<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
MARCH 2, 1998
- --------------------------------------------------------------------------------
Date of Report (Date of earliest event reported)
COINMACH CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its character)
DELAWARE 0-7694 53-0188589
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) number)
55 LUMBER ROAD, ROSLYN, NEW YORK 11576
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(516) 484-2300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Exhibit Index is located on Page 26
<PAGE>
Item 2. Acquisition or Disposition of Assets.
- ---------------------------------------------
On March 2, 1998, pursuant to the terms and conditions of a Purchase
Agreement, dated as of January 20, 1998, as amended by Amendment No. 1 thereto
(as amended, the "Agreement"), Coinmach Corporation ("Coinmach" or the
"Company"), a wholly-owned subsidiary of Coinmach Laundry Corporation ("CLC"),
completed the acquisition of (i) 100% of the outstanding partnership interests
of Macke Laundry Service Limited Partnership ("MLSLP"), a Delaware limited
partnership, held by Macke Laundry Service Midwest Limited Partnership, MAS
Laundry, Inc., JPS Laundry, Inc. and Macke Laundry Service, Inc. and (ii)
substantially all of the assets of Coin Controlled Washers, Inc., Macke Laundry
Service-Central Limited Partnership, Macke Laundry Services-Texas, Inc.,
Superior Coin, Inc., Superior Coin II, Inc. and Advance/Macke Domestic Machines,
Inc. (collectively, the "Macke Entities") for an aggregate purchase price of
approximately $213 million (the "Macke Acquisition") excluding transaction
expenses. The Macke Entities, operating approximately 236,000 washers and
dryers, provide outsourced laundry equipment services to multi-family properties
throughout the United States.
Immediately following the Macke Acquisition, MLSLP was dissolved, the
partnership interests were liquidated and all of MLSLP's assets were distributed
to Coinmach.
Concurrently with the Macke Acquisition, CLC also entered into an amended
and restated senior financing agreement with its existing lenders, including,
Bankers Trust Company, as Administration Agent, and First Union National Bank of
North Carolina, as Syndication Agent, providing for approximately $200 million
of additional financing used to fund the Macke Acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- ---------------------------------------------------------------------------
a. Financial Statements.
---------------------
The audited combined financial statements of the Macke Entities for
the years ended June 30, 1997, 1996 and 1995, together with auditors'
report thereon, are attached hereto as Attachment 7(a) and are
incorporated herein by this reference.
b. Pro forma financial information.
-------------------------------
The unaudited pro forma combined financial statements of Coinmach
Corporation for the nine-month period ended December 26, 1997 and for
the year ended March 28, 1997 are attached hereto as Attachment 7(b)
and are incorporated herein by this reference.
Page 2 of 27
<PAGE>
c. Exhibits.
--------
The following exhibits are filed as part of this report.
10.59* Purchase Agreement, dated as of January 20, 1998, by
and among Coinmach, Matthew A. Spagat, Jerome P. Seiden,
Macke Laundry Service Midwest Limited Partnership, JPS
Laundry, Inc., Macke Laundry Service, Inc., Coin Controlled
Washers, Inc., Macke Laundry Service-Central Limited
Partnership, Macke Services-Texas, Inc., Superior Coin,
Inc., Superior Coin II, Inc., and Advance/Macke Domestic
Machines, Inc.
10.60* Amendment No. 1, dated as of March 2, 1998, to Purchase
Agreement, dated as of January 20, 1998, by and among
Coinmach, Matthew A. Spagat, Jerome P. Seiden, Macke Laundry
Service Midwest Limited Partnership, JPS Laundry, Inc.,
Macke Laundry Service, Inc., Coin Controlled Washers, Inc.,
Macke Laundry Service-Central Limited Partnership, Macke
Services-Texas, Inc., Superior Coin, Inc., Superior Coin II,
Inc., and Advance/Macke Domestic Machines, Inc.
10.61* Second Amended and Restated Credit Agreement, dated as of
March 2, 1998, among Coinmach, CLC, First Union National
Bank of North Carolina, as Syndication Agent, Bankers Trust
Company, as Administrative Agent, and the Banks party
thereto
10.62* First Amendment to the Second Amended and Restated Credit
Agreement, dated as of March 2, 1998, among Coinmach, CLC,
First Union National Bank of North Carolina, as Syndication
Agent, Bankers Trust Company, as Administrative Agent, and
the Banks party thereto
27.1 Financial Data Schedule
99.1* Press release, dated March 2, 1998
* * * * *
- --------------------
* Previously filed as an identically numbered exhibit to Coinmach's Current
Report on Form 8-K, dated March 2, 1998, as filed with the United States
Securities and Exchange Commission on March 16, 1998.
Page 3 of 27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: May 15, 1998
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By: ______________________________________
Robert M. Doyle
Senior Vice President
Page 4 of 27
<PAGE>
Attachment 7(a)
Combined Financial Statements
Macke Laundry Service Limited Partnership
and Affiliates
Years ended June 30, 1997, 1996 and 1995
with Report of Independent Auditors
Page 5 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Combined Financial Statements
Years ended June 30, 1997, 1996 and 1995
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors................................................ 1
Audited Combined Financial Statements
Combined Balance Sheets....................................................... 2
Combined Statements of Income and Shareholders' Equity and Partners' Capital.. 3
Combined Statements of Cash Flows............................................. 4
Notes to Combined Financial Statements........................................ 5
</TABLE>
Page 6 of 27
<PAGE>
Report of Independent Auditors
The Partners and Shareholders
Macke Laundry Service Limited Partnership and Affiliates
We have audited the accompanying combined balance sheets of Macke Laundry
Service Limited Partnership and Affiliates (the "Entities") as of June 30, 1997
and 1996, and the related combined statements of income and shareholders' equity
and partners' capital and cash flows for each of the three years in the period
ended June 30, 1997. These financial statements are the responsibility of the
Entities' 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, the financial statements referred to above present fairly, in
all material respects, the combined financial position of the Entities at June
30, 1997 and 1996, and the combined results of their operations and their cash
flows for each of the three years in the period ended June 30, 1997 in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Melville, New York
April 30, 1998
1
Page 7 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Combined Balance Sheets
<TABLE>
<CAPTION>
JUNE 30
1997 1996
-------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 7,046,964 $ 6,867,948
Accounts receivable 1,243,586 1,201,053
Inventories 1,170,264 1,028,734
Prepaid expenses 813,732 1,440,733
Property and equipment, net 52,408,122 48,260,576
Advance rental payments 27,577,534 26,881,161
Other assets and deferred charges 1,516,878 1,671,060
-------------------------------
Total assets $91,777,080 $87,351,265
===============================
LIABILITIES AND SHAREHOLDERS' EQUITY
AND PARTNERS' CAPITAL
Liabilities:
Accounts payable $ 4,088,434 $ 4,111,393
Accrued commissions 7,216,335 6,821,250
Accrued interest 328,712 334,158
Other accrued expenses 1,477,447 1,810,381
Capital lease obligations 1,955,459 2,055,194
Long-term debt 62,612,471 62,226,970
-------------------------------
Total liabilities 77,678,858 77,359,346
-------------------------------
Shareholders' equity and partners' capital:
Common stock 177,000 177,000
Retained earnings and partners' capital 13,921,222 9,814,919
Total shareholders' equity and partners' -------------------------------
capital 14,098,222 9,991,919
-------------------------------
Total liabilities and shareholders' equity
and partners' capital $91,777,080 $87,351,265
===============================
</TABLE>
See accompanying notes.
2
Page 8 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Combined Statements of Income
and Shareholders' Equity and Partners' Capital
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1997 1996 1995
---------------------------------------------------
<S> <C> <C> <C>
Revenues $116,043,107 $108,773,789 $104,044,847
Costs and expenses:
Laundry operating expenses 76,730,870 70,547,171 68,035,887
General and administrative 4,635,408 3,539,963 3,798,452
Depreciation and amortization 19,996,205 17,918,592 18,338,424
Gain on sale of equipment (245,621) (231,522) (382,378)
---------------------------------------------------
101,116,862 91,774,204 89,790,385
---------------------------------------------------
Operating income 14,926,245 16,999,585 14,254,462
Interest expense, net 5,980,744 5,895,152 5,941,955
---------------------------------------------------
Net income 8,945,501 11,104,433 8,312,507
Shareholders' equity and 9,991,919 2,928,569 (1,377,760)
partners' capital
(deficit)--beginning of year
Partners' distributions and
dividends (4,839,198) (4,041,083) (4,006,178)
---------------------------------------------------
Shareholders' equity and
partners' capital --end of year $ 14,098,222 $ 9,991,919 $ 2,928,569
===================================================
</TABLE>
See accompanying notes.
3
Page 9 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Combined Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1997 1996 1995
----------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 8,945,501 $ 11,104,433 $ 8,312,507
Adjustments to reconcile net income to
net cash flows provided by operating
activities:
Depreciation and amortization 19,996,205 17,918,592 18,338,424
Net gain on disposition of assets (245,621) (231,522) (382,378)
Changes in operating assets and
liabilities:
Accounts receivable, inventories and
other assets 537,903 (798,128) 187,325
Accounts payable, accrued expenses and
other liabilities 33,747 234,073 1,816,523
----------------------------------------------
Net cash provided by operating activities 29,267,735 28,227,448 28,272,401
----------------------------------------------
INVESTING ACTIVITIES
Purchases of property and equipment (16,071,729) (16,116,145) (14,754,073)
Advance payments to location owners (7,866,789) (11,890,086) (7,097,788)
Proceeds from sale of assets 515,575 523,370 1,045,194
----------------------------------------------
Net cash used in investing activities (23,422,943) (27,482,861) (20,806,667)
----------------------------------------------
FINANCING ACTIVITIES
Payments on notes payable and capital
lease obligations (4,755,587) (7,046,933) (51,064,172)
Proceeds of long-term notes 3,929,009 12,113,690 47,176,406
Deferred loan costs - - (515,975)
Partners' distributions and dividends (4,839,198) (4,041,083) (4,006,178)
Net cash (used in) provided by financing ----------------------------------------------
activities (5,665,776) 1,025,674 (8,409,919)
----------------------------------------------
Net increase (decrease) in cash and cash
equivalents 179,016 1,770,261 (944,185)
Cash and cash equivalents at beginning
of year 6,867,948 5,097,687 6,041,872
----------------------------------------------
Cash and cash equivalents at end of year $ 7,046,964 $ 6,867,948 $ 5,097,687
==============================================
</TABLE>
See accompanying notes.
4
Page 10 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Notes to Combined Financial Statements
June 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The accompanying combined financial statements include the accounts of Macke
Laundry Service Limited Partnership (the "Partnership") and certain companies
affiliated with the Partnership through common ownership and management
(collectively, the "Entities"). These affiliates are: Coin Controlled Washers,
Inc. ("CCW"); Advance/Macke Domestic Machines, Inc.; Superior Coin-op, Inc.
("Superior"); Superior Coin II, Inc.; Macke Services-Texas, Inc. ("Macke-
Texas"); and Macke Laundry Service-Central Limited Partnership ("Central L.P.").
Intercompany accounts and transactions have been eliminated in the combination.
DESCRIPTION OF BUSINESSES
The Entities operate coin-operated laundry businesses in various leased
facilities located within multi-family housing complexes located throughout the
Mid-Atlantic, South Central and Mid-West regions of the United States.
On March 2, 1998, the interest of the Partnership and the assets of the
affiliated companies were sold to Coinmach Corporation for approximately $214
million. The accompanying combined financial statements have been prepared
without regard to such transaction.
RECOGNITION OF LAUNDRY REVENUES
The Entities have agreements with various property owners which provide for
installation and operation of laundry machines at various locations in return
for a commission. These agreements provide for both contingent (percentage of
revenues) and fixed commission payments. The Entities report revenues from
laundry machines on the accrual basis and have accrued the cash computed to be
in the machines at the end of the year.
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 reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
5
Page 11 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Notes to Combined Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
The Entities consider all highly liquid investments with a maturity of less than
three months when purchased to be cash equivalents.
INVENTORIES
Inventories of repair parts and supplies are stated at the lower of cost (first-
in, first-out) or market.
PROPERTY AND EQUIPMENT
Property, equipment and leasehold improvements are carried at cost and are
depreciated on a straight-line method over the lesser of the estimated useful
lives or lease life:
YEARS
---------------
Laundry equipment and fixtures 5-8
Automobiles and trucks 3
Office furniture, equipment and other 3-7
ADVANCE RENTAL PAYMENTS
Advance payments to location owners are amortized on a straight-line basis over
the contract term, which generally ranges from 5 to 10 years.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash and cash equivalents, accounts receivable and other
receivables and accounts payable are reasonable estimates of their fair value.
The carrying values of capital lease obligations and notes payable are a
reasonable estimate of their fair values as the interest rates approximate rates
currently available to the Entities for debt with similar terms and remaining
maturities.
6
Page 12 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Notes to Combined Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Income taxes have not been provided for the Entities as any taxable income or
loss is allocated to the partners (or Subchapter S shareholders) and is
generally not subject to tax at the Entity level.
ADVERTISING COSTS
Advertising costs are expensed as incurred.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
June 30
1997 1996
---------------------------------
Laundry equipment and fixtures $107,201,252 $ 96,319,870
Automobiles and trucks 5,529,645 5,092,877
Office furniture, equipment and other 4,909,579 4,028,051
---------------------------------
117,640,476 105,440,798
Less accumulated depreciation 65,232,354 57,180,222
---------------------------------
$ 52,408,122 $ 48,260,576
=================================
At June 30, 1997 and 1996, automobiles and trucks include $4,962,000 and
$4,414,000, respectively, of assets acquired under capital leases. Related
accumulated depreciation at those dates totaled $3,010,000 and $2,405,000. The
statements of cash flows do not include $1,085,000, $1,479,000 and $1,007,000 of
leased vehicles which were capitalized during the years ended June 30, 1997,
1996 and 1995, respectively.
7
Page 13 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Notes to Combined Financial Statements (continued)
3. ADVANCE RENTAL PAYMENTS
JUNE 30
1997 1996
--------------------------------
Cost $58,994,847 $55,975,586
Less accumulated amortization 31,417,313 29,094,425
--------------------------------
$27,577,534 $26,881,161
================================
4. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
June 30
1997 1996
------------------------------
Partnership debt under loan and security
agreement dated December 5, 1994:
Term loan $21,250,000 $22,750,000
Fixed revolving loan 10,000,000 10,000,000
Floating revolving loan 14,230,615 12,952,606
Other 411,338 211,997
--------------------------------
Partnership long-term debt 45,891,953 45,914,603
Affiliates long-term debt:
Central L.P. 3,342,857 4,662,901
CCW 9,468,275 8,725,185
Macke-Texas 3,200,000 2,000,000
Other 709,386 924,281
--------------------------------
$62,612,471 $62,226,970
================================
In connection with the sale of the Entities to Coinmach Corporation in March
1998, all long-term debt amounts were repaid.
PARTNERSHIP DEBT
On December 5, 1994, the Partnership entered into a Loan and Security Agreement
(Loan Agreement) with two financial institutions with an original total loan
availability of $50,000,000. The original loan structure included a term loan
($25,000,000), fixed revolving loan ($10,000,000) and a floating revolving loan
($15,000,000 facility).
8
Page 14 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Notes to Combined Financial Statements (continued)
4. LONG-TERM DEBT (CONTINUED)
The term loan and fixed revolving loan both bore interest at a fixed rate of
9.75%. The floating revolving loan bore interest at a floating rate of either
prime plus 1% or LIBOR plus 3%. At June 30, 1997, the prime rate was 8.5% and
the one-month LIBOR rate was 5.69%.
Obligations payable under the Loan Agreement were secured by all of the
Partnership's real property, personal property, and leasehold interests, except
for certain security interests. The Loan Agreement did not allow the Partnership
to incur any additional indebtedness and restricted distributions to the
partners. The Loan Agreement also required the Partnership to meet certain
financial ratios and restricted capital expenditures.
CENTRAL L.P. DEBT
The note payable was secured by all of Central L.P.'s real property, personal
property, and leasehold interests. The note had a floating interest rate of
prime plus 1%. The note included a $600,000 participation by one of the partners
of Central L.P.
CCW DEBT
The CCW secured debt represented two notes. One note (principal balance of
$8,407,380 and $8,725,185 at June 30, 1997 and 1996, respectively) bore interest
at a floating rate of prime minus .15%. The second note (principal balance of
$1,060,895 at June 30, 1997) bore interest at a floating rate of prime plus 1%.
The notes were secured by all of CCW's real property, personal property, and
leasehold interests, and by a pledge of the stock in CCW.
MACKE-TEXAS SECURED DEBT
The note payable was secured by all of Macke-Texas' real property, personal
property, and leasehold interests. The note had an interest rate of prime.
9
Page 15 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Notes to Combined Financial Statements (continued)
4. LONG-TERM DEBT (CONTINUED)
CAPITAL LEASE OBLIGATIONS
Future minimum lease payments for capital leases are as follows:
Year ending June 30:
1998 $1,206,212
1999 790,496
2000 311,730
2001 15,002
---------------
2,323,440
Less amounts representing interest 367,981
Capital lease obligations $1,955,459
===============
INTEREST EXPENSE
Interest paid in the years ended June 30, 1997, 1996 and 1995 totaled
$5,986,190, $5,941,000 and $5,570,000, respectively.
5. EMPLOYEE BENEFIT PLANS
The Entities sponsor various defined contribution employee savings plans,
generally covering all employees with more than one year of service. The
Entities contribute 50% of contributions up to a maximum of 2.5% of
participants' salaries.
During the years ended June 30, 1997, 1996 and 1995 expense recognized for
contributions to the employee savings plans was $234,000, $230,000 and $210,000,
respectively.
6. OPERATING LEASES
The Entities have entered into operating leases for office and warehouse
facilities. One of these leases is with a former principal owner of the
Entities. The total rental expenses under these leases were $776,000, $778,000
and $743,000 for the years ended June 30, 1997, 1996 and 1995, respectively. Of
the total rental expense, $162,600, $162,600 and $140,000 related to the lease
with the former principal owner for the years ended June 30, 1997, 1996 and
1995, respectively.
10
Page 16 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Notes to Combined Financial Statements (continued)
6. OPERATING LEASES (CONTINUED)
At June 30, 1997, future minimum rental payments required under operating leases
with initial noncancelable lease terms in excess of one year were as follows:
TOTAL
----------------
Year ending June 30:
1998 $ 720,000
1999 680,000
2000 461,000
2001 307,000
2002 252,000
Thereafter 1,529,000
----------------
$3,949,000
================
7. SHAREHOLDERS' EQUITY AND PARTNERS' CAPITAL
At June 30, 1997 and 1996, common stock related to the Entities' Subchapter S
corporations consisted of the following:
CCW
Authorized--1,000 shares--no par value
Issued and outstanding--1,000 shares $140,000
ADVANCE/MACKE
Authorized--1,000 shares--no par value
Issued and outstanding--1,000 shares 10,000
SUPERIOR
Authorized--10,000 shares--no par value
Issued and outstanding--1,000 shares 5,000
SUPERIOR II
Authorized--1,000 shares--no par value
Issued and outstanding--1,000 shares 21,000
MACKE-TEXAS
Authorized--10,000 shares--no par value
Issued and outstanding--1,000 shares 1,000
---------------
$177,000
===============
11
Page 17 of 27
<PAGE>
Macke Laundry Service Limited Partnership and Affiliates
Notes to Combined Financial Statements (continued)
7. SHAREHOLDERS' EQUITY AND PARTNERS' CAPITAL (CONTINUED)
At June 30, 1997 and 1996, the partners' capital accounts for Macke Laundry
Service-Central Limited Partnership consisted of the following:
June 30
1997 1996
------------------------------
Macke Laundry Service-
Central Limited Partnership:
General partners $2,519,023 $1,733,127
Limited partners 5,546 2,816
------------------------------
Total partners' capital $2,524,569 $1,735,943
==============================
There were no other limited partnership interests for the Partnership or any of
its affiliates for the periods presented.
8. RELATED PARTY
In fiscal 1997, the Entities purchased $467,000 of debit card equipment from a
company owned by the former principal owners. In addition $234,000 is included
in prepaid expenses at June 30, 1997 for machines received subsequent to year-
end. The Entities also reimbursed the related company for certain expenses,
which were included in laundry operating expenses in the amount of $558,000 and
$101,000 in fiscal 1997 and 1996, respectively.
9. BUSINESS ACQUISITIONS
During the months of July to September 1997, the Entities acquired three
additional independent laundry businesses for purchase prices aggregating
approximately $13 million. These additional businesses were included in the
March 2, 1998 sale to Coinmach Corporation.
12
Page 18 of 27
<PAGE>
Attachment 7(b)
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma combined balance sheet as of December 26,
1997 gives effect only to the Macke Acquisition, as if such transaction occurred
as of December 26, 1997. The unaudited pro forma combined statements of
operations of Coinmach for the twelve month period ended March 28, 1997 and the
nine month period ended December 26, 1997 give effect only to the Macke
Acquisition, which occurred on March 2, 1998, as if such transaction occurred at
the beginning of the fiscal year ended March 28, 1997 (the "1997 Fiscal Year").
The pro forma adjustments are based upon currently available information as
well as upon certain assumptions that management believes are reasonable. The
Macke Acquisition was accounted for as a purchase with assets recorded at their
estimated fair market values. Management believes that actual fair market value
adjustments, if any, will not differ materially from the preliminary allocation
of the purchase price contained in the pro forma adjustments reflected in the
pro forma financial information.
The unaudited pro forma combined financial statements are not necessarily
indicative of either future results of operations or results that might have
been achieved if the foregoing transactions had been consummated as of the
indicated dates. The unaudited pro forma combined financial statements should
be read in conjunction with the notes thereto and the historical consolidated
financial statements of Coinmach as previously filed in Coinmach's Annual Report
on Form 10-K, as of and for the year ended March 28, 1997.
Page 19 of 27
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 26, 1997
(In thousands of Dollars)
<TABLE>
<CAPTION>
HISTORICAL
BASIS OF
MACKE
ENTITIES'
COMPANY ASSETS PRO FORMA PRO FORMA
HISTORICAL ACQUIRED ADJUSTMENTS COMBINED
----------- -------- ----------- ---------
ASSETS:
<S> <C> <C> <C> <C>
Cash and cash equivalents........................ $ 16,780 $ 5,306 $ -- $ 22,086
Receivables, net................................. 8,003 741 -- 8,744
Inventories and prepaid expenses................. 17,659 2,012 -- 19,671
Advance location payments........................ 48,644 25,423 -- 74,067
Property and equipment, net...................... 133,181 60,209 (9,371)(a) 184,019
Contract rights, net............................. 215,858 8,665 134,882(a) 359,405
Goodwill, net.................................... 108,199 -- -- 108,199
Other assets..................................... 17,721 900 -- 18,621
-------- -------- -------- --------
Total assets................................... $566,045 $103,256 $125,511 $794,812
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities......... $ 40,221 $ 13,324 $ -- $ 53,545
Due to Coinmach Laundry Corporation.............. 63,368 -- -- 63,368
Deferred income taxes............................ 78,028 -- -- 78,028
11 3/4% Series A/B/C Notes due 2005.............. 296,655 -- -- 296,655
Premium on 11 3/4% Series C Notes due 2005....... 9,669 -- -- 9,669
Credit facility.................................. 75,000 -- 213,267(a) 288,267
Other long-term debt............................. 2,563 2,176 -- 4,739
-------- -------- -------- --------
565,504 15,500 213,267 794,271
-------- -------- -------- --------
Stockholder's equity:
Common stock and capital in excess of par value.. 41,391 -- -- 41,391
Net equity of acquisition........................ -- 87,756 (87,756) --
Accumulated deficit.............................. (40,596) -- -- (40,596)
-------- -------- -------- --------
795 87,756 (87,756) 795
Receivables from management...................... (254) -- -- (254)
-------- -------- -------- --------
Total stockholder's equity.................. 541 87,756 (87,756) 541
-------- -------- -------- --------
Total liabilities and stockholder's equity.. $566,045 $103,256 $125,511 $794,812
======== ======== ======== ========
</TABLE>
See Accompanying Notes
Page 20 of 27
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 26, 1997
(In thousands of Dollars)
(a) Reflects allocation of purchase price aggregating approximately $213,000 for
the Macke Acquisition. The Macke Acquisition was accounted for as a
purchase. Preliminary purchase price allocations are based on fair value
using a methodology consistent with prior acquisitions. Contract rights will
be amortized over 15 years. Management believes that actual fair market
value adjustments, if any, will not differ materially from such preliminary
purchase price allocations. Coinmach funded the Macke Acquisition with
financing under an amended new credit facility in an aggregate principal
amount of approximately $213,000.
Page 21 of 27
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Year Ended March 28, 1997
(In thousands of Dollars)
<TABLE>
<CAPTION>
COMPANY ACQUIRED PURCHASE PRO FORMA
HISTORICAL BUSINESS(a) ACCOUNTING OTHER COMBINED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues..................................... $206,852 $122,533 $ 0 $ 0 $329,385
Costs and Expenses
Operating, general and administrative 143,966 84,043 0 (4,400)(b) 223,609
expenses...................................
Depreciation and amortization............... 46,316 22,703 (2,185)(c) 75,826
8,992(d)
Stock based compensation charge............. 1,768 0 0 0 1,768
-------- -------- ------- ------- --------
192,050 106,746 6,807 (4,400) 301,203
-------- -------- ------- ------- --------
Operating income............................. 14,802 15,787 (6,807) 4,400 28,182
Interest expense, net........................ 27,417 7,131 0 9,930(e) 44,478
-------- -------- ------- -------- --------
Net (loss) income before income taxes........ (12,615) 8,656 (6,807) (5,530) (16,296)
-------- -------- ------- ------- --------
Provision (benefit) for income taxes......... (2,307) 0 (2,382)(f) 1,094(f) (3,595)
-------- -------- ----------- -------- --------
Net (loss) income before extraordinary item.. $(10,308) $ 8,656 $(4,425) $(6,624) $(12,701)
======== ======== ======= ======= ========
</TABLE>
See Accompanying Notes
Page 22 of 27
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED STATEMENTS OF OPERATIONS
Year Ended March 28, 1997
(In thousands of Dollars)
(a) Represents historical combined operating results of the Macke Entities for
the year ended June 30, 1997, including the pro forma results from certain
acquisitions made by the Macke Entities during or subsequent to the year
ended June 30, 1997.
(b) Reflects anticipated cost savings directly related to the Macke Acquisition.
Prior to completing an acquisition, the Company formulates a cost savings
program affecting corporate financial and administrative functions and
regional operations which is implemented upon the completion of each
acquisition. The cost savings from the Macke Acquisition represents certain
identifiable personnel cost savings relating to Coinmach's determination to
terminate 89 employees employed by the Macke Entities for $3,318 and certain
identifiable cost savings for facility and other costs for $1,082 resulting
from the reduction and consolidation of certain regional operations in
various offices and administrative functions in Roslyn, N.Y. pursuant to the
cost savings program. The above-mentioned pro forma personnel and facility
cost savings are derived from actual historical amounts reflected on the
acquired entities' financial statements. Additionally, substantially all
the employees have been terminated and the expected costs savings have begun
to be realized with respect to all of the facilities for which cost savings
have been recorded. If the Company's integration plans had occurred on
March 28, 1997, the Company believes that there would have been no effect on
revenues or expenses other than as presented in the pro forma statements of
operations.
(c) Represents the decrease in depreciation expense for certain of the fixed
assets of the Macke Entities, primarily resulting from differences between
the fair market value and the historical costs of such assets.
(d) Represents the amortization of contract rights over 15 years, related to the
Macke Acquisition.
(e) The following table presents a reconciliation of pro forma interest expense:
YEAR ENDED
MARCH 28, 1997
---------------
Historical combined interest expense....... $34,548
-------
Add:
Interest on $213.3 million term
loan and revolving loan to finance
the Macke Acquisition............... 17,061
Deduct:
Interest of acquired business........ (7,131)
-------
Pro forma adjustment....................... 9,930
-------
Pro forma interest expense................. $44,478
=======
(f) Represents the income tax impact on purchase accounting adjustments and
other pro forma adjustments.
Page 23 of 27
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Nine Months Ended December 26, 1997
(In thousands of Dollars)
<TABLE>
<CAPTION>
COMPANY ACQUIRED PURCHASE PRO FORMA
HISTORICAL BUSINESS(A) ACCOUNTING OTHER COMBINED
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues................................ $230,415 $93,591 $ 0 $ 0 $324,006
Costs and Expenses
Operating, general and administrative 158,634 64,013 0 (3,300)(b) 219,347
expenses..............................
Depreciation and amortization.......... 52,537 17,434 6,744(c) 0 74,922
(1,793)(d)
Stock based compensation charge........ 820 0 0 0 820
-------- ------- ------- ------- --------
211,991 81,447 4,951 (3,300) 295,089
-------- ------- ------- -------
Operating income........................ 18,424 12,144 (4,951) 3,300 28,917
Interest expense, net................... 32,456 5,458 0 7,338(e) 45,252
-------- ------- ------- ------- --------
Net (loss) income before income taxes... (14,032) 6,686 (4,951) (4,038) (16,335)
Provision (benefit) for income taxes.... (2,600) -- 1,733 (f) 927(f) (3,406)
-------- ------- ----------- ------- --------
Net (loss) income....................... $(11,432) $ 6,686 $(3,218) $(4,965) $(12,929)
======== ======= ======= ======= ========
</TABLE>
See Accompanying Notes
Page 24 of 27
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED STATEMENTS OF OPERATIONS
Nine Months Ended December 26, 1997
(In thousands of Dollars)
(a) Represents historical combined operating results of the Macke Entities for
the nine months ended December 31, 1997, including the pro forma results
from certain acquisitions made by the Macke Entities during the nine months
ended December 31, 1997. The nine month results were derived by adding the
quarter ended June 30, 1997 with the six months ended December 31, 1997 for
the Macke Entities.
(b) Reflects anticipated cost savings directly related to the Macke Acquisition.
Prior to completing an acquisition, the Company formulates a cost savings
program affecting corporate financial and administrative functions and
regional operations which is implemented upon the completion of each
acquisition. The cost savings from the Macke Acquisition represents certain
identifiable personnel cost savings relating to Coinmach's determination to
terminate 89 employees employed by the Macke Entities for $2,488 and certain
identifiable cost savings for facility and other costs for $812 resulting
from the reduction and consolidation of certain regional operations in
various offices and administrative functions in Roslyn, N.Y. pursuant to the
cost savings program. The above-mentioned pro forma personnel and facility
cost savings are derived from actual historical amounts reflected on the
acquired entities' financial statements. Additionally, substantially all
the employees have been terminated and the expected costs savings have begun
to be realized with respect to all of the facilities for which cost savings
have been recorded. If the Company's integration plans had occurred on
March 28, 1997, the Company believes that there would have been no effect on
revenues or expenses other than as presented in the pro forma statements of
operations.
(c) Represents the amortization of contract rights over 15 years, related to the
Macke Acquisition.
(d) Represents the decrease in depreciation expense for certain of the fixed
assets of the Macke Entities primarily resulting from differences between
the fair market value and the historical costs of such assets.
(e) The following table presents a reconciliation of pro forma interest expense:
NINE MONTHS
ENDED
DECEMBER 26, 1997
------------------
Historical combined interest expense....... $37,914
-------
Add:
Interest on $213.3 million term loan
and revolving loan to finance the
Macke Acquisition.................... 12,796
Deduct:
Interest of acquired business........ (5,458)
-------
Pro forma adjustment........................ 7,338
-------
Pro forma interest expense.................. $45,252
=======
(f) Represents the income tax impact on purchase accounting adjustments and
other pro forma adjustments.
Page 25 of 27
<PAGE>
EXHIBIT INDEX
PAGE
----
EXHIBIT NUMBER DOCUMENT NUMBER
- -------------- -------- ------
10.59* Purchase Agreement, dated as of January 20,
1998, by and among Coinmach, Matthew A.
Spagat, Jerome P. Seiden, Macke Laundry
Service Midwest Limited Partnership, JPS
Laundry, Inc., Macke Laundry Service, Inc.,
Coin Controlled Washers, Inc., Macke Laundry
Service-Central Limited Partnership, Macke
Services-Texas, Inc., Superior Coin, Inc.,
Superior Coin II, Inc., and Advance/Macke
Domestic Machines, Inc.
10.60* Amendment No. 1, dated as of March 2, 1998, to
Purchase Agreement, dated as of January 20,
1998, by and among Coinmach, Matthew A.
Spagat, Jerome P. Seiden, Macke Laundry
Service Midwest Limited Partnership, JPS
Laundry, Inc., Macke Laundry Service, Inc.,
Coin Controlled Washers, Inc., Macke Laundry
Service-Central Limited Partnership, Macke
Services-Texas, Inc., Superior Coin, Inc.,
Superior Coin II, Inc., and Advance/Macke
Domestic Machines, Inc.
10.61* Second Amended and Restated Credit
Agreement, dated as of March 2, 1998, among
Coinmach, CLC, First Union National Bank of
North Carolina, as Syndication Agent, Bankers
Trust Company, as Administrative Agent, and
the Banks party thereto
10.62* First Amendment to the Second Amended and
Restated Credit Agreement, dated as of March 2,
1998, among Coinmach, CLC, First Union
National Bank of North Carolina, as Syndication
Agent, Bankers Trust Company, as
Administrative Agent, and the Banks party
thereto
27.1 Financial Data Schedule 27
99.1* Press release, dated March 2, 1998
- --------------
* Previously filed as an identically numbered exhibit to Coinmach's Current
Report on Form 8-K, dated March 2, 1998, as filed with the United States
Securities and Exchange Commission on March 16, 1998.
Page 26 of 27
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 8-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> MAR-28-1997 MAR-31-1998
<PERIOD-START> MAR-30-1996 MAR-29-1997
<PERIOD-END> MAR-28-1997 DEC-26-1997
<CASH> 0 22,086
<SECURITIES> 0 0
<RECEIVABLES> 0 8,744
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 794,812
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 589,661
0 0
0 0
<COMMON> 0 41,391
<OTHER-SE> 0 (40,850)
<TOTAL-LIABILITY-AND-EQUITY> 0 794,812
<SALES> 0 0
<TOTAL-REVENUES> 329,385 324,006
<CGS> 0 0
<TOTAL-COSTS> 223,609 219,347
<OTHER-EXPENSES> 77,594 75,742
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 44,478 45,252
<INCOME-PRETAX> (16,296) (16,335)
<INCOME-TAX> (3,595) (3,406)
<INCOME-CONTINUING> (12,701) (12,929)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (12,701) (12,929)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
