s
Registration Statement on Form S-4 (Registration No. 33-91374).
10.18 Master Revolving Note ($4,500,000) between The Colonel's and
Comerica Bank dated May 1, 1995. Incorporated by reference from
Amendment No. 1 to Brainerd International, Inc.'s Registration
Statement on Form S-4 (Registration No. 33-91374).
10.19 Security Agreement between The Colonel's and Comerica Bank (f/k/a
Manufacturers National Bank of Detroit) dated December 4, 1991.
Incorporated by reference from Amendment No. 1 to Brainerd
International, Inc.'s Registration Statement on Form S-4
(Registration No. 33-91374).
38
<PAGE>
10.20 Amended and Restated Security Agreement between The Colonel's and
Comerica Bank (f/k/a Manufacturers National Bank of Detroit)
dated December 4, 1991. Incorporated by reference from Amendment
No. 1 to Brainerd International, Inc.'s Registration Statement on
Form S-4 (Registration No. 33-91374).
10.21 Amended and Restated Guaranty between Donald and Patsy Williamson
and Comerica Bank dated October 8, 1992. Incorporated by
reference from Amendment No. 1 to Brainerd International, Inc.'s
Registration Statement on Form S-4 (Registration No. 33-91374).
10.22 Lease Agreement between 620 Platt Road, Inc. and The Colonel's
dated June 18, 1993 (for Milan, Michigan manufacturing facility).
Incorporated by reference from Amendment No. 1 to Brainerd
International, Inc.'s Registration Statement on Form S-4
(Registration No. 33-91374).
10.23 First Amendment to Lease Agreement between 620 Platt Road, L.L.C.
(f/k/a 620 Platt Road, Inc.) and The Colonel's dated June 16,
1995. Incorporated by reference from Amendment No. 1 to Brainerd
International, Inc.'s Registration Statement on Form S-4
(Registration No. 33-91374).
10.24 Industrial/Warehouse Lease between JMB/Warehouse Associates
Limited Partnership and The Colonel's dated August 1, 1993 (for
Houston, Texas warehouse distribution facility). Incorporated by
reference from Amendment No. 1 to Brainerd International, Inc.'s
Registration Statement on Form S-4 (Registration No. 33-91374).
10.25 Lease Agreement between Industrial Properties Corporation and The
Colonel's dated September 15, 1992 (for Dallas, Texas warehouse
distribution facility). Incorporated by reference from Amendment
No. 1 to Brainerd International, Inc.'s Registration Statement on
Form S-4 (Registration No. 33-91374).
10.26 Standard Industrial Lease between Revco D.S., Inc. and The
Colonel's dated February 5, 1993 (for Phoenix (Glendale), Arizona
warehouse distribution facility). Incorporated by reference from
Amendment No. 1 to Brainerd International, Inc.'s Registration
Statement on Form S-4 (Registration No. 33-91374).
10.27 Interim Equipment Lease Schedule ($2,729,370) between The
Colonel's and Comerica Leasing Corporation dated July 27, 1995.
Incorporated by reference from Amendment No. 2 to Brainerd
International, Inc.'s Registration Statement on Form S-4
(Registration No. 33-91374).
39
<PAGE>
10.28 Interim Equipment Lease Schedule ($2,044,000) between The
Colonel's and Comerica Leasing Corporation dated July 27, 1995.
Incorporated by reference from Amendment No. 2 to Brainerd
International, Inc.'s Registration Statement on Form S-4
(Registration No. 33-91374).
10.29 Interim Equipment Lease Schedule ($383,468) between The Colonel's
and Comerica Leasing Corporation dated July 27, 1995.
Incorporated by reference from Amendment No. 2 to Brainerd
International, Inc.'s Registration Statement on Form S-4
(Registration No. 33-91374).
10.30 Lease Schedule ($3,464,557) between The Colonel's, Inc. and
Comerica Leasing Corporation dated December 27, 1995.
Incorporated by reference from Exhibit 10.30 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1995.
10.31 Interim Lease Schedule ($960,000) between The Colonel's, Inc. and
Comerica Leasing Corporation dated December 27, 1995.
Incorporated by reference from Exhibit 10.31 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1995.
10.32 Interim Lease Schedule ($542,811) between The Colonel's, Inc. and
Comerica Leasing Corporation dated December 27, 1995.
Incorporated by reference from Exhibit 10.32 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1995.
10.33 Interim Lease Schedule ($85,800) between The Colonel's, Inc. and
Comerica Leasing Corporation dated January 26, 1996.
Incorporated by reference from Exhibit 10.33 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1995.
10.34 Interim Lease Schedule ($52,556) between The Colonel's, Inc. and
Comerica Leasing Corporation dated February 16, 1996.
Incorporated by reference from Exhibit 10.34 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1995.
10.35 Interim Lease Schedule ($584,250) between The Colonel's, Inc. and
Comerica Leasing Corporation dated December 27, 1995.
Incorporated by reference from Exhibit 10.35 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1995.
10.36 Interim Lease Schedule ($364,650) between The Colonel's, Inc. and
Comerica Leasing Corporation dated January 26, 1996.
Incorporated by reference from Exhibit 10.36 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1995.
40
<PAGE>
10.37 Interim Lease Schedule ($178,200) between The Colonel's, Inc. and
Comerica Leasing Corporation dated February 16, 1996.
Incorporated by reference from Exhibit 10.37 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1995.
10.38 Lease Schedule between The Colonel's, Inc. and Comerica Leasing
Corporation dated May 31, 1996. Incorporated by reference from
Exhibit 10.38 to the Registrant's Report on Form 10-Q for the
period ended September 30, 1996.
10.39 Lease Agreement between The Colonel's, Inc. and Gamma Realty Co.
for lease of premises in Totowa, New Jersey. Incorporated by
reference from Exhibit 10.39 to the Registrant's Report on Form
10-Q for the period ended September 30, 1996.
10.40 Interim Lease Schedule between The Colonel's, Inc. and Comerica
Leasing Corporation dated June 17, 1996. Incorporated by
reference from Exhibit 10.40 to the Registrant's Report on Form
10-Q for the period ended September 30, 1996.
10.41 Interim Lease Schedule between The Colonel's, Inc. and Comerica
Leasing Corporation dated August 30, 1996. Incorporated by
reference from Exhibit 10.38 to the Registrant's Report on Form
10-Q for the period ended September 30, 1996.
10.42 Client Services Agreement between HRC4 and The Colonel's, Inc.
dated September 28, 1995. Incorporated by reference to Exhibit
10.42 to the Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1996, filed on March 31, 1997.
10.43 Lease Agreement between 620 South Platt Road, Inc. and The
Colonel's, Inc. dated October 1, 1995. Incorporated by reference
to Exhibit 10.43 to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1996, filed on March 31, 1997.
10.44 Master Revolving Note between Comerica Bank and The Colonel's
International, Inc. and subsidiaries dated May 1, 1996.
Incorporated by reference to Exhibit 10.44 to the Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1996,
filed on March 31, 1997.
10.45 Supply Agreement between The Colonel's, Inc. and The Dow
Chemical Company dated January 1, 1996. Incorporated by reference
to Exhibit 10.45 to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1996, filed on March 31, 1997.
11.1 Computation of Per Share Earnings. Incorporated by reference to
Exhibit 11.1 to the Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1996, filed on March 31, 1997.
41
<PAGE>
21.1 Subsidiaries of the Registrant. Incorporated by reference to
Exhibit 21.1 to the Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1996, filed on March 31, 1997.
23.1 Consent of Auditors.
24.1 Powers of Attorney. Incorporated by reference to Exhibit 24.1
to the Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1996, filed on March 31, 1997.
27.1 Financial Data Schedule. Incorporated by reference to Exhibit
27.1 to the Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1996, filed on March 31, 1997.
42
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-10527 of The Colonel's International, Inc. on Form S-8 of our report
dated March 14, 1997, appearing in this Annual Report on Form 10-K of The
Colonel's International, Inc. for the year ended December 31, 1996.
/s/ Deloitte & Touche LLP
Detroit, Michigan
March 28, 1997
