<PAGE>
UNITED STATES
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 quarterly period ended March 31, 1999
Commission file number: 0-25620
A.S.V., Inc.
(Exact name of registrant as specified in its charter)
Minnesota 41-1459569
State or other jurisdiction of I.R.S. Employer Identification No.
incorporation of organization
840 Lily Lane
P.O. Box 5160
Grand Rapids, MN 55744 (218) 327-3434
Address of principal executive offices Registrant's telephone number
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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. [X] Yes [ ] No
As of May 4, 1999 9,663,263 shares of the registrant's Common Stock were
issued and outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
A.S.V., INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................. $ 3,536,252 $ 308,565
Short-term investments................................ 3,759,418 243,035
Accounts receivable, net.............................. 6,062,114 4,563,840
Inventories........................................... 26,145,086 18,776,758
Prepaid expenses and other............................ 687,366 1,076,446
----------- -----------
Total current assets 40,190,236 24,968,644
Property and equipment, net.............................. 4,608,689 4,563,996
----------- -----------
Total Assets $44,798,925 $29,532,640
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit........................................ $ -- $ 3,535,000
Current portion of long-term liabilities.............. 245,298 219,417
Accounts payable...................................... 3,239,883 2,913,526
Accrued liabilities
Compensation........................................ 169,146 281,055
Warranties.......................................... 400,000 400,000
Other............................................... 397,044 204,017
Income taxes payable.................................. 85,747 --
----------- -----------
Total current liabilities 4,537,118 7,553,015
----------- -----------
LONG-TERM LIABILITIES, less current portion.............. 2,255,065 2,464,385
----------- -----------
COMMITMENTS AND CONTINGENCIES............................ -- --
SHAREHOLDERS' EQUITY
Capital stock, $.01 par value:
Preferred stock, 11,250,000 shares authorized;
no shares outstanding............................. -- --
Common stock, 33,750,000 shares authorized;
9,639,312 shares issued and outstanding in 1999;
8,601,835 shares issued and outstanding in 1998... 96,393 86,018
Additional paid-in capital............................ 30,533,802 12,701,622
Retained earnings..................................... 7,376,547 6,727,600
----------- -----------
38,006,742 19,515,240
----------- -----------
Total Liabilities and Shareholders' Equity $44,798,925 $29,532,640
=========== ===========
</TABLE>
See notes to consolidated financial statements.
2
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A.S.V., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Net sales............................................. $ 8,462,645 $ 9,028,838
Cost of goods sold.................................... 6,225,518 6,770,995
------------ ------------
Gross profit................................. 2,237,127 2,257,843
Operating expenses:
Selling, general and administrative................ 1,113,159 808,195
Research and development........................... 108,208 98,449
------------ ------------
Operating income............................. 1,015,760 1,351,199
Other income (expense)
Interest expense................................... (65,903) (128,946)
Other, net......................................... 84,090 34,585
------------ ------------
Income before income taxes................... 1,033,947 1,256,838
Provision for income taxes............................ 385,000 465,000
------------ ------------
NET INCOME................................... $ 648,947 $ 791,838
============ ============
Net income per common share:
Basic............................................ $ .07 $ .11
============ ============
Diluted *........................................ $ .07 $ .09
============ ============
Weighted average number of common shares outstanding:
Basic............................................ 9,314,156 7,528,733
============ ============
Diluted *........................................ 9,679,889 8,918,682
============ ============
</TABLE>
* Includes add back of after-tax effect of interest expense for convertible
debentures for 1998.
See notes to consolidated financial statements.
3
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A.S.V., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 648,947 $ 791,838
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation........................................ 85,500 75,000
Interest accrued on capital lease obligation........ 12,072 11,514
Deferred income taxes............................... (30,000) (35,000)
Effect of warrant earned............................ 37,800 37,800
Changes in assets and liabilities:
Accounts receivable............................... (1,498,274) (695,654)
Inventories....................................... (7,368,328) (984,571)
Prepaid expenses and other........................ 419,080 22,836
Accounts payable.................................. 326,357 860,033
Accrued expenses.................................. 81,118 84,304
Income taxes payable.............................. 235,747 306,250
------------ ----------
Net cash provided by (used in) operating activities........ (7,049,981) 474,350
------------ ----------
Cash flows from investing activities:
Purchase of property and equipment...................... (130,193) (165,613)
Purchase of short-term investments...................... (3,516,383) --
Redemption of short-term investment..................... -- 250,142
------------ ----------
Net cash provided by (used in) investing activities........ (3,646,576) 84,529
------------ ----------
Cash flows provided by financing activities:
Principal payments on line of credit.................... (3,535,000) --
Principal payments on long-term liabilities............. (195,511) (9,475)
Proceeds from sale of common stock and warrant, net of
offering costs....................................... 17,551,558 --
Proceeds from exercise of stock options................. 139,109 57,167
Retirements of common stock............................. (35,912) --
------------ ----------
Net cash provided by financing activities.................. 13,924,244 47,692
------------ ----------
Net increase in cash and cash equivalents.................. 3,227,687 606,571
Cash and cash equivalents at beginning of period........... 308,565 316,599
------------ ----------
Cash and cash equivalents at end of period................. $ 3,536,252 $ 923,170
============ ==========
Supplemental disclosure of cash flow information:
Cash paid for interest.................................. $ 83,063 $ 117,845
Cash paid for income taxes.............................. 15,264 193,750
Supplemental disclosure of non-cash investing and
financing activities:
Tax benefit from exercise of stock options.............. $ 150,000 $ 60,000
Assets acquired by incurring long-term liabilities...... -- 647,794
</TABLE>
See notes to consolidated financial statements.
4
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A.S.V., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal, recurring
adjustments) considered necessary for a fair presentation have been included.
Results for the interim periods are not necessarily indicative of the results
for an entire year.
Reclassifications
Certain 1998 amounts have been reclassified to conform with the
presentation in the 1999 financial statements.
NOTE 2. SHAREHOLDERS' EQUITY
On October 14, 1998, the Company entered into a Securities Purchase
Agreement (the Agreement) with Caterpillar Inc. The Agreement was approved by
the Company's shareholders on January 28, 1999 and subsequently closed on
January 29, 1999. Under the terms of the Agreement, Caterpillar acquired, for an
aggregate purchase price of $18,000,000, one million newly issued shares of
common stock and a warrant to purchase an additional 10,267,127 newly issued
shares of common stock at a price of $21.00 per share. The warrant is
exercisable immediately and at any time over the next ten years, subject to
partial termination in the event the Company achieves certain financial goals.
As a result of the Agreement, the board of directors was increased from eight to
ten members with the additional two members appointed by Caterpillar. In
addition, the Agreement contains other provisions which allow Caterpillar to
maintain its proportionate potential ownership and that restricts certain
situations including acquisitions, loans and the payment of dividends, without
approval of at least one of the Caterpillar designated members of the Board.
The Company and Caterpillar have entered into a Commercial Alliance
Agreement pursuant to which Caterpillar will provide the Company with access to
its dealer network and will make various management, financial and engineering
resources available to the Company. Included in the Commercial Alliance
Agreement is a Marketing Agreement which provides, among other things, that the
Company will pay Caterpillar a commission equal to 5% of the dealer net price
for complete machines and 3% for replacement parts and Company-branded
attachments for all sales made to Caterpillar dealers. In addition, if the
Company's products are sold under the Caterpillar brand name, the Company will
pay Caterpillar a trademark license fee equal to 3% of the net sales of these
products to Caterpillar dealers. The Company and Caterpillar also entered into
other ancillary agreements for the benefit of both the Company and Caterpillar.
Upon closing, Caterpillar owned approximately 8.8% of the Company's
outstanding common stock (assuming the exercise of all outstanding options and
warrants). Caterpillar will have the right to own up to approximately 52% of the
Company's common stock (assuming the exercise of all outstanding options and
warrants) upon exercise of the warrant.
The warrant issued to Caterpillar provides for a potential change of
control. As a result, in accordance with the 1994 and 1996 stock option plans,
all previously issued stock options became fully vested upon the closing of the
transaction. As a result of the acceleration, the Company will reflect pro forma
compensation of approximately $4,400,000 in its calculation of pro forma net
income and pro forma net income per share for 1999, in accordance with pro forma
disclosures required by Statement of Financial Accounting Standard No. 123 -
"Accounting for Stock Based Compensation".
In connection with the Agreement, the Company incurred expenses of
approximately $448,000, which were offset against the proceeds for the issued
shares.
5
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A.S.V., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1999
(Unaudited)
NOTE 3. CONTINGENCY
The Year 2000 issue relates to limitations in computer systems and
applications that may prevent proper recognition of the Year 2000. The potential
effect of the Year 2000 issue on the Company and its business partners will not
be fully determinable until the year 2000 and thereafter. If Year 2000
modifications are not properly completed either by the Company or entities with
whom the Company conducts business, the Company's financial condition and
results of operations could be adversely impacted.
6
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following table sets forth certain Statements of Earnings data as a
percentage of net sales:
Three Months Ended March 31,
1999 1998
---- ----
Net sales...................................... 100.0% 100.0%
Cost of goods sold............................. 73.6% 75.0
Gross profit................................... 26.4% 25.0
Selling, general and administrative expenses... 13.2% 9.0
Operating income............................... 12.0% 15.0
Interest expense............................... 0.8% 1.4
Net income..................................... 7.7% 8.8
Net Sales. For the three months ended March 31, 1999, net sales were
approximately $8,463,000, a decrease of six percent compared with the three
months ended March 31, 1998. This decrease was due to the reduced sales of
Posi-Track vehicles and related accessories due to the continued transition of
distributing the Posi-Track through a primarily independent dealer network to
the Caterpillar dealer network. As of April 23, 1999, the Company has a total of
24 Caterpillar dealers selling Posi-Tracks. Of these 24 dealers, who have 154
locations, 21 are located in the United States, which represents one-third of
all U.S. Caterpillar dealers. The Company's total dealer location count is
approximately 200, compared with approximately 100 at this time last year. Sales
of parts, used equipment and other items increased 39% for the three month
period ended March 31, 1999 as compared with 1998. This increase was due in part
to a 65% increase in the sale of parts as the number of vehicles in the field
has increased. Also, the Company recognized net sales of approximately $665,000
in the first quarter of 1999 for the final subcontract work performed on a
military contract.
Gross Profit. Gross profit for the three months ended March 31, 1999 was
approximately $2,237,000 compared with approximately $2,258,000 in 1998.
However, the gross profit percentage increased from 25.0% in 1998 to 26.4% in
1999. The increased gross profit percentage can be attributed to a greater
number of units produced in 1999, which resulted in lower fixed costs per unit,
and also improved inventory management.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from approximately $808,000, or 9.0% of net
sales in 1998, to approximately $1,113,000, or 13.2% of net sales in 1999. These
increases are due primarily to increased marketing costs as well as higher
compensation costs as sales and administrative personnel have been added to
support expanded sales and customer service roles. In addition, with the closing
of the Commercial Alliance Agreement with Caterpillar Inc., the Company began
paying a commission to Caterpillar for sales to Caterpillar dealers as of
January 29, 1999. This commission accounted for slightly over one-half of the
percentage increase in selling, general and administrative expenses.
Research and Development. Research and development expenses increased from
approximately $98,000 in 1998 to approximately $108,000 in 1999. The increase is
due to the Company devoting more resources to future product alternatives.
In order to maintain its competitive advantage over other manufacturers of
similar products, the Company believes it will increase the level of spending on
research and development activities. It is expected the main thrust of these
activities will be directed towards extensions of the Company's current product
lines and improvements of existing products.
Interest Expense. Interest expense decreased from approximately $129,000
for the first quarter of 1998 to approximately $66,000 for the first quarter of
1999. The decrease was the net effect of two factors. First, the Company's
convertible debentures were exchanged for common stock in the fourth quarter of
1998, eliminating future interest expense on the debentures. Second, the Company
utilized its line of credit during the month of January, prior to the closing of
the Caterpillar transaction, to fund operations.
7
<PAGE>
Net Income. Net income for the first quarter of 1999 was approximately
$649,000, as compared with approximately $792,000 for the first quarter of 1998.
The decrease in 1999 resulted primarily from slightly reduced sales and
increased operating expenses, offset in part by an increased gross profit
percentage and decreased interest expense.
Liquidity and Capital Resources
At March 31, 1999, the Company had working capital of approximately
$35,653,000 compared with working capital of approximately $17,416,000 at
December 31, 1998, an increase of approximately $18,237,000. This increase was
due to the sale of common stock and warrant to Caterpillar Inc. in January 1999
for $18 million. The Company used these proceeds primarily to pay off its line
of credit and fund current operations. During the transition to Caterpillar
dealers, the Company chose not to reduce its production levels, but instead,
increased its finished goods. This decision, along with the repurchase of
certain inventory from current and former dealers, caused inventory levels to
increase 39% compared with December 31, 1998. Accounts receivable increased as
extended terms have been offered to certain dealers. Also, approximately
$665,000 was invoiced in March 1999 for the final subcontract work performed on
a military contract.
On October 14, 1998, the Company entered into a Securities Purchase
Agreement (the Agreement) with Caterpillar Inc. (Caterpillar). The Agreement was
approved by the Company's shareholders on January 28, 1999 and closed January
29, 1999. Under the terms of the Agreement, Caterpillar acquired, for an
aggregate purchase price of $18,000,000, one million newly issued shares of the
Company's common stock and a warrant to purchase an additional 10,267,127
newly-issued shares of the Company's common stock at a price of $21.00 per
share. Also under the terms of the Agreement, the Company's board of directors
was increased from eight to ten with the additional two members appointed as
designated by Caterpillar.
In connection with entering into the Agreement, the Company and Caterpillar
have entered into several ancillary agreements. These agreements provide the
Company access to Caterpillar's dealer network and also make various management,
financial and engineering resources from Caterpillar available to the Company
following the closing. One of these agreements is a Marketing Agreement which
provides, among other things, that the Company will pay Caterpillar a commission
equal to 5% of the dealer net price for complete machines and 3% for replacement
parts and Company-branded attachments for all sales made to Caterpillar dealers.
Should the Company manufacture products that are sold under the Caterpillar
brand name, the Company will pay Caterpillar a trademark license fee equal to 3%
of the net sales of these products to Caterpillar dealers.
It is the intent of the Company and Caterpillar to introduce the Company's
Posi-Track products to Caterpillar's North American dealers as soon as
practicable. With the signing and announcement of the Agreement with
Caterpillar, certain of the Company's existing, non-Caterpillar dealers have
been hesitant to place orders for the Company's products. Management believes
these dealers are uncertain of their future status as Posi-Track dealers.
Between the time of the announcement of the Caterpillar transaction and March
1999, approximately 36 dealer locations elected to no longer carry the Company's
products. These 36 locations are comprised of eleven dealers who will no longer
carry the Company's products and two dealers whose Posi-Track trade areas have
been reduced. One of those dealers whose trade area has been reduced was the
Company's largest customer for 1998. This dealer accounted for approximately 21%
of the Company's net sales in 1998. This dealer is a Caterpillar dealer and
their Posi-Track trade area was reduced as they were selling into the trade area
of approximately nine other Caterpillar dealers.
The Company believes its sales during the first quarter of 1999 decreased
due to the factors discussed above. In addition, several Caterpillar dealers
have chosen to wait until they have received training on the Posi-Track from
factory representatives before placing significant orders. The Company is in the
process of providing this training. The Company believes the slow-down in sales
is temporary and expects the order level to increase as additional Caterpillar
dealers receive training and begin carrying the Posi-Track models. Although the
Company has been working closely with Caterpillar to introduce the Posi-Track
products to North American Caterpillar dealers as quickly as possible, the
Company may experience a decrease in its sales volume while the Company proceeds
through this transitional period with Caterpillar.
In connection with the replacement of the Company's independent dealers
with Caterpillar dealers, the Company has made arrangements with certain dealers
to repurchase their existing inventory of Posi-Track products and transfer it to
the new Caterpillar dealers. In some instances, it has been necessary for the
Company to take possession of the inventory, rather than transferring it
directly to the new Caterpillar dealer. In these situations, the Company will be
responsible for re-marketing this inventory. The Company does not currently
anticipate a material loss from the re-marketing of this inventory.
8
<PAGE>
As a result of the transaction, the Company's near term revenues,
profitability and other financial results are expected to be lower than if the
transaction were not entered into. The decline is related to a number of
factors, including (i) the commission to be paid to Caterpillar for sales made
to Caterpillar dealers, (ii) transition issues affecting orders from the
preexisting non-Caterpillar affiliated dealers, and (iii) certain other costs of
implementing the Transaction and the agreements contemplated by the Commercial
Alliance Agreement. Over the longer term, however, management believes that the
Company will be able to achieve improved financial results due to the
Transaction and the Commercial Alliance Agreement.
The Company believes its existing cash and marketable securities, together
with cash expected to be provided by operations and available, unused credit
lines, will satisfy the Company's projected working capital needs and other cash
requirements for at least the next twelve months.
Impact of the Year 2000 Issue. The Company has established a team to assess
and address the possible exposures related to the Year 2000 ("Y2K") issue and is
in the initial assessment phase. The areas under investigation include business
computer systems, production equipment, vendor readiness and contingency plans.
The Company does not use internally developed computer software and is therefore
not anticipating major reprogramming efforts. The Company's primary financial
and operational system has been assessed and is certified Y2K compliant. There
are several ancillary applications that may not currently be Y2K compliant, but
the Company expects it will be able to purchase Y2K compliant versions by mid to
late-calendar 1999, the cost of which is not expected to be material. The
majority of the Company's personal computers are currently Y2K compliant. Those
computers that may not currently be Y2K compliant are planned to be replaced as
part of the Company's technology update strategy. None of these replacements
have been accelerated in response to the Y2K issue and are not anticipated to
have a material effect on the Company consolidated financial statements.
Equipment used for production or quality control does not use dates to control
operations. The costs of this examination to date have been expensed as incurred
and have totaled less than $5,000.
The Company mailed questionnaires to its significant vendors during the
first quarter of 1999 to determine the extent to which the Company may be
vulnerable to those third parties' failure to remediate their own Y2K issues. It
is anticipated this assessment will be completed during second quarter 1999. The
Company anticipates developing a contingency plan once it has completed its
assessment of significant vendor compliance which it anticipates to be by the
end of second quarter 1999. A contingency plan, if needed, will be developed
during the second half of 1999 to minimize the Company's exposure to work
slowdowns or business disruptions. In the event any vendors are not Y2K
compliant, the Company may seek new vendors to meet its production needs. Any
costs that may be incurred by the Company that are related to external systems
Y2K issues are unknown at this time (other than immaterial costs of the
questionnaire itself). However, management expects that after reviewing and
evaluating the responses to the survey, it will be able to complete an
assessment of its Y2K exposure and estimate the costs associated with resolving
any Y2K issues.
Although the Company does not at this time expect a significant impact on
its consolidated financial position, results of operations and cash flows, the
assessment has not been completed and there can be no assurance that the systems
of other companies will be converted on a timely basis and will not have a
corresponding adverse effect on the Company.
The statements set forth above under "Liquidity and Capital Resources" in
this Form 10-Q which are not historical facts are forward-looking statements
including the statements regarding the Company's expected revenue, profitability
and other financial results in 1999 and beyond, the Company's capital needs and
the impact of and the Company's plans with respect to the year 2000. These
forward-looking statements involve risks and uncertainties, many of which are
outside the Company's control and, accordingly, actual results may differ
materially. Factors that might cause such a difference include, but are not
limited to, lack of market acceptance of new or existing products, inability to
attract new dealers for the Company's products, unexpected delays in obtaining
raw materials, unexpected delays in the manufacturing process, unexpected
additional expenses or operating losses, the activities of competitors or the
failure of the Company or third parties to adequately address issues relating to
the year 2000. Additional factors include the Company's ability to realize the
anticipated benefits from the relationship with Caterpillar. Any forward-looking
statements provided from time-to-time by the Company represent only management's
then-best current estimate of future results or trends.
9
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no history of, and does not anticipate in the future,
investing in derivative financial instruments, derivative commodity instruments
or other such financial instruments. Transactions with international customers
are entered into in US dollars, precluding the need for foreign currency hedges.
Additionally, the Company invests in money market funds and fixed rate U.S.
government and corporate obligations, which experience minimal volatility. Thus,
the exposure to market risk is not material.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On January 29, 1999 (the "Closing Date"), the Company sold to Caterpillar
Inc., in a cash transaction for an aggregate purchase price of $18,000,000, one
million newly-issued shares of the Company's Common Stock and a warrant (the
"Warrant") to purchase an additional 10,267,127 newly-issued shares of the
Company's Common Stock at an exercise price of $21.00 per share. The Common
Stock and Warrant were sold pursuant to an exemption from registration under
Rule 506 of Regulation D of the Securities Act of 1933, as amended. There were
no underwriting discounts or commissions incurred for the sale of the Common
Stock and Warrant. The Warrant is exercisable at any time from the Closing Date
until the tenth anniversary of the Closing Date, except that it may expire with
respect to a portion of the shares in the event the Company meets certain
revenue levels and certain other conditions are met.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of shareholders of A.S.V., Inc. was held on January 28,
1999. The following matter was presented for vote by the shareholders:
Approval of the Securities Purchase Agreement dated October 14, 1998
between A.S.V., Inc. and Caterpillar Inc. and the transactions
contemplated thereunder, including the issuance and sale to Caterpillar
Inc. of 1,000,000 shares of Common Stock of A.S.V., Inc., par value
$.01 per share and a warrant to purchase 10,267,127 shares of Common
Stock and the issuance of Common Stock upon exercise of the warrant.
Shareholders approved the above matter with a vote of 6,105,670 votes for,
68,114 votes against and 15,653 shares abstaining.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
- ------ -----------
3.1 Second Restated Articles of Incorporation of the Company (a)
3.1a Amendment to Second Restated Articles of Incorporation of the Company
filed January 6, 1997 (e)
3.1b Amendment to Second Restated Articles of Incorporation of the Company
filed May 4, 1998 (h)
10
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3.2 Bylaws of the Company (a)
4.1 Specimen form of the Company's Common Stock Certificate (a)
4.3 * 1994 Long-Term Incentive and Stock Option Plan (a)
4.4 Form of Warrant issued to Summit Investment Corporation (b)
4.6 Warrant issued to Leo Partners, Inc. on December 1, 1996 (d)
4.7 * 1996 Incentive and Stock Option Plan (e)
4.8 * 1996 Incentive and Stock Option Plan, as amended (f)
4.9 * 1998 Non-Employee Director Stock Option Plan (f)
4.10 Securities Purchase Agreement dated October 14, 1998 between
Caterpillar Inc. and the Company (h)
4.11 Warrant issued to Caterpillar Inc. on January 29, 1999 (i)
4.12 Option Certificate dated as of October 14, 1998 between
Caterpillar Inc and the Company (h)
4.13 Voting Agreement dated as of October 14, 1998 by certain shareholders
of the Company and Caterpillar Inc. (h)
10.1 Development Agreement dated July 14, 1994 among the Iron Range
Resources and Rehabilitation Board ('IRRRB'), the Grand Rapids
Economic Development Agency ('EDA') and the Company (b)
10.2 Lease and Option Agreement dated July 14, 1994 between the EDA and
the Company (b)
10.3 Option Agreement dated July 14, 1994 between the EDA and the
Company (b)
10.4 Grant Contract dated July 1, 1994 between the Company and the
IRRRB (b)
10.5 Letter Credit Agreement dated September 15, 1994 between the Security
State Bank of Hibbing and the Company (a)
10.6 Supplemental Lease Agreement dated April 18, 1997 between the EDA and
the Company (e)
10.7 Supplemental Development Agreement dated April 18, 1997 between the
EDA and the Company (e)
10.8 Line of Credit dated May 22, 1997 between Norwest Bank Minnesota
North, N.A. and the Company (e)
10.9 * Employment Agreement dated October 17, 1994 between the Company and
Thomas R. Karges (c)
10.10 Consulting Agreement between the Company and Leo Partners, Inc. dated
December 1, 1996 (d)
10.11 Extension of Lease Agreement dated May 13, 1998 between the EDA and
the Company (g)
10.12 First Amendment to Credit Agreement dated September 30, 1998 between
Norwest Bank Minnesota North, N.A. and the Company (g)
10.13 Commercial Alliance Agreement dated October 14, 1998 between
Caterpillar Inc. and the Company (h)
10.14 Management Services Agreement dated January 29, 1999 between
Caterpillar Inc. and the Company (j)
11
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10.15 Marketing Agreement dated January 29, 1999 between Caterpillar Inc.
and the Company (j)
11 Statement re: Computation of Per Share Earnings
22 List of Subsidiaries (a)
27 Financial Data Schedule for the three months ended March 31, 1999
- ----------
(a) Incorporated by reference to the Company's Registration Statement on Form
SB-2 (File No. 33-61284C) filed July 7, 1994.
(b) Incorporated by reference to the Company's Post-Effective Amendment No. 1
to Registration Statement on Form SB-2 (File No. 33-61284C) filed August 3,
1994.
(c) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
for the quarter ended September 30, 1994 (File No. 33-61284C) filed
November 11, 1994.
(d) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1996 (File No. 0-25620) filed electronically
March 28, 1997.
(e) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1997 (File No. 0-25620) filed electronically
August 13, 1997.
(f) Incorporated by reference to the Company's Definitive Proxy Statement for
the year ended December 31, 1997 (File No. 0-25620) filed electronically
April 28, 1998.
(g) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998 (File No. 0-25620) filed electronically
August 12, 1998.
(h) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-25620) filed electronically October 27, 1998.
(i) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-25620) filed electronically February 11, 1999.
(j) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998 (File No. 0-25620) filed electronically
March 26, 1999.
* Indicates management contract or compensation plan or arrangement.
(b) Reports on Form 8-K
The following Current Report on Form 8-K was filed by the Company during
the quarter ended March 31, 1999:
Current Report on Form 8-K dated February 10, 1999 reporting under Item 5.
"Other Events" that on January 29, 1999, A.S.V., Inc. closed a transaction (the
"Transaction") with Caterpillar Inc. ("Caterpillar") whereby the following
events occurred: (i) Caterpillar purchased 1,000,000 newly issued shares of the
Registrant's Common Stock, par value $.01 per share (the " Common Stock"); (ii)
the Registrant canceled an outstanding option issued to Caterpillar (the
"Option") to purchase 1,579,000 shares of the Registrant's Common Stock (the
"Option Shares") at an exercise price of $18.00 per share; (iii) the Registrant
issued to Caterpillar a warrant (the "Warrant") to purchase up to 10,267,127
shares of the Registrant's Common Stock (the "Warrant Shares") at an exercise
price of $21.00 per share; (iv) the Board of Directors of the Registrant
increased the number of seats constituting the Board of Directors by two, fixing
the total number of such seats of the Board of Directors at ten, and appointed,
as designated by Caterpillar, Richard A. Benson and Richard A. Cooper to fill
the two newly created vacancies; and (v) Caterpillar delivered to the
Registrant, by wire transfer, consideration for the Transaction of $18,000,000
(the "Cash Consideration").
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
A.S.V., Inc.
Dated: May 13, 1999 By /s/ Gary Lemke
-------------------------
Gary Lemke
President
Dated: May 13, 1999 By /s/ Thomas R. Karges
-------------------------
Thomas R. Karges
Chief Financial Officer
(principal financial and
accounting officer)
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Method of Filing
- ------- ----------------
<S> <C> <C>
11 Statement re: Computation of Per Share Earnings Filed herewith electronically
27 Financial Data Schedule Filed herewith electronically
</TABLE>
<PAGE>
A.S.V., Inc. and Subsidiary
Exhibit 11 - Computation of Earnings per Share
Three Months Ended March 31, 1999 and 1998
1999 1998
---------- ----------
Basic
Earnings
Net income $ 648,947 $ 791,838
========== ==========
Shares
Weighted average number of common
shares outstanding 9,314,156 7,528,733
========== ==========
Earnings per common share $ .07 $ .11
========== ==========
Diluted
Earnings
Net income $ 648,947 $ 791,838
Add after tax interest expense applicable
to 6.5% convertible debentures -- 51,187
---------- ----------
Net income applicable to common stock $ 648,947 $ 843,025
========== ==========
Shares
Weighted average number of common
shares outstanding 9,314,156 7,528,733
Assuming exercise of options and warrants
reduced by the number of shares which could
have been purchased with the proceeds from
the exercise of such options and warrants 365,733 708,131
Assuming conversion of 6.5% convertible
debentures -- 681,818
---------- ----------
Weighted average number of common and
common equivalent shares outstanding 9,679,889 8,918,682
========== ==========
Earnings per common share $ .07 $ .09
========== ==========
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF EARNINGS FOUND ON PAGES 2 AND 3 OF
THE COMPANY'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,536,252
<SECURITIES> 3,759,418
<RECEIVABLES> 6,102,114
<ALLOWANCES> 40,000
<INVENTORY> 26,145,086
<CURRENT-ASSETS> 40,190,236
<PP&E> 5,567,736
<DEPRECIATION> 959,047
<TOTAL-ASSETS> 44,798,925
<CURRENT-LIABILITIES> 4,537,118
<BONDS> 2,255,065
0
0
<COMMON> 96,393
<OTHER-SE> 37,910,349
<TOTAL-LIABILITY-AND-EQUITY> 44,798,925
<SALES> 8,462,645
<TOTAL-REVENUES> 8,462,645
<CGS> 6,225,518
<TOTAL-COSTS> 6,225,518
<OTHER-EXPENSES> 1,015,760
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,903
<INCOME-PRETAX> 1,033,947
<INCOME-TAX> 385,000
<INCOME-CONTINUING> 648,947
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 648,947
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
