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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Quarter Ended March 31, 1999
Commission File Number 0-23222
FINISHMASTER, INC.
(Exact Name of Registrant as Specified in its Charter)
Indiana 38-2252096
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
54 Monument Circle, Suite 600, Indianapolis, IN 46204
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (317) 237-3678
Indicate by check mark whether the registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months and (2) has
been subject to the filing requirements for at least the past 90 days. Yes X No
On May 17, 1999, there were 7,535,856 shares of the Registrant's common stock
outstanding.
<PAGE>
FINISHMASTER, INC.
FORM 10-Q
For the Quarter Ended March 31, 1999
TABLE OF CONTENTS
PAGE
Part 1. Financial Information 3
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (unaudited) 3
Condensed Consolidated Statements of Operations
(unaudited) 4
Condensed Consolidated Statements of Cash Flows
(unaudited) 5
Notes to Condensed Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part 2. Other Information 13
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
PART I. FINANCIAL STATEMENTS
FINISHMASTER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, December 31,
1999 1998 (1)
---------- ------------
ASSET (unaudited)
CURRENT ASSETS
Cash $ 1,197 $ 1,009
Accounts receivable, net of allowance for doubtful
accounts of $ 1,650 and 1,680, respectively $31,795 30,212
Inventory 51,306 57,744
Prepaid expenses and other current assets 7,779 8,922
-------- --------
TOTAL CURRENT ASSETS 92,077 97,887
PROPERTY AND EQUIPMENT, NET 10,773 11,259
OTHER ASSETS
Intangible assets, net 112,972 114,526
Other 3,279 3,275
-------- --------
116,251 117,801
-------- --------
$219,101 $226,947
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 29,319 $ 36,785
Accrued expenses and other current liabilities 11,391 8,821
Current maturities of long-term debt 10,803 9,985
-------- --------
TOTAL CURRENT LIABILITIES 51,513 55,591
LONG-TERM OBLIGATIONS 117,064 122,008
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 1,000,000 shares
authorized; no shares issued or outstanding
Common stock, $ 1 stated value, 25,000,000
shares authorized; 7,535,856
shares issued and outstanding 7,536 7,536
Additional paid-in capital 27,351 27,351
Retained earnings 15,637 14,461
-------- --------
50,524 49,348
-------- --------
$219,101 $226,947
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
(1) The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
<PAGE>
FINISHMASTER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
-------------------
1999 1998
------- -------
N$T SALES $80,106 $76,024
COST OF SALES 51,486 49,079
------- -------
GROSS PROFIT 28,620 26,945
------- -------
EXPENSES
Operating 11,451 11,714
Selling, general and administrative 9,467 8,938
Depreciation 891 920
Amortization of intangible assets 1,738 1,493
------- -------
TOTAL 23,547 23,065
------- -------
INCOME FROM OPERATIONS 5,073 3,880
Interest expense, net 2,747 2,873
------- -------
INCOME BEFORE INCOME TAXES 2,326 1,007
Income tax expense 1,150 479
------- -------
NET INCOME $ 1,176 $ 528
======= =======
NET INCOME PER SHARES-BASIC $ 0.16 $ 0.09
======= =======
NET INCOME PER SHARES DILUTED $ 0.16 $ 0.09
======= =======
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING--BASIC 7,536 5,993
======= =======
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING--DILUTED 7,543 5,995
======= =======
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
FINISHMASTER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three Months Ended
March 31,
----------------------
OPERATING ACTIVITIES 1999 1998
-------- --------
Net income $ 1,176 $ 528
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,629 2,413
Amortization of financing costs 80 81
Changes in operating assets and liabilities:
Accounts receivable (1,583) (423)
Inventories 6,341 1,725
Prepaid expenses and other current assets 1,139 1,720
Accounts payable and accrued expenses (4,896) 4,304
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,886 10,348
INVESTING ACTIVITIES
Business acquisitions and payments under
earn-out provisions of prior acquisition
agreements (264) (297)
Purchases of property and equipment (308) (231)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (572) (528)
FINANCING ACTIVITIES
Borrowings from long-term debt 32,300 33,300
Repayments of long-term debt (36,426) (42,840)
Debt issuance costs -- (69)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (4,126) (9,609)
-------- --------
INCREASE IN CASH 188 211
CASH AT THE BEGINNING OF PERIOD 1,009 364
-------- --------
CASH AT THE END OF PERIOD 1,197 575
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
FINISHMASTER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Basis of Presentation: The interim financial statements are unaudited but, in
the opinion of management, reflect all adjustments necessary for a fair
presentation of financial position, results of operations and cash flows for the
periods presented. These adjustments consist of normal recurring items. The
results of operations for any interim period are not necessarily indicative of
results for the full year. The condensed consolidated financial statements and
notes are presented as permitted by the requirements for Form 10-Q and do not
contain certain information included in the Company's annual consolidated
financial statements and notes. This Form 10-Q should be read in conjunction
with the Company's consolidated financial statements and notes included in its
1998 Annual Report on Form 10-K.
Nature of Business: FinishMaster, Inc. ("the Company" or "FinishMaster") is the
leading national distributor of automotive paints, coatings, and paint-related
accessories to the automotive collision repair industry. As of March 31, 1999,
the Company operated 152 sales outlets and three major distribution centers in
22 states and is organized into three major geographic regions - the
Southeastern, Western, and Central/Northeastern Divisions. The Company provides
a comprehensive selection of brand name products to its customers. The Company
is highly dependent on four key suppliers, BASF, DuPont, 3M and PPG, which
account for approximately 60% of the Company's purchases.
Principles of Consolidation: The Company's condensed consolidated financial
statements include the accounts of FinishMaster and Refinishers Warehouse, Inc.,
as well as Thompson PBE, Inc. ("Thompson") and LDI AutoPaints, Inc.
("AutoPaints"), from the dates of their respective acquisitions. All significant
intercompany accounts and transactions are eliminated. References to the Company
or FinishMaster throughout this report relate to the consolidated entity.
Majority Shareholder: Lacy Distribution, Inc. ("Distribution"), an Indiana
corporation, which is an indirect wholly-owned subsidiary of LDI, Ltd. ("LDI"),
an Indiana limited partnership, is the majority shareholder of the Company with
5,587,516 shares of common stock, representing 74.1% of the outstanding shares
at March 31, 1999. Throughout the remainder of this report, LDI and Distribution
are collectively referred to as "LDI."
Recent Accounting Pronouncement: In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," (SFAS No. 133).
The Company is not routinely involved in derivative and hedging activities and
adoption of this Statement is not expected to have a material impact on
financial condition or results of operations.
2. ACQUISITIONS
On June 30, 1998, the Company completed the acquisition by merger of AutoPaints
pursuant to which the Company merged with AutoPaints and issued to LDI an
additional 1,542,416 shares of common stock. Since this was a transaction within
a controlled group, the acquisition of AutoPaints was accounted for using its
historical cost basis. Equity securities issued to LDI in exchange for the net
assets of AutoPaints were recorded at the historical cost basis of the net
assets acquired as of the effective date of the transaction.
On November 21, 1997, the Company acquired substantially all of the outstanding
common stock of Thompson. The total purchase price, including related
acquisition costs, was $73,471,000. The Company also refinanced $34,474,000 of
Thompson indebtedness in conjunction with the transaction.
During the first quarter of 1999 the Company completed two additional
acquisitions that are not material to its historical or pro forma results of
operations.
3. NET INCOME PER SHARE
The following table sets forth the computation of basic and diluted net income
per share:
Three Months Ended March 31,
(in thousands, except per share data) 1999 1998
------ ------
Numerator:
Net Income $1,176 $ 528
------ ------
Denominator:
Basic-weighted average shares 7,536 5,993
Effect of dilutive stock options 7 2
------ ------
Diluted-weighted average shares 7,543 5,995
====== ======
Basic net income per share $ 0.16 $ 0.09
====== ======
Diluted net income per share $ 0.16 $ 0.09
====== ======
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
The historical financial statements of the Company include the results of
operations of AutoPaints since its acquisition date of June 30, 1998. The
Company believes that the presentation of Management's Discussion and Analysis
on a pro forma basis provides a more meaningful understanding of the Company's
performance by better reflecting the effect of the AutoPaints acquisition. The
following tables include unaudited pro forma consolidated results, as if the
acquisition of AutoPaints had occurred on January 1, 1998. The unaudited pro
forma amounts do not purport to be indicative of results that would have
occurred had the acquisition been in effect for the periods presented, nor do
they purport to be indicative of the results that may be obtained in the
future.
Net Sales
Three Months Ended March 31,
- -------------------------------------------------------
(In thousands) 1999 Change 1998
- -------------------------------------------------------
Historical $80,106 5.4% $76,024
- -------------------------------------------------------
Pro forma $80,106 2.0% $81,743
- -------------------------------------------------------
Pro forma net sales for the first quarter decreased $1.6 million, or 2.0%.
Following the acquisitions of Thompson and AutoPaints, certain unprofitable
store locations were closed and store locations serving the same geographical
area were consolidated. The closure and consolidation of these sales outlets
during this time period decreased first quarter sales by approximately $2.5
million. Partially offsetting the effect on sales of store closures and
consolidations was a $0.8 million or 1.1% increase in same store sales.
Gross Margin
Three Months Ended March 31,
- ----------------------------------------------------------------------
(In thousands) 1999 Change 1998
- ----------------------------------------------------------------------
Historical $ 28,620 6.2% $26,945
Percentage of net sales 35.7% 35.4%
- ----------------------------------------------------------------------
Pro forma $ 28,620 2.4% $29,310
Percentage of net sales 35.7% 35.9%
- ----------------------------------------------------------------------
Pro forma gross margin decreased $0.7 million, or 2.4%, primarily due to the
decrease in pro forma net sales. Lower pro forma net sales volume impacted gross
margin by approximately $0.6 million.
Operating Expenses
Three Months Ended March 31,
- ---------------------------------------------------------------------------
(In thousands) 1999 Change 1998
- ---------------------------------------------------------------------------
Historical $ 11,451 2.2% $11,714
Percentage of net sales 14.3% 15.4%
- ---------------------------------------------------------------------------
Pro forma $ 11,451 3.9% $11,917
Percentage of net sales 14.3% 14.6%
- ---------------------------------------------------------------------------
Operating expenses consist of wages, facility expenses, vehicle and related
costs for the Company's store and distribution locations. Pro forma operating
expenses decreased $0.5 million or 3.9%. This decrease was a direct result of
the Company's profit improvement initiatives that included savings from the
consolidation and closure of sales outlets following the acquisitions of
Thompson and AutoPaints, and reduced spending programs at store and distribution
locations.
<PAGE>
Selling, General and
Administrative Expenses
Three Months Ended March 31,
- -------------------------------------------------------------------------
(In thousands) 1999 Change 1998
- -------------------------------------------------------------------------
Historical $ 9,467 5.9% $ 8,938
Percentage of net sales 11.8% 11.8%
- -------------------------------------------------------------------------
Pro forma $ 9,467 7.1% $10,190
Percentage of net sales 11.8% 12.5%
- -------------------------------------------------------------------------
Selling, general and administrative expenses ("SG&A") consist of costs
associated with the Company's corporate support staff, and expenses for
commissions, wages, and customer sales support activities. Pro forma SG&A
expenses decreased $0.7 million, or 7.1% as a result of the consolidation of
four corporate offices into one, the closure and consolidation of sales outlets,
reduced spending initiatives and lower selling expenses related to reduced sales
volume.
Depreciation
Three Months Ended March 31,
- -----------------------------------------------------------------------------
(In thousands) 1999 Change 1998
- -----------------------------------------------------------------------------
Historical $ 891 3.2% $ 920
Percentage of net sales 1.1% 1.2%
- -----------------------------------------------------------------------------
Pro forma $ 891 13.9% $1,035
Percentage of net sales 1.1% 1.3%
- -----------------------------------------------------------------------------
Amortization of Intangible Assets
Three Months Ended March 31,
- -----------------------------------------------------------------------
(In thousands) 1999 Change 1998
- -----------------------------------------------------------------------
Historical $ 1,738 16.4% $1,493
Percentage of net sales 2.2% 2.0%
- -----------------------------------------------------------------------
Pro forma $ 1,738 0.8% $1,752
Percentage of net sales 2.2% 2.1%
- -----------------------------------------------------------------------
Interest Expense, net
Three Months Ended March 31,
- --------------------------------------------------------------------------
(In thousands) 1999 Change 1998
- --------------------------------------------------------------------------
Historical $ 2,747 4.4% $2,873
Percentage of net sales 3.4% 3.8%
- --------------------------------------------------------------------------
Pro forma $ 2,747 4.9% $2,890
Percentage of net sales 3.4% 3.5%
- --------------------------------------------------------------------------
Pro forma interest expense decreased $0.1 million, or 4.9%, due to lower average
outstanding borrowings of approximately $10.3 million.
<PAGE>
Income Tax Expense
Three Months Ended March 31,
- ------------------------------------------------------------------------
(In thousands) 1999 Change 1998
- ------------------------------------------------------------------------
Historical $ 1,150 140.1% $479
Percentage of net sales 1.4% 0.6%
Effective tax rate 49.4% 47.6%
- ------------------------------------------------------------------------
Pro forma $ 1,150 70.6% $674
Percentage of net sales 1.4% 0.8%
Effective tax rate 49.4% 44.2%
- ------------------------------------------------------------------------
Pro forma income tax expense rose $0.5 million, or 70.6%, due to higher pro
forma income before income taxes. The pro forma effective tax rate varied from
the federal statutory rate as a result of certain expenses, principally
nondeductible intangible amortization. In 1998, the Company's pro forma
effective tax rate for the year was 55.0%. The lower projected rate for 1999 is
reflective of higher anticipated full year income before income taxes and
consistent levels of nondeductible items.
Net Income and Income Per Share
Three Months Ended March 31,
- ------------------------------------------------------------------------------
(In thousands, except per share 1999 Change 1998
data)
- ------------------------------------------------------------------------------
Historical $ 1,176 122.7% $ 528
Percentage of net sales 1.5% 0.7%
Net income per share $ 0.16 $ 0.09
- ------------------------------------------------------------------------------
Pro forma $ 1,176 38.0% $ 852
Percentage of net sales 1.5% 1.0%
Net income per share $ 0.16 $ 0.11
- ------------------------------------------------------------------------------
Factors contributing to the changes in net income and pro forma net income and
the related per share amounts are discussed in the detail above.
Seasonality and Quarterly Fluctuations
The Company's sales and operating results have varied from quarter to quarter
due to various factors and the Company expects these fluctuations to continue.
Among these factors are seasonal buying patterns of the Company's customers and
the timing of acquisitions. Historically, sales have slowed in the late fall and
winter of each year largely due to inclement weather and the reduced number of
business days during the holiday season. In addition, the timing of acquisitions
may cause substantial fluctuations of operating results from quarter to quarter.
The Company takes advantage of periodic special incentive programs available
from its suppliers that extend the due date of inventory purchases beyond terms
normally available with large volume purchases. The timing of these programs can
contribute to fluctuations in the Company's quarterly cash flows. Although the
Company continues to investigate strategies to smooth the seasonal pattern of
its quarterly results of operations, there can be no assurance that the
Company's net sales, results of operations and cash flows will not continue to
display seasonal patterns.
<PAGE>
Financial Condition, Liquidity and Capital Resources
(In thousands) March 31, December 31,
1999 1998
- ---------------------------------------------------------------------------
Working capital $ 40,564 $ 42,296
Long-term debt $ 114,176 $ 119,120
- ---------------------------------------------------------------------------
Three Months Ended March 31,
- ---------------------------------------------------------------------------
(In thousands) 1999 1998
- ---------------------------------------------------------------------------
Cash provided by operating activities $ 4,886 $ 10,348
Cash used in investing activities $ (572) $ (528)
Cash used in financing activities $ (4,126) $ (9,609)
- ---------------------------------------------------------------------------
Net cash generated from operating activities was $4.9 million in the first
quarter of 1999 compared with $10.3 million in the comparable prior year period.
This decrease was a result of a negative change in cash flows generated from
operating assets and liabilities, partially offset by higher earnings and
increased depreciation and amortization expense. The negative change in cash
flows generated from operating assets and liabilities was attributable to a
decrease in accounts payable and accrued expenses resulting from differences in
payment terms between years on large inventory purchases, partially offset by
more substantial decreases in seasonal inventory levels.
Net cash used in financing activities, primarily the repayment of debt, was $4.1
million for the quarter ended March 31, 1999, down from $9.6 million in 1998.
This decrease in debt repayments was due to the decrease in cash generated by
operating activities.
Total capitalization at March 31, 1999 was $176 million, comprised of $125
million of debt and $51 million of equity. Debt as a percentage of total
capitalization was 71.2% at March 31, 1999 compared to 72.3% at December 31,
1998.
At March 31, 1999, the Company had term credit and revolving credit facilities
totaling $100 million, and senior subordinated debt of $30 million. The Company
also had a senior subordinated revolving credit facility in the amount of $10
million with its majority shareholder, which was available to fund working
capital and acquisition needs. The original expiration date on the $10 million
facility of March 27, 1999 was extended to June 29, 1999. The Company was in
compliance with the covenants underlying its credit facilities, and had
estimated availability under its revolving credit facility of $1.3 million as of
May 1, 1999, based upon the March 31, 1999 borrowing base calculation.
Based on current and projected operating results and giving effect to total
indebtedness, the Company believes that cash flow from operations and funds
available from lenders and other creditors will provide adequate funds for
ongoing operations, debt service and planned capital expenditures. The Company
is, however, currently pursuing other financing arrangements. Should the Company
be successful in obtaining acceptable financing terms, proceeds will be used to
retire certain bank term loans, a portion of amounts outstanding under the
revolving credit facility and the subordinated debt payable to LDI. Early
retirement of indebtedness will result in an extraordinary loss in the amount of
the net book value of capitalized debt issuance costs. At March 31, 1999,
unamortized debt issuance costs were approximately $1.4 million.
<PAGE>
Year 2000 Date Conversion
Many existing computer programs use only two digits to identify years. These
programs were designed without consideration for the effects of the upcoming
change in the century, and if not corrected, could fail or create erroneous
results by or at the Year 2000. Essentially all of the Company's information and
technology-based systems, as well as many non-information technology-based
systems, are potentially affected by the Year 2000 issue. Technology-based
systems reside on the Company's midrange computer, servers and personal
computers in the corporate office as well as in division offices and stores.
Specific systems include accounting, financial reporting, inventory tracking and
control, budgeting, tax, accounts receivable, accounts payable, purchasing,
distribution, word processing and spreadsheet applications. Non-information
technology-based systems include equipment and services containing embedded
microprocessors such as alarm systems and voice mail systems. The Company has
relationships with numerous third parties, including several paint
manufacturers, equipment suppliers, utility companies, insurance companies,
banks, and payroll processors, that may be affected by the Year 2000 issue.
The Company's State of Readiness
Remediation plans have been established for all major systems potentially
affected by the Year 2000 issue. The current status of the plans for information
technology-based systems are summarized as follows:
1. Identification of all applications and hardware with potential Year 2000
issues. To the best of the Company's knowledge, this has been completed.
2. For each item identified, performance of an assessment to determine an
appropriate action plan and timetable for remediation of each item. The
plan may consist of replacement, upgrade or elimination of the application.
This phase has been completed.
3. Implementation of the specific action plan. This phase has been completed
except for the store paint formula systems (see item 5).
4. Testing each application upon completion. All in-house developed systems
have been tested and found to be compliant. Vendor-supplied software has
been upgraded to Year 2000 compliant versions, and the Company has
certification of compliance from the software vendors.
5. Placement of the new process into production. All applications and systems
are now in production. The exception to this is the store paint formula
systems supplied by paint vendors. These systems will be upgraded by the
end of the third quarter of 1999.
The Company is in the process of identifying all non-information technology
based systems. Appropriate remediation plans are being developed, implemented
and tested when each affected system is identified. Identification should be
completed by the end of the second quarter of 1999 and remedied by the end of
the third quarter.
Identification of areas of potential third party risk is nearly complete and,
for those areas identified to date, remediation plans are being developed.
Identification and assessment should be completed by the end of the second
quarter of 1999 and implemented by the end of the third quarter of 1999.
The Costs Involved
The total cost to the Company of achieving Year 2000 compliance is not expected
to exceed $0.2 million and will consist primarily of the utilization of internal
resources. Spending to date totals approximately $0.1 million. Costs relating to
internal systems' Year 2000 compliance are included in the Information Systems
budget and are immaterial as a percentage of that budget. All costs related to
achieving Year 2000 compliance are based on management's best estimates. There
can be no assurance that actual results will not differ from these estimates.
<PAGE>
Risks and Contingency Plan
The Company is in the process of determining the risks it would face in the
event certain aspects of its Year 2000 remediation plan failed. It is also
developing contingency plans for all mission-critical processes. Under a "worst
case" scenario, the Company's operations would be unable to deliver product due
to internal system failures and/or the inability of vendors to deliver materials
for distribution. Inventory levels of certain key products may be temporarily
increased to minimize exposure. While virtually all internal systems can be
replaced with manual systems on a temporary basis, the failure of any
mission-critical system will have at least a short-term negative effect on
operations. The failure of national and worldwide banking information systems or
the loss of essential utilities services due to the Year 2000 issue could result
in the inability of many businesses, including the Company, to conduct business.
Risk assessment has been completed and contingency plans should be completed in
the third quarter of 1999.
Forward-Looking Statements
This Report contains certain forward-looking statements pertaining to, among
other things, the Company's future results of operations, cash flow needs and
liquidity, acquisitions, and other aspects of its business. The Company may make
similar forward-looking statements from time to time. These statements are based
largely on the Company's current expectations and are subject to a number of
risks and uncertainties. Actual results could differ materially from these
forward-looking statements. Important factors to consider in evaluating such
forward-looking statements include changes in external market factors, changes
in the Company's business strategy or an inability to execute its strategy due
to changes in its industry or the economy generally, difficulties associated
with assimilating acquisitions, the emergence of new or growing competitors,
seasonal and quarterly fluctuations, governmental regulations, the potential
loss of key suppliers, and various other competitive factors. In light of these
risks and uncertainties, there can be no assurance that the future developments
described in the forward-looking statements contained in this Report will in
fact occur.
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held on April 29, 1999.
(b) The following directors were elected at the meeting:
For Withheld
Margot L. Eccles 7,426,170 3,780
Peter L. Frechette 7,426,070 1,880
David W. Knall 7,426,170 1,780
Andre B. Lacy 7,426,170 1,780
Michael L. Smith 7,426,170 1,780
Walter S. Wiseman 7,426,170 1,780
Thomas U. Young 7,426,170 1,780
(c) Approval of the Amendments to FinishMaster, Inc. Stock Option Plan
For Against Abstain
7,156,163 258,087 13,700
No other matters were voted upon at the meeting.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits, unless otherwise indicated, have been
filed as exhibits to Form S-1 Registration Statement, No. 33-73804,
effective date of February 22, 1994, or as exhibits otherwise filed by the
Registrant, and are hereby incorporated by reference.
Exhibit No. Description of Document
2.1 Agreement and Plan of Merger, dated as of October 14, 1997,
by and among FinishMaster, Inc., FMST Acquisition
Corporation and Thompson PBE, Inc. (incorporated by
reference to Exhibit (c)(2) of Schedule 14D-1 previously
filed by FMST Acquisition Corporation on October 21, 1997).
2.2 Agreement and Plan of Merger, dated February 16, 1998, by
and among FinishMaster, Inc., LDI AutoPaints, Inc. and Lacy
Distribution, Inc. (previously filed with Form 10-K dated
March 31, 1998)
3.1 Articles of Incorporation of FinishMaster, Inc., an Indiana
corporation, as amended June 30, 1998 (previously filed with
Form 10-Q dated August 14, 1998)
3.2 Amended and Restated Code of Bylaws of FinishMaster, Inc.,
an Indiana corporation (previously filed with Form 10-K/A
dated April 14, 1998)
10.1 FinishMaster, Inc. Stock Option Plan (Amended and Restated
as of April 29, 1999)(previously filed with Registrant's
proxy statement on Schedule 14/A dated April 9, 1999)
21 Subsidiaries of the Registrant (previously filed with Form
10-K date March 31, 1999)
27* Financial Data Schedule
99(a) Credit Agreement, dated as of November 19, 1997, among
FinishMaster, Inc., the Institutions from Time to Time
Parties Thereto as Lenders and NBD Bank, N.A., as Agent
(previously filed with Form 8-K dated December 3, 1997)
99(b) Subordinated Note Agreement, dated as of November 19, 1997,
by and between FinishMaster, Inc. and LDI, Ltd. (previously
filed with Form 8-K dated December 3, 1997)
99(c) First Amendment to Credit Agreement dated December 10, 1997
(previously filed with Form 10-K dated March 31, 1998)
99(d) Second Amendment to Credit Agreement dated March 27, 1998
(previously filed with Form 10-K dated March 31, 1998)
99(e) Credit Agreement dated March 27, 1998 between FinishMaster,
Inc. and LDI, Ltd. (previously filed with Form 10-K dated
March 31, 1998)
99(f) Third Amendment to the Credit Agreement dated as of October
30, 1998.
* Filed herewith
(b) Reports on Form 8-K. The Company filed a report on Form 8-K on April 1,
stating that effective April 5, 1999, the Company's Common Stock would be
traded on the Nasdaq SmallCap Market and that its trading symbol (FMST)
would remain the same.
<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.
Date April 17, 1999 FINISHMASTER, INC.
By: /s/ Thomas U. Young
-----------------------------
Thomas U. Young
President, Vice Chairman of the
Board and Chief Operating Officer
By: /s/ Robert R. Millard
-----------------------------
Robert R. Millard
Senior Vice President and
Chief Financial Officer
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RE-INSTATEMENT
and
FIRST AMENDMENT
THIS RE-INSTATEMENT AND FIRST AMENDMENT (the "Amendment") dated as of May
6, 1999 is of and to the Credit Agreement (the "Credit Agreement") dated March
27, 1998 between FinishMaster, Inc., ("FinishMaster") an Indiana corporation and
LDI, Ltd. ("LDI") an Indiana limited partnership. Unless otherwise defined
herein, terms defined in the Credit Agreement are used as herein as defined
therein.
WHEREAS, the parties hereto have entered into the Credit Agreement which
provides for LDI to make Loans to FinishMaster; and
WHEREAS, the parties hereto desire to re-instate the Credit Agreement in
all aspects except as amended herein; and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:
ARTICLE I: DEFINITIONS. The "Revolving Loan Termination Date" is amended
from "means March 27, 1999." To "means June 29, 1999."
IN WITNESS WHEREOF, FinishMaster and LDI have executed this Re-instatement
and First Amendment as of the date first above written.
FINISHMASTER, INC.
By: /s/Robert R. Millard
----------------------------
Robert R. Millard
Sr. Vice President and
Chief Financial Officer
LDI, Ltd.
By: LDI Management, Inc.
----------------------------
By: /s/Andre B. Lacy
Andre B. Lacy
Chairman and CEO
