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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1997 Commission File Number 33-88526
GRIFFITH CONSUMERS COMPANY
CARL KING, INC.
FREDERICK TERMINALS, INC.
(Exact name of registrants as specified in their charters)
Delaware 52-1887726
Delaware 04-2941998
Maryland 52-1863759
(State or other jurisdiction of (I.R.S. Employer No.)
incorporation or organization)
Griffith Consumers Company Carl King, Inc.
Frederick Terminals, Inc. 2336 Goddard Parkway
2510 Schuster Drive Salisbury, Maryland 21801
Cheverly, Maryland 20781 (410)860-0400
(301) 322-3111
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulations S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment of this
Form 10-K [ ].
As of September 29, 1997, the Issuers had the following number of shares of
common stock outstanding (all of which are held by affiliates):
Griffith Consumers Company : 1,000 shares
Carl King, Inc.: 1,000 shares
Frederick Terminals, Inc.: 500 shares
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The fiscal year of Griffith Consumers Company ends June 30 and unless
otherwise indicated, references to particular years are references to fiscal
years ending June 30 of the year indicated.
PART I
Item 1. Business
Griffith Consumers Company ("Griffith" and together with its wholly owned
subsidiaries, the "Company"), a Delaware corporation, is one of the leading
full service, independent retail, petroleum products distributors operating
in the Baltimore/Washington Metropolitan area as well as in portions of
Northern Virginia, Maryland, West Virginia, Delaware, New Jersey, and
Pennsylvania. The Company and its subsidiaries, Carl King, Inc. ("King") and
Frederick Terminals, Inc., distribute heating oil, gasoline, diesel fuel,
kerosene and heavy oils and sell products and services related to their
business.
In December 1994, Griffith Holdings, Inc. ("GHI"), a corporation previously
unrelated to the Company, acquired all of the 2,360,000 outstanding shares of
common stock of Griffith Consumers Company, a Maryland corporation ("Griffith
Maryland"), the predecessor to the Company. Pursuant to a merger agreement,
ABC Acquisition Corp., a Maryland corporation ("ABC") and a wholly-owned
subsidiary of GHI, merged with and into Griffith Maryland. As a result of
the merger, the Company became a wholly-owned subsidiary of GHI (the "1994
Acquisition").
On July 11, 1996, the Company, through its wholly-owned subsidiary, Shore
Stop Corporation, acquired certain assets (the "Acquisition") used in the
operations of a chain of 49 convenience stores and retail gasoline stations
within the states of Maryland, Delaware, and Virginia, under the "Shore Stop"
trade name and a dealer petroleum sales business supplying 31 dealers from
two facilities located in Virginia and Maryland from Regent Investments,
Inc., Delaware Investments, Inc. and Mid-Atlantic Investments, Inc., each a
Virginia corporation (collectively, the "Sellers"). 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 (the "Regent Note") secured by first priority mortgages or deeds of
trust on certain assets of the Company for 1996.
Since 1898, the Company and its predecessors have been in the fuel
distribution business. The Company acquired the assets and certain
liabilities of its predecessor from ARCO on July 1, 1985. Since then,
management has followed a program of selective acquisitions of heating oil
distributors and motor fuel marketers to increase the market share in its
present market area and to expand geographically in the mid-Atlantic states.
The purchase price of the 43 acquisitions made between July 1, 1985 and June
30, 1997 was $67 million. The five largest acquisitions made since July 1,
1985 were Hessick, Inc. ($5 million), Carl King, Inc. ($14 million),
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Calotex Delaware, Inc. ($5 million), Steuart Heating ($15 million), and Shore
Stop Corp. ($17 million).
Griffith and Frederick Terminals, Inc. have its principal offices at 2510
Schuster Drive, Cheverly, Maryland; its telephone number is (301) 322-3111.
Carl King has its primary headquarters at 2336 Goddard Parkway, Salisbury,
Maryland 21801; its telephone number is (410) 860-0400.
MOTOR FUELS
Sales. During 1997, the Company sold 168 million gallons of gasoline and
diesel, representing 77% of the petroleum gallons sold by the Company and
accounting for 63% of the Company's total revenue for the year. During 1997,
the existing operations of Griffith and Carl King (excluding Shore Stop
Corporation ("Shore Stop"))sold 127 million gallons of gasoline and diesel,
representing 72% of the petroleum gallons sold by the existing operations of
Griffith and Carl King. In 1996 and 1995, the Company sold 124 million
gallons and 128 million gallons, respectively, of gasoline and diesel,
accounting for 58% and 63% of the revenue for the respective years.
Gasoline and diesel sales were made primarily through 91 Company owned and
Company operated gasoline stations and 112 dealer operated gasoline stations.
The Company operates convenience stores or sells sundries at all of its
Company owned and operated gasoline stations. Sundry sales accounted for
approximately 15% of total revenues.
Company Operated Stations. The Company operates 91 gasoline stations under
market brand gasoline. The Company operates convenience stores sales areas
that range from 1,000 to 2,500 square feet of selling space and carry a wide
variety of groceries, hot and cold snacks, food items, coffee, soda, and
other beverages at 84 stations. There are also small sundry booths at seven
stations. The Company's facilities are generally open 16 to 24 hours a day
and primarily operate on a self-service basis.
Dealer Supply Arrangements. The Company sells motor fuel to dealers, the
majority of which are supplied pursuant to dealer supply arrangements. These
arrangements, which have a typical term of 5 to 10 years, generally require
the dealer to purchase all of its motor fuel from the Company, at the
Company's dealer price at the time of purchase. In return, the Company
generally provides the dealer with equipment either by advancing funds to the
dealer for the purchase of the equipment by the dealer and/or by leasing
equipment to the dealer. Such equipment is used to upgrade station
operations and may include dispensers, signage and canopies. The
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dealer supply arrangements generally do not have specified monthly or yearly
maximums or minimums; however, the arrangements pursuant to which the
equipment is provided to the dealer usually require the dealer to purchase a
minimum amount in order to reduce its obligation for the equipment so
provided.
In approximately 20% of the dealer supply arrangements, the Company delivers
motor fuel to the dealer's station on a consignment basis. In these cases,
the Company pays the dealer a fixed commission for each gallon of motor fuel
sold and the dealer generally does not participate in the profit generated
from motor fuel sales. The Company sets the selling price, owns the
inventory in the tanks at the dealer's station, and receives the revenue for
all gallons sold less the commission.
Delivered Motor Fuel. The Company also supplies motor fuel to customers who
have their own on-site storage facilities, such as construction sites and
fleet operators.
Transportation. The Company's supply of motor fuel is transported by common
carrier to the Company operated stations and dealer stations. In addition,
the Company operates four tractor trailers for deliveries to stations.
Delivered motor fuel is transported by common carriers and Company operated
vehicles.
HEATING FUELS
Residential Sales. During 1997, residential heating oil and kerosene sales
accounted for 13% of total Company revenue. During 1997, residential heating
oil and kerosene sales accounted for 18% of the revenue from the existing
operations (excluding Shore Stop) of Griffith and Carl King. The Company
sold 29 million gallons of residential heating oil and kerosene representing
13% of total petroleum gallons sold by the Company and 16% of total petroleum
gallons sold by the existing operations (excluding Shore Stop) of Griffith
and Carl King. In 1996 and 1995, the Company sold 35 million gallons and 30
million gallons, respectively, of residential heating oil and kerosene,
accounting for 18% and 17% of the revenue for the respective years.
The Company has two types of residential customers; automatic delivery
service and delivery on demand. Fuel deliveries to approximately 70% of the
Company's total residential customers are made under its automatic delivery
service program. This system is a computerized program which analyzes
prevailing weather conditions and the individual customer's consumption
patterns to determine when each customer needs a delivery. Approximately
one-half of the Company's residential customers also have heating equipment
maintenance contracts with the Company which provide an annual tune-up and
cleaning of equipment, free parts replacements for normal wear and tear, and
up to 24 hour radio dispatched service
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for routine and emergency calls. During 1997, maintenance contracts and
repair services accounted for approximately 2% of total revenue. In
addition, the Company sells and services heating and air conditioning
equipment and water heaters, which accounted for another approximately 1% of
1997 revenue.
Approximately 60% of the Company's residential customers use the "Level
Payment Plan", making payments in eleven equal monthly installments starting
in August. Since the heating season begins in October, customers usually have
a credit balance until midwinter. These advance payments also provide a
source of cash that improves the Company's cash flow in the summer and early
fall.
Operating Structure. Heating oil operations are conducted through seven
divisions, which serve as distribution and service centers. Each division
provides heating oil delivery service, heating equipment sales, and during
winter months, up to 24 hour repair service. Each division operates on an
autonomous basis with respect to customer service. Marketing, credit,
purchasing and pricing are centralized at the corporate offices in Cheverly,
Maryland.
Commercial Sales. During 1997, the Company's commercial heating oil revenue
was 6% of the total Company revenue, from the sale of 21 million gallons of
commercial heating oil, accounting for 10% of total petroleum gallons sold by
the Company and 12% of total petroleum gallons sold by the existing
operations of Griffith and Carl King. For 1996 and 1995, the Company sold 38
million gallons and 26 million gallons, respectively, of commercial heating
oil, accounting for 14% and 10% of the revenue for the respective years.
The Company maintains its commercial accounts through its recognition in the
industry as a provider of quality commercial burner service, timely
deliveries, and personalized technical support. Many commercial customers
have dual fuel systems that allow them to switch between oil and gas to the
lowest cost fuel. Also, natural gas suppliers have made arrangements with
certain of their commercial customers that allow the supplier to interrupt
the supply of natural gas to these customers during extended cold periods.
Gas interruptions generated significantly less revenue during 1997 as
compared to 1996, due to the warmer than normal weather.
Transportation. The Company utilizes a fleet of approximately 267 tank
trucks, service vans and other vehicles to deliver heating oil and to provide
service to commercial and residential customers. Approximately 90% of these
vehicles are owned by the Company with the remainder under operating leases.
In addition, the Company utilizes independent tank truck operators to
deliver heating oil.
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OPERATING ENVIRONMENT
Seasonality and Weather. The weather patterns during the winter months can
have a material effect on the Company's sale of heating oil. Although
temperature levels for the heating season have been relatively stable over
time, variations can occur from year to year, and warmer than normal winter
weather will adversely affect the Company's annual results. The seasonal
nature of the Company's heating oil results in most of the heating oil
operation's revenue being generated in the second and third quarters of each
year. During 1997, the temperature level was 16.3% warmer than 1996 and 5.1%
warmer than normal based on the number of degree days. The warmer heating
season negatively affected the number of heating oil gallons sold during 1997.
When weather conditions are favorable, particularly during the summer
vacation season, customers are more likely to purchase more gasoline. As a
result, the motor fuel operations typically generate slightly higher revenues
during warmer weather months, which fall within the Company's first and
fourth quarters. If weather conditions are not favorable during these
periods, the Company's operating results and cash flow from operations would
be affected negatively.
Insurance. The Company maintains a comprehensive package of insurance
policies including pollution or environmental impairment liability coverage.
Further, state underground storage tank reimbursement programs in Delaware
and Virginia currently provide additional risk transfer mechanisms.
Competition. The heating oil business is highly competitive. The Company
competes with heating oil distributors offering a broad range of services and
prices, from full service distributors, like the Company, to those offering
delivery only. Competition with other companies in the heating oil industry
is based primarily on customer service and price. The Company believes that
commercial customers are somewhat more sensitive to price than residential
customers, but also expect professional and timely service. Long-standing
customer relationships are typical in the retail home heating oil industry.
As a result, it is difficult to acquire new retail customers due to existing
relationships between potential customers and other home heating oil
distributors. Therefore, the Company continues to maintain aggressive and
creative marketing plans to attract new customers. Many companies in the
industry, including the Company, deliver home heating oil to a majority of
their customers based upon weather conditions and historical consumption
patterns without the customer having to make an affirmative purchase decision
each time heating oil is needed. In addition, most companies, including the
Company, provide home heating equipment repair service up to 24 hours per
day, which tends to build customer loyalty.
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In all of its heating oil geographic markets, the Company competes for
customers with suppliers of alternate energy products, principally natural
gas and electricity. Over the past five years, the conversion of the
Company's customers from heating oil to other sources, primarily natural gas,
has averaged approximately 1% per annum of the homes served by the Company.
This rate of conversion is largely a function of the cost of replacing an
oil-fired heating system with one that uses natural gas and the relative
retail prices of heating oil and natural gas.
In the vast majority of cases involving commercial accounts, the customer has
the capability of using oil or gas with their dual-fuel burners. Therefore,
competition with gas companies exist, and combined with environmental
concerns related to underground storage tanks, commercial heating oil sales
are highly competitive.
The retail motor fuel industry is highly competitive. The number and type of
competitors vary by location. The Company operated stations presently
compete with dealers supplied by major refiners and marketers, independent
gasoline service stations operators and convenience stores with gasoline
operations.
The Company's wholesale/commercial motor fuel operations compete with
refiners and other motor fuel distributors. Key competitive factors include,
among others, location, pricing, brand image, ease of access, hours of
operation, cleanliness, product promotions and marketing.
Suppliers. The Company's petroleum products are available from numerous
sources, including integrated international oil companies, independent
refiners and independent wholesalers.
The Company generally purchases a majority of its heating oil requirements
under contracts with major oil companies and independent suppliers. These
supply contracts do not fix the purchase price; rather, the price is
determined daily. The Company seeks to minimize its exposure to oil price
decreases by maintaining very low inventories of heating oil and motor fuel,
and through buying most heating oil and motor fuel at current market prices.
The Company purchases the remainder of its requirements from other major oil
companies and independent suppliers on the spot market at current market
prices. The Company believes its policy of contracting supply needs is
sufficient to meet sales volume requirements.
The Company has entered into distributor franchise agreements with Mobil,
Texaco, Citgo, Conoco and Chevron, and has a supply agreement with an Exxon
franchise distributor for one station. The distributor franchise agreements
with Mobil, Texaco, Citgo, Conoco and Chevron also permit the Company to
resell motor fuel to dealers under the refiner's brand name. The Company
purchases most of its motor fuel under these contracts with major refiners.
These
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contracts do not fix the purchase price; rather, the price is determined
daily. The contracts generally specify minimum and maximum purchase
requirements. Although the Company is not required to purchase the minimum
amounts, if the minimum requirements are not met, the suppliers generally may
terminate the contracts. Motor fuel is purchased on the spot market for the
11 unbranded dealer stations and the delivered motor fuel business. There
are no supply agreements for these stations or delivered motor fuel customers.
Employees. As of June 30, 1997, the Company employed 1,047 persons, of whom
272 were employed directly by the Company, 321 by King, and 454 by Shore
Stop. Approximately 40 additional employees are hired by the Company during
the heating season. The Company's employees are not represented by any
union. Management believes its relationship with its employees is excellent.
Regulation; Environmental. The industry is subject to extensive
environmental regulations, particularly laws regulating underground petroleum
storage tanks ("USTs"). Federal, state and local regulatory authorities
adopted regulations governing USTs, a portion of which are being phased in
over a period extending to December 1998. Approximately 70% of the Company
operated stations are already in compliance. The Clean Air Act dictates that
gasoline sold in the nation's nine smoggiest cities have been blended, or
reformulated to reduce pollutants by January 1995. Kent, New Castle and
Sussex Counties in Delaware, Maryland and Northern Virginia are required or
have elected to adhere to these new standards.
1988 Underground Storage Tank Regulations. The U.S. Environmental Protection
Agency's ("EPA") underground storage tank ("UST") regulations (40 C.F.R. Part
280) established standards for new and existing UST systems to prevent,
detect and clean up releases from these systems.
New UST systems are those that are installed after December 1988. These
systems must meet specified performance standards relating to: (i) proper
installation and certification thereof; (ii) spill and overfill protection
devices; and (iii) protection of tanks and piping from corrosion. In
addition, new UST systems must use an approved method of release detection
for tanks and piping.
Existing UST systems are those installed before December 1988. These systems
must have had release detection devices installed by December 1993. By
December 1998 (10 years after the UST regulations became effective), all
existing UST systems must either: (i) meet new UST performance standards;
(ii) be upgraded in accordance with specified requirements for corrosion
protection and spill and overflow protection devices; or (iii) cease
operations and be closed using specified procedures.
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The Company already meets the 1998 standards for corrosion protection and
requirements for the installation of spill and overfill devices at 63 of the
91 Company operated stations. The per location cost of upgrades is between
$75,000 and $175,000, while closure costs typically range from $25,000 to
$75,000 per location. Management, therefore, does not believe that these
capital expenditures will materially affect the Company's Operations.
In addition, the Company is subject to regulatory requirements to clean up
releases when they occur, properly close USTs to prevent future releases,
maintain evidence of financial responsibility for taking corrective action
and for compensating third parties for bodily injury and property damage
resulting from releases, and maintain appropriate records. The states in
which the Company operates also have adopted UST regulatory programs. EPA
has approved Maryland's tank program and has proposed approval of Delaware's
program. Once approved, the State's UST rules substitute for the federal
program.
In the ordinary course of business, the Company maintains a program to
routinely detect releases of gasoline or other regulated substances from USTs
it owns or operates. The Company employs groundwater monitoring wells and/or
sophisticated in-tank monitoring devices at a majority of its Company
operated stations and this information is available on-line at the Company's
headquarters.
As part of its UST management program, the Company is involved in
environmental assessment and remediation activities with respect to releases
of regulated substances from its existing and previously owned UST systems.
Due to the nature of UST releases, the actual payments for assessment and
remediation activities may vary significantly from year to year.
Stage II Vapor Recovery. The Clean Air Act of 1990 requires the Company to
comply with the regulations promulgated by the EPA and state governments for
Stage II. The Company has a program to install the equipment necessary to
comply with these regulations, which is designed to capture emissions that
escape from a vehicle's fuel tank during refueling. Delaware and Maryland
are phasing in compliance under their Stage II regulations based on average
throughput, with the higher volume locations complying first. As of June 30,
1997 the Company is in compliance with the state of Delaware and the state of
Maryland regulations.
Environmental Assessment. The Company is subject to extensive and changing
federal, state and local environmental laws and regulations, including those
relating to the use, handling, storage, discharge and disposal of hazardous
substances and the remediation of environmental contamination and, as a
result, is from time to time involved in administrative and judicial
proceedings and inquiries relating to environmental matters.
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During 1996, expenditures in connection with the Company's compliance with
federal, state and local environmental laws and regulations did not have a
material adverse effect on the Company's earnings or competitive position.
Management believes that the environmental reserve is sufficient to cover all
known liabilities under which it is probable that the Company will be
obligated to undertake remediation. Management's assessment of the
environmental liability is based, in part, on two comprehensive environmental
studies conducted on different segments of the Company's business by
independent environmental consultants that were completed during fiscal year
1995 and fiscal year 1996. Management is not aware of any additional
significant environmental exposures since the completion of these studies.
The Company maintains a program to routinely detect releases of gasoline or
other regulated substances from underground storage tanks it owns or
operates. The Company employs groundwater monitoring wells and/or
sophisticated in-tank monitoring devices at a majority of its Company
operated stations and this information is available on-line through the
computer at the Company's headquarters. Management believes that contingent
liabilities other than those recorded in the financial statements will not
have a material adverse effect on the Company's financial position or results
of operations.
Reformulated Gasoline. On December 15, 1993, the EPA finalized regulations
to implement the reformulated gasoline ("RFG") program mandated by Section
211 (k) of the Clean Air Act. RFG is a gasoline that is manufactured to
reduce ozone-forming emissions when burned in motor vehicles.
Under the RFG program, which began on January 1, 1995, only RFG may be sold
at retail gasoline outlets in the nation's worst ozone non-attainment areas
and in ozone non-attainment areas of states that choose to comply with the
provisions of the RFG program. The parts of the country in which RFG must be
sold are called "covered areas." Kent, New Castle and Sussex Counties in
Delaware, Maryland and Northern Virginia are covered areas. The RFG program
also requires that the gasoline produced by a refiner to be sold in areas
that are not covered areas ("conventional areas") must not result in higher
emissions than the refiner's 1990 gasoline.
The RFG program has a strong enforcement component and establishes a
presumption of liability for all parties in the gasoline distribution system
"upstream" from a location at which a violation of the mandates of the
program occurred. Thus, if a violation is found at a retail outlet, the
owner of the retail outlet as well as all suppliers of that retail outlet are
presumed liable for the violation. This presumption is rebuttable under the
RFG program. For gasoline retailers, this presumption may be overcome by
showing that the retailer or its employees or agents did not cause the
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violation, that gasoline product transfer documents certifying all of the
gasoline found at the outlet are in the possession of the owner, and that the
owner has conducted a quality assurance sampling and testing program. A
violation of the mandates of the RFG program is punishable by a fine of up to
$25,000 per day of violation.
Company operated stations and dealer stations are located in both covered and
conventional areas. As a result, the Company has implemented quality
assurance and record-keeping programs to assure that it will be able to rebut
the presumption of liability if a violation is found at one of its outlets or
at a dealer outlet. These programs require a modest amount of capital
expenditure and must be continued for as long as the RFG program is in
effect. Management believes that the Company's potential liability for
violations of the RFG program is not material in the aggregate to the
Company's consolidated financial position or results of operations.
The Petroleum Marketing Practices Act. The Petroleum Marketing Practices Act
("PMPA"), as amended, is a federal law that prohibits a franchiser engaged in
the sale, consignment or distribution of refiner-branded motor fuel from
terminating or failing to renew a "franchise" or "franchise relationship,"
except on specified grounds and only after compliance with the statute's
notification provisions. PMPA expressly pre-preempts state law concerning
the termination, nonrenewal and notice thereof with respect to gasoline
marketing franchises. PMPA is enforced judicially through cases interpreting
the statute.
The Company is a franchiser under the PMPA because it distributes and sells
motor fuel under refiners' trademarks, including pursuant to licensing
arrangements. Thus, the Company is subject to PMPA's termination, nonrenewal
and notice requirements in each of its individual contracts with its retail
dealers. At the same time, the Company is entitled to PMPA's protections in
each of its agreements with its branded suppliers.
Item 2. Properties and Facilities
Griffith's and Frederick Terminal Inc.'s principal office is located at 2510
Schuster Drive, Cheverly, Maryland 20781, and includes corporate offices and
a garage. The building has approximately 17,138 square feet. The lease for
this facility expires on June 30, 2001, with two 5-year options to renew.
On June 2, 1997, the Company entered into a lease to rent an additional 4,632
square feet of office space. The lease for this facility expires on July 31,
2001, with one 5-year option to renew.
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King's principal office is located at 2336 Goddard Parkway, Salisbury, MD.
The building has approximately 9,000 square feet. The lease for this facility
expires on July 31, 2002, with an option to renew in 3 years, and another 2
year option after that.
At June 30, 1997, the Company occupied six additional office facilities. The
Company also owns and/or operates 53 gasoline stations in Delaware, 3
stations in West Virginia, 26 stations in Maryland, and 9 stations in
Virginia, of which 84 include convenience stores. The stations' convenience
stores have a standard square footage sales area ranging from 1,000 to 2,500
square feet and storage sales areas capacity of 30,000 to 50,000 gallons.
The Company has eight bulk storage facilities serving all operating
locations; some are at office locations. Three of the bulk storage plants
are leased and the remaining five are owned. The Company feels that the
storage capacity is adequate for serving customers.
Item 3. Legal Proceedings
The Company from time to time is involved in various legal proceedings
arising from the ordinary course of its business operations, such as personal
injury claims, employment matters and contractual disputes. Management
believes that the Company's potential liability with respect to proceedings
currently pending is either covered by insurance or is not material in the
aggregate to the Company's consolidated financial position or results of
operations.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of 1997.
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PART II
Item 5. Market for Common Stock
Not applicable.
Item 6. Selected Financial Data
The following selected financial data as of, and for the years ended June 30,
1997 and 1996 and for the periods December 16, 1994 through June 30, 1995 and
July 1, 1994 through December 15, 1994 and the years ended June 30, 1994, and
1993 is derived from the audited financial statements of the Company. Because
of certain purchase price allocation in connection with the Acquisition, the
selected financial data after December 16, 1994 is not directly comparable to
the selected financial data prior to December 16, 1994. The data should be
read in connection with the Company's financial statements and related notes
and other financial information included elsewhere in this Form 10-K report.
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
RESULTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
12/16/94- 7/1/94-
1997 1996 6/30/95 12/15/94 1994 1993
---- ---- --------- --------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales $277,117 $198,017 $104,115 $74,376 $176,938 $146,711
Cost of sales 222,278 154,158 80,505 59,739 134,223 118,971
-------- -------- -------- ------- -------- --------
Gross profit 54,839 43,859 23,610 14,637 42,715 27,740
Selling, general &
administrative expenses 42,385 29,033 15,359 12,867 28,385 19,693
Amortization &
depreciation 13,761 11,189 6,108 3,318 7,315 5,014
Interest 10,711 9,398 5,054 1,239 2,526 1,795
Other income 1,920 668 851 200 565 410
-------- -------- -------- ------- -------- --------
Income (loss) before
income taxes (10,098) (5,093) (2,060) (2,587) 5,054 1,648
Income tax (expense)
benefit 3,650 1,428 592 1,004 (1,971) (647)
-------- -------- -------- ------- -------- --------
Net Income (loss) ($6,448) ($3,665) ($1,468) ($1,583) $3,083 $1,001
-------- -------- -------- ------- -------- --------
-------- -------- -------- ------- -------- --------
Earnings (Loss) per Share(1) (2) (2) (2) (2) $1.31 $0.43
</TABLE>
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(1) Per share calculations have been made with the following for each period.
Average Shares of
Outstanding Common
Fiscal Stock
- ------ ------------------
1997 1000
1996 1000
12/16/94-6/30/95 1000
7/1/94- 12/15/94 2,360,000
1994 2,360,000
1993 2,355,000
(2) The earnings(loss) per share for 1997, 1996 and for the period
12/16/94-6/30/95 are not comparable to the earlier years and period due to
the 1994 Acquisition. In addition, the earnings (loss) per share for the
period 12/16/94-6/30/95 is not comparable to the earlier years and to the
period 7/1/94-12/15/94 due to the seasonality of the Company's business The
earnings (loss) per share for 1997, 1996, and the period 12/16/94-6/30/95,
and 7/1/94-12/15/94 is $(6,448), $(3,665), $(1,468), and $(.67),
respectively.
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Current assets $23,132 $17,711 $15,287 $14,753 $12,820
Current liabilities 22,563 18,126 15,895 18,263 16,809
-------- -------- -------- ------- --------
Working capital (deficit) 569 (415) (608) (3,510) (3,989)
Total assets 125,277 108,570 115,176 51,676 51,700
Long-term debt and capital
lease obligations 85,107 65,351 68,614 24,740 29,813
Total liabilities 116,166 93,012 95,952 43,841 46,948
Shareholders' equity 9,111 15,558 19,224 7,835 4,752
</TABLE>
Item 7. Management's Discussion and Analysis
Overview
Except for historical information, statements in this Management's Discussion
and Analysis of Financial Condition and Results of Operations are
forward-looking. In analyzing the results of the Company's operations,
consideration should be given to the seasonal nature of the heating oil
business and prevailing weather conditions, growth by acquisition, world oil
market conditions and the ability to pass on variations in wholesale
petroleum costs to customers. Financial results may vary from year-to-year
as a result of these factors. The Company undertakes no obligation and
13
<PAGE>
does not intend to update, revise or otherwise publicly release the result of
any revisions to these forward-looking statements that may be made to reflect
future events or circumstances.
The Company's heating oil business is highly seasonal with approximately 83%
of current fiscal year sales made in the quarters ending December and March.
Sales from the Company's motor fuel operations are more evenly spread
throughout the year with some seasonal increases in the summer months. Also,
the Company's heating oil sales fluctuate depending upon weather conditions.
In 1997, warmer than normal winter temperatures significantly decreased
heating oil volume from the previous year.
The Company will attempt to increase its sales volume in both heating oil and
motor fuels. Although the customer base for heating oil is declining
industry-wide, the Company is working to increase sales by attracting new
customers to offset the customers lost through attrition and seeking to
acquire other petroleum distributors.
In a market of declining wholesale product costs, retail selling prices tend
to decline, but not as quickly as wholesale product costs, thereby allowing
the Company to increase gross margins during this type of market. In a
market of increasing wholesale product costs, the Company raises its selling
prices to protect profit margins, but may have lower margins in this market
condition because retail selling prices tend to increase at a slower rate
than wholesale product costs.
The Company's motor fuel sales are subject to greater profit margin
fluctuations due to changes in wholesale prices and competition with major
oil companies. Because the major oil companies have their own refineries and
deal in very substantial volumes, the product cost of their direct station
may be lower than the Company's, resulting in a correspondingly lower sales
price with which the Company must compete. This, in turn, causes a
fluctuation in the Company's gross profit on gasoline and diesel sales.
The Company's operations generate substantial amounts of cash flow relative
to net income, principally because of depreciation of fixed assets and
amortization of customer and service accounts, and goodwill.
14
<PAGE>
The following discussion and analysis of the Company's financial condition
and results of operations covers the period ending June 30, 1997.
Results of Operations.
Fiscal 1997 vs. Fiscal 1996
The following discussion and analysis of the Company's financial condition
and results of operations covers the year ended June 30, 1997.
Net loss for 1997 was $6,448,000 compared to net loss of $3,665,000 for 1996.
Net loss from the existing operations of Griffith and Carl King, Inc. ("Carl
King") was $5,446,000, an increased loss of $1,781,000. The 1997 net loss
from Shore Stop was $1,002,000.
Total sales was $277,117,000 for 1997, compared to $198,017,000 for 1996.
Total sales from the existing operations of Griffith and Carl King decreased
$2,755,000, or 1%, to $195,262,000 from 1996. Total gallons of all petroleum
products increased by 11%. Total gallons of all petroleum products from the
existing operations of Griffith and Carl King decreased by 10%. Heating fuel
volume decreased by 30% as a result of two factors. One factor was the warm
weather which was 16.3% warmer than last year and 5.1% warmer than normal.
The second reason was that during several weeks in fiscal 1996, commercial
natural gas customers switched to oil because of interruptions in their
natural gas supply, while during 1997 the gas interruptions were minimal.
Motor fuel volume increased by 34%. Motor fuel volume from the existing
operations of Griffith and Carl King increased by 1%.
Cost of sales for 1997 was $222,278,000 compared to $154,158,000 for 1996.
Cost of sales from the existing operations of Griffith and Carl King
increased to $155,737,000, or 1%, from 1996. This increase is primarily
attributable to a 13% increase in the average wholesale cost of all petroleum
products purchased. The cost of sales from Shore Stop Operations was
$66,541,000.
Gross profit for 1997 was $54,839,000 compared to $43,860,000 for 1996.
Gross profit from the existing operations of Griffith and Carl King was
$39,525,000, a decrease of $4,335,000, or 10% from 1996. The gross profit
decrease was primarily due to the decrease in gallons of heating fuel sold.
Gross profit from Shore Stop Operations was $15,314,000.
Selling, general and administrative ("SG&A") expenses for 1997 were
$42,385,000, compared to $29,033,000 for 1996. The increase was due primarily
to operating costs of $13,646,000 related to the Shore Stop Operations. SG&A
expenses from the existing operations of Griffith and Carl King were
$28,739,000, a decrease of $294,000, or 1%, from 1996. The decease is
attributable to lower operating costs
15
<PAGE>
associated with the decease in heating oil volume in 1997 from 1996.
Depreciation and amortization expenses for 1997 were $13,761,000, compared to
$11,189,000 for 1996. The increase was due primarily to depreciation and
amortization related to the Shore Stop Acquisition. Depreciation and
amortization expenses from the existing operations of Griffith and Carl King
were $11,242,000, an increase of $53,000, or .5%, from 1996.
Interest expense for 1997 was $10,711,000, compared to $9,398,000 for 1996.
Interest expense from the existing operations of Griffith and Carl King was
$8,676,000, a decrease of $722,000, or 8%, from 1996. The decrease in
interest expense was primarily due to the decrease in outstanding debt
because of principal payments. Interest expense related to additional debt
incurred in connection with the Shore Stop Acquisition was $2,035,000.
Other income for 1997 was $1,920,000, compared to $668,000 for 1996. This
increase is primarily related to other income of $1,064,000 from Shore Stop
operations as well as an increase in customer finance charges and interest
income from the existing operations of Griffith and Carl King.
Fiscal 1996 vs. Fiscal 1995
The following discussion and analysis of the Company's financial condition
and results of operations covers the year ending June 30,1996.
Net loss for 1996 was $3,665,000 compared to net income of $3,051,000 for
1995.
Total sales increased $19,526,000, or 11%, to $198,017,000 from 1995. Total
gallons of all petroleum products decreased by 8% primarily as a result of
heating oil volume increasing by 30%, which increase was caused by two
factors. One was the cold weather which was 26.3% colder than last year and
13.4% colder than normal. The second reason was that for several weeks in
fiscal 1996, commercial natural gas customers switched to oil because of
interruptions in their natural gas supply, while during 1995 the gas
interruptions were minimal. Motor fuel volume decreased by 1%.
Cost of sales increased to $154,158,000, an increase of $13,914,000, or 10%
from 1995. This can be attributed to the increase in the number of gallons
of heating fuel sold and a 1% increase in the average wholesale cost of all
petroleum products purchased.
16
<PAGE>
Gross profit for 1996 was $43,860,000; an increase of $5,612,000, or 15%,
from 1995. The gross profit increase was primarily due to the increase in
gallons of heating fuel sold.
Selling, general and administrative expenses for 1996 were $29,033,000, an
increase of $807,000, or 3%, from 1995. This increase was primarily
attributable to the higher expenses as a result of increased petroleum sales
due to colder weather offset, in part, by reductions of administrative
expenses attributable to continued consolidations of operations and general
cost savings.
Depreciation and amortization expenses were $11,189,000, an increase of
$1,763,000, or 19%, from 1995. The increase was primarily attributable to
the additional depreciation and amortization on the fixed assets and
intangible assets resulting from purchase accounting adjustments in
connection with the Acquisition.
Interest expense increased by $3,104,000, or 49%, to $9,398,000 from 1995.
This increase resulted primarily from additional indebtedness incurred in
connection with the Acquisition.
Other income for 1996 was $668,000, a decrease of $382,000, or 36%, from
1995. The decrease results from decreased interest income, partially offset
by an increase in the gain on the sale of fixed assets.
Fiscal 1995 vs. Fiscal 1994
Net loss for 1995 was $3,051,000 compared to net income of $3,083,000 for
1994.
Total sales increased $1,553,000, or 1%, to $178,491,000 from 1994. Total
gallons of all petroleum products decreased by 5%. Heating fuel volume
decreased by 25% as a result of two factors. One was the warm weather, which
was 16% warmer than last year and 10.2% warmer than normal. The second
reason was that for several weeks in fiscal 1994, commercial natural gas
customers switched to oil because of interruptions in their natural gas
supply, while during 1995 the gas interruptions were minimal. Motor fuel
volume rose by 7% primarily due to aggressive marketing used to acquire
additional contracts to supply independent gasoline stations.
Cost of sales increased to $140,244,000, an increase of $6,022,000, or 4%
from 1994. This can be attributed to the fact that on a per gallon basis,
the average wholesale cost of all petroleum products purchased increased by 6
cents per gallon, or 9%. The cost per gallon increase was offset partially
by a 5% decrease in the number of gallons sold.
17
<PAGE>
Gross profit for 1995 was $38,248,000, a decrease of $4,468,000, or 10%, from
1994. The gross profit decrease was primarily due to the decrease in gallons
of petroleum products sold and the higher average wholesale cost of sales per
gallon.
Selling, general and administrative expenses for 1995 were $28,225,000, a
decrease of $160,000, or less than 1%, from 1994. This decrease was
primarily attributable to the lower operating expenses as a result of
decreased petroleum sales due to warmer weather offset, in part, by
additional operating expenses related to new company operated stations and
increases in insurance expenses.
Depreciation and amortization expenses were $9,426,000, an increase of
$2,111,000, or 29%, from 1994. Most of the increase is related to the
additional amortization on the intangible assets resulting from purchase
accounting adjustments in connection with the Acquisition.
Interest expense increased by $3,768,000, or 149%, to $6,294,000 from 1994.
This increase resulted primarily from additional indebtedness incurred in
connection with the Acquisition and higher interest rates.
Other income for 1995 was $1,050,000, an increase of $486,000, or 86%, from
1994. The increase results from increased interest income and gains on the
sale of fixed assets.
Financial Condition.
Fiscal 1997 vs. Fiscal 1996
Substantially all of the line items of the financial statements have
increased from June 30, 1996 because of the Shore Stop Acquisition. The
following discussion will focus on increases or decreases in balance sheet
line items unrelated to the Shore Stop Acquisition and items which require
additional explanation.
Accounts and notes receivable were $11,183,000 in 1997, compared to
$11,813,000 in 1996. Accounts and notes receivable from Griffith and Carl
King decreased by 11%, or $1,246,000, to $10,567,000. The decrease was
primarily due to the decreased sales volume in 1997.
Refundable income taxes increased $169,000 from a payable of $73,000 to a
refund due of $96,000 due to the income tax benefit related to the loss for
1997.
18
<PAGE>
Other taxes receivable increased $906,000 primarily due to a change in state
motor vehicle licenses which requires the company to pay Maryland motor fuel
taxes when importing fuel into the state and apply for refunds, which take
two to three months to receive, when exporting fuel out of the State and
also an increase in federal excise taxes receivable. Short term deferred tax
asset increased due certain temporary tax differences for warranty accrual,
deferred revenue, and other balance sheet items.
Property, plant and equipment before depreciation increased by $11,104,000,
or 47%. The Company acquired $6,238,000 of fixed assets through acquisitions,
including the acquisition of Shore Stop. The additional increase was due to
capital expenditures made to comply with Stage II Vapor Recovery regulations
at some of the company-operated stations, investments in new dealer supply
contracts, and the purchase of, and major repairs to tank trucks, service
vans and other vehicles to provide service to customers.
Net intangibles was $73,962,000 in 1997, compared to $68,533,000 in 1996.
Net intangibles from Griffith and Carl King decreased 9%, or $5,878,000, to
$62,655,000. The decrease is primarily due to the amortization of the
intangibles. Net intangibles for Shore Stop was $11,307,000.
Deferred debt costs and other increased $320,000 from $3,760,000 to
$4,080,000 as a result of the capitalization of the finance costs and other
costs incurred in connection with financing the Shore Stop Acquisition. Such
increase was partially offset by the amortization of such finance costs and
other finance costs capitalized in connection with the 1994 Acquisition.
Accounts payable increased $1,128,000 to $8,709,000 in 1997. Accounts
payable from Griffith and Carl King decreased by $2,312,000, or 31%, to
$5,270,000. The decrease was primarily due to the timing of vendor payments
at the end of 1997.
Deferred revenue increased primarily as a result of payments received from
major oil companies in exchange for rebranding some of the company-operated
stations.
Long term debt increased $19,756,000 to $85,107,000, primarily as a result of
the debt incurred in connection with the Shore Stop Acquisition, partially
offset by principal repayments.
Deferred income taxes decreased $2,111,000, or 26%, from $7,994,000 to
$5,883,000 because of the amortization of intangible assets relating to the
Acquisition and changes in other temporary differences.
Liquidity and Capital Resources.
19
<PAGE>
The Company's cash requirements consist principally of working capital,
payments of principal and interest on its outstanding indebtedness, capital
expenditures and expenditures for acquisitions.
The Company believes that cash flow from operating activities, cash on hand
and periodic borrowings, if necessary, will be adequate to meet its operating
cash requirements for the foreseeable future. In addition to its existing
working capital facilities, the Company may enter into additional financing
facilities to fund future acquisitions and for other purposes, to the extent
such facilities are permitted under the terms of the Indenture (the
"Indenture") governing the Company's 14 1/2% Senior Subordinated Notes due
December 15, 2004 (the "Notes") and the Company's existing credit agreement.
The Company's operations generate substantial amounts of cash flow relative
to net income, principally because of depreciation of fixed assets and
amortization of customer and service accounts, and other intangibles obtained
in acquisitions. During 1997, 1996, and 1995, net cash provided by operating
activities was $6.6 million, $5.6 million, and $.4 million, respectively.
Cash flow from operating activities in 1997 increased by $.8 million. Net
cash provided by operating activities from existing operations of Griffith
and Carl King decreased by $2.6 million . Such decrease was primarily the
result of a decrease in net income, after adjusting for non-cash expenses,
from the existing operations of Griffith and Carl King plus a net increase in
operating assets and liabilities, in 1997 from 1996. Net cash provided by
operating activities from Shore Stop was $3.2 million. Cash flow from
operating activities in 1996 increased by $5.2 million as compared to 1995
due to colder winter weather.
During 1997, 1996, and 1995, net cash used in investing activities was $26
million, $1.6 million, and $62.3 million, respectively. Net cash used in
investing activities increased by $24.4 million in 1997 primarily as a
result of the Shore Stop Acquisition. Net cash used in investing activities
decreased $60.7 million in 1996 from 1995 primarily as a result of the 1994
Acquisition.
During 1997, 1996, and 1995, net cash provided by(used in) financing
activities $20.8 million, $(3.1) million, and $60 million, respectively.
Net cash provided by financing activities increased by $23.9 million in 1997
primarily as a result of the increased debt incurred in connection with the
Shore Stop Acquisition. Net cash provided by financing activities decreased
$63.1 million in 1996 from 1995 primarily as a result of the additional debt
incurred in connection with the 1994 Acquisition.
20
<PAGE>
As of July 8, 1996, in connection with the Shore Stop Acquisition, the Company
amended and restated its then existing credit agreement (the "Prior Credit
Agreement"; and as amended and restated, the "Credit Agreement") to, among other
things, increase the amount of revolving credit facility borrowings (including
the maximum drawing amount under outstanding Letters of Credit (as defined)
available thereunder) from $12,000,000 to $13,000,000 and the term loan
thereunder from $34,450,000 to $54,450,000. The Credit Agreement was
subsequently amended by an amendment dated as of December 31, 1996 to, among
other things, increase the amount of the revolving credit facility provided
thereunder from $13,000,000 to $16,000,000 during the period from February 12,
1997 through March 31, 1997 and to revise certain financial covenants contained
therein. In addition, the Credit Agreement and the Indenture were amended as of
March 15, 1997 to revise certain financial covenants contained therein. The
Company is currently in compliance with the covenants contained in the Credit
Agreement and Indenture, as amended.
On August 29, 1997, The Company amended and restated the Credit Agreement to
increase the amount of term borrowings outstanding thereunder from $49,850,000
to $50,100,000. The amendment modified the term loan's repayment schedule and
revised certain financial covenants contained therein. The Company believes
that it will be able to comply with all covenants in place during fiscal year
1998. Due to the seasonal nature of the heating oil business, the potential
impact of warmer than normal winter temperatures and prevailing market
conditions, actual financial results could differ from those originally
anticipated.
Under the Credit Agreement, at the Company's request, the agent for the lenders
from time to time issues letters of credit (the "Letters of Credit"). During
the period from July 1, 1996 through June 30, 1997, the Company's peak total
usage of the revolving credit facility was approximately $8.0 million in
outstanding borrowings and $4.9 million in maximum drawing amount under Letters
of Credit. At June 30, 1997, there was $6.4 million in borrowings and $3.6
million in Letters of Credit outstanding with respect to the revolving credit
facility, leaving, subject to meeting certain borrowing base tests, $3,000,000
available for use thereunder. The revolving portion of the Credit Agreement
expires in 1999 and the Company may be required to replace the revolving portion
at such time. At September 26, 1997, there was $2.2 million in borrowings and
$3.2 million in letters of credit outstanding.
The Company believes that cash flow provided by operations, supplemented by
external long-term borrowings, will provide sufficient funds to meet the
Company's liquidity needs for current operations and internal growth and to
finance expansion through acquisitions.
The Company purchases petroleum as necessary to meet the delivery demands of its
customers on a short-term basis. Thus, the Company carries relatively small
amounts of petroleum in inventory.
Certain sections of this form 10-K, including "Notes to Consolidated Financial
Statements" and Management's Discussion and Analysis of Financial Condition and
Results of Operations," contain forward looking statements within the meaning of
Section 21E of the
21
<PAGE>
Securities Exchange Act of 1934, as amended, with respect to the Company's
expectations or beliefs concerning future events. The Company cautions that
these statements are further qualified by important factors that could cause
actual results to differ materially from those in the forward looking
statements. The forward looking statements include, without limitation, the
effects of seasonality on revenue and cost of goods sold, the amount of
reserves, the effect of contingent liabilities and the ability to meet the
Company's future operating cash requirements.
Item 8. Financial Statements and Supplementary Data
See Page F-1.
Item 9. Change in and Disagreements with Accountants on Accounting
and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Company
The following table sets forth certain information regarding the Company's
Executive Officers and Directors of Griffith as of September 27, 1996:
Name Age Position with the Company
---- --- --------------------------
Howard B. Schlosberg 53 President, Director
Raymond R. McKenzie, Jr. 42 Chief Financial Officer,
Vice President, Treasurer and Secretary
W. Randy Groft 36 Operations General Manager and Assistant
Secretary
Todd R. Berman 40 Chairman of the Board
Barry Lassman 56 Director, Consultant
Neil H. McLaurin, III 53 Director
Walter J. Meighan 72 Director, Consultant
Michael S. Shein 33 Director, Vice President
Howard B. Schlosberg has served as President of the Company since October 1992
and a director since 1991. He joined the Company in September 1990 and served
as Vice President responsible for retail marketing until August 1991 when he
became the Chief Operating Officer and Director in Charge of Operations. From
1983 to 1989, he served as Vice President and General Manager for Acme Oil
Corporation in New Jersey. He has 23 years of experience in retail petroleum
distribution and marketing.
22
<PAGE>
Raymond R. McKenzie, Jr. has served as Chief Financial Officer, Treasurer and
Secretary of the Company since March 1991 and as Vice President of the Company
since September 1996. Mr. McKenzie joined the Company in November 1990 as the
Corporate Controller. He has over 20 years of financial experience in both
public accounting with the big six and in the private corporate sector. Most
recently, he served as Controller for The Milton Company in Tysons Corner,
Virginia from 1989 to 1990 and prior to that as a Senior Manager with Price
Waterhouse, Washington, D.C.
W. Randy Groft has served as Assistant Secretary of the Company since April
1990. Mr. Groft joined the Company in September 1986 when the Company acquired
John R. Brown, Inc. where he served as Operations Manager. Mr. Groft started
with John R. Brown in 1983, giving him a total of eleven years experience in the
industry. He has served the Company in various capacities, most recently
appointed to Operations General Manager in March 1994.
Todd R. Berman has served as Chairman of the Board of Directors of the Company
since December 1994. Mr. Berman is the President and founder of Chartwell
Investments Inc. ("Chartwell"), a merchant banking firm. Prior to forming the
predecessor to Chartwell in 1992, Mr. Berman served as a Managing Director of
E.S. Jacobs & Company, an investment firm, from 1984 to 1992. Previously, Mr.
Berman was a Vice President at Oppenheimer & Co., Inc. and an Associate at Allen
& Company Incorporated. Mr. Berman is also a director, President and CEO of
GHI. Mr. Berman has served as a director of Petro Stopping Centers, L.P. since
January 1997.
Barry Lassman has served as a Director of and consultant to the Company since
December 1994. Mr. Lassman has been the Chief Operating Officer of Benzoline
Energy Company, a full service residential and commercial heating oil
distributor in Connecticut, since 1984. Mr. Lassman is also the President of
BJL Holdings, L.L.C. ("BJL Holdings"). Prior to his employment with Benzoline,
Mr. Lassman was the Chief Operating Officer of MacArthur Petroleum, a New Jersey
based distributor of heating oil and gasoline, and Assistant to the President
and Vice President -- Finance of Consolidated Edison of New York, a major gas
and electric utility in New York.
Neil H. McLaurin, III has been a Director of the Company since December 1995.
Mr. McLaurin has been Chairman of the Board of Directors, and Chief
Executive Officer of E-Z Serve Corporation (E-Z Serve), since October 1990.
Mr. McLaurin was also president of E-Z Serve from October 1990 to March 1997.
E-Z Serve operates 706 convenience stores, 11 franchises, and distributes
motor fuels through 189 non-company operated retail outlets in 20 states,
predominantly in the Sunbelt. From 1989 to 1990, Mr. McLaurin served as a
consultant for L.B. Consulting Co., an investment company in Houston, Texas.
23
<PAGE>
Walter J. Meighan has served as a Director of the Company and as a consultant to
the Company since December 1994. Mr. Meighan has served as Chairman and a
Director of the Board of Directors of the Company since 1985, as President of
the Company from April 1988 to July 1990 and as Director of Acquisitions of the
Company from 1985-1988. From 1979 until June 1985, Mr. Meighan served as
President of the predecessor of Griffith Consumers Company. Mr. Meighan joined
such predecessor in 1962 serving in the following capacities: Executive Vice
President, Vice President of Sales, General Sales Manager and Baltimore Division
Manager.
Michael S. Shein has served as a Director of the Company and Vice President of
the Company since December 1994. Mr. Shein is a Managing Director and
co-founder of Chartwell. Prior to joining the predecessor to Chartwell in 1992,
Mr. Shein served as a Senior Vice President, Vice President and Associate of
E.S. Jacobs & Company from 1988 to 1992. Previously, Mr. Shein was employed by
Goldman, Sachs & Co., an investment banking firm, in the Mergers & Acquisition
Department. Mr. Shein is also a director and Vice President, Treasurer and
Secretary of GHI. Mr. Shein has served as director of Petro Stopping Centers,
L.P. since January 1997.
The directors of the Company are elected each year by the shareholder to serve
for a one or two year term and until their successors are elected and qualified.
GHI has agreed to vote all shares of Common Stock of the Company owned by it for
the election of Mr. Meighan to the Board of Directors of the Company. See
"Certain Transactions." The executive officers of the Company are elected by
the Board of Directors to serve at the discretion of the Board.
Members of the Board of Directors, other than Mr. Meighan and Mr. McLaurin, III,
do not receive directors fees, but are reimbursed by the Company for their
out-of-pocket expenses incurred in attending Board of Directors and committee
meetings. Mr. Meighan and Mr. McLaurin,III receive an annual retainer of
$10,000 plus an additional $1,500 fee for each director's meeting attended.
Directors and Executive Officers of Carl King
The following table sets forth certain information regarding Carl King's
Executive Officers and Directors as of September 27, 1996:
Name Age Position with Carl King
---- --- -----------------------
Todd R. Berman 40 Chairman of the Board, Director
Gregory A. Stutzman 42 President
Howard B. Schlosberg 53 Vice President, Director
Michael S. Shein 33 Vice President, Director
Raymond R. McKenzie, Jr. 42 Vice President
Terrence P. Sullivan 39 Vice President
24
<PAGE>
William L. Sanner 44 Vice President, Secretary
and Treasurer
W. Randy Groft 36 Assistant Secretary
For information with respect to directors and officers of Carl King who serve as
directors or officers of the Company, see "Directors and Executive Officers of
the Company." The following is a brief description of the business experience
for at least the past five years of the directors and officers of Carl King who
do not have a position with the Company:
Gregory A. Stutzman was named President of Shore Stop Corp. And Carl King, Inc.
in September 1996. Prior to the Company's purchase of Shore Stop, he served as
Executive Vice President of Regent Investments, Inc. dba Shore Stop Food Stores.
He has been continuously employed with Shore Stop since June 1987. Prior to
being named Executive Vice President in 1995, he served as Director of
Operations, Marketing Manager, and District Manager for Shore Stop. Prior to
his employment with Shore Stop, he was employed with the Southland Corporation
in Hampton, Virginia.
Terrence P. Sullivan has served as Vice President of Carl King, Inc. since
October 1995. He joined the Company in October 1989. Mr. Sullivan is
responsible for the contract dealer class of trade, commercial sales, supply and
distribution. Prior to joining The Company, Mr. Sullivan held several marketing
and financial analyst positions for Mobil Oil Corporation.
William L. Sanner has served as Controller and Treasurer of Carl King since June
1987. He has sixteen years of accounting, finance and budgeting experience with
Carl King, USAir Inc. and MCI Telecommunications Inc.
The directors of Carl King are elected each year by the shareholder of Carl King
to serve for a one-year term and until their successors are elected and
qualified. The executive officers of Carl King are elected by the Board of
Directors of Carl King to serve at the discretion of the Board of Carl King.
Directors and Executive Directors of Frederick Terminals
Position with
Name Age Frederick Terminals
- ---- --- -------------------
Todd R. Berman 40 Chairman of the Board, Director
Howard B. Schlosberg 53 Director, President
25
<PAGE>
Raymond R. McKenzie, Jr. 42 Director, Treasurer and Secretary
Michael S. Shein 33 Director, Vice President
See "Directors and Executive Officers of the Company" for a description of the
business experience of the executive officers and directors of Frederick
Terminals for the past five years.
The directors of Frederick Terminals are elected each year by the shareholder of
Frederick Terminals to serve for a one-year term and until their successors are
elected and qualified. The executive officers of Frederick Terminals are
elected by the Board of Directors of Frederick Terminals to serve at the
discretion of the Board of Frederick Terminals.
Item 11. Executive Compensation
Set forth below is the applicable compensation information for the Company's
President and the other most highly compensated executive officers whose annual
paid or payable aggregate cash and non-cash compensation exceeded $100,000 (the
"Named Executives") with respect to the fiscal year ended June 30, 1997.
26
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Awards
Fiscal Year Annual Compensation(1) All Other Shares of GHI Underlying
Name June 30, Salary Bonus Comp.(2) Options (#)
- ---- ----------- ------ ----- --------- ------------------------
<S> <C> <C> <C> <C> <C>
Howard B. Schlosberg 1997 $200,000 $ 5,000 $15,200
President & Chief 1996 158,875 58,000 15,200
Executive Officer 1995 155,000 47,500 9,500 20,400
Bruce W. King 1997 158,875 -0- 7,000
President - 1996 158,875 58,000 11,000
Carl King (3) 1995 155,000 47,500 10,500 20,400
Gregory A. Stutzman 1997 120,000 5,000 9,500 6,000
President - Shore Stop/ 1996 N/A N/A N/A N/A
Carl King 1995 N/A N/A N/A N/A
Raymond R.
McKenzie, Jr. 1997 140,000 5,000 10,800
Chief Financial 1996 128,125 52,000 10,800
Officer, Vice President, 1995 125,000 43,750 8,500 10,200
Treasurer and Secretary
W. Randy Groft 1997 95,000 5,000 8,300
Assistant Secretary 1996 85,000 25,000 6,400 5,000
1995 N/A N/A N/A
Terrence P. Sullivan 1997 75,000 20,000 8,700
Vice President - 1996 75,000 45,000 6,400 5,000
Carl King (Only) 1995 N/A N/A N/A
William L. Sanner 1997 85,000 5,000 9,000
Treasurer and Secretary 1996 75,000 25,000 6,400 5,000
Carl King (Only) 1995 N/A N/A N/A
(1) Compensation deferred at the election of executive includable in category and year earned.
(2) Other compensation consists of employer matching contribution to the 401(K) plan that are 100%
vested and automobile allowances.
(3) Bruce King was no longer employed by the Company at June 30, 1997
</TABLE>
27
<PAGE>
The following table sets forth the "In-the-money" options for GHI common stock
at fiscal year-end with respect to each of the executive officers named in the
summary compensation table:
Fiscal Year-end Option Values
Number of Securities
Underlying Unexercised Option
at Fiscal Year-end
Name (#) Exercisable/Unexercisable
- --------------------------------------------------------------------------------
Howard B. Schlosberg 13,600/6,800
- --------------------------------------------------------------------------------
Gregory A. Stutzman 0/6,000
- --------------------------------------------------------------------------------
Raymond R. McKenzie, Jr. 6,800/3,400
- --------------------------------------------------------------------------------
W. Randolph Groft 1,666/3,334
- --------------------------------------------------------------------------------
Terrence P. Sullivan 1,666/3,334
- --------------------------------------------------------------------------------
William L. Sanner 1,666/3,334
- --------------------------------------------------------------------------------
Neil H. McLaurin, III 2,000/2,000
- --------------------------------------------------------------------------------
The following table sets forth option grants made with respect to shares of GHI,
the Company's parent, in 1997 with respect to each of the Executive Officers
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION GRANTS OF SHARES OF GHI IN 1997
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
- ----------------------------------------------------------------------------------------------------------------------
Percent of total Exercise
No. of shares option granted of Base
underlying to employees in Price
Name option granted fiscal year ($/sh) Expiration Date 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gregory A. Stutzman 6,000 100% $30.00 September 14, $113,201 $286,873
2006
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
Employment Agreements
The Company has entered into employment agreements with Messrs. Schlosberg
and McKenzie for a period of three and two years ending on December 15, 2000
and December 15, 1999, respectively. Under the employment agreements the
annual base salaries of Messrs. Schlosberg and McKenzie initially are
$200,000, and $140,000, respectively, subject to an annual cost of living
adjustment. They are also entitled to participate in any bonus plan approved
by the Board of Directors of the Company. They are also entitled to any
other benefits generally available to the senior management of the Company
and the use of a company car. In addition, as described under "Incentive
Equity Plan," GHI has established an incentive equity plan for senior
management of the Company. Pursuant to their employment agreements, Messrs.
Schlosberg and McKenzie received under the incentive equity plan options to
purchase (at an exercise price per share of $16.4905) 1.5% and .75%,
respectively, of GHI's common stock, on a fully diluted basis, as of the
closing of the Acquisition. The Company has also entered into employment
agreements with Messrs. W. Randolph Groft, William Sanner, Terrence
Sullivan, and Gregory Stutzman with annual base salaries of $95,000,
$85,000, $75,000, and $120,000, respectively, for three year periods ending
between October 1998 and December 2000. If the Company terminates any of the
employment agreements without cause or because the officer has been
incapacitated for three consecutive months, then the terminated officer will
be entitled to continue to receive his salary, plus certain benefits, for
twelve months from the date of the notice of termination. The employment
agreements contain certain customary non-solicitation and non-competition
provisions upon termination of such agreements. The Company had entered into
an employment contract with Bruce King which has been terminated.
The Company has also entered into employment agreements with Messrs. Berman
and Shein for a period of five years commencing on December 15, 1994. Under
the employment agreements, Messrs. Berman and Shein will receive salaries of
$50,000 each year during the term of the agreements plus any other benefits
generally available to senior management of the Company. If the Company
terminates either of their employment agreements, then the terminated officer
will be entitled to continue to receive his salary, plus certain benefits,
for the balance of the term.
Incentive Equity Plans.
GHI has established nonqualified stock option plans to attract and retain key
personnel, including senior management, and to enhance their interest in the
Company's continued success.
29
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The table below sets forth as of September 29, 1997 the number and percentage
of outstanding shares of the Company's common stock, par value $.01 per share
(the "Common Stock") beneficially owned by (i) each of the named executive
officers of the Company; (ii) each director of the Company, Carl King and
Frederick Terminals who owns Common Stock; (iii) all directors and executive
officers of the Company, Carl King and Frederick Terminals as a group; and
(iv) each person known by the Company to own beneficially more than five
percent of the Common Stock. The Company believes that each individual or
entity named has sole investment and voting power with respect to shares of
Common Stock indicated as beneficially owned by them, except as otherwise
noted.
Name Shares Owned %
---- ------------ ---
Griffith Holdings, Inc............. 1000 100
2510 Schuster Drive
Cheverly, MD 20781
King and Frederick Terminals are wholly owned Subsidiaries of the Company.
The following table sets forth as of June 30, 1997, the number and percentage
of outstanding shares of the GHI common stock, par value $.01 per share,
beneficially owned by (I) each of the named executive officers of the
Company; (ii) each director of the Company, King, and Frederick Terminals;
and (iii) all directors and executive officers of the Company, King, and
Frederick Terminals as a group. The Company believes that each individual or
entity named has sole investment and voting power with respect to shares of
GHI Common Stock indicated as beneficially owned by them, except as otherwise
noted.
Name Shares Owned %
- ---- ------------ ---
Todd R. Berman(1)......................... - -
Michael S. Shein(1)....................... - -
Barry J. Lassman(2)....................... 47,458 3.63
Howard B. Schlosberg(3)................... 3,032 *
Neil H. McLaurin, III (3)................. 4,000 *
Raymond R. McKenzie, Jr.(3)............... 1,516 *
Walter J. Meighan......................... - -
All Directors and Officers as a Group(10)
56,006 4.28
- ------------
* Less than one percent.
(1) Messrs. Berman and Shein are limited partners of Chartwell, L.P.,
a Cayman Islands limited partnership, which is the general
partner and a limited partner of Griffith Partners L.P. and holds
approximately 63% of the partnership interests of Griffith
Partners L.P. and, consequently, may be deemed to beneficially
own all of the shares of GHI beneficially owned by Chartwell
Partners L.P. Griffith Partners L.P. beneficially holds 77.03%
of the outstanding shares of GHI.
(2) BJL Holdings holds options to purchase 47,458 shares of the
Common Stock of GHI, which options are immediately exercisable at
a price per share equal to $16.4905. Mr. Lassman, President of
BJL Holdings, may be deemed beneficially to own the shares owned
by BJL Holdings.
(3) Messrs. Schlosberg, McLaurin, III and McKenzie hold options to
purchase 20,400 shares, 4,000 shares and 10,200 shares,
respectively, of GHI Common Stock exercisable within 60 days at a
price per share equal to $16.4905.
30
<PAGE>
Item 13. Certain Relationships and Related Transactions
GHI, the Company and Carl King entered into a management consulting
agreement with Chartwell pursuant to which Chartwell will provide the
Company with certain management, advisory and consulting services for
a fee of $200,000 for each fiscal year of the Company during the term
of the agreement, with up to an additional $200,000 payable for each
of fiscal years 1996 through 2000, provided that certain financial
goals are achieved, plus reimbursement of certain expenses. The term
of the management consulting agreement is five years commencing on
December 15, 1994, with one additional five year renewal term. Mr.
Berman and Mr. Shein are founders and officers of Chartwell.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K
(a) Documents filed as part of this report:
1. Financial Statements
Page
-----
Reports of Independent Auditors.................. F-2-3
Consolidated Balance Sheets...................... F-4
Consolidated Statements of Operations............ F-5
Consolidated Statements of Changes in
Shareholders' Equity........................... F-6
Consolidated Statements of Cash Flows............ F-7
Notes to Consolidated Financial Statements....... F-8-23
2. All other schedules for which provision is made in the
applicable accounting regulation of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable, and therefore have been omitted.
3. Exhibits
[c]2.1 Asset Purchase Agreement dated as of November 30, 1989
between Griffith Consumers Company, a Maryland
corporation and predecessor to the Company ("Griffith
Maryland"), and Hessick, Inc.
[e]2.2 Asset Purchase Agreement dated October 3, 1991 between
Carl King and Calotex Delaware, Inc.
[g]2.3 Asset Purchase Agreement dated April 23, 1993 between
Griffith Maryland and Steuart Petroleum Company and
Steuart Investment Company.
[i]2.4 Agreement for Merger dated as of August 26, 1994 among
Griffith Maryland, Griffith Holdings, Inc. ("GHI") and
ABC Acquisition Corp. ("ABC") (the "Merger Agreement").
[i]2.5 First Amendment, dated as of October 28, 1994, to
Merger Agreement.
[i]2.6 Second Amendment, dated as of November 18, 1994, to
Merger Agreement.
[i]2.7 Third Amendment, dated as of December 12, 1994, to
Merger Agreement.
[i]2.8 Agreement and Plan of Merger dated as of December 15,
1994 among Griffith Maryland and Andrew One Corp.
[i]3.1 Certificate of Incorporation of Griffith Holdings, Inc.
[i]3.2 Certificate of Amendment to the Certificate of
Incorporation of Griffith Holdings, Inc., changing its
name to Andrew One Corp., dated August 23, 1994.
[i]3.3 Certificate of Merger of Griffith Maryland with and
into Andrew One Corp. and changing the name of Andrew
One Corp. to Griffith Consumers Company, dated December
15, 1994.
[i]3.4 Certificate of Incorporation of CKC Corporation.
31
<PAGE>
[i]3.5 Certificate of Amendment to Certificate of
Incorporation of CKC Corporation, changing its name to
Carl King, Inc., dated January 5, 1987.
[i]3.6 Articles of Incorporation of Frederick Terminals, Inc.
[i]3.7 By-laws of the Company.
[i]3.8 By-laws of Carl King, Inc.
[i]3.9 By-laws of Frederick Terminals, Inc.
[i]4.1 Indenture dated as of December 15, 1994 among the
Company, Carl King, Frederick Terminals and NationsBank
Trust Company of New York, as Trustee (including form
of 141/2% Senior Subordinated Notes due 2004).
[i]4.2 Purchase Agreement dated as of December 12, 1994 among
GHI, Andrew One Corp. and Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ").
[i]4.3 A/B Exchange Registration Rights Agreement dated as of
December 15, 1994 among the Company, Carl King,
Frederick Terminals and DLJ.
[j]4.4 Form of Letter Agreement dated December 15, 1994 among
the Company, Sun Life Insurance Company of America,
John Hancock Mutual Life Insurance Co., The Lincoln
National Life Insurance Company and Pecks Management
Partners.
[i]4.5 Third Amended and Restated Revolving Credit and Term
Loan Agreement dated as of December 15, 1994 among the
Company, Carl King, and certain lending institutions,
with The First National Bank of Boston, as Agent (the
"Credit Agreement").
[i]4.6 Fourth Amended and Restated Revolving Credit Note, in
the original principal amount of $9,500,000, dated as
of December 15, 1994, made by the Company and Carl
King in favor of The First National Bank of Boston.
[i]4.7 Fourth Amended and Restated Revolving Credit Note, in
the original principal amount of $2,500,000, dated as
of December 15, 1994, made by the Company and Carl
King in favor of The Riggs National Bank of Washington,
D.C.
[i]4.8 Term Note A dated as of December 15, 1994 made by the
Company and Carl King in favor of each of Term Loan A
lenders under the Credit Agreement.
[i]4.9 Term Note B dated as of December 15, 1994 made by the
Company and Carl King in favor of each of the Term Loan
B lenders under the Credit Agreement.
[i]4.10 Guaranty dated as of December 15, 1994 by Frederick
Terminals in favor of the lending institutions party to
the Credit Agreement and The First National Bank of
Boston, as Agent.
[i]4.11 Security Agreement dated as of December 15, 1994 among
the Company, Carl King and The First National Bank of
Boston, as Agent for the lending institutions party to
the Credit Agreement.
[i]4.12 Security Agreement dated as of December 15, 1994 among
Frederick Terminals and The First National Bank of
Boston, as Agent for the lending institutions party to
the Credit Agreement.
[i]4.13 Second Amended and Restated Stock Pledge Agreement
dated as of December 15, 1994 among the Company and The
First National Bank of Boston, as Agent for the lending
institutions party to the Credit Agreement.
[k]4.14 Amendment No. 1 dated as of March 15, 1995, to the
Third Amended and Restated Revolving Credit and Loan
Agreement dated as of December 15, 1994 among the
Company, King, and certain lending institutions, with
The First National Bank of Boston as Agent.
[k]4.15 Amendment No. 1 dated as of March 15, 1995, to
Indenture dated December 15, 1994, among the Company,
King, Frederick Terminals and NationsBank Trust Company
of New York, as Trustee.
32
<PAGE>
[n]4.16 Amendment No. 2 dated as of August 11, 1995, to the
Third Amended and Restated Revolving Credit and Loan
Agreement dated as of December 15, 1994, among the
Company, King, and certain lending institutions, with
The First National Bank of Boston as Agent.
[p]4.17 Amendment No. 3 dated as of January 5, 1996 to the
Third Amended and Restated Revolving Credit and
Agreement dated as of December 15, 1994 among Griffith,
Carl King, Inc. Shore Stop Corporation and certain
lending institutions, with the First National Bank of
Boston as Agent.
[p]4.18 Fourth Amendedand Restated Revolving Credit and Term
Loan Agreement dated as of July 8, 1996 among Griffith,
Carl King, Inc. And certain lending institutions, with
the First National Bank of Boston as Agent.
[p]4.19 Second Supplemental Indenture, dated as of June 30,
1996 to Indenture dated as of December 15, 1994 among
the Company, King, Frederick Terminals and the Bank of
New York as Successor Trustee.
[q]4.20 First Amendment to Fourth Amended and Restated
Revolving Credit and Term Loan Agreement dated as of
December 31, 1996 among the Company, King, Frederick
Terminals and the Bank of New York as Successor
Trustees
4.21* Second Amendment to Fourth Amended and Restated
Revolving Credit and Term Loan Agreement dated as of
March 31, 1997 among the Company, King, Frederick
Terminals and the Bank of New York as Successor
Trustees.
4.22* Third Amendment to Fourth Amended and Restated
Revolving Credit and Term Loan Agreement dated as of
August 29, 1997 among the Company, King, Frederick
Terminals and the Bank of New York as Successor
Trustees.
[j]5.1 Legal Opinion of Akin, Gump, Strauss, Hauer & Feld,
L.L.P. concerning the legality of the New Notes.
[a]10.1 Purchase Agreement dated June 30, 1986 between Griffith
Maryland and Griffith Consumers Leasing Partnership.
[b]10.2 Lease dated December 30, 1986 between Carl King and
CKC.
[d]10.3 Product Sales Agreement between Mobil Oil Company and
Carl King, Inc. dated April 15, 1988.
[d]10.4 Product Sales Agreement between Mobil Oil Company and
Griffith Maryland dated May 29, 1990.
[f]10.5 Product Sales Agreement between Star Enterprise and
Carl King, Inc. dated December 6, 1991.
[f]10.6 Non-compete Agreement dated January 2, 1992 between
Griffith Maryland and Walter J. Meighan.
[g]10.7 Lease dated June 9, 1993 between Griffith Maryland and
Steuart Petroleum Company.
[g]10.8 Non-compete Agreement dated June 9, 1993 between
Griffith Maryland and Steuart Investment Company.
[g]10.9 Non-compete Agreement dated June 9, 1993 between
Griffith Maryland and Steuart Petroleum Company.
[g]10.10 Non-compete Agreement dated June 9, 1993 between
Griffith Maryland and Leonard P. Steuart, II and Guy T.
Steuart, II.
[h]10.11 Non-compete Agreement dated July 1, 1993 between
Griffith Maryland and Rockville Fuel and Feed Company.
[h]10.12 Non-compete Agreement dated July 1, 1993 between
Griffith Maryland and James D. Ward.
[h]10.13 Non-compete Agreement dated August 2, 1993 between
Griffith Maryland and Frederick Petroleum Company.
[h]10.14 Non-compete Agreement dated August 2, 1993 between
Griffith Maryland and DeWalt J. Willard, Jr.
33
<PAGE>
[h]10.15 Non-compete Agreement dated March 21, 1994 between
Griffith Maryland and George G. Brown.
[i]10.16 Agreement with Shareholders dated as of August 26, 1994
among Certain Shareholders of Griffith Maryland, GHI
and ABC.
[i]10.17 Consulting, Noncompetition and Indemnity Agreement
dated as of August 26, 1994 among Richard Slifka,
Alfred A. Slifka, GHI and ABC.
[i]10.18 Letter Agreement dated as of October 28, 1994 among
Richard Slifka, Alfred A. Slifka, GHI and ABC regarding
Consulting, Noncompetition and Indemnity Agreement
dated as of August 26, 1994.
[i]10.19 Consulting and Noncompetition Agreement dated as of
August 26, 1994 among Thomas A. McManmon, GHI and ABC.
[i]10.20 Noncompetition Agreement dated as of August 26, 1994
among Global Petroleum Co., GHI and ABC.
[i]10.21 License Agreement dated as of December 15, 1994 among
Global Petroleum Corp., the Company and Carl King.
[i]10.22 Advisory Agreement dated as of December 15, 1994 among
First Chartwell Investments Inc., the Company, GHI, ABC
and Carl King.
[i]10.23 Management Agreement dated as of December 15, 1994
among Chartwell Investments Inc., the Company and Carl
King.
[i]10.24 Consulting Agreement dated as of June 15, 1994 among
BJL Holdings, LLC, GHI and ABC.
[i]10.25 Consulting Agreement dated as of December 15, 1994
among Walter J. Meighan, GHI and the Company.
[i]10.26 Employment Agreement dated as of December 15, 1994
among the Company and Todd R. Berman.
[i]10.27 Employment Agreement dated as of December 15, 1994
among the Company and Michael S. Shein.
[i]10.28 Employment Agreement dated as of December 15, 1994
among the Company and Howard B. Schlosberg.
[i]10.29 Employment Agreement dated as of December 15, 1994
among the Company and Bruce W. King.
[i]10.30 Employment Agreement dated as of December 15, 1994
among the Company and Raymond R. McKenzie, Jr..
[i]10.31 Executive Nonqualified Stock Option Plan dated as of
December 15, 1994.
[i]10.32 Grant and Stock Option Agreements dated as of December
15, 1994 among GHI and each of Howard B. Schlosberg,
Bruce W. King and Raymond R. McKenzie, Jr., granting
1/3 of the options to which they are entitled under the
Executive Nonqualified Stock Option Plan.
[i]10.33 Grant and Stock Option Agreements dated as of December
15, 1994 among GHI and each of Howard B. Schlosberg,
Raymond R. McKenzie, Jr. and Bruce W. King, granting
2/3 of the options to which they are entitled under the
Executive Nonqualified Stock Option Plan.
[i]10.34 Amended and Restated Master Lease Agreement dated as of
December 15, 1994 among Griffith Consumers Leasing
Partnership and the Company.
[i]10.35 Letter Agreement dated as of December 14, 1994 among
the Company, The Travelers Insurance Company, The
Travelers Indemnity Company, The Travelers Life and
Annuity Company and The Phoenix Insurance Company.
[i]10.36 Indemnification Agreements between the Company and each
of the directors and officers of the Company, Carl King
and Frederick Terminals.
[i]10.37 Guaranty dated as of September 15, 1994 by Duncan O.
Thomas in favor of Griffith Maryland.
34
<PAGE>
[j]10.38 Independent Contractors Nonqualified Stock Option Plan.
[j]10.39 Form of Grant and Stock Option Agreements among GHI and
each of Simon Ramo, Robert Lindsay and William Spencer.
[n]10.40 Non-compete Agreement dated July 26, 1994 between the
Company and Reed Oil.
[l]10.41 Indemnity Agreement dated December 20, 1995 by and
between Griffith and Neil H. McLaurin III
[m]10.42 Asset Purchase and Sale Agreement, dated as of April
23, 1996, by and among Griffith, Regent Investments,
Inc., Delaware Investments, Inc. And Mid-Atlantic
Investments, Inc.
[p]10.43 Employment Agreement, dated October 18, 1995 between
Griffith and Terrence P. Sullivan
[p]10.44 Consulting Agreement, dated December 15, 1995 among
Griffith, GHI and Walter J. Meighan.
[j]12 Computation of Ratio of Earnings to Fixed Charges.
[n]16 Letter from Ernst & Young LLP with respect to
disclosure in Annual Report on Form 10-K (1995)
relating to change in accountants.
[i]21 Subsidiaries of the Company.
[i]25 Form T-1 Statement of Eligibility and Qualification
under the Trust Indenture Act of 1939 of NationsBank
Trust Company of New York relating to the New Notes
(bound separately).
27* Financial Data Schedule
[i]99.1 Letter of Transmittal.
[i]99.2 Notice of Guaranteed Delivery.
_______________________
* Filed herewith.
[a] Incorporated by reference to Exhibits to Registration
Statement No. 0-16359 filed by Griffith Maryland.
[b] Incorporated by reference to Exhibits to Griffith
Maryland's Report of Form 10-K for the year ended June
30, 1987.
[c] Incorporated by reference to Exhibits to Griffith
Maryland's Report on form 8-K dated December 22, 1989
and Form 8-K, Amended dated February 24, 1990.
[d] Incorporated by reference to Exhibits to Griffith
Maryland's Report on Form 10-K for the year ended June
30, 1990.
[e] Incorporated by reference to Exhibits to Griffith
Maryland's Report on Form 8-K dated December 18, 1991
and filed December 19, 1991.
[f] Incorporated by reference to Exhibits to Griffith
Maryland's Report on Form 10-K for the year ended June
30, 1992.
[g] Incorporated by reference to Exhibits to Griffith
Maryland's Report on Form 8-K dated June 9, 1993 and
filed June 24, 1993.
[h] Incorporated by reference to Exhibits to Griffith
Maryland's Report on Form 10-K for the year ended June
30, 1994.
35
<PAGE>
[i] Incorporated by reference to Exhibits to the Company's
Registration Statement No. 33-88526 on Form S-4 dated
January 13, 1995.
[j] Incorporated by reference to Exhibits to the Company's
Amendment No. 1 to the Registration Statement No. 33-88526
on Form S-4 dated March 31, 1995.
[k] Incorporated by reference to Exhibits to the Company's
Report on Form 10-Q for the Quarter Ended March 31, 1995.
[l] Incorporated by reference to Exhibits to the Company's
Report on Form 10-Q for the Quarter Ended December 31, 1995.
[m] Incorpoated by reference to Exhibits to the Company's Report
on Form 8-K dated May 3, 1996.
[n] Incorporated by reference to Exhibits to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended June
30, 1995.
[o] Incorporated by reference to Exhibits to the Company's
Current Report on Form 8-K dated May 3, 1996.
[p] Incorporated by reference to Exhibits to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended June
30, 1996.
[q] Incorporated by reference to Exhibits to the Company's
Report on Form 10-Q for the Quarter Ended Decemberr 31,
1996.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company in the
fourth quarter of 1997.
36
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, each registrant has duly caused this report to
be signed on its behalf by the undersigned, each thereunto duly
authorized on the 29th day of September, 1997.
GRIFFITH CONSUMERS COMPANY
By: /s/ Raymond R. McKenzie
----------------------------
Name: Raymond R. McKenzie
Title: Vice President, Secretary, and
Treasurer
CARL KING, INC.
By: /s/ Raymond R. McKenzie
----------------------------
: Raymond R. McKenzie
Title: Vice President
FREDERICK TERMINALS, INC.
By: /s/ Raymond R. McKenzie
-----------------------------
: Raymond R. McKenzie
Title: Secretary and Treasurer
37
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrants and in the capacities and on the dates indicated.
GRIFFITH CONSUMERS COMPANY
Name Title Date
/s/ Todd R. Berman Chairman of the Board of September 29, 1997
- ---------------------------- Directors
Todd R. Berman
/s/ Howard B. Schlosberg President and Director September 29, 1997
- ---------------------------- (Principal Executive Officer)
Howard B. Schlosberg
/s/ Michael S. Shein Vice President and Director September 29, 1997
- ----------------------------
Michael S. Shein
/s/ Raymond R. McKenzie, Jr. Vice President, Secretary and September 29, 1997
- ---------------------------- Treasurer (Principal Financial
Raymond R. McKenzie, Jr. and Accounting Officer)
/s/ Barry J. Lassman Director September 29, 1997
- ----------------------------
Barry J. Lassman
/s/Walter J. Meighan Director September 29, 1997
- ----------------------------
Walter J. Meighan
/s/Neil H. McLaurin Director September 29, 1997
- ----------------------------
Neil H. McLaurin
38
<PAGE>
CARL KING, INC.
Name Title Date
/s/ Todd R. Berman Chairman of the Board September 29, 1997
- ---------------------------- of Directors
Todd R. Berman
/s/ Gregory A. Stutxman President September 29, 1997
- ----------------------------
Gregory A. Stutzman
/s/ Raymond R. McKenzie, Jr. Vice President(Principal September 29, 1997
- ---------------------------- Financial and Accounting
Raymond R. McKenzie, Jr. Officer)
/s/ Michael S. Shein Vice President and Director September 29, 1997
- ----------------------------
Michael S. Shein
/s/Howard B. Schlosberg Vice President and Director September 29, 1997
- ----------------------------
Howard B. Schlosberg
FREDERICK TERMINALS, INC.
Name Title Date
/s/ Todd R. Berman Chairman of the Board of September 29, 1997
- ---------------------------- Directors
Todd R. Berman
/s/ Howard B. Schlosberg President and Director September 29, 1997
- ---------------------------- (Principal Executive Officer)
Howard B. Schlosberg
/s/ Michael S. Shein Vice President and Director September 29, 1997
- ----------------------------
Michael S. Shein
/s/ Raymond R. McKenzie, Jr. Secretary, and Director September 29, 1997
- ---------------------------- (Principal Financial and
Raymond R. McKenzie, Jr. Accounting Officer)
39
<PAGE>
Exhibit # Description
4.21 Second Amendment to the Fourth Amended and Restated Revolving
Credit and Loan Agreement dated as of March 31, 1997, among the
Company, King, and certain lending institutions, with The First
National Bank of Boston as Agent.
4.22 Third Amendment to the Fourth Amended and Restated Revolving
Credit and Loan Agreement dated as of August 29, 1997, among the
Company, King, and certain lending institutions, with The First
National Bank of Boston as Agent. .
40
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of
Griffith Consumers Company:
We have audited the accompanying consolidated balance sheets of Griffith
Consumers Company (a Delaware corporation) and subsidiaries ("Successor") as of
June 30, 1997, and 1996, and the related consolidated statements of operations,
changes in shareholder's equity and cash flows for the years ended June 30, 1997
and 1996, and for the period from December 16, 1994 through June 30, 1995.
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 Griffith Consumers Company and
subsidiaries as of June 30, 1997 and 1996, and the results of their operations
and their cash flows for the years ended June 30, 1997 and 1996, and for the
period from December 16, 1994 through June 30, 1995, in conformity with
generally accepted accounting principles.
/S/ ARTHUR ANDERSEN LLP
Washington, DC
September 10, 1997
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTS
To the Shareholders of
Griffith Consumers Company:
We have audited the accompanying consolidated statements of operations,
changers in shareholder's equity and cash flows of Griffith Consumers Company
and subsidiaries ("Predecessor") for the period July 1, 1994 through December
15, 1994. 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 audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Griffith
Consumers Company and subsidiaries for the period July 1, 1994 through
December 15, 1994, in conformity with generally accepted accounting
principles.
/S/ ARTHUR ANDERSEN LLP
New York, New York
September 18, 1996
F-2
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
ASSETS: 1997 1996
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
CURRENT ASSETS
CASH............................................................................. $ 3,212,107 $ 1,687,443
ACCOUNTS AND NOTES RECEIVABLE, LESS ALLOWANCE FOR BAD DEBTS...................... 11,182,949 11,813,211
PETROLEUM PRODUCTS INVENTORY..................................................... 1,704,747 1,228,347
REPAIR PARTS AND SUNDRY INVENTORY................................................ 3,294,711 1,662,048
PREPAID EXPENSES AND OTHER....................................................... 1,336,380 1,320,055
INCOME TAXES RECEIVABLE.......................................................... 95,603 --
OTHER TAXES RECEIVABLE........................................................... 906,050 --
DEFERRED TAX ASSET............................................................... 1,399,424 --
-------------- --------------
TOTAL CURRENT ASSETS............................................................. 23,131,971 17,711,104
PROPERTY, PLANT AND EQUIPMENT
LAND............................................................................. $ 5,622,871 $ 5,533,870
BUILDINGS........................................................................ 3,979,731 1,844,358
MACHINERY AND EQUIPMENT.......................................................... 25,032,748 16,152,930
-------------- --------------
34,635,350 23,531,158
LESS: ACCUMULATED DEPRECIATION................................................... 11,523,797 6,019,263
-------------- --------------
23,111,553 17,511,895
INTANGIBLES--NOTE C
CUSTOMER AND SERVICE ACCOUNTS.................................................... 39,842,186 37,063,186
COVENANTS NOT TO COMPETE......................................................... 3,821,001 2,936,824
GOODWILL......................................................................... 48,294,314 39,000,867
OTHER INTANGIBLES................................................................ 868,869 836,344
-------------- --------------
92,826,370 79,837,221
LESS: ACCUMULATED AMORTIZATION................................................... 18,863,920 11,304,362
-------------- --------------
73,962,450 68,532,859
LONG-TERM NOTES RECEIVABLE....................................................... 990,694 1,054,816
DEFERRED DEBT COSTS & OTHER...................................................... 4,080,416 3,759,756
-------------- --------------
TOTAL ASSETS..................................................................... $ 125,277,084 $ 108,570,430
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
LIABILITIES AND SHAREHOLDER'S EQUITY: 1997 1996
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
CURRENT LIABILITIES:
ACCOUNTS PAYABLE................................................................. $ 8,708,702 $ 7,581,065
ACCRUED EXPENSES................................................................. 3,680,181 3,560,374
DEFERRED REVENUE................................................................. 3,189,405 2,471,880
INCOME TAXES PAYABLE............................................................. -- 73,103
OTHER TAXES PAYABLE.............................................................. 1,536,084 198,517
CURRENT PORTION OF LONG-TERM DEBT-
NOTE F........................................................................... 5,448,956 4,240,893
-------------- --------------
TOTAL CURRENT LIABILITIES........................................................ 22,563,328 18,125,832
LONG-TERM DEBT, LESS CURRENT PORTION-NOTE F...................................... 85,107,114 65,350,995
DEFERRED REVENUE................................................................. 1,089,414 --
DEFERRED INCOME TAXES............................................................ 5,882,534 7,993,849
POST-RETIREMENT EMPLOYEE BENEFITS AND OTHER...................................... 1,523,830 1,541,330
-------------- --------------
TOTAL LIABILITIES................................................................ 116,166,220 93,012,006
SHAREHOLDER'S EQUITY
COMMON STOCK, par value $.01 per share, 1,000 shares, authorized, issued and
outstanding.................................................................... 10 10
ADDITIONAL PAID-IN CAPITAL....................................................... 20,691,314 20,691,314
RETAINED DEFICIT................................................................. (11,580,460) (5,132,900)
-------------- --------------
TOTAL SHAREHOLDER'S EQUITY....................................................... 9,110,864 15,558,424
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY....................................... $ 125,277,084 $ 108,570,430
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
---------------------------------------------- -------------
JUL 1, 1996 - JUL 1, 1995 - DEC 16, 1994 - JUL 1, 1994 -
JUN 30, 1997 JUNE 30, 1996 JUNE 30, 1995 DEC 15, 1994
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
SALES FROM PETROLEUM PRODUCTS..................... $ 228,848,461 $ 178,834,396 $ 94,579,313 $ 65,437,258
SERVICE, EQUIPMENT, AND OTHER SALES............... 48,268,872 19,182,816 9,535,569 8,939,201
-------------- -------------- ------------- -------------
TOTAL SALES..................................... 277,117,333 198,017,212 104,114,882 74,376,459
COST OF SALES..................................... 222,278,093 154,157,555 80,504,645 59,739,106
-------------- -------------- ------------- -------------
GROSS PROFIT.................................... 54,839,240 43,859,657 23,610,237 14,637,353
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES..... 42,384,649 29,032,933 15,358,839 12,866,611
DEPRECIATION EXPENSE.............................. 5,671,562 4,124,316 2,136,576 1,304,698
AMORTIZATION EXPENSE.............................. 8,089,904 7,065,138 3,970,889 2,013,836
-------------- -------------- ------------- -------------
OPERATING (LOSS)INCOME.......................... (1,306,875) 3,637,270 2,143,933 (1,547,792)
INTEREST EXPENSE.................................. 10,711,022 9,398,476 5,054,455 1,239,657
OTHER INCOME...................................... 1,920,241 668,001 850,722 199,747
-------------- -------------- ------------- -------------
LOSS BEFORE INCOME TAX.......................... (10,097,656) (5,093,205) (2,059,800) (2,587,702)
INCOME TAX BENEFIT................................ (3,650,096) (1,428,073) (592,032) (1,004,455)
-------------- -------------- ------------- -------------
NET LOSS........................................ $ (6,447,560) $ (3,665,132) $ (1,467,768) (1,583,247)
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
ADDITIONAL RETAINED TOTAL
COMMON PAID-IN EARNINGS SHAREHOLDER'S
PREDECESSOR SHARES STOCK CAPITAL (DEFICIT) EQUITY
- ------------------------------------------ ----------- --------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance June 30, 1994..................... 2,355,000 $ 23,550 $ 2,849,407 $ 4,962,499 $ 7,835,456
Issuance Of Stock......................... 5,000 50 24,950 -- 25,000
Net Loss.................................. -- -- -- (1,583,247) (1,583,247)
----------- --------- ------------- -------------- -------------
Balance December 15, 1994................. 2,360,000 23,600 2,874,357 3,379,252 6,277,209
Stock Redemption.......................... (2,360,000) (23,600) (2,874,357) (3,379,252) (6,277,209)
----------- --------- ------------- -------------- -------------
Balance December 16, 1994................. -- $ -- $ -- $ -- $ --
----------- --------- ------------- -------------- -------------
----------- --------- ------------- -------------- -------------
SUCCESSOR
Capital Contributions from Parent......... 1,000 $ 10 $ 20,691,314 $ -- $ 20,691,324
Net Loss.................................. -- -- -- (1,467,768) (1,467,768)
----------- --------- ------------- -------------- -------------
Balance June 30, 1995..................... 1,000 10 20,691,314 (1,467,768) 19,223,556
Net Loss.................................. -- -- -- (3,665,132) (3,665,132)
----------- --------- ------------- -------------- -------------
Balance June 30, 1996..................... 1,000 10 20,691,314 (5,132,900) 15,558,424
Net Loss.................................. -- -- -- (6,447,560) (6,447,560)
----------- --------- ------------- -------------- -------------
Balance June 30, 1997..................... 1,000 $ 10 $ 20,691,314 ($ 11,580,460) $ 9,110,864
----------- --------- ------------- -------------- -------------
----------- --------- ------------- -------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
--------------------------------------------------------- -----------------
YEAR ENDED YEAR ENDED DECEMBER 16, 1994 JULY 1, 1994
JUNE 30, JUNE 30, THROUGH THROUGH
1997 1996 JUNE 30, 1995 DECEMBER 15, 1994
----------------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Operating activities
Net loss.......................... ($ 6,447,560) ($ 3,665,132) ($ 1,467,768) ($ 1,583,247)
Adjustments to reconcile net loss
to net cash provided by (used
in) operating activities:
Depreciation.................... 5,671,562 4,124,316 2,136,576 1,304,698
Amortization.................... 8,089,904 7,065,138 3,970,889 2,013,836
Provision for bad debts......... 322,118 336,000 96,000 92,000
Amortization of bond discount... 182,107 182,108 72,264 --
Gain on sale of property, plant,
equipment, and intangibles..... (88,507) (137,772) (6,498) (24,087)
Changes in operating assets and
liabilities
Accounts and notes
receivable................... 372,266 (3,555,567) 1,439,016 (1,571,994)
Inventory..................... (2,109,063) (131,640) 43,919 (175,887)
Prepaid expenses and other.... 197,675 366,271 951,694 (1,841,787)
Refundable Income taxes, net.. (2,474,180) 1,257,483 55,411 (1,234,890)
Other assets.................. 664,022 (151,688) (1,990,701) (771,997)
Accounts payable.............. 1,127,637 1,530,219 (2,770,914) 1,319,125
Accrued expenses.............. 119,807 1,415,755 254,306 (283,208)
Deferred revenue.............. 1,806,939 (779,158) (1,615,715) 1,822,452
Other liabilities............. (791,248) (2,233,090) (238,900) 392,473
------------ ------------ --------------- -------------
Net cash provided by (used in)
operating activities............ 6,643,479 5,623,243 929,579 (542,513)
Investing activities
Purchases of property, plant, and
equipment....................... (5,309,677) (2,376,852) (2,061,981) (1,497,243)
Purchases of intangible assets... -- -- -- (750,000)
Proceeds from sale of property,
plant, and equipment, and
intangible assets............... 364,944 767,283 89,431 125,545
Acquisition of business.......... (18,906,157) -- (76,650) (142,000)
Purchase of predecessor's stock
per Merger...................... -- -- (54,280,000) --
Acquisition costs................ (2,050,000) -- (3,674,391) --
------------ ------------- --------------- -------------
Net cash used in investing
activities...................... (25,900,890) (1,609,569) (60,003,591) (2,263,698)
Financing activities
Proceeds from (payment of)
line of credit.................. 3,800,000 800,000 (1,850,000) 1,850,000
Proceeds from bond debentures
issuance........................ -- -- 31,196,612 --
Bond issue costs................. -- -- (1,473,000) --
Proceeds from term loans......... 21,850,000 -- 40,275,853 --
Prepaid interest................. -- -- (1,170,000) --
Payments on long-term debt....... (4,867,925) (3,929,316) (27,793,692) (1,760,875)
Capital Contributions from
Parents......................... -- -- 20,691,314 --
Issuance of capital stock........ -- -- 10 25,000
------------ ------------- --------------- -------------
Net cash provided by (used in)
financing activities............ 20,782,075 (3,129,316) 59,877,097 114,125
------------ ------------- --------------- -------------
Increase (Decrease) in cash...... 1,524,664 884,358 803,085 (2,692,086)
Cash at beginning of period...... 1,687,443 803,085 0 2,692,086
------------ ------------- --------------- -------------
Cash at end of period............. $ 3,212,107 $ 1,687,443 $ 803,085 $ 0
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
<PAGE>
Griffith Consumers Company And Subsidiaries
June 30, 1997
Notes to Consolidated Financial Statements
Note A--Introduction
On December 15, 1994, the transaction contemplated by the merger agreement
("Merger Agreement") dated August 26, 1994 between Griffith Consumers Company
("Griffith" and together with its wholly-owned subsidiaries, the "Company") and
Griffith Holdings, Inc. ("GHI"), a corporation previously unrelated to the
Company, closed, whereby GHI acquired all of the Company's 2,360,000 outstanding
shares of common stock (the "Common Stock") for $23.00 cash per share. Pursuant
to the Merger Agreement, ABC Acquisition Corp. ("ABC"), a wholly owned
subsidiary of GHI, merged with and into the Company, and each share of the
Company's common stock was converted into the right to receive $23.00 in cash
(the "1994 Acquisition"). As a result of the Acquisition, the Company became a
wholly owned subsidiary of GHI.
The 1994 Acquisition has been accounted for under the purchase method of
accounting as of December 16, 1994. Accordingly, GHI has allocated its total
purchase cost of approximately $54,280,000 to the assets and liabilities of the
Company based upon the fair value of these assets and liabilities. The fair
values assigned on the December 16, 1994 balance sheet were adjusted when
valuation studies were completed. Because of this purchase price allocation,
the accompanying consolidated financial statements of the Company for the
periods July 1,1996 through June 30, 1997, July 1, 1995 through June 30, 1996
and December 16, 1994 through June 30, 1995 ("the Successor") are not directly
comparable to the consolidated financial statements of the Company prior to
December 16, 1994 ("the Predecessor").
On July 11, 1996, the Company acquired certain assets used in the operations of
a chain of convenience stores and retail gasoline stations within the states of
Maryland, Delaware, and Virginia under the "Shore Stop" trade name and a dealer
petroleum sales business at two facilities located in Virginia and Maryland
("the Acquisition") from Regent Investments, Inc., Delaware Inc., and
Mid-Atlantic Investments, Inc. each a Virginia corporation (collectively, the
"Sellers"). 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 (the "Regent Note") secured by first priority
mortgages or deeds of trust on certain stores. In addition, the Company also
assumed $350,000 of debt. The acquisition was financed through an amendment and
restatement of the Company's prior credit agreement ("Prior Credit Agreement",
and as amended and restated, "Credit Agreement"). See Note F -- Debt
F-8
<PAGE>
Note B--Business
The Company is engaged principally in the retail sale of home heating oil, the
retail sale of gasoline through Company-owned gas stations, the sale of gasoline
to independent dealer gas stations and the sale of other petroleum products.
The Company is also engaged in the sale and service of oil heating and
air-conditioning equipment.
Note C--Significant Accounting Policies
Principles of Consolidation: The subsidiaries' accounts have been included in
the consolidated financial statements. All significant intercompany accounts and
transactions have been eliminated.
Revenue Recognition: Sales are recognized as deliveries are made or services
are performed. Deferred revenue represents collections from customers who are
on a periodic payment plan and who have made payments in excess of deliveries or
services received and payments received from major petroleum suppliers in
exchange for rebranding some of the company owned stations. Deferred revenue
related to the station rebranding agreements is being amortized over the life of
the related contracts.
Cash: Outstanding checks in excess of the cash balance of $972,000 and $763,000
are included in accounts payable balance at at June 30, 1997 and 1996,
respectively.
Allowance for Bad Debts: A provision for bad debts is provided when the
collection of the account is doubtful.
Inventories: Inventories are valued at the lower of average cost or market.
Property, Plant and Equipment: Property, plant and equipment are recorded at
cost. Depreciation is recorded using the straight-line method over the
following useful lives:
Buildings 20 years
Dealer equipment and station improvements 5-10 years
Machinery and equipment 3- 5 years
As of December 16, 1994, the remaining useful lives were used to depreciate
property, plant and equipment revalued under purchase accounting.
Maintenance and repairs are expensed as incurred; significant renewals and
betterments are capitalized. Maintenance and repair expense for the years ended
June 30, 1997 and June 30, 1996, and the periods December 16, 1994 through June
30, 1995 and July 1, 1994 through December 15, 1994 was $1,958,417, $1,159,137,
F-9
<PAGE>
$650,118, and $643,655, respectively.
Intangible Assets: Customer and service accounts obtained through acquisitions
are amortized over their estimated useful lives of eight years. Other
identified intangibles are amortized over periods not exceeding ten years.
Covenants not to compete are amortized over the period stated in the agreements.
Goodwill is being amortized over a thirty year period except the goodwill
related to the Acquisition which is amortized over 15 years. All intangible
assets are amortized using the straight-line method. The Company adopted
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
(SFAS No.121). This statement establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangibles to be disposed of. SFAS No. 121 requires these
assets to be reviewed for possible impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. The
Company evaluates the potential impairment of intangibles and other long-lived
assets by comparing the related undiscounted cash flow from operations to the
net book value of such assets. Any impairment would be the excess of net book
value over discounted future cash flow from operations. For these purposes, the
related cash flow is the earnings before taxes, depreciation, amortization, and
interest attributable to the intangibles and other long-lived assets whose
impairment is being assessed.
Burner Service Contracts: A contingent liability is provided for labor and
parts given free to customers during the years in which no revenue is received
from the customer.
Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures About Fair Value of Financial Instruments,"
requires disclosures of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present values or other valuation
techniques. Those techniques are significantly affected by the assumptions made
by management, including discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be substantiated by
comparison to independent markets and, in many cases , could not be realized in
immediate settlement of the instrument.
The carrying amount reported in the June 30, 1997 balance sheet approximates the
fair value for cash, accounts receivable and accounts payable. The fair value of
the Company's fixed rate notes payable are estimated using a discounted cash
flow analysis based on rates of 15%-16% which would generate fair market values
ranging
F-10
<PAGE>
between $29,565,000 and $29,185,000.
Reclassifications: Certain amounts in the consolidated balance sheet for the
year ended June 30, 1996 have been reclassified to conform to the June 30, 1997
presentations. Additionally, certain amounts in the consolidated statements of
operations, changes in shareholder's equity and statements of cash flows for the
periods July 1, 1994 through December 15, 1994 and December 16, 1994 through
June 30, 1995, and the year ended June 30, 1996 have been reclassified to
conform with the June 30, 1997 presentation.
Debt Issuance Costs: The costs associated with the issuance of debt are
amortized utilizing the effective interest method over the term of the
underlying debt instrument. The terms of the Company's existing debt, incurred
in December 1994 and July 1996, range from six to ten years.
Income Taxes: Deferred income taxes are provided for the temporary differences
between the financial statements and the tax basis of assets and liabilities,
except for goodwill in connection with the Acquisition, which is not deductible
for tax purposes. Deferred income taxes relate primarily to depreciation
associated with property, plant, and equipment, allowances for bad debt and
various accruals of salaries and related benefits.
Use of Estimates : The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-11
<PAGE>
Note D--1997 Acquisitions--Allocation of Purchase Price
In addition to the Shore Stop Acquisition, the Company consummated another 10
acquisitions which involved the purchase of certain assets of various retail
heating oil companies and gasoline stations during fiscal year 1997. These
acquisitions and the Shore Stop Acquisition were accounted for using the
purchase method of accounting and, therefore, the financial statements include
the results of operations of each acquired company from its acquisition date.
There were no acquisitions during fiscal year 1996. The cost of the acquisitions
in the current fiscal year was allocated as follows:
Year Ended
June 30, 1997
Shore Stop Other
----------------------------
Customer and service
accounts $ 2,400,000 $ 404,000
Covenants not to compete 200,000 150,000
Other Intangibles,
primarily Goodwill 8,980,000 534,000
Property, Plant and Equipment 5,770,000 468,000
----------- -------------
$17,350,000 $1,556,000
----------- -------------
----------- -------------
Note E--Shore Stop Acquisition
The following condensed presentation of unaudited pro forma
information was prepared to illustrate the estimated effects of the
Shore Stop Acquisition on the Company with the assumption that the
Shore Stop Acquisition occurred at July 1,1995:
(000's)
Twelve Months Ended
June 30,
-----------------------
1997 1996
-----------------------
Pro forma total sales $279,986 $ 281,846
Pro forma net loss (6,444) (1,352)
Note F--Debt
In connection with the 1994 Acquisition, the Company retired the
Predecessor's existing operating line of credit and primary bank term
loan and negotiated a new term loan and operating line of credit with
the Company's primary bank lender (the "Mortgage
F-12
<PAGE>
Notes") on several properties located in Delaware, Maryland and West
Virginia were assumed by the Successor. As of July 8, 1996, in
connection with funding of the Shore Stop Acquisition, the Company
amended and restated the Prior Credit Agreement (as amended and
restated, the "Credit Agreement") to increase the amount of term loan
borrowings outstanding thereunder from $34,450,000 to $54,450,000 and
the amount of revolving credit facility borrowings (including the
maximum drawing amount under outstanding letters of credit) available
from $12,000,000 to $13,000,000. Borrowings under the Credit
Agreement are secured by a first lien on substantially all the assets
of the Company, except those properties located in Delaware, Maryland
and West Virginia securing the Mortgage Notes and those properties
located in Delaware, Maryland, and Virginia securing the Regent Note.
Borrowings under the Credit Agreement are subordinated to the Mortgage
Notes and Regent Note on these properties. As of June 30, 1997, the
amount of the revolving credit facility borrowings outstanding was
$6,400,000 and the maximum drawing amount under outstanding letters of
credit was $3,631,000. During fiscal year 1997, the Company has paid
$4,486,000 of interest and $4,600,000 of principal on the term loan
under the Credit Agreement.
The Credit Agreement contains various provisions regarding events of
default and restrictive covenants, including, among others,
restrictions on new liens and indebtedness, restrictions on the sale
of assets, restrictions on mergers and consolidations, and a
prohibition on the payment of dividends. In addition, at the end of
each quarter and/or fiscal year-end, the Company is required to
maintain a certain cumulative cash flow coverage ratio, minimum
tangible net worth, minimum working capital, specified maximum ratio
of funded debt to earnings before interest, taxes, depreciation and
amortization ("EBITDA") and debt service coverage ratio.
In addition to borrowings under the Prior Credit Agreement, the
Company financed the 1994 Acquisition with $34 million of 14 1/2%
Senior Subordinated Notes due December 15, 2004 (the "Notes").
Interest on the Notes is payable semiannually on June 15 and December
15 of each year. The Notes are subordinated to all existing and
future senior indebtedness of the Company. The Indenture governing
the Notes (the "Indenture") contains certain restrictive covenants and
financial covenants similar to the Credit Agreement.
The Company has amended the Credit Agreement and Indenture on several
occasions, (including its amendment and restatement in connection with
the Shore Stop Acquisition), which among other things, revised certain
financial covenants contained therein. The Company is currently in
compliance with the Credit Agreement and the Indenture, as amended.
Subsequent to year end, the Company amended the agreement. See
Note N -- Subsequent Events.
F-13
<PAGE>
The outstanding balances, due dates and interest rates of debt at June
30, 1997 and 1996 were as follows:
June 30, June 30,
1997 1996 Rate
------------------------------------------
Term loan due December 31, 2000 $16,100,000 $17,200,000 Prime + 1.5%
or Eurodollar
Rate + 2.75%
Term loan due December 31, 2002 $19,000,000 $17,250,000 Prime + 2%
or Eurodollar
Rate + 3.25%
Term loan due December 31, 2003 $14,750,000 --- Prime + 2.25%
or Eurodollar
Rate + 3.5%
Mortgage note due April 5, 2001 $259,351 $324,905 7.75%
Promissory Note due July 11, 2005 $1,500,000 --- 8.0%
Senior Subordinated Notes due
December 15, 2004, net of
unamortized bond discount
of $2,366,312 $31,633,688 $31,451,581 14.5%
Line of Credit due December $6,400,000 $2,600,000 Prime + 1.5%
31, 1998 or Eurodollar
Rate + 2.75%
Other long-term debt due 7.0% through
through 2006 $ 913,031 $765,402 9.5%
----------- ----------
Total debt $90,556,070 $69,591,888
Current portion of
long-term debt ($5,448,956) ($4,240,893)
Long-term debt, less
current portion $ 85,107,114 $65,350,995
------------ ------------
------------ ------------
The term loan interest is payable either quarterly or based on the
maturity of the Eurodollar Rate Loans. The Senior Subordinated Notes
interest is paid semi-annually. All other interest payments are made
monthly.
F-14
<PAGE>
As noted above, the Company's term loan and line of credit are based
on either the Prime rate or Eurodollar rate. The Company decides
whether to use the Eurodollar or Prime rate based on the current
market interest rates during the year.
The prime rate was 8.50% and 8.25% at June 30, 1997 and 1996,
respectively. The average Eurodollar rate at June 30, 1997 and 1996
was 5.63% and 5.5%, respectively.
The Company entered into a interest rate swap covering the term loans
outstanding at January 17, 1996. The amount of the swap coverage is
reduced as payments of principle on the term loan are made. The
interest rate provides a fixed Eurodollar rate of 5.22% for the term.
The fair market value of this swap at June 30, 1997 was $134,527. On
November 5, 1996, the Company entered into another interest rate swap
agreement covering the additional term loan amounts outstanding on
that date. The interest rate provides a fixed Eurodollar rate of 6.2%
for the term of the agreement which expires on December 31, 1999. The
fair market value of this swap at June 30, 1997 was $43,809.
The Company has available lines of credit. The maximum and average
amounts outstanding (including the maximum drawing amount under
Outstanding Letters of Credit)and the maximum available for the fiscal
years are as follows:
Year Ended June 30
1997 1996
-------------------------
Maximum Outstanding $8,000,000 $ 10,800,000
Average Outstanding $2,659,000 $ 2,850,000
Maximum Available $16,000,000 $ 16,000,000
The operating line of credit has a commitment fee of 1/2% per annum on
the unused portion of the available amount. The Company paid $36,012,
$44,281, $15,385, and $13,015 for the years ended June 30, 1997 and
1996 and during the periods December 16, 1994 through June 30, 1995
and during the periods July 1, 1994 through December 15, 1994,
respectively.
The Company paid $10,711,022, $9,398,476, $5,054,455 and $1,239,657 in
interest for the years ended June 30, 1997 and 1996 and during the
periods December 16, 1994 through June 30, 1995 and July 1, 1994
through December 15, 1994, respectively. Principal payments due
during each fiscal year ended June 30 under all loan agreements are as
follows:
1998 $ 5,448,968
1999 11,768,176
2000 6,544,678
2001 8,143,626
2002 8,289,321
Thereafter 50,361,301
-----------
$90,556,070
-----------
-----------
F-15
<PAGE>
Seven letters of credit, totaling $3,631,299, were outstanding at June
30, 1997 which reduce the amounts available under the line of credit.
These letters expire on or before July 31, 1998. Management believes
none of these letters of credit will be called in the future.
Note G--Related Party Transactions
In connection with the change of control in December 1994, the Company
paid certain transaction-related fees and expense reimbursements to
entities owned by certain of the current directors and controlling
shareholders of the Company. Such payments totaled $1,172,360. A
quarterly management fee is also paid to entities owned by certain of
the current directors and controlling shareholders. The Company paid
$300,000 for fiscal years 1997 and 1996.
NOTE H--Income Taxes
The components of income tax expense (benefit) are as follows:
SUCCESSOR PREDECESSOR
----------------------------------- -------------
YEAR ENDED YEAR ENDED DEC 16, 1994- JUL 1, 1994-
JUNE 30, 1997 JUNE 30,1996 JUN 30, 1995 DEC 15, 1994
------------- ------------ ------------- ------------
Federal income taxes
Current $ (61,966) $ 159,438 $ 11,469 $ (807,313)
Deferred (3,381,389) (1,609,321) (605,188) (78,419)
State income taxes (206,741) 21,810 1,687 (118,723)
----------- ----------- ----------- -----------
$(3,650,096) $(1,428,073) $ (592,032) $(1,004,455)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
A reconciliation of the difference between income tax (benefit)
expense at the statutory federal rate and the effective rate is as
follows:
SUCCESSOR PREDECESSOR
------------------------------------------ -------------
YEAR ENDED YEAR ENDED DEC 16, 1994- JUL 1,1994-
JUNE 30,1997 JUN 30, 1996 JUN 30, 1995 DEC 15,1994
------------ ----------- ------------ -----------
Statutory federal rate
(34%) $(3,433,203) $(1,731,690) $ (700,332) $ (879,819)
State income taxes, net
of federal benefit (504,883) (254,660) (102,990) (140,400)
Goodwill-pre acquisition -0- -0- 12,480 12,963
Goodwill-post acquisition 499,980 500,073 193,419 -0-
Other, n et (211,990) 58,204 5,391 2,801
----------- ----------- ----------- -----------
Income tax (benefit)
expense $(3,650,096) $(1,428,073) $ (592,032) $(1,004,455)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
F-16
<PAGE>
The components of deferred taxes are as follows at June 30, 1997:
Deferred tax liabilities:
Depreciation - PP&E $ 443,012
Step-up in assets,
excluding goodwill 7,198,709
----------
Total $7,641,721
Deferred tax assets:
Allowance for bad debts 262,342
Accrued Vacation 109,807
Alternative Minimum Tax 121,900
Deferred Revenue 508,950
Reserve for Liabilities 417,000
Net operating loss carryover 865,282
Warranty reserves 283,082
Other 460,898
----------
Total 3,029,261
----------
Net deferred tax liabilities $4,612,460
----------
----------
Deferred income taxes are provided for the temporary differences between
the financial statements and the tax basis of assets and liabilities,
except for goodwill in connection with the 1994 Acquisition, which is not
deductible for tax purposes. The Company received income tax refunds of
$132,948, $880,366, $199,504 in the years ended June 30, 1997 and 1996 and
the periods December 16, 1994 through June 30, 1995, respectively. The
Company made income tax payments of $165,467, $42,000, $107,189, and
$278,300 in the years ended June 30, 1997 and 1996, the periods December
16, 1994 through June 30, 1995 and July 1, 1994 through December 15, 1994,
respectively.
The Company files a consolidated federal income tax return with GHI as its
parent corporation. GHI is ultimately liable for future federal income tax
liabilities of the Company. The Company's federal tax provision is
calculated on a separate return basis. The Company files separate company
state income tax returns and is ultimately liable for its future state
income tax liabilities.
The Company has net operating losses of $2,218,671 that expire in the year
2012 and alternative minimum tax credits of $312,566 that expire beginning
in the year 2007.
Note I--Environmental Regulations
Management believes that the environmental reserve recorded as of June 30,
1997 is sufficient to cover all known liabilities under which it is
probable that the Company will be obligated to undertake remediation.
Management's assessment of the environmental liability is based, in part,
on two comprehensive environmental studies conducted on different segments
of the Company's business by independent environmental consultants that
were completed during fiscal year 1995 and fiscal year 1996. Management
is not aware of
F-17
<PAGE>
any additional significant environmental exposures since the completion of
these studies.
The Company maintains a program to routinely detect releases of gasoline or
other regulated substances from underground storage tanks it owns or
operates. The Company employs groundwater monitoring wells and/or
sophisticated in-tank monitoring devices at a majority of its Company
operated stations and this information is available on-line through the
computer at the Company's headquarters. Management believes that contingent
liabilities other than those recorded in the financial statements will not
have a material adverse effect on the Company's financial position or
results of operations.
Note J--Pension and Other Benefit Plans
As part of an acquisition agreement, the Company agreed to provide
postretirement health and life benefits to certain retirees and spouses of
an entity acquired in 1987. The net present value of these postretirement
benefits has been established as a liability for all periods presented.
Under this agreement, the Company pays 100% of the health insurance
premiums for 33 retirees and spouses, 100% of the life insurance premiums
for 15 retirees and spouses. There were 33 retirees and spouses at June
30, 1997 and the Company's portion of the retirees' premiums approximated
$36,000, $37,000, and $36,000 during the years ended June 30, 1997, 1996,
and 1995, respectively.
The actuarial present value of the accumulated post-retirement benefit
obligation ("APBO") was approximately $560,000 as of June 30, 1997. Net
post-retirement benefit expense for the year ended June 30, 1996 was
$39,000.
Effective January 1, 1988, the Company adopted "The Griffith Consumers
Company 401(k) Plan and Trust" (the "Plan"). All full-time employees are
eligible to participate in the Plan after one year of employment. Until
December 31, 1992, each eligible participant could elect to contribute 2%
to 15% of compensation, and the Company contributed an equal amount up to
2% of the participant's total compensation. Effective January 1, 1993, the
Company contribution was increased to 3%. Total contributions charged to
expense for the years ended June 30, 1997 and 1996 and the periods
December 16, 1994 through June 30, 1995 and July 1, 1994 through December
15, 1994 were $334,000, $286,000, $141,000, and $119,000, respectively.
F-18
<PAGE>
Note K--Allowance for Bad Debts
Activity in the allowance for bad debts is as follows:
YEAR ENDED June 30
1997 1996 1995
--------- -------- ---------
Beginning Balance $ 691,479 $ 463,398 $ 552,073
Provision for bad debts 322,118 336,000 188,000
Accounts written off,
net of recoveries (340,924) (107,919) (276,675)
--------- --------- ---------
Ending balance $ 672,673 $ 691,479 $ 463,398
--------- --------- ---------
--------- --------- ---------
Note L--Commitments and Contingencies
The Company leases office facilities, petroleum product storage facilities,
computer equipment and transportation equipment. The Company's operating
leases range in length from one to six years. Certain leases have options
for renewal.
Future minimum payments, by year and in the aggregate, under noncancelable
operating leases with terms of one year or more, consist of the following:
YEAR ENDING TOTAL OPERATING
JUNE 30, LEASES
----------- ---------------
1998 $ 2,454,389
1999 1,605,988
2000 1,004,597
2001 764,144
2002 328,947
Thereafter -0-
-----------
Total minimum
lease payments $ 6,158,065
-----------
-----------
Rental expense for all operating leases for the years ended June 30, 1997
and 1996 and the periods December 16, 1994 through June 30, 1995 and July
1, 1994 through December 15, 1994 was $2,527,459, $1,147,110, $643,929, and
$544,863, respectively. The Company derives rental income primarily from
real estate leases to dealers. Rental income for the years ended June 30,
1997 and 1996 and the periods December 16, 1994 through June 30, 1995 and
July 1, 1994 through December 15, 1994 was $218,467, $212,216, $109,580,
and $88,395 respectively.
The Company purchases petroleum products pursuant to supply contracts or on
the spot market. At June 30, 1997, the Company was a party to 14 supply
contracts which are effective for periods of up to three years. These
contracts establish maximum amounts of
F-19
<PAGE>
petroleum products which a supplier is required to provide but the Company
is not required to purchase. The price approximates market at time of
purchase. Historically, the Company has procured approximately one-half of
its petroleum products under these supply contracts and the balance on the
spot market.
The Company has 112 contracts with terms varying from two to twenty years
to supply nonaffiliated gasoline stations with petroleum products. These
contracts establish minimum amounts of petroleum products which the Company
will supply. The price approximates market at time of purchase.
Company management believes the probability is remote that the outcome of
litigation and other proceedings relating to Griffith Consumers Company and
its subsidiaries will have a material adverse impact on the results of the
Company's operations or its financial position.
Note M--Subsidiaries' Condensed Financial Statement Data
Griffith's wholly owned subsidiaries, Carl King, Inc. ("King"), Frederick
Terminals, Inc. ("Frederick"), and Shore Stop Corporation ("Shore Stop" and
, collectively with King and Frederick, the "Subsidiaries") are full,
unconditional joint and several guarantors on the Notes. The only
subsidiaries of Griffith are King, Frederick, Shore Stop, and Regent
Transport, Inc. This footnote sets forth the combined condensed balance
sheet of King, Frederick, and Shore Stop as of June 30, 1997 and June 30,
1996, the combined condensed statements of operations and cash flows for
the years ended June 30,1997 and June 30, 1996, and changes in
shareholder's equity for the period from June 30, 1994 through June 30,
1997.
In accordance with Staff Accounting Bulletin No. 55, the separate financial
statement data reflects all of the expenses that the Company incurred on
each Subsidiary's behalf. Except for certain general and administrative
expenses and income taxes, expenses are separately identifiable and,
therefore, charged directly to the respective Subsidiary. Common general
and administrative expenses are allocated based on management's assessment
of the actual costs associated with the operations; and income tax expense
is provided in the financial data on a separate return basis. Management
believes that the methods used to allocate expenses to each Subsidiary are
reasonable.
F-20
<PAGE>
CARL KING, INC., FREDERICK TERMINALS, INC., AND SHORE STOP CORPORATION
COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
------------- -------------
JUNE 30 JUNE 30
1997 1996
------------- -------------
<S> <C> <C>
Current assets................................................................... $ 8,420,729 $ 5,215,700
Net property, plant and equipment................................................ 19,322,128 13,500,023
Net intangibles.................................................................. 23,416,596 12,496,263
Other............................................................................ 2,372,638 566,783
------------- -------------
$ 53,532,091 $ 31,778,769
------------- -------------
------------- -------------
Liabilities and Shareholder's Equity:
Current liabilities.............................................................. $ 12,303,935 $ 5,940,506
Due to Parents................................................................... 4,142,706 5,335,763
Long-term debt, less current portion............................................. 34,681,538 15,143,539
Other liabilities................................................................ 1,117,377 1,555,511
Shareholder's equity............................................................. 1,286,535 3,803,450
------------- -------------
$ 53,532,091 $ 31,778,769
------------- -------------
------------- -------------
</TABLE>
CARL KING, INC., FREDERICK TERMINALS, INC., AND SHORE STOP CORPORATION
COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
-------------- -------------
JUL 1, 1996 - JUL 1, 1995 -
JUNE 30, 1997 JUNE 30, 1996
-------------- -------------
<S> <C> <C>
Total sales....................................................................... $ 182,587,779 $ 96,811,737
Cost of sales..................................................................... 155,356,837 84,057,750
-------------- -------------
Gross profit.................................................................... 27,230,942 12,753,987
Selling, general, and administrative expenses..................................... 22,077,719 8,398,315
Depreciation expense.............................................................. 4,206,072 2,800,950
Amortization expense.............................................................. 2,222,540 875,467
-------------- -------------
Operating (loss) income......................................................... (1,275,389) 679,255
Interest expense................................................................ 4,160,745 2,304,060
Other income.................................................................... 1,302,505 238,749
-------------- -------------
Loss before income tax benefit.................................................. (4,133,629) (1,386,056)
Income tax benefit.............................................................. (1,616,714) (448,087)
-------------- -------------
Net loss........................................................................ $ (2,516,915) $ (937,969)
-------------- -------------
-------------- -------------
</TABLE>
F-21
<PAGE>
CARL KING, INC., FREDERICK TERMINALS, INC., AND SHORE STOP CORPORATION
COMBINED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
INVESTMENT RETAINED TOTAL
BY EARNINGS SHAREHOLDER'S
PARENT (DEFICIT) EQUITY
------------ ------------ ------------
<S> <C> <C> <C>
PREDECESSOR
Balance June 30, 1994.................................................. $ 5,792,610 $ 2,031,209 $7,823,819
Net Income............................................................. -- 375,524 375,524
------------ ------------ ------------
Balance December 15, 1994.............................................. 5,792,610 2,406,733 8,199,343
Stock Redemption....................................................... -- (2,406,733) (2,406,733)
------------ ------------ ------------
Balance December 16, 1994.............................................. $ 5,792,610 -- $5,792,610
------------ ------------ ------------
------------ ------------ ------------
SUCCESSOR
Net Loss............................................................... -- (1,051,191) (1,051,191)
------------ ------------ ------------
Balance June 30, 1995.................................................. -- (1,051,191) 4,741,419
Net Loss............................................................... -- (937,969) (937,969)
------------ ------------ ------------
Balance June 30, 1996.................................................. -- (1,989,160) 3,803,450
Net Loss............................................................... -- (2,516,915) (2,516,915)
------------ ------------ ------------
Balance June 30, 1997.................................................. -- (4,506,075) 1,286,535
</TABLE>
CARL KING, INC., FREDERICK TERMINALS, INC., AND SHORE STOP CORPORATION
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
JUL 1, 1995-
JUL 1, 1996- JUNE 30,
JUNE 30, 1997 1996
------------- ------------
<S> <C> <C>
Operating activities................................................................. $ 4,300,832 $ 1,994,347
Investment activities................................................................ (24,719,233) (92,128)
Financing activities................................................................. 20,406,915 (948,985)
------------- ------------
(Decrease) Increase in cash.......................................................... (11,486) 953,234
Cash at beginning of year............................................................ 953,234 --
------------- ------------
Cash at end of year.................................................................. $ 941,748 $ 953,234
------------- ------------
------------- ------------
</TABLE>
F-22
<PAGE>
Note N--Subsequent Events
On August 29, 1997, the Company amended and restated the Credit Agreement to
increase the amount of term borrowings outstanding thereunder from
$49,850,000 to $50,100,000. The amendment modified the term loan's repayment
schedule and revised certain financial covenants contained therein. The
Company believes that it will be able to comply with all covenants in place
during fiscal year 1998. Due to the seasonal nature of the heating oil
business, the potential impact of warmer than normal winter temperatures,
and prevailing market conditions, actual financial results could differ from
those originally anticipated.
The revised principal payments due during each fiscal year ended June 30
under all loan agreements are as follows:
1998 $2,009,553
1999 8,578,761
2000 2,963,988
2001 7,103,146
2002 8,789,321
2003 12,312,184
Thereafter 49,049,117
----------
$90,806,070
----------
----------
F-23
<PAGE>
Exhibit 4.21
SECOND AMENDMENT TO
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This SECOND AMENDMENT, dated as of March 31, 1997, by and among (a)
Griffith Consumers Company ("Griffith"), Shore Stop Corporation ("SSC"), and
Carl King, Inc. ("King"), each a Delaware corporation, (collectively, the
"Borrowers"), (b) BankBoston, N.A. (f/k/a The First National Bank of Boston).
The Travelers Insurance Company, The Travelers Indemnity Company, Senior Debt
Portfolio and Riggs Bank N.A. (collectively, the "Banks") and (c) BankBoston,
N.A. as agent for the Banks (the "Agent").
WHEREAS, the Borrowers, the Banks and the Agent are parties to that
certain Fourth Amended and Restated Revolving Credit and Term Loan Agreement
dated as of July 8, 1996 (as amended to date, the "Credit Agreement"), and
WHEREAS, the Borrowers have requested and the Banks have agreed, subject
to the terms and conditions set forth herein, to modify certain provisions of
the Credit Agreement.
NOW, THEREFORE, the Borrowers, the Banks and the Agent hereby covenant and
agree as follows:
ss.1. Defined Terms. Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement shall have the same
meanings herein as in the Credit Agreement.
ss.2. Amendment to the Credit Agreement.
(a) Section 1.1 of the Credit Agreement is hereby amended by inserting the
following definitions in the appropriate alphabetical order:
Rebranding Expenditures. Expenditures incurred by the Borrower in
connection with rebranding certain retail gasoline stations pursuant
to the terms of the Reimbursement Agreements, including, without
limitation, the cost of replacing signs and other station or brand
identification.
Rebranding Proceeds. Proceeds received by the Borrowers in
connection with rebranding certain retail gasoline stations pursuant
to the terms of the Reimbursement Agreements.
Reimbursement Agreements. Collectively, the Reimbursement Agreement
for Mobil Distributor dated April 17, 1997 between Mobil Oil
Corporation and Carl King, Inc. and the Advance Agreement dated May
20, 1997 between SSC and CITGO Petroleum Corporation (collectively,
the "Reimbursement Agreements").
(b) Section 11.1 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
<PAGE>
-2-
11.1. Debt Service Coverage Ratio. For each period of four consecutive
fiscal quarters ending on a date set forth in the table below, the Borrowers
will not permit the Debt Service Coverage Ratio for such period to be less than
the amount set forth opposite the relevant period in the table below:
- --------------------------------------------------------------------------------
Period of Four Consecutive
Fiscal Quarters ending: Ratio
----------------------- -----
- --------------------------------------------------------------------------------
6/30/96 and 9/30/96 1.10:1.00
- --------------------------------------------------------------------------------
12/31/96 1.10:1.00
- --------------------------------------------------------------------------------
3/31/97 0.35:1.00
- --------------------------------------------------------------------------------
6/30/97 and 9/30/97 0.90:1.00
- --------------------------------------------------------------------------------
12/31/97 0.98:1.00
- --------------------------------------------------------------------------------
3/31/98 and thereafter 1.10:1.00
- --------------------------------------------------------------------------------
(c) Section 11.2 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
11.2. Cash Flow Ratio. For each period of four consecutive fiscal
quarters ending on a date set forth in the table below, commencing with
the period of four consecutive fiscal quarters ending June 30, 1996, the
Borrowers will not permit the ratio of (a) Consolidated Net Earnings
Available for Debt Service calculated for the period of four consecutive
fiscal quarters then ended after excluding therefrom to the extent
otherwise included Rebranding Proceeds and Rebranding Expenditures plus
(i) the aggregate proceeds from all Indebtedness which is permitted under
ss.10.1(g) and (h) which is incurred by the Borrowers during such period
to the extent that in accordance with generally accepted accounting
principles the acquisition or Capitalized Lease in connection with which
such Indebtedness arises was treated as a Capital Expenditure plus, (ii)
subject to the limitation set forth below in this ss.11.2. for each period
of four consecutive fiscal quarters which include one or more fiscal
quarters which end in Fiscal Year 1997, Fiscal Year 1998 or Fiscal Year
1999, the amount of Capital Expenditures (after excluding therefrom, to
the extent otherwise included, Rebranding Expenditures) actually made in
such period of four consecutive fiscal quarters in excess of $3,500,000,
(provided that the Borrowers may, at their option, elect not to add back
such excess amount for any period of four consecutive fiscal quarters if
such fiscal quarters do not occur in a single Fiscal Year) plus (iii)
Rebranding Proceeds after deducting therefrom Rebranding Expenditures to
(b) Consolidated Debt Service calculated for such period plus
Discretionary Capital Expenditures (after excluding therefrom, to the
extent otherwise included, Rebranding Expenditures) made by the Borrowers
and their Subsidiaries during such period, to be less than the amount set
forth opposite the relevant period in the table below:
- --------------------------------------------------------------------------------
Period of Four Consecutive
Fiscal Quarters ending: Ratio
----------------------- -----
- --------------------------------------------------------------------------------
6/30/96 and 9/30/96 1.000:1.00
- --------------------------------------------------------------------------------
12/31/96 0.850:1.00
- --------------------------------------------------------------------------------
3/31/97 0.770:1.00
- --------------------------------------------------------------------------------
6/30/97 0.810:1.00
- --------------------------------------------------------------------------------
<PAGE>
-3-
- --------------------------------------------------------------------------------
9/30/97 0.830:1.00
- --------------------------------------------------------------------------------
12/31/97 0.900:1.00
- --------------------------------------------------------------------------------
3/31/98 through 3/31/00 (inclusive) 1.000:1.00
- --------------------------------------------------------------------------------
6/30/00 and thereafter 1.100:1.00
- --------------------------------------------------------------------------------
Notwithstanding the foregoing, for purposes of calculating compliance with
this covenant, the Borrowers may not add back Capital Expenditures
pursuant to clause (a) (ii) of this ss.11.2 in an aggregate amount in
excess of $5,000,000. For purposes of calculating compliance with this
limitation, the aggregate amount of Capital Expenditures added back
pursuant to clause (a) (ii) above shall be equal to the aggregate of the
add back amounts attributed (as provided below) to each fiscal quarter
(without duplication for each of the four times such fiscal quarter
appears in the rolling four quarter periods for which compliance hereunder
is calculated). The add back of Capital Expenditures shall be attributable
to the fiscal quarter which is the last fiscal quarter in the period of
four consecutive fiscal quarters with respect to which such add back first
occurs.
(d) Section 11.5 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
11.5. Capital Expenditures. With respect to each fiscal period set
forth below, the Borrowers will not, and will not permit any of their
Subsidiaries to, make Capital Expenditures (exclusive of any Capital
Expenditures made by delivery of Permitted Seller Notes issued in such
fiscal period and permitted under ss.10.1 but including any cash principal
repayment made with respect to such Permitted Seller Notes in the period
during which such repayments are made) or Investments made pursuant to
Section 10.3(e) in such fiscal period that exceed, in the aggregate, the
amount set forth below for such fiscal period:
- --------------------------------------------------------------------------------
Capital Expenditures and
Fiscal Period ss.10.3(e) Investments
------------- ----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fiscal Year ending 1996 $ 1,500,000
- --------------------------------------------------------------------------------
Fiscal Year ending 1997 $ 6,400,000
- --------------------------------------------------------------------------------
Fiscal Quarter ending 6/30/97 $ 2,200,000
- --------------------------------------------------------------------------------
Fiscal Quarter ending 9/30/97 $ 600,000
- --------------------------------------------------------------------------------
Fiscal Quarter ending 12/31/97 $ 600,000
- --------------------------------------------------------------------------------
Fiscal Quarter ending 3/31/98 $ 1,500,000
- --------------------------------------------------------------------------------
Fiscal Year ending 1998 $ 4,000,000
- --------------------------------------------------------------------------------
Fiscal Year ending 1999 $ 4,500,000
- --------------------------------------------------------------------------------
Each Fiscal Year Thereafter $ 3,500,000
- --------------------------------------------------------------------------------
provided, however, that (a) for purposes of this ss.11.5, Capital
Expenditures shall be calculated exclusive of (i) up to $900,000 of
Rebranding Expenditures which would otherwise be included as Capital
Expenditures and (ii) Capital Expenditures of the type described in
clauses (A) and (B) of ss.4.5.2(b) made in lieu of a mandatory prepayment
of the Term Loans with the net cash proceeds from the sale of assets
permitted under ss.10.5.2.; (b) the amount of Capital Expenditures which
are permitted to be incurred in the Fiscal Year ending June 30, 1998 and
which are not incurred in such year may be carried over and used in the
Fiscal Years ending
<PAGE>
-4-
June 30, 1999 and June 30, 2000 and shall be deemed to be the first
amounts utilized in such Fiscal Years; and (c) if during any other fiscal
period set forth above the amount of Capital Expenditures permitted for
that fiscal period is not so utilized, such unutilized amount may be
utilized, and shall be deemed to be the first amount utilized, in the
immediately succeeding fiscal period set forth in the table above only.
(e) Section 11.6 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
11.6. Funded Debt to Consolidated EBITDA Ratio. The Borrowers will
not permit the ratio of (a) Funded Debt as of the end of each period of
four consecutive fiscal quarters of the Borrowers ending on a date set
forth in the table below, commencing with the four quarter period ending
June 30, 1996, to (6) Consolidated EBITDA for such period, to be more than
the amount set forth opposite the relevant period in the table below:
- --------------------------------------------------------------------------------
Period of Four Consecutive
Fiscal Quarters ending: Ratio
----------------------- -----
- --------------------------------------------------------------------------------
6/30/96, 9/30/96 and 12/31/96 5.00:1.00
- --------------------------------------------------------------------------------
3/31/97, 6/30/97 and 9/30/97 5.75:1.00
- --------------------------------------------------------------------------------
12/31/97 5.25:1.00
- --------------------------------------------------------------------------------
3/31/98 4.75:1.00
- --------------------------------------------------------------------------------
6/30/98, 9/30/98 and 12/31/98 4.35:1.00
- --------------------------------------------------------------------------------
3/31/99 4.00:1.00
- --------------------------------------------------------------------------------
6/30/99 and thereafter 3.50:1.00
- --------------------------------------------------------------------------------
; provided that, for purposes of calculating the ratio of Funded Debt to
Consolidated EBITDA (a) for any period, any Permitted Acquisition which
occurred during such period shall be deemed to have occurred immediately
prior to the beginning of such period; and (6) for each period of four
fiscal quarters ending at any time from the Closing Date through and
including June 30, 1997, Funded Debt shall be decreased by $5,000,000; and
(c) for each period of four fiscal quarters ending at any time from and
including September 30, 1997 through and including June 30, 1998, Funded
Debt shall be decreased by $2,500,000.
(f) Section 11.7 of the Credit Agreement is hereby amended by substituting
the figure "$15,000,000" for the figure $17,000,000" therein.
ss.3. Consent to Asset Transfer. Subject to the satisfaction of the
conditions set forth herein, the Banks hereby consent to (i) the merger of any
Borrower with and into another Borrower and to the transfer of any assets of a
Borrower from such Borrower to any other Borrower; provided that after giving
effect to each such merger and/or transfer, the Agent continues to have a first
priority perfected security interest (subject only to Permitted Liens) in such
transferred assets, or, if applicable, the assets of the merged Borrower
pursuant to the terms of the Loan Documents in order to secure the Obligations,
(ii) the transfer to a wholly-owned subsidiary of Griffith of assets currently
owned by King which do not consist of assets comprising or used in connection
with retail service stations or convenience stores; provided that such assets
remain subject to a first priority perfected security interest (subject only to
Permitted Liens) in favor of the Agent to secure the Obligations under the Loan
<PAGE>
-5-
Agreement and such wholly-owned Subsidiary is or assumes the obligations of a
Borrower under the Credit Agreement or is or becomes a guarantor of the
Obligations pursuant to a guaranty in form and substance satisfactory to the
Agent and (iii) the transfer by Griffith of the outstanding shares of capital
stock of King to SSC or, alternatively, the transfer by Griffith of the
outstanding shares of capital stock of SSC to King. This consent is conditioned
upon the delivery by the Borrower to the Agent and the Banks of prior written
notice detailing the terms of such merger or transfer.
ss.4. Conditions to Effectiveness. This Amendment shall become effective
upon satisfaction of each of the following conditions precedent:
(a) receipt by the Agent of this Amendment, executed and delivered by each
of the Borrowers, the Agent and the Banks;
(b) payment of an amendment fee to the Agent for the account of the Banks
in an aggregate amount equal to 0.125% of the aggregate principal amount of the
Term Loans outstanding plus the aggregate of each Bank's Revolving Credit
Commitment, such amendment fee to be shared pro rata by the Banks in accordance
with each Bank's percentage interest in the sum of (i) the aggregate principal
amount of the Term Loans outstanding and (ii) the Revolving Credit Commitments;
and
(c) a copy, certified to be accurate and complete on the date hereof by a
duly authorized officer of the Company, of the executed Third Supplemental
Indenture of even date herewith (the "Supplemental Indenture") to the Indenture
dated as of December 15, 1994 among the Borrowers, Frederick and NationsBank
Trust Company of New York as trustee. such amendment to be in form and substance
satisfactory to the Agent in all respects; provided that in any event, (i) the
Supplemental Indenture shall include amendments to Section 4.21 of the Indenture
which reset the covenant levels therein to 90% of the covenant levels in Section
11.1 of the Credit Agreement, as amended hereby, and 110% of the covenant levels
in Section 11.6 of the Credit Agreement, as amended hereby, and (ii) any
amendment fee payable to the holders of Subordinated Debt evidenced by such
Subordinated Debt Documents in connection with the Supplemental Indenture shall
be disclosed to the Banks and the Agent in writing and shall be acceptable to
the Banks and the Agent.
ss.5. Affirmation of the Borrowers. Each of the Borrowers hereby affirms
all of its obligations under the Credit Agreement, as amended hereby, the Notes
and under each of the other Loan Documents to which it is a party and hereby
affirms its absolute and unconditional promise to pay to the Banks the Loans and
all other amounts due under the Credit Agreement, as amended hereby. Each of the
Borrowers hereby represents, warrants and confirms that the Obligations, as
amended hereby, are and remain secured pursuant to the Security Documents.
ss.6. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to the Banks and the Agent as follows:
(a) Representations and Warranties. The representations and warranties
contained in ss.8 of the Credit Agreement were true and correct in all material
respects when made. The representations and warranties contained in ss.8 of the
Credit Agreement, after giving effect to this Amendment, are true and correct on
the date hereof, except (i) for those representations and warranties which
relate specifically to a particular date, which representations and warranties
were true and correct as of such
<PAGE>
-6-
date and (ii) as otherwise disclosed in writing by the Borrowers to each of the
Banks and the Agent subsequent to the Closing Date.
(b) Authority. The execution and delivery by each Borrower of this
Amendment and the Additional Notes, and the performance by each Borrower of this
Amendment, the Additional Notes and the Credit Agreement, as amended hereby, (i)
are within the corporate authority of such Borrower, (ii) have been duly
authorized by all necessary corporate proceedings, (iii) do not conflict with or
result in any breach or contravention of any provision of law, statute, rule or
regulation to which such Borrower is subject or any judgment, order, writ,
injunction, license or permit applicable to such Borrower, and (iv) do not
conflict with any provision of the corporate charter or bylaws of such Borrower
or any agreement or other instrument binding upon such Borrower.
(c) Enforceability. This Amendment, the Additional Notes and the Credit
Agreement, as amended hereby, are valid and legally binding obligations of each
Borrower, enforceable against such Borrower in accordance with their respective
terms and provisions, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditor's rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
(d) No Default. No Default or Event of Default exists or will exist after
giving effect to the execution and delivery of this Amendment.
ss.7. No Other Amendments. Except as expressly provided in this Amendment,
all of the terms and conditions of the Credit Agreement and the other Loan
Documents remain unchanged, and the terms and conditions of the Credit Agreement
as amended hereby and he other Loan Documents remain in full force and effect.
ss.8. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
ss.9. Miscellaneous. This Amendment shall be deemed to be a contract under
seal under the laws of The Commonwealth of Massachusetts and shall for all
purposes be construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts. The captions in this Amendment are for
convenience of reference only and shall not define or limit the provisions
hereof. The Borrowers agree to pay to the Agent, on demand by the Agent, all
reasonable out-of-pocket costs and expenses incurred or sustained by the Agent
in connection with the preparation of this Amendment, including reasonable legal
fees.
<PAGE>
-7-
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GRIFFITH CONSUMERS COMPANY
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: V-P Finance, Sec & Treasurer
CARL KING, INC.
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: V-P
SHORE STOP CORPORATION
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: V-P
BANKBOSTON, N.A.
f/k/a The First National Bank of Boston,
individually and as Agent
By:
-------------------------------------
Title:
THE TRAVELERS INSURANCE COMPANY
By:
-------------------------------------
Title:
THE TRAVELERS INDEMNITY COMPANY
By:
-------------------------------------
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Adviser
By:
-------------------------------------
Title:
<PAGE>
-7-
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GRIFFITH CONSUMERS COMPANY
By:
-------------------------------------
Title:
CARL KING, INC.
By:
-------------------------------------
Title:
SHORE STOP CORPORATION
By:
-------------------------------------
Title:
BANKBOSTON, N.A.
f/k/a The First National Bank of Boston,
individually and as Agent
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Vice President
THE TRAVELERS INSURANCE COMPANY
By:
-------------------------------------
Title:
THE TRAVELERS INDEMNITY COMPANY
By:
-------------------------------------
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Adviser
By:
-------------------------------------
Title:
<PAGE>
-7-
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GRIFFITH CONSUMERS COMPANY
By:
-------------------------------------
Title:
CARL KING, INC.
By:
-------------------------------------
Title:
SHORE STOP CORPORATION
By:
-------------------------------------
Title:
BANKBOSTON, N.A.
f/k/a The First National Bank of Boston,
individually and as Agent
By:
-------------------------------------
Title:
THE TRAVELERS INSURANCE COMPANY
By: /s/ Allen R. Cantrell
-------------------------------------
Title: Allen R. Cantrell
Investment Officer
THE TRAVELERS INDEMNITY COMPANY
By: /s/ Allen R. Cantrell
-------------------------------------
Title: Allen R. Cantrell
Investment Officer
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Adviser
By:
-------------------------------------
Title:
<PAGE>
-7-
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GRIFFITH CONSUMERS COMPANY
By:
-------------------------------------
Title:
CARL KING, INC.
By:
-------------------------------------
Title:
SHORE STOP CORPORATION
By:
-------------------------------------
Title:
BANKBOSTON, N.A.
f/k/a The First National Bank of Boston,
individually and as Agent
By:
-------------------------------------
Title:
THE TRAVELERS INSURANCE COMPANY
By:
-------------------------------------
Title:
THE TRAVELERS INDEMNITY COMPANY
By:
-------------------------------------
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Adviser
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Vice President
<PAGE>
-8-
RIGGS BANK N.A.
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Vice President
<PAGE>
Exhibit 4.22
THIRD AMENDMENT TO THE
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This THIRD AMENDMENT to the Fourth Amendment and Restated Revolving Credit
and Term Loan Agreement, dated as of August 29, 1997 ("Third Amendment"), by and
among (a) Griffith Consumers Company, Carl King, Inc., and Shore Stop
Corporation, each a Delaware corporation, (collectively, the "Borrowers"), (b)
BankBoston, N.A. (formerly known as The First National Bank of Boston), The
Travelers Insurance Company, The Travelers Indemnity Company, Senior Debt
Portfolio, Riggs Bank N.A., CypressTree Investment Management Company, Inc.,
CypressTree Investment Partners I, Ltd. ("CypressTree I"), and Deeprock &
Company (collectively, the "Banks"), and (c) BankBoston, N.A. as agent for the
Banks (the "Agent").
WHEREAS, the Borrowers, the Banks (other than CypressTree Investment
Management Company, Inc. ("CypressTree"), and Deeprock & Company ("Deeprock"))
and the Agent are parties to that certain Fourth Amended and Restated Revolving
Credit and Term Loan Agreement dated as of July 8, 1996 (as amended and in
effect prior to giving effect to this Amendment, the "Credit Agreement"); and
WHEREAS, each of CypressTree, and Deeprock wishes to become a party to the
Credit Agreement with all of the rights, privileges, and obligations of a "Bank"
thereunder and the other Banks wish to consent to CypressTree, CypressTree I,
and Deeprock so becoming such a party to the Credit Agreement; and
WHEREAS, the Borrowers have requested and the Banks have agreed, subject
to the terms and conditions set forth herein, to modify certain provisions of
the Credit Agreement;
NOW, THEREFORE, the Borrowers, the Banks and the Agent hereby covenant and
agree as follows:
ss.1. Defined Terms. Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement shall have the same
meanings herein as in the Credit Agreement.
<PAGE>
-2-
ss.2. Amendment to the Credit Agreement.
(a) Section 1.1 (Definitions) of the Credit Agreement is hereby further
amended by adding or replacing in their entirety the following terms in the
appropriate places in the alphabetical sequence thereof;
Amendment Closing Date. ___________ __, 1997.
Cash Flow Percentage. 75%.
Revolving Credit Maturity Date. (a) June 30, 2000, or (b) December
31, 2000, if all of the Banks listed on Schedule 1(a), in their sole
discretion, shall agree to extend the Revolving Credit Maturity Date for
an additional six months upon the written request of the Borrowers
delivered after July 8, 1998, but prior to January 1, 2000.
Term Loan C. The term loans in an aggregate principal amount
outstanding of $29,750,000 as of the Amendment Closing Date after giving
effect to the transactions contemplated by the Third Amendment, which
loans were made by the Banks listed on Schedule 1(b) to the Borrowers in
an amount equal with respect to each such Bank to such Bank's Term Loan C
Aggregate Amount and which are evidenced by Term Notes C.
Term Loan C Additional Amount. With respect to each Bank listed on
Schedule 1(b), the term loans to be made by such Bank to the Borrowers on
the Amendment Closing Date pursuant to the terms and conditions of the
Third Amendment in the amount set forth opposite such Bank's name on
Schedule 1(b) hereto under the column Term Loan C Additional Amount.
Term Loan C Aggregate Amount. With respect to each Bank listed on
Schedule 1(b), that amount set forth opposite such Bank's name in Schedule
1(b) hereto under the column Term Loan C Aggregate Amount.
Third Amendment. The Third Amendment to the Credit Agreement dated
as of the Amendment Closing Date by and among the Borrowers, the Banks and
the Agent.
(b) Section 3.3 (Mandatory Loan Reduction Period) of the Credit
Agreement is hereby amended by inserting after the phrase "commencing
<PAGE>
-3-
with the Calendar Year 1995" the following phrase: "but not including
Calendar Year 1997".
(c) Section 4.1 (Commitment to Lend) of the Credit Agreement is
hereby amended by adding the following sentence to the end of such
section:
Subject to the terms and conditions set forth in the Third
Amendment, each Bank listed on Schedule 1(b) agrees to lend to the
Borrowers on the Amendment Closing Date its Term Loan C Additional
Amount.
(d) Section 4.2.3 (Term Note C) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
4.2.3. Term Note C. Term Loan C shall be evidenced by separate
promissory notes of the Borrowers in substantially the form of Exhibit J-3
hereto (each a "Term Note C"), dated the Amendment Closing Date and
completed with appropriate insertions. One Term Note C shall be payable to
the order of each Bank listed on Schedule 1(13) in a principal amount
equal to such Bank's Term Loan C Aggregate Amount and representing the
joint and several obligation of the Borrowers to pay to such Bank such
principal amount or, if less, the outstanding amount of such Bank's Term
Loan C Commitment Percentage of Term Loan C, plus interest accrued
thereon, as set forth below. The Borrowers irrevocably authorize each Bank
to make or cause to be made a notation on such Bank's Term Note Record
reflecting the original principal amount of such Bank's Term Loan C
Commitment Percentage of Term Loan C and, at or about the time of such
Bank's receipt of any principal payment on such Bank's Term Note C an
appropriate notation on such Bank's Term Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term Note
Record shall be prima facie evidence of the principal amount thereof owing
and unpaid to such Bank, but the failure to record, or any error in so
recording, any such amount on such Bank's Term Note Record shall not
affect the obligations of the Borrowers hereunder or under any Term Note C
to make payments of principal of and interest on any Term Note C when due.
(e) Section 4.3.1 (Term Loan A) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
4.3.1. Term Loan A. Term Loan A shall be paid in the principal
amount of $14,750,000 on the Amendment Closing Date.
<PAGE>
-4-
The remaining balance of $1,350,000 shall be paid in consecutive quarterly
installments, with each quarterly payment in a given Fiscal Year equal to
the amount set forth opposite such Fiscal Year in the table below, such
installments to be due and payable on the last day of each fiscal quarter
commencing on September 30, 1997 and ending on December 31, 2000, with a
final additional payment on December 31, 2000 in an amount equal to the
remaining unpaid principal balance (if any) of Term Loan A.
- --------------------------------------------------------------------------------
Fiscal Year Ending in June of Quarterly Payments Annual Total
----------------------------- ------------------ ------------
- --------------------------------------------------------------------------------
1998 $ 90,146.25 $ 360,585
- --------------------------------------------------------------------------------
1999 $ 90,146.25 $ 360,585
- --------------------------------------------------------------------------------
2000 $104,827.50 $ 419,310
- --------------------------------------------------------------------------------
2001 (Sept. 30, 2000, Dec. 31, 2000) $104,760.00 $ 209,520
==========
- --------------------------------------------------------------------------------
$1,350,000
(f) Section 4.3.2 (Term Loan B) of the Credit Agreement is hereby amended
by substituting the following table for the table currently set forth therein:
- --------------------------------------------------------------------------------
Fiscal Year Ending in June of Quarterly Payments Annual Total
----------------------------- ------------------ ------------
- --------------------------------------------------------------------------------
1998 $ 250,000 $ 1,000,000
- --------------------------------------------------------------------------------
1999 $ 250,000 $ 1,000,000
- --------------------------------------------------------------------------------
2000 $ 437,500 $ 1,750,000
- --------------------------------------------------------------------------------
2001 $1,500,000 $ 6,000,000
- --------------------------------------------------------------------------------
2002 $2,000,000 $ 8,000,000
- --------------------------------------------------------------------------------
2003 (Sept. 30, 2002, Dec. 31, 2002) $ 625,000 $ 1,250,000
==========
- --------------------------------------------------------------------------------
$19,000,000
(g) Section 4.3.3 (Term Loan C) of the Credit agreement is hereby amended
by substituting the following table for the table currently set forth therein:
- --------------------------------------------------------------------------------
Fiscal Year Ending in June of Quarterly Payments Annual Total
----------------------------- ------------------ ------------
- --------------------------------------------------------------------------------
1998 $ 62,500 $ 250,000
- --------------------------------------------------------------------------------
1999 $ 125,000 $ 500,000
- --------------------------------------------------------------------------------
2000 $ 125,000 $ 500,000
- --------------------------------------------------------------------------------
2001 $ 187,500 $ 750,000
- --------------------------------------------------------------------------------
2002 $ 187,500 $ 750,000
- --------------------------------------------------------------------------------
2003 $2,750,000 $11,000,000
- --------------------------------------------------------------------------------
2004 (Sept. 30, 2003, Dec. 31, 2003) $8,000,000 $16,000,000
==========
- --------------------------------------------------------------------------------
$29,750,000
<PAGE>
-5-
(h) Section 9.12 (Use of Proceeds) of the Credit Agreement is hereby
amended by inserting the following sentence to the end of such section:
The Borrowers will use the proceeds of Term Loan C advanced on the
Amendment Closing Date to repay Term Loan A in an amount equal to
$14,750,000, and to pay certain fees and expenses incurred in connection
with the Third Amendment.
(i) The table in Section 11.1 (Debt Service Coverage Ratio) of the Credit
Agreement is hereby amended and restated in its entirety as set forth below:
- --------------------------------------------------------------------------------
Period of Four Consecutive
Fiscal Quarters ending: Ratio
----------------------- -----
- --------------------------------------------------------------------------------
6/30/96, 9/30/96 and 12/31/96 1.10:1.00
- --------------------------------------------------------------------------------
3/31/97 0.85:1.00
- --------------------------------------------------------------------------------
6/30/97 and 9/30/97 0.90:1.00
- --------------------------------------------------------------------------------
12/31/97 0.98:1.00
- --------------------------------------------------------------------------------
3/31/98 1.10:1.00
- --------------------------------------------------------------------------------
6/30/98 and thereafter 1.20:1.00
- --------------------------------------------------------------------------------
(j) The table in Section 11.2 (Cash Flow Ratio) of the Credit Agreement is
hereby amended and restated in its entirety as set forth below.
- --------------------------------------------------------------------------------
Period of Four Consecutive
------ -- ---- -----------
Fiscal Quarters ending: Ratio
------ -------- ------- -----
- --------------------------------------------------------------------------------
6/30/96 and 9/30/96 1.000:1.00
- --------------------------------------------------------------------------------
12/31/96 0.850:1.00
- --------------------------------------------------------------------------------
3/31/97 0.770:1.00
- --------------------------------------------------------------------------------
6/30/97 0.810:1.00
- --------------------------------------------------------------------------------
9/30/97 0.830:1.00
- --------------------------------------------------------------------------------
12/31/97 0.900:1.00
- --------------------------------------------------------------------------------
3/31/98 1.000:1.00
- --------------------------------------------------------------------------------
6/30/98 and thereafter (inclusive) 1.10:1.0
- --------------------------------------------------------------------------------
(k) Section 11.7 (Minimum Consolidated EBITDA) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:.
<PAGE>
-6-
The Borrowers will not permit Consolidated EBITDA for each period
consisting of four consecutive fiscal quarters of the Borrowers ending on
a date set forth in the table below to be less than the amount set forth
opposite the relevant period in the table below:
- --------------------------------------------------------------------------------
Period of Four Consecutive Fiscal Minimum Consolidated
------ -- ---- ----------- ------ ------- ------------
Quarters ending: EBITDA
-------- ------- ------
- --------------------------------------------------------------------------------
June 30, 1997 $15,000,000
- --------------------------------------------------------------------------------
December 31, 1997 $16,000,000
- --------------------------------------------------------------------------------
March 31, 1998 $17,500,000
- --------------------------------------------------------------------------------
June 30, 1998 and thereafter $18,000,000
- --------------------------------------------------------------------------------
(l) Section 11 of the Credit Agreement is hereby amended by inserting the
following new Section 11.8:
11.8. Consolidated EBITDA to Consolidated Total Interest Expense.
The Borrowers will not permit the ratio of (a) Consolidated EBITDA for
each period consisting of four consecutive fiscal quarters of the
Borrowers ending on a date set forth in the table below, commencing with
the four quarter period ending March 31, 1998, to (6) Consolidated Total
Interest Expense for such period, to be less than the amount set forth
opposite the relevant date in the table below:
- --------------------------------------------------------------------------------
Period Ratio
------ -----
- --------------------------------------------------------------------------------
3/31/98 1.75:1.00
- --------------------------------------------------------------------------------
6/30/98 and thereafter 1.80:1.00
- --------------------------------------------------------------------------------
(m) Schedule 1 to the Credit Agreement is hereby deleted in its entirety
and Schedule 1 attached hereto is substituted therefore.
(n) Schedule 1(b) to the Credit Agreement is hereby deleted in its
entirety and Schedule 1(b) attached hereto is substituted therefor.
ss.3. Conditions to Effectiveness to Amendment. This Amendment shall
become effective upon satisfaction of each of the following conditions precedent
on the Amendment Closing Date:
(a) receipt by the Agent of this Amendment, executed and delivered by each
of the Borrowers, the Agent and the Banks;
<PAGE>
-7-
(b) execution and delivery by the Borrowers to each of the Banks listed on
Schedule 1(b) to the Credit Agreement which either hold or will be advancing
any portion of Term Loan C, a Term Note C in the form of Exhibit J-3 to the
Credit Agreement in an amount equal to such Bank's Term Loan C Commitment
Percentage of $29,750,000;
(c) receipt by the Agent of an opinion of counsel to the Borrowers, in
form and substance satisfactory to the Agent;
(d) execution and delivery by each of CypressTree and Deeprock to the
Agent of an Instrument of Accession substantially in the form of Exhibit A
attached hereto;
(e) a certificate of the Secretary of State of Delaware as to the legal
existence and good standing of each Borrower;
(f) a certificate of an officer of each of the Borrowers certifying as to
(i) no changes to such Borrower's charter and bylaws since July 8, 1996, (ii)
the resolutions of the Board of Directors of such Borrower authorizing and
approving the execution, delivery and performance of this Amendment and the
other documents contemplated hereby and (iii) the incumbency and signature of
officers authorized to execute and deliver this Amendment and the other
documents contemplated hereby; and
(g) payment of a closing fee in the amount of $157,750 for the pro rata
account of each Bank in accordance with each Bank's percentage interest in the
sum of (i) the Revolving Credit Commitments plus (ii) the aggregate principal
amount of the Term Loans outstanding after giving effect to the transactions
contemplated by this Amendment.
ss.4. Affirmation of the Borrowers. Each of the Borrowers hereby affirms
all of its obligations under the Credit Agreement, as amended hereby, and the
Notes (including the new Term Notes C delivered pursuant hereto) and under each
of the other Loan Documents to which it is a party and hereby affirms its
absolute and unconditional promise to pay to the Banks the Loans and all other
amounts due under the Credit Agreement, as amended hereby. Each of the Borrowers
hereby represents, warrants and confirms that the Obligations, as amended
hereby, are and remain secured pursuant to the Security Documents.
ss.5. Consent by Banks.
<PAGE>
-8-
(a) Upon execution and delivery of an Instrument of Accession
(substantially in the form of Exhibit A attached hereto) by each of Cypress Tree
and Deeprock and the effectiveness of this Amendment, each of the Banks shall be
deemed to have agreed that CypressTree and Deeprock shall become "Banks," as
such term is used in the Credit Agreement, with all of the rights, privileges,
and obligations of "Banks" under the Credit Agreement and Loan Documents.
(b) Each of the Banks hereby consents to the application of the proceeds
of Term Loan C to prepay Term Loan A in the aggregate amount of $14,750,000,
prior to the pre-payment of Term Loan B and Term Loan C.
ss.6. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to the Banks and the Agent as follows:
(a) Representations and Warranties. The representations and warranties
contained in ss.8 of the Credit Agreement were true and correct in all material
respects when made. The representations and warranties contained in ss.8 of the
Credit Agreement, after giving effect to this Amendment, are true and correct on
the date hereof, except (i) for those representations and warranties which
relate specifically to a particular date, which representations and warranties
were true and correct as of such date and (ii) as otherwise disclosed in writing
by the Borrowers to each of the Banks and the Agent subsequent to the Closing
Date.
(b) Authority. The execution and delivery by each Borrower of this
Amendment and the new Term Notes C to be delivered hereunder, and the
performance by each Borrower of this Amendment, such new Notes and the Credit
Agreement, as amended hereby, (i) are within the corporate authority of such
Borrower, (ii) have been duly authorized by all necessary corporate proceedings,
(iii) do not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which such Borrower is subject
or any judgment, order, writ, injunction, license or permit applicable to such
Borrower, and (iv) do not conflict with any provision of the corporate charter
or bylaws of such Borrower or any agreement or other instrument binding upon
such Borrower.
(c) Enforceability. This Amendment, the new Term Notes C to be delivered
hereunder and the Credit Agreement, as amended hereby, are valid and legally
binding obligations of each Borrower, enforceable against such Borrower in
accordance with their respective terms and provisions, except as
<PAGE>
-9-
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting generally the enforcement of creditor's
rights and except to the extent that availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
(d) No Default. No Default or Event of Default exists or will exist after
giving effect to the execution and delivery of this Amendment.
ss.7. No Other Amendments. Except as expressly provided in this Amendment,
all of the terms and conditions of the Credit Agreement and the other Loan
Documents remain unchanged, and the terms and conditions of the Credit Agreement
as amended hereby and the other Loan Documents remain in full force and effect.
ss.8. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
ss.9. Miscellaneous. This Amendment shall be deemed to be a contract under
seal under the laws of The Commonwealth of Massachusetts and shall for all
purposes be construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts. The captions in this Amendment are for
convenience of reference only and shall not define or limit the provisions
hereof. The Borrowers agree to pay to the Agent, on demand by the Agent, all
reasonable out-of-pocket costs and expenses incurred or sustained by the Agent
in connection with the preparation of this Amendment, including reasonable legal
fees.
<PAGE>
-10-
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GRIFFITH CONSUMERS
COMPANY
By: /s/ [ILLEGIBLE]
----------------------------------------
Title: Secretary Treasurer & Vice President
CARL KING, INC.
By: /s/ [ILLEGIBLE]
----------------------------------------
Title: Vice President
SHORE STOP CORPORATION
By: /s/ [ILLEGIBLE]
----------------------------------------
Title: Vice President
BANKBOSTON, N.A. (formerly known as
The First National Bank Of Boston),
individually and as Agent
By:
----------------------------------------
Title:
THE TRAVELERS INSURANCE COMPANY
By:
----------------------------------------
Title:
THE TRAVELERS INDEMNITY COMPANY
By:
----------------------------------------
Title:
<PAGE>
-10-
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GRIFFITH CONSUMERS
COMPANY
By:
----------------------------------------
Title:
CARL KING, INC.
By:
----------------------------------------
Title:
SHORE STOP CORPORATION
By:
----------------------------------------
Title:
BANKBOSTON, N.A. (formerly known as
The First National Bank Of Boston),
individually and as Agent
By: /s/ [ILLEGIBLE]
----------------------------------------
Title: Vice President
THE TRAVELERS INSURANCE COMPANY
By:
----------------------------------------
Title:
THE TRAVELERS INDEMNITY COMPANY
By:
----------------------------------------
Title:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1997 10-K OF GRIFFITH CONSUMERS COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<CIK> 0000935814
<NAME> GRIFFITH CONSUMERS COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 3,212
<SECURITIES> 0
<RECEIVABLES> 12,846
<ALLOWANCES> 673
<INVENTORY> 4,999
<CURRENT-ASSETS> 23,132
<PP&E> 34,635
<DEPRECIATION> 11,524
<TOTAL-ASSETS> 125,277
<CURRENT-LIABILITIES> 22,563
<BONDS> 31,634
0
0
<COMMON> 20,691
<OTHER-SE> (11,580)
<TOTAL-LIABILITY-AND-EQUITY> 125,277
<SALES> 272,964
<TOTAL-REVENUES> 277,117
<CGS> 221,485
<TOTAL-COSTS> 222,278
<OTHER-EXPENSES> 56,146
<LOSS-PROVISION> 341
<INTEREST-EXPENSE> 10,711
<INCOME-PRETAX> (10,098)
<INCOME-TAX> (3,650)
<INCOME-CONTINUING> (6,448)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,448)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
