<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 26, 1996
(July 11, 1996)
---------------
GRIFFITH CONSUMERS COMPANY
CARL KING, INC.
FREDERICK TERMINALS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 33-88526 52-1887726
Delaware 04-2941998
Maryland 52-1863759
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
Griffith Consumers Company Carl King, Inc.
Frederick Terminals, Inc. 109 South Main Street
2510 Schuster Drive Camden, Delaware 19934
Cheverly, Maryland 20781 (302) 697-3251
(301) 322-3111
(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not Applicable
ITEM 2. ACQUISITION OF ASSETS
On July 11, 1996, Griffith Consumers Company (the "Company") acquired
certain assets used in the operations of a chain of convenience stores within
the states of Maryland, Delaware and Virginia under the "Shore Stop" trade
name and a dealer petroleum sales business at two facilities located at Belle
Haven, Virginia and Pocomoke City, Maryland from Regent Investments, Inc.,
Delaware Investments, Inc. and Mid-Atlantic Investments, Inc., each a
Virginia corporation (collectively, the "Sellers" or "Regent"). The Company
intends to continue using the acquired assets as convenience stores and
dealer petroleum sales business, respectively. The Company paid the Sellers
$17,000,000 (plus the purchase price of certain inventory), subject to
certain adjustments, of which $1,500,000 was in the form of a promissory note
secured by first priority mortgages or deeds of trust on certain stores and
assumed $350,000 of debt. The terms and conditions of the acquisition were
determined upon arms length negotiations between the Company and Sellers and
are set forth in the Asset Purchase and Sale Agreement by and among the
Sellers and the Company, dated as of April 23, 1996 (the "Purchase
Agreement"). No material relationship exists between the Company and the
Sellers.
The Purchase Agreement, filed as Exhibit 1 to the Company's Current
Report on Form 8-K, filed with the Securities and Exchange Commission (the
"Commission") on May 3, 1996, is incorporated herein by reference.
The Company financed the transaction with borrowings under the Company's
Senior Credit Facility, as amended.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not Applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS
Not Applicable
ITEM 5. OTHER EVENTS
Not Applicable
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
Not Applicable
-2-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
ITEM 7(a) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED
REGENT INVESTMENTS, INC.
Financial Statements
December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
-3-
<PAGE>
KPMG Peat Marwick LLP
2100 Dominion Tower
999 Waterside Drive
Norfolk, VA 23510
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Regent Investments, Inc.:
We have audited the accompanying balance sheets of Regent Investments, Inc.
as of December 31, 1995 and 1994, and the related statements of earnings and
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Regent Investments, Inc. as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
March 13, 1996
1
<PAGE>
REGENT INVESTMENTS, INC.
Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets 1995 1994
------ ----------- -----------
<S> <C> <C>
Current assets:
Cash $ 534,173 957,012
Receivables:
Trade accounts, less allowance for doubtful
accounts of $17,785 in 1995 192,925 382,785
Advances to stockholders (note 2) 1,750,799 --
Other, including current installments of
notes receivable (note 2) 227,862 158,878
----------- -----------
Total receivables 2,171,586 541,663
----------- -----------
Inventories (notes 4, 8 and 9):
FlFO cost 2,554,105 2,605,193
Less LIFO reserve 359,800 282,100
----------- -----------
2,194,305 2,323,093
----------- -----------
Prepaid expenses 107,272 97,466
----------- -----------
Total current assets 5,007,336 3,919,234
----------- -----------
Property and equipment (notes 8 and 9):
Land 887,249 720,399
Store equipment and fixtures 3,170,829 2,908,411
Buildings and service stations 3,599,114 2,823,370
Pumps, tanks and equipment 6,365,240 5,815,918
Transportation equipment 176,851 197,959
----------- -----------
14,199,283 12,466,057
Less accumulated depreciation 6,836,394 5,814,464
----------- -----------
Net property and equipment 7,362,889 6,651,593
----------- -----------
Intangible assets, net (note 7) 39,050 60,350
Long-term notes receivable, excluding current
installments 160,622 238,343
Deferred loan costs, net 8,179 40,895
Other assets (note 6) 364,637 411,911
----------- -----------
$12,942,713 11,322,326
----------- -----------
----------- -----------
Liabilities and Stockholders' Equity 1995 1994
------------------------------------ ----------- -----------
Current liabilities:
Current installments of long-term debt (note 8) $ 258,240 924,003
Current installments of obligations under
noncompete agreements -- 110,161
Advances on bank line of credit (note 9) 859,093 310,510
Advances from shareholders -- 210,758
Accounts payable 2,784,262 3,034,322
Accrued expenses (note 12) 3,239,182 1,579,999
----------- -----------
Total current liabilities 7,140,777 6,169,753
----------- -----------
Long-term debt, excluding current
installments (note 8) 672,017 238,430
Environmental remediation (note 12) 400,000 --
----------- -----------
Total liabilities 8,212,794 6,408,183
----------- -----------
Stockholders' equity:
Common stock, 5,000 shares authorized,
1,000 shares issued 500,000 500,000
Additional paid-in capital 1,500,000 1,500,000
Retained earnings 2,729,919 2,914,143
----------- -----------
Total stockholders' equity 4,729,919 4,914,143
----------- -----------
Commitments, contingencies and subsequent event
(notes 5, 11, 12 and 13) ----------- -----------
$12,942,713 11,322,326
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
REGENT INVESTMENTS, INC.
Statements of Earnings and Retained Earnings
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
------------ ----------
Sales and operating revenues $ 84,965,926 81,280,439
Cost of sales 66,900,651 64,132,393
------------ ----------
Gross profit 18,065,275 17,148,046
------------ ----------
Operating expenses:
Selling, service and distribution 13,758,162 13,882,737
General and administrative (note 7) 4,160,825 2,671,040
------------ ----------
17,918,987 16,553,777
------------ ----------
Operating income 146,288 594,269
------------ ----------
Other income (deduction):
Interest income 41,324 59,867
Interest expense (174,450) (213,709)
Gain on disposal of property and equipment, net 52,958 81,390
Other, net 169,908 47,237
------------ ----------
89,740 (25,215)
------------ ----------
Net earnings 236,028 569,054
Retained earnings at beginning of year 2,914,143 2,814,091
Distributions to stockholders (420,252) (469,002)
------------ ----------
Retained earnings at end of year $ 2,729,919 2,914,143
------------ ----------
------------ ----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
REGENT INVESTMENTS, INC.
Statements of Cash Flows
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---------- -----------
Cash flows from operating activities:
Net earnings $ 236,028 569,054
----------- ----------
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Increase (decrease) in allowance for
doubtful accounts 17,785 (13,059)
Increase in LIFO reserve 77,700 110,200
Increase in environmental remediation 500,000 --
Depreciation and amortization 1,424,397 1,554,970
Gain on disposal of property and
equipment, net (52,958) (81,390)
Decrease (increase) in notes receivable (110,000) 247,000
Change in assets and liabilities:
Receivables 180,110 (102,903)
Inventories 51,088 (10,971)
Prepaid expenses (9,806) 3,297
Accounts payable (250,060) 363,491
Accrued expenses 1,559,183 (405,179)
----------- ----------
Total adjustments 3,387,439 1,665,456
----------- ----------
Net cash provided by
operating activities 3,623,467 2,234,510
----------- ----------
Cash flows from investing activities:
Proceeds from disposal of property and equipment 123,459 989,830
Acquisitions of property and equipment (1,452,178) (2,028,254)
Principal payments received on notes receivable 110,702 161,337
Advances to stockholders (1,750,799) --
Decrease in other assets 47,274 21,816
----------- ----------
Net cash used in investing activities (2,921,542) (855,271)
----------- ----------
Cash flows from financing activities:
Net proceeds from bank line of credit 548,583 310,510
Net proceeds (payments) from advances from
shareholders (210,758) 210,758
Principal payments on long-term debt (932,176) (1,853,958)
Principal payments on noncompete agreements (110,161) (209,241)
Stockholder distributions (420,252) (469,002)
----------- ----------
Net cash used in financing activities (1,124,764) (2,010,933)
----------- ----------
Net decrease in cash (422,839) (631,694)
Cash at beginning of year 957,012 1,588,706
----------- ----------
Cash at end of year $ 534,173 957,012
----------- ----------
----------- ----------
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $ 178,289 279,719
----------- ----------
----------- ----------
</TABLE>
Supplemental information on noncash investing and financing activities -
During the year ended December 31, 1995, the Company purchased the assets
and land of three stores through notes payable in the amount of $700,000.
See accompanying notes to financial statements.
4
<PAGE>
REGENT INVESTMENTS, INC.
Notes to Financial Statements
December 31, 1995 and 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) OPERATIONS
Regent Investments, Inc. (Regent; the Company) is engaged in the
operation of 51 convenience stores and a gasoline distribution business
which provides gasoline to the convenience stores and unrelated
customers. The Company operates throughout the eastern shore of
Virginia, Maryland and Delaware. The Company only grants credit to
local gas retail customers.
(b) INVENTORIES
Inventories are stated at the lower of cost or market. The last-in,
first-out (LIFO) cost method is used to value inventories.
(c) PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Buildings and equipment
are depreciated over the estimated useful lives of the respective
assets, primarily using the straight-line method.
(d) INTANGIBLE ASSETS
Intangible assets are comprised of noncompete agreements which are
being amortized on a straight-line basis over five year periods.
(e) INCOME TAXES
Income or loss of the Company is required to be reported by the
individual stockholders on their income tax returns rather than by the
Company. Accordingly, earnings of the Company are taxable to the
individual stockholders rather than to the Company.
(f) USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(2) RELATED PARTY TRANSACTIONS
During 1995, the Company advanced the stockholders $1,750,799 which is
non-interest bearing and payable on demand.
Included in other receivables at December 31, 1995 is an amount due
from a related party in the amount of $110,000.
During 1994, the Company sold land and buildings with a net book value
of $807,292 for $750,000 to a related party.
(3) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following presents the carrying amounts and estimated fair values of
the Company's financial instruments at December 31, 1995. The methods
and assumptions used to estimate the fair value of each class of
financial instrument are also described below. FASB Statement No. 107,
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, which is
effective for the Company for 1995, defines the fair value of a
financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties.
(Continued)
5
<PAGE>
Long-term notes receivable with a carrying value of $160,622 have a fair
value which approximates the carrying value. The fair value is
determined as the present value of expected future cash flows discounted
at the interest rate currently offered by the Company, which
approximates rates currently offered by local lending institutions for
loans of similar terms to companies with comparable credit risk.
Long-term debt with a carrying value of $672,017 has a fair value which
approximates the carrying value. This fair value is estimated by
discounting the future cash flows of the instrument at rates currently
offered to the Company for similar debt instruments of comparable
maturities by the Company's bankers.
All other financial assets and liabilities have a carrying value which
approximates the fair value due to the short maturity of those
instruments.
(4) INVENTORIES
A summary of inventories for comparative purposes is as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------- ----------------------
LIFO FIFO LIFO FIFO
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Gasoline $ 746,273 903,273 775,502 905,902
Convenience store
merchandise 1,448,032 1,650,832 1,547,591 1,699,291
---------- --------- --------- ---------
$2,194,305 2,554,105 2,323,093 2,605,193
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>
For the years ended December 31, 1995 and 1994, earnings on a LIFO
basis were $77,700 and 110,200, respectively, less than if
computed on a FIFO basis.
(5) LEASES
Future minimum lease payments under noncancelable operating leases as
of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Operating
leases
----------
<S> <C>
1996 $1,367,484
1997 1,306,802
1998 1,094,599
1999 162,011
2000 46,596
Thereafter 63,224
----------
Total minimum lease payments $4,040,716
----------
----------
</TABLE>
Regent has noncancelable operating lease agreements for convenience
stores and office facilities at December 31, 1995. The leases expire
during the next one to eight years. The operating lease agreements
generally allow for renewal periods of five to ten years. Total rental
expense for operating leases in 1995 and 1994 was approximately
$1,450,000 and $1,500,000, respectively, including payments to related
parties of approximately $260,000 and $229,000 in 1995 and 1994,
respectively.
(Continued)
6
<PAGE>
As a result of the sale of auto parts stores in 1993, the Company has
guaranteed four operating leases that were assigned to the purchasers of
the stores. Such leases call for annual payments of approximately
$60,000 through 1999.
(6) OTHER ASSETS
Included in other assets is a 7% investment in a limited partnership.
The investment is accounted for under the equity method and has a
carrying value of $358,710 and $378,184 at December 31, 1995 and 1994,
respectively.
(7) INTANGIBLE ASSETS
Included in intangible assets at December 31, 1995 and 1994 are
noncompete agreements valued at $39,050 and $60,350, respectively,
net of accumulated amortization of
$67,450 and $46,150.
Amortization expense of noncompete agreements totalled $21,300 and
$194,422 in 1995 and 1994, respectively, and is included in general
and administrative operating expenses.
(8) LONG-TERM DEBT
A summary of the long-term debt as of December 31, 1995 and 1994
follows:
<TABLE>
<CAPTION>
1995 1994
--------- -----------
<S> <C> <C>
Note payable to bank, interest
rate at 7.56%, due in monthly
principal installments of
$76,667, plus interest. The note is
secured by a blanket security
interest in assets of the Company,
and is guaranteed by the stockholders
and a Stock Pledge Agreement covering
all stock of Regent. Principal
installments, plus interest, are due
monthly until March 1996 $ 228,000 1,148,000
9% note payable due to an individual
in monthly installments of $428 which
include principal and interest,
through March 1998 10,430 14,433
8% notes payable due to an individual
in monthly installments of $6,690 which
include principal and interest,
through September 2010, secured
by property and equipment 691,827 --
--------- -----------
Total long-term debt 930,257 1,162,433
Less current installments of
long-term debt 258,240 924,003
--------- -----------
Long-term debt, excluding
current installments $672,017 $ 238,430
--------- -----------
--------- -----------
</TABLE>
The aggregate maturities of long-term debt after December 31, 1995 are
as follows: 1996, $258,240; 1997, $32,797; 1998, $31,601; 1999, $32,852;
2000, $35,579 and thereafter, $539,188.
(Continued)
7
<PAGE>
The Company is subject to certain covenants under the debt agreements.
At December 31, 1995, the Company was in compliance with such covenants
or received waivers in instances of noncompliance.
(9) LINE OF CREDIT AGREEMENT
The Company has a line of credit agreement with a local bank. The line
of credit carries an interest rate at the bank's prime rate and is due
on demand. The total line commitment amount is $2,000,000 and it is
secured by the same assets as the 7.56% note payable to bank (see note
8). It is reviewed annually for renewal. At December 31, 1995 there was
$859,093 outstanding under the line of credit and at December 31, 1994
there was $310,510 outstanding.
(10) PROFIT-SHARING RETIREMENT PLAN
Regent has a profit-sharing plan, the Regent Investments, Inc. Employee
Savings and Profit Sharing Plan (the Plan), covering substantially all
full-time employees. Employees become members of the Plan on the January
1st or July 1st following the completion of 1,000 hours of service. The
Plan is exempt from Federal income taxes under Section 401(a) of the
Internal Revenue Code.
Under the Plan, participants are allowed to make contributions of not
less than 1% nor more than 15% of their annual compensation. Regent will
contribute on behalf of each participant, amounts equal to 50% of the
participant contribution up to 6% of the participant's annual
compensation. Employee contributions totaled approximately $121,000 and
$126,000 for the years ended December 31, 1995 and 1994, respectively.
Matching contributions totaled approximately $50,000 for each year.
The Plan also provides for profit sharing contributions which are
determined by Regent at its sole discretion, subject to limitations
imposed by the Internal Revenue Service. These contributions are
allocated among the members based on a percentage of eligible members
compensation. There were no profit sharing contributions made in 1995 or
1994.
Participants are fully vested in their contribution balances at all
times. Participants become vested in the matching and profit sharing
contribution balances based upon years of service; vesting increases in
20% increments with each year of service beginning with the second year
of service.
Members also become fully vested in the matching and profit sharing
contributions to the Plan upon normal retirement at age 65, disability,
death, Plan termination, or permanent discontinuance of contributions by
Regent. Management maintains the right to amend or terminate the Plan
without the consent of members.
(11) LETTERS OF CREDIT
The Company has $2,000,000 in open letters of credit which relate to
compliance with various state pollution requirements.
(12) ENVIRONMENTAL REMEDIATION
The Company has identified environmental contamination associated with
18 underground storage tank sites it operates. The Company engaged an
environmental consultant to develop a remediation work plan to satisfy
clean-up criteria of the applicable state regulatory agencies. Utilizing
the remediation plan developed by the environmental consultant, the
Company developed an estimate of future cash payments for the
remediation plan.
(Continued)
8
<PAGE>
The total estimated aggregate cost of $500,000 is principally related to
treatment of contaminated soil and is expected to be paid $100,000 in
1996 and the balance in 1997. The aggregate undiscounted amount has been
accrued since it represents management's best estimate of the cost, but
the payments are not considered to be fixed and reliably determinable.
The estimate of costs and their timing of payment could change as a
result of changes to the plan required by state regulatory agencies and
unforeseen circumstances existing at the site.
(13) SUBSEQUENT EVENT
On February 13, 1996, the Company signed a letter of intent to sell
substantially all operating assets of property, equipment and inventory
of the Company to an unrelated party. While final proceeds have not yet
been determined, it is expected that the transaction will result in a
net gain.
9
<PAGE>
ITEM 7(b). PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma statements of operation reflect the
combined financial operations of the Company and the impact of those certain
assets acquired from the Sellers on July 11, 1996. In preparing the pro forma
information, adjustments have been made to the Sellers' financial statements to
only include the assets that were acquired by the Company. The acquired
operations have business locations in Delaware, Maryland and Virginia.
The preliminary allocation of the $17.35 million purchase price is as follows:
<TABLE>
<S> <C>
Land $ 170,000
Buildings $ 1,571,550
Equipment $ 4,028,450
Covenant not to compete $ 200,000
Dealer contracts $ 2,400,000
Goodwill $ 8,980,000
-----------
Total $17,350,000
-----------
-----------
</TABLE>
The addition of these assets, and the related amortization and depreciation, and
the debt financing of the acquisition are the only adjustments necessary for
preparation of the pro forma statements of operations. The acquisition
described above, for the purpose of preparing the pro forma statements of
operations assumes it was completed on July 1, 1995.
The acquisition was accounted for as a purchase transaction, therefore future
statements will be consolidated only from the date of purchase. The purchase
price has been financed through an amendment to an existing loan agreement with
the Company's primary lender. The amendment provides for quarterly loan
repayments of $125,000 in fiscal year ending June 30, 1997, $187,500 in fiscal
year ending June 30, 1998 and 1999, $312,000 in fiscal year ending June 30, 2000
and balloon payments in fiscal years 2001, 2002, 2003 and 2004 (See the Fourth
Amended and Restated Credit and Term Loan Agreement dated as of July 8, 1996).
The pro forma statements of operation for the year ended June 30, 1995 and the
nine months ended March 31, 1996 and balance sheet as of March 31, 1996 are not
necessarily indicative of the results which actually would have occurred had the
transaction been in effect on the date and for the periods indicated or which
may result in the future.
10
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
<TABLE>
<CAPTION>
REGENT
ASSETS: GRIFFITH ACQUISITION PRO FORMA
- ------- ------------ ------------ ------------
<S> <C> <C> <C>
CURRENT ASSETS:
- ---------------
Cash $ 2,684,166 $ 3,941,590 $ 6,625,756
Accounts and notes receivable less
allowance for bad debts 17,600,681 0 17,600,681
Inventories 2,882,874 0 2,882,874
Other current assets 1,744,693 213,651 1,958,344
----------- ------------ -------------
TOTAL CURRENT ASSETS 24,912,414 4,155,241 29,067,655
PLANT, PROPERTY AND EQUIPMENT:
- ------------------------------
Land 5,570,189 170,000 5,740,189
Buildings 1,837,578 1,571,550 3,409,128
Machinery and Equipment 15,178,141 4,028,450 19,206,591
----------- ------------ -------------
22,585,908 5,770,000 28,355,908
Less: Allowances for Depreciation 4,993,145 0 4,993,145
----------- ------------ -------------
17,592,763 5,770,000 23,362,763
INTANGIBLES:
- ------------
Customer and service accounts 37,244,315 0 37,244,315
Covenants not to compete 2,936,564 200,000 3,136,564
Goodwill 38,848,703 8,980,000 47,828,703
Other intangibles 836,344 2,400,000 3,236,344
----------- ------------ -------------
79,865,926 11,580,000 91,445,926
Less: Allowances for Amortization 9,530,538 0 9,530,538
----------- ------------ -------------
70,335,388 11,580,000 81,915,388
Long-term Notes Receivable 1,128,267 0 1,128,267
Deferred Costs 3,168,294 1,836,349 5,004,643
----------- ------------ -------------
TOTAL ASSETS $ 117,137,126 $ 23,341,590 $ 140,478,716
----------- ------------ -------------
----------- ------------ -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
<TABLE>
<CAPTION>
REGENT
LIABILITIES AND SHAREHOLDER'S EQUITY GRIFFITH ACQUISITION PRO FORMA
- ----------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
- --------------------
Accounts Payable $ 8,659,727 $ 0 $ 8,659,727
Accrued Expenses 3,407,200 1,491,590 4,898,790
Deferred Revenue 1,912,029 1,912,029
Income Taxes Payable 464,212 0 464,212
Other Taxes Payable 700,326 0 700,326
Current Portion of Long-Term Debt 5,124,660 500,000 5,624,660
----------- ------------ -------------
TOTAL CURRENT LIABILITIES 20,268,154 1,991,590 22,259,744
LONG-TERM DEBT, LESS
CURRENT PORTION 67,797,222 21,350,000 89,147,222
DEFERRED INCOME TAXES 8,871,063 8,871,063
POST-RETIREMENT EMPLOYEE BENEFITS
AND OTHER 1,602,916 0 1,602,916
----------- ------------ -------------
TOTAL LIABILITIES 98,539,355 23,341,590 121,880,945
SHAREHOLDER'S EQUITY:
- ---------------------
COMMON STOCK, par value $.01 per share,
100 shares, authorized, issued and
outstanding 1 0 1
additional paid-in capital 20,691,323 0 20,691,323
retained deficit ( 2,093,553) 0 ( 2,093,553)
----------- ------------ -------------
TOTAL SHAREHOLDER'S EQUITY 18,597,771 0 18,597,771
----------- ------------ -------------
TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY $ 117,137,126 $ 23,341,590 $ 140,478,716
----------- ------------ -------------
----------- ------------ -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
ACQUISITION
GRIFFITH OF CERTAIN PRO FORMA
CONSUMERS ASSETS OF ADJUSTMENTS
COMPANY & REGENT INCREASE PRO FORMA
SUBSIDIARIES INVESTMENTS (DECREASE) RESULTS
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
SALES (Note 2) $ 153,752,127 $ 61,064,550 $ 0 $ 214,816,677
COST OF SALES
(Note 2) 117,837,581 48,105,422 0 165,943,003
-------------- ------------- ------------- -------------
GROSS PROFIT 35,914,546 12,959,128 0 48,873,674
GENERAL AND
ADMINISTRATIVE
EXPENSES 21,917,468 11,907,804 0 33,825,272
DEPRECIATION
(Note 3) 3,074,619 1,060,850 ( 379,100) 3,756,369
AMORTIZATION
(Note 4) 5,121,688 40,500 950,250 6,112,438
-------------- ------------- ------------- -------------
OPERATING INCOME 5,800,771 ( 50,026) ( 571,150) 5,179,595
INTEREST
EXPENSE
(Note 5) 7,049,527 107,065 1,340,435 8,497,027
OTHER INCOME 480,029 912,468 0 1,392,497
-------------- ------------- ------------- -------------
(LOSS) INCOME
BEFORE INCOME TAX ( 768,727) 755,377 ( 1,911,585) ( 1,924,935)
INCOME TAX (BENEFIT)
EXPENSE ( 142,942) 294,597 ( 745,518) ( 593,863)
-------------- ------------- ------------- -------------
NET INCOME (LOSS) ($ 625,785) $ 460,780 ($1,166,067) ($ 1,331,072)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
13
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
ACQUISITION
GRIFFITH OF CERTAIN PRO FORMA
CONSUMERS ASSETS OF ADJUSTMENTS
COMPANY & REGENT INCREASE PRO FORMA
SUBSIDIARIES INVESTMENTS (DECREASE) RESULTS
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
SALES (Note 2) $ 178,491,341 $ 83,828,650 $ 0 $ 262,319,991
COST OF SALES
(Note 2) 140,243,751 65,671,268 0 205,915,019
------------- ------------- ------------ -------------
GROSS PROFIT 38,247,590 18,157,382 0 56,404,972
GENERAL AND
ADMINISTRATIVE
EXPENSES 28,225,449 15,022,992 0 43,248,441
DEPRECIATION
(Note 3) 3,441,274 1,414,191 ( 505,191) 4,350,274
AMORTIZATION
(Note 4) 5,984,725 72,922 1,248,078 7,305,725
------------- ------------- ------------ -------------
OPERATING INCOME 596,142 1,647,277 ( 742,887) 1,500,532
INTEREST EXPENSE
(Note 5) 6,294,112 143,643 1,786,357 8,224,112
OTHER INCOME 1,050,470 1,135,287 0 2,185,757
------------- ------------- ------------ -------------
(LOSS) INCOME BEFORE
INCOME TAXES ( 4,647,500) 2,638,921 ( 2,529,244) ( 4,537,823)
INCOME TAX (BENEFIT)
EXPENSE ( 1,596,487) 1,029,179 ( 986,405) ( 1,553,713)
------------- ------------- ------------ -------------
NET INCOME (LOSS) ($3,051,013) $1,609,742 ($1,542,839) ($2,984,110)
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
</TABLE>
SEE NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
14
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
- ---------------------------------------
1. The pro forma statement of operations for the year ended June 30, 1995
includes the sales, cost of sales, general and administrative expenses,
depreciation, amortization, interest and other income of the acquired operations
of the Sellers for the 12 months ended September 30, 1995. The 12 month period
ending September 30, 1995 was calculated by deducting the quarter ending
December 31, 1995 and adding the quarter ending December 31, 1994 to audited
year end financials for December 31, 1995. The pro forma statements of
operations for the nine months ended March 31, 1996 include the results of
operations of the Sellers for the period July 1, 1995 through March 31, 1996.
2. Regent annual sales and cost of sales have been adjusted to include only
those assets that were acquired by the Company.
3. Depreciation has been adjusted to reflect the fixed assets purchased by the
Company from the Sellers. Buildings are being depreciated over fifteen years
while equipment and vehicles are over five years. All fixed assets are
depreciated under the straight-line method.
4. Amortization of covenants not to compete is over seven years, dealer
contracts are amortized over a period of five years, and goodwill is amortized
over a period of fifteen years. All intangibles are amortized using the
straight-line method.
5. Interest expense has been adjusted to reflect the interest expense on the
$21,850,000 of debt incurred to finance the purchase of the Sellers.
6. Income tax effect for the pro forma is computed at the Company's statutory
tax rate for the applicable period.
15
<PAGE>
C. EXHIBITS.
None
ITEM 8. CHANGE IN FINANCIAL YEAR
Not Applicable
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 hereunto duly authorized.
GRIFFITH CONSUMERS COMPANY
Dated: September 26, 1996 By: /S/ RAYMOND R. MCKENZIE, JR.
------------------------------------------
Name: Raymond R. McKenzie, Jr.
Its: Vice President - Finance (Authorized
Officer and Principal Financial Officer)
16
