<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q/A
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2000
Commission File Number 1-6018
TOKHEIM CORPORATION
(Exact name of Registrant as specified in its charter)
INDIANA 35-0712500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10501 CORPORATE DRIVE, FORT WAYNE, IN 46845
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number including area code): (219) 470-4600
NOT APPLICABLE
(Former name, former address, and former fiscal year if changed since last
report)
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 for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No
As of February 29, 2000, 12,669,377 shares of voting common stock were
outstanding.
The exhibit index is located on page 20.
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
Consolidated Condensed Statement of Earnings
(Amounts in thousands except amounts per share) Three Months Ended Three Months Ended
February 29, February 28,
2000 1999
------------------------------------------
<S> <C> <C>
Net sales................................................... $ 132,412 $ 166,193
Cost of sales, exclusive of items listed below.............. 104,362 133,297
Selling, general, and administrative expenses............... 25,721 25,767
Depreciation and amortization............................... 6,074 6,892
Merger and acquisition costs and other unusual items........ 2,725 1,123
----------- -----------
Operating loss........................................... (6,470) (886)
----------- -----------
Interest expense, net....................................... 14,648 12,307
Foreign currency (gain) loss .............................. (169) 1,438
Minority interest in subsidiaries........................... (2) 94
Other income, net .......................................... (290) (154)
----------- -----------
Loss before income taxes and extraordinary loss............. (20,657) (14,571)
Income taxes................................................ (106) (393)
----------- -----------
Loss before extraordinary loss.............................. (20,551) (14,178)
Extraordinary loss on debt extinguishment................... -- (6,249)
----------- -----------
Net loss.................................................... (20,551) (20,427)
Preferred stock dividends ($1.94 per share)................. (388) (374)
----------- -----------
Loss applicable to common stock............................. $ (20,939) $ (20,801)
=========== ===========
Loss per common share:
Basic
Before extraordinary loss.............................. $ (1.65) $ (1.15)
Extraordinary loss on debt extinguishment.............. -- (0.49)
----------- -----------
Net loss............................................... $ (1.65) $ (1.64)
=========== ===========
Weighted average shares outstanding.................... 12,669 12,662
=========== ===========
Diluted
Before extraordinary loss.............................. $ (1.65) $ (1.15)
Extraordinary loss on debt extinguishment.............. -- (0.49)
----------- -----------
Net loss............................................... $ (1.65) $ (1.64)
=========== ===========
Weighted average shares outstanding.................... 12,669 12,662
=========== ===========
</TABLE>
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
==========================================================================================================
Consolidated Condensed Balance Sheet
(Amounts In thousands)
February 29, November 30,
2000 1999
------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................... $ 13,250 $ 14,437
Accounts receivable, net.................................... 119,725 168,565
Inventories:
Raw materials, service parts, and supplies.............. 67,779 68,122
Work in process.......................................... 16,971 16,389
Finished goods........................................... 8,104 9,017
----------- -----------
92,854 93,528
Other current assets........................................ 17,972 12,598
----------- -----------
Total current assets........................................ 243,801 289,128
Property, plant, and equipment, net......................... 69,338 71,976
Other tangible assets....................................... 2,071 2,328
Intangible assets, net...................................... 303,401 308,552
Other non-current assets, net............................... 15,894 18,818
----------- -----------
Total assets................................................ $ 634,505 $ 690,802
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt........................ 8,647 10,731
Cash overdrafts............................................. 13,068 12,321
Accounts payable............................................ 66,320 84,511
Accrued expenses............................................ 95,480 111,507
----------- -----------
Total current liabilities................................... 183,515 219,070
Notes payable, bank credit agreement........................ 206,763 204,284
Senior subordinated notes................................... 195,408 198,681
Junior subordinated payment in kind notes................... 46,371 45,020
Other long-term debt, less current maturities............... 2,960 3,168
Guaranteed Employees' Stock Ownership Plan obligation....... 3,947 4,351
Post-retirement benefit liability........................... 18,711 18,693
Other long-term liabilities................................. 3,905 4,926
----------- -----------
661,580 698,193
----------- -----------
Redeemable convertible preferred stock...................... 24,000 24,000
Guaranteed Employees' Stock Ownership Plan obligation....... (3,947) (4,351)
Treasury stock, at cost..................................... (4,294) (4,210)
----------- -----------
15,759 15,439
----------- -----------
Common stock................................................ 90,375 90,375
Common stock warrants....................................... 26,187 20,000
Accumulated comprehensive loss.............................. (74,330) (69,077)
Accumulated deficit......................................... (84,535) (63,597)
----------- -----------
(42,303) (22,299)
Less treasury stock, at cost................................ (531) (531)
----------- -----------
(42,834) (22,830)
----------- -----------
Total liabilities and shareholders' equity.................. $ 634,505 $ 690,802
=========== ===========
</TABLE>
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
==========================================================================================================
Consolidated Condensed
Statement of Cash Flows
(In thousands)
February 29, February 28,
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $ (20,551) $ (20,427)
Adjustments to reconcile net loss to cash used in operating
activities:
Payment in kind interest............................... 1,351 1,200
Extraordinary loss on debt extinguishment.............. 6,249
Depreciation and amortization.......................... 6,074 6,892
Gain on sale of property, plant, and equipment......... (30) (18)
Deferred income taxes.................................. (21) (135)
Changes in assets and liabilities: --
Accounts receivable, net............................... 44,291 20,529
Inventories............................................ (1,477) 4,247
Other current assets................................... (5,826) (2,774)
Accounts payable....................................... (16,128) (17,921)
Accrued expenses....................................... (14,328) 1,222
Other.................................................. (1,401) (372)
----------- -----------
Net cash used in operating activities....................... (8,046) (1,308)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant, and equipment........ 80 --
Property, plant, and equipment additions.................... (1,361) (4,996)
Other....................................................... (1,173) --
----------- -----------
Net cash used in investing activities....................... (2,454) (4,996)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of senior notes.................................. -- (22,500)
Proceeds from 11.375% senior subordinated notes............ -- 209,647
Redemption of senior subordinated notes..................... -- (170,000)
Decrease in other debt...................................... (2,312) (438)
Increase in notes payable, banks........................... 8,253 3,001
Increase in cash overdraft.................................. 1,230 463
Deferred debt issuance costs................................ (521) (6,084)
Premiums paid on debt extinguishment........................ -- (555)
Other....................................................... (84) 170
Preferred stock dividends................................... (388) (374)
----------- -----------
Net cash provided from financing activities................. 6,178 13,330
----------- -----------
EFFECT OF TRANSLATION ADJUSTMENT ON CASH.................... 3,135 893
CASH AND CASH EQUIVALENTS:
Increase (decrease) in cash................................ (1,187) 7,919
Beginning of year........................................... 14,437 26,801
----------- -----------
End of period............................................... $ 13,250 $ 34,720
=========== ===========
</TABLE>
<PAGE>
Notes to the Consolidated Condensed Financial Statements
The interim financial statements are unaudited and reflect all adjustments
(consisting solely of normal recurring adjustments) that, in the opinion of
management, are necessary for a fair statement of the interim periods presented.
This report includes information in a condensed format and should be read in
conjunction with the audited consolidated financial statements included in
Tokheim Corporation's (the "Company") Annual Report to Shareholders filed on
form 10-K for the year ended November 30, 1999. The results of operations for
the three months ended February 29, 2000 are not necessarily indicative of the
results to be expected for the full year or any other interim period.
New Accounting Pronouncements
- -----------------------------
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued in June 1998 and is effective for the year ending
November 30, 2001. SFAS No. 133 establishes a new model for accounting for
derivatives in the balance sheet as either assets or liabilities and measures
them at fair value. Certain disclosures concerning the designation and
assessment of hedging relationships are also required. Management has not yet
determined the impact of this statement on the Company's consolidated financial
statements.
Segment Reporting
- -----------------
For the periods ended February 29, 2000 and February 28, 1999, the Company had
only one reportable industry segment-the design, manufacture and servicing of
petroleum dispensing systems. The Company has three reportable operating
segments: North America; Europe; and Africa. The accounting policies of these
segments are the same as described in the summary of significant accounting
policies in the Company's form 10-K for the year ended November 30, 1999. The
Company evaluates the performance of each operating segment based upon income
from operations before merger and acquisition costs and other unusual items. The
Company's selling, general, and administrative expenses are charged to each
segment based upon the operating segment where the costs are incurred. Segment
results for the periods ended February 29, 2000 and February 28, 1999 are
summarized in the table below.
<TABLE>
<CAPTION>
2000
North Europe Africa Eliminations Consolidated
America *
<S> <C> <C> <C> <C> <C>
Customer sales.............................. $ 50,463 $ 77,776 $ 4,173 $ 0 $132,412
Intercompany sales.......................... 754 945 0 (1,699) 0
Depreciation and amortization............... 2,758 3,250 66 0 6,074
Operating profit (loss), before merger &
acquisition costs and other
unusual items............................. (5,689) 1,481 510 (47) (3,745)
Total assets................................ $609,048 $373,972 $12,614 $(361,129) $634,505
1999
Customer sales.............................. $ 56,293 $105,551 $ 4,349 $ 0 $166,193
Intercompany sales.......................... 811 831 3 (1,645) 0
Depreciation and amortization............... 2,376 4,440 76 0 6,892
Operating profit (loss), before merger &
acquisition costs and other
unusual items............................. $ (2,057) 2,225 101 (32) 237
Total assets................................ $641,447 $460,264 $14,791 $(391,596) $724,906
Reconciliation from segment reporting to consolidated condensed statement of earnings:
for the three month periods ended February 29 and February 28, respectively.
2000 1999
---- ----
Segment operating profit (loss)...................... $ (3,745) $ 237
Merger and acquisition costs and other
unusual items...................................... (2,725) (1,123)
Operating loss..................................... $ (6,470) $ (886)
</TABLE>
* Includes corporate expenses.
<PAGE>
Comprehensive Loss
- ------------------
The table below summarizes comprehensive loss for the three month periods ended
February 29, 2000 and February 28, 1999.
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Net loss.................................... $ (20,551) $ (20,427)
Other comprehensive loss:
Foreign currency translation adjustments.... (5,253) (25,257)
Comprehensive loss.......................... $ (25,804) $ (45,684)
========= =========
</TABLE>
Bank Credit Agreement
- ---------------------
On December 22, 1999, the Company amended its New Credit Agreement. Among the
items amended were the removal of the requirement to obtain $50.0 million
through the issuance of equity type securities and the provision for the
mandatory reduction of the term loan by $50.0 million. Other terms of the New
Credit Agreement that were amended include the addition of $5.7 million to the
borrowing availability under the working capital facility; changes to the
consolidated net worth covenant; changes to the leverage and senior leverage
ratio covenants; changes to the minimum EBITDA covenant; the addition of a clean
down or availability covenant on the working capital facility; and an
acceleration of the termination date of the New Credit Agreement from September
24, 2004 to September 30, 2003.
In consideration for the amendment to the New Credit Agreement, the Company paid
certain fees and expenses to the bank group including warrants to purchase 16.5%
of the outstanding common stock of the Company at a purchase price of $3.95 per
share. The warrants are exercisable for an aggregate of 2,097,427 shares. The
Company has the right, subject to the terms and conditions of the New Credit
Agreement, to purchase 100% of the warrants upon termination of the New Credit
Agreement or 50% by meeting specified de-leveraging conditions at various
discount rates. At the date of issuance the fair value of the warrants was $6.2
million.
The term loan under the amended New Credit Agreement calls for equal quarterly
principal payments aggregating $7.3 million in 2000; $9.8 million in 2001; and
$12.2 in 2002. The principal payments in 2003 include equal quarterly payments
in the first three quarters of $3.7 million each with the remainder due at
maturity on September 30, 2003.
The New Credit Agreement requires the Company to meet certain consolidated
financial tests, including minimum level of consolidated net worth, minimum
level of EBITDA (as defined in the New Credit Agreement), minimum level of
consolidated interest coverage, maximum consolidated leverage ratio and senior
leverage ratio and minimum consolidated fixed charge coverage ratio. The New
Credit Agreement also contains covenants which, among other things, limit the
incurrence of additional indebtedness, dividends, transactions with
affiliates, asset sales, acquisitions, investments, mergers and
consolidations, prepayments of certain other indebtedness, amendments to
certain other indebtedness, liens and encumbrances and other matters
customarily restricted in such agreements. The New Credit Agreement requires
the Company to maintain specified financial ratios and satisfy certain
financial tests. During the year ended November 30, 1999 and in December 1999,
the Company was required to enter into three amendments to the New Credit
Agreement to avoid the occurrence of events of default relating to certain
financial ratios and tests. The Company's ability to meet such amended
financial ratios and tests in the future may be affected by events beyond its
control. While the Company currently expects to be in compliance with the
covenants and satisfy the financial ratios and tests in the future, there can
be no assurance that the Company will meet such financial ratios and tests or
that it will be able to obtain future amendments to the New Credit Agreement,
if so needed, to avoid a default. In the event of a default, the lenders could
elect to declare all amounts borrowed under the New Credit Agreement to be due
and payable.
<PAGE>
Indebtedness (other than with respect to the additional availability under the
working capital facility) under the New Credit Agreement bears interest based
upon (at the applicable Borrower's option) (i) the Base Rate in the case of U.S.
dollar denominated loans (defined as the higher of (x) the applicable prime rate
and (y) the federal funds rate (as adjusted pursuant to the New Credit
Agreement) plus 0.50%) plus an applicable margin based upon the Company's
leverage ratio (with a range of 1.50% to 3.50% for revolving loans and 3.50% for
term loans) or (ii) the applicable Eurocurrency Rate (as defined in the New
Credit Agreement) for a deposit in the currency of, and for a maturity
corresponding to, the applicable loan and interest period, plus an applicable
margin based upon the Company's leverage ratio (with a range of 2.50% to 4.50%
for revolving loans and 4.50% for term loans). In addition, the $5.7 million of
additional availability under the working capital facility bears an applicable
margin on Base Rate loans of 5.00% and Eurocurrency Rate loans of 6.00%.
The New Credit Agreement requires an amount equal to all net proceeds from asset
sales by the Company or any of its subsidiaries (with certain exceptions) to be
applied to repay the loans under the New Credit Agreement. The New Credit
Agreement also requires the Company to prepay the loans under the New Credit
Agreement in an amount equal to (i) all net proceeds from the sale or issuance
of debt (with certain exceptions), (ii) all net proceeds from the sale or
issuance of equity (with certain exceptions) and (iii) a percentage of Excess
Cash Flow (as defined in the New Credit Agreement) for each fiscal year with a
range of 50% to 85%, based upon the Company's leverage ratio, commencing with
the Company's fiscal year ending November 30, 1999.
Restructuring Charges
- ---------------------
Included in accrued liabilities are certain costs the Company will incur to
effect an integration and rationalization plan for the RPS Division's
operations. These costs represent involuntary termination and other closure
costs in connection with closing redundant manufacturing and service operations.
These accrued costs do not include costs associated with consolidation of
previously existing Tokheim subsidiaries, which will be expensed as incurred or
separately accrued once all criteria for accrual are met, nor do these costs
benefit future periods. The Company expects the integration and rationalization
plan to be completed by the end of year 2000. The table below summarizes the
accrued liability activity by major category and initiative during the three
month period ended February 29, 2000.
<TABLE>
<CAPTION>
November 30, Charges to February 29,
1999 Accrual 2000
<S> <C> <C> <C>
Involuntary termination benefits.............. $8,006 $(1,398) $6,608
Facility closure and other closure costs...... 211 (41) 170
Lease and contract termination fees........... 381 (141) 240
------ ------- ------
Total accrued integration and
rationalization costs....................... $8,598 $(1,580) $7,018
====== ======= ======
</TABLE>
During 1999, as a result of the continuing integration and rationalization of
the RPS Division with other business units, the Company accrued approximately
$2,700 as a charge to operations to establish an accrual for involuntary
termination benefits and related costs for approximately 69 employees that
served in primarily service and administration roles at various service
facilities in France. This amount also included amounts for lease termination
and other exit costs and was added to an amount of $0.3 million that remained
accrued at November 30, 1999 for pension payments due to retirees who formerly
worked at the Company's Glenrothes Scotland facility.
The table below summarizes the accrued liability activity by major category and
initiative for the three month period ended February 29, 2000.
<TABLE>
<CAPTION>
November 30, Charges to February 29,
1999 Accrual 2000
<S> <C> <C> <C>
Involuntary termination benefits............. $2,442 $(164) $2,278
Facility closure and other closure costs..... 460 (37) 423
Lease and contract termination fees.......... 138 (25) 113
------ ----- ------
Total accrued integration and
rationalization costs...................... $3,040 $(226) $2,814
====== ===== ======
</TABLE>
<PAGE>
Guarantor and Nonguarantor Financial Statements
- -----------------------------------------------
In connection with the RPS Division acquisition and as part of the subsequent
financing, the Company issued $123.0 million of 11.375% U.S. dollar denominated
senior subordinated notes and 75.0 million of 11.375% Euro denominated senior
subordinated notes (together the "Outstanding Notes"). The Outstanding Notes are
general unsecured obligations of the Company, subordinated in right of payment
to all existing and future senior indebtedness of the Company, and guaranteed on
a full, unconditional, joint and several basis by the Company's wholly owned
domestic subsidiaries.
The following condensed consolidating financial information presents:
1) Condensed consolidating financial statements as of February 29, 2000, and
November 30, 1999 and for the three month periods ended February 29, 2000 and
February 28, 1999, of (a) Tokheim Corporation, the parent; (b) the guarantor
subsidiaries; (c) the nonguarantor subsidiaries; and (d) the Company on a
consolidated basis.
2) Elimination entries necessary to consolidate Tokheim Corporation, the parent,
with guarantor and nonguarantor subsidiaries.
Investments in subsidiaries are accounted for by the parent using the equity
method of accounting. The guarantor and nonguarantor subsidiaries are presented
on a combined basis. The principal elimination entries eliminate investments in
subsidiaries and intercompany transactions and balances.
Separate financial statements for the guarantor subsidiaries and the
nonguarantor subsidiaries are not presented because management believes that
such financial statements would not be meaningful.
<PAGE>
Consolidated Condensed Statement of Earnings
For the three months ended February 29, 2000
(Amounts in thousands)
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales.................................................. $ 38,584 $ 12,528 $ 83,909 $ (2,609) $ 132,412
Cost of sales, exclusive of items listed below............. 30,352 8,760 67,859 (2,609) 104,362
Selling, general, and administrative expenses.............. 7,789 6,932 11,000 25,721
Depreciation and amortization.............................. 2,087 658 3,329 6,074
Merger and acquisition costs and other unusual items....... 1,770 955 2,725
------------ ------------ ------------ ------------ ------------
Operating profit (loss).................................... (3,414) (3,822) 766 (6,470)
Interest (income) expense, net............................. 6,680 754 7,214 14,648
Foreign currency gain...................................... (75) (42) (52) (169)
Equity in (earnings) loss of consolidated subsidiaries..... 10,921 (10,921)
Minority Interest.......................................... (2) (2)
Other (income) expense, net ............................... (2,138) 6,860 (5,012) (290)
------------ ------------ ------------ ------------ ------------
Earnings (loss) before income taxes........................ (18,802) (11,394) (1,382) 10,921 (20,657)
Income taxes............................................... 1,749 (1,967) 112 (106)
------------ ------------ ------------ ------------ ------------
Earnings (loss) before extraordinary item.................. (20,551) (9,427) (1,494) 10,921 (20,551)
Extraordinary loss on debt extinguishment..................
------------ ------------ ------------ ------------ ------------
Net earnings (loss)........................................ $ (20,551) $ (9,427) $ (1,494) $ 10,921 $ (20,551)
============ ============ ============ ============ ============
</TABLE>
<PAGE>
Consolidated Condensed Statement of Earnings
For the three months ended February 29, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Guarantor Nonguarantor
Parent Subsidiaries Subsidiaries
----------- ------------ ------------
<S> <C> <C> <C>
Net sales.................................................. $ 27,546 $ 29,875 $ 111,067
Cost of sales, exclusive of items listed below............. 22,335 22,381 90,876
Selling, general, and administrative expenses.............. 6,017 6,108 13,642
Depreciation and amortization.............................. 1,268 1,097 4,527
Merger and acquisition costs and other unusual items....... 106 1,017
------------ ------------ ------------
Operating profit (loss).................................... (2,074) 183 1,005
Interest expense, net...................................... 6,683 5,214 410
Foreign currency loss (gain).............................. 193 (3,330) 4,575
Equity in (earnings) loss of consolidated subsidiaries..... 6,716
Minority Interest.......................................... 94
Other (income) expense, net ............................... (1,505) 6,364 (5,013)
------------ ------------ ------------
Earnings (loss) before income taxes........................ (14,161) (8,065) 939
Income taxes............................................... 17 (361) (49)
------------ ------------ ------------
Earnings (loss) before extraordinary item.................. (14,178) (7,704) 988
Extraordinary loss on debt extinguishment.................. 6,249
------------ ------------ ------------
Net earnings (loss)........................................ $ (20,427) $ (7,704) $ 988
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Consolidated
Eliminations Total
------------ ------------
<S> <C> <C>
Net sales.................................................. $ (2,295) $ 166,193
Cost of sales, exclusive of items listed below............. (2,295) 133,297
Selling, general, and administrative expenses.............. 25,767
Depreciation and amortization.............................. 6,892
Merger and acquisition costs and other unusual items....... 1,123
------------ ------------
Operating profit (loss).................................... (886)
Interest expense, net...................................... 12,307
Foreign currency loss (gain)............................... 1,438
Equity in (earnings) loss of consolidated subsidiaries..... (6,716)
Minority Interest.......................................... 94
Other (income) expense, net ............................... (154)
------------ ------------
Earnings (loss) before income taxes........................ 6,716 (14,571)
Income taxes............................................... (393)
------------ ------------
Earnings (loss) before extraordinary item.................. 6,716 (14,178)
Extraordinary loss on debt extinguishment.................. 6,249
------------ ------------
Net earnings (loss)........................................ $ 6,716 $ (20,427)
============ ============
</TABLE>
<PAGE>
Consolidated Condensed Balance Sheet
As of February 29, 2000
(Amounts In thousands)
<TABLE>
<CAPTION>
Guarantor Nonguarantor
Parent Subsidiaries Subsidiaries
------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 2,059 $ 1,734 $ 9,457
Accounts receivables, net.................................. 33,215 66,366 91,019
Inventories, net........................................... 26,372 9,257 57,448
Other current assets....................................... 2,051 1,478 14,443
------------ ------------ ------------
Total current assets....................................... 63,697 78,835 172,367
Investments in subsidiaries................................ 66,767 250,201 6,635
Property, plant, and equipment, net........................ 24,592 10,978 33,768
Goodwill, net.............................................. 119,595 10,111 173,695
Other non-current assets and deferred charges, net......... 188,565 71,640 5,473
------------ ------------ ------------
Total assets............................................... $ 463,216 $ 421,765 $ 391,938
============ ============ ============
LIABILITIES AND SHAREHOLDERS EQUITY
Current maturities of long-term debt....................... $ $ 5,625 $ 2,766
Notes payable to banks..................................... 256
Cash overdrafts............................................ 13,068
Accounts payable........................................... 65,044 6,952 65,198
Accrued expenses........................................... 39,447 12,112 43,921
------------ ------------ ------------
Total current liabilities.................................. 104,491 24,689 125,209
Notes payable, bank credit agreement....................... 17,064 189,699
Senior subordinated notes.................................. 195,408
Junior subordinated Payment In Kind note................... 46,371
Other long-term debt, less current maturities.............. 6,000 245,523
Guaranteed Employees' Stock Ownership Plan obligation...... 3,947
Post-retirement benefit liability.......................... 15,025 3,686
Other long-term liabilities................................ 189 (239) 4,115
------------ ------------ ------------
342,124 260,520 378,533
---------- ---------- ------------
Redeemable convertible preferred stock..................... 24,000
Guaranteed Employees' Stock Ownership Plan obligation...... (3,947)
Treasury stock, at cost.................................... (4,294)
------------ ------------ ------------
15,759
Common stock............................................... 90,375 234,966 65,578
Common stock warrants...................................... 26,187
Accumulated comprehensive loss............................. (8,023) (40,093) (17,512)
Retained earnings (accumulated deficit).................... (2,675) (33,628) (34,661)
------------ ------------ ------------
105,864 161,245 13,405
Less treasury stock, at cost............................... (531)
------------ ------------ ------------
105,333 161,245 13,405
------------ ------------ ------------
Total liabilities and shareholders' equity................. $ 463,216 $ 421,765 $ 391,938
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Consolidated
Eliminations Total
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ $ 13,250
Accounts receivables, net.................................. (70,875) 119,725
Inventories, net........................................... (223) 92,854
Other current assets....................................... 17,972
------------ ------------
Total current assets....................................... (71,098) 243,801
Investments in subsidiaries................................ (323,603)
Property, plant, and equipment, net........................ 69,338
Goodwill, net.............................................. 303,401
Other non-current assets and deferred charges, net......... (247,713) 17,965
------------ ------------
Total assets............................................... $ (642,414) $ 634,505
============ ============
LIABILITIES AND SHAREHOLDERS EQUITY
Current maturities of long-term debt....................... $ $ 8,391
Notes payable to banks..................................... 256
Cash overdrafts............................................ 13,068
Accounts payable........................................... (70,874) 66,320
Accrued expenses........................................... 95,480
------------ ------------
Total current liabilities.................................. (70,874) 183,515
Notes payable, bank credit agreement....................... 206,763
Senior subordinated notes.................................. 195,408
Junior subordinated Payment In Kind note................... 46,371
Other long-term debt, less current maturities.............. (248,563) 2,960
Guaranteed Employees' Stock Ownership Plan obligation...... 3,947
Post-retirement benefit liability.......................... 18,711
Other long-term liabilities................................ (160) 3,905
------------ ------------
(319,597) 661,580
------------ ------------
Redeemable convertible preferred stock..................... 24,000
Guaranteed Employees' Stock Ownership Plan obligation...... (3,947)
Treasury stock, at cost.................................... (4,294)
------------ ------------
15,759
Common stock............................................... (300,544) 90,375
Common stock warrants...................................... 26,187
Accumulated comprehensive loss............................. (8,702) (74,330)
Retained earnings (accumulated deficit).................... (13,571) (84,535)
------------ ------------
(322,817) (42,303)
Less treasury stock, at cost............................... (531)
------------ ------------
(322,817) (42,834)
------------ ------------
Total liabilities and shareholders' equity................. $ (642,414) $ 634,505
============ ============
</TABLE>
<PAGE>
Consolidated Condensed Balance Sheet
As of February 28, 1999
(Amounts In thousands)
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 1,780 $ 2,927 $ 30,013 $ $ 34,720
Accounts receivables, net............................... 60,175 60,819 106,773 (80,821) 146,946
Inventories, net........................................ 16,452 15,383 80,716 (116) 112,435
Other current assets.................................... 1,562 1,478 18,092 21,132
-------- -------- --------- --------- --------
Total current assets.................................... 79,969 80,607 235,594 (80,937) 315,233
Investments in subsidiaries............................. 110,351 142,584 3,250 (256,185)
Property, plant, and equipment, net..................... 23,734 11,035 41,105 75,874
Goodwill, net........................................... 16,451 92,029 192,009 300,489
Other non-current assets and deferred charges, net...... 107,974 254,840 5,628 (335,132) 33,310
-------- -------- --------- --------- --------
Total assets............................................ $338,479 $581,095 $ 477,586 $(672,254) $724,906
======== ======== ========= ========= ========
LIABILITIES AND SHAREHOLDERS EQUITY
Current maturities of long-term debt.................... $ $ $ 1,911 $ $ 1,911
Notes payable to banks.................................. 383 383
Cash overdrafts......................................... 238 14,774 15,012
Accounts payable........................................ 40,878 39,157 78,676 (83,803) 74,908
Accrued expenses........................................ 17,892 42,598 73,661 134,151
-------- -------- --------- --------- --------
Total current liabilities............................... 58,770 81,993 169,405 (83,803) 226,365
Notes payable, bank credit agreement.................... 134,635 50,511 185,146
Senior subordinated notes............................... 205,690 205,690
Junior subordinated Payment In Kind note................ 41,200 41,200
Other long-term debt, less current maturities........... 6,000 316,618 (319,048) 3,570
Guaranteed Employees' Stock Ownership Plan obligation... 6,347 6,347
Post-retirement benefit liability....................... 14,799 14,799
Minimum pension liability............................... 3,135 3,135
Other long-term liabilities............................. 476 (217) 6,979 (97) 7,141
-------- -------- --------- --------- --------
265,362 337,977 493,002 (402,948) 693,393
-------- -------- --------- --------- --------
Redeemable convertible preferred stock.................. 24,000 24,000
Guaranteed Employees' Stock Ownership Plan obligation... (6,347) (6,347)
Treasury stock, at cost................................. (4,712) (4,712)
-------- -------- --------- --------- --------
12,941 12,941
Common stock............................................ 90,353 238,170 14,958 (253,127) 90,354
Common stock warrants................................... 20,000 20,000
Minimum pension liability............................... (3,135) (3,135)
Accumulated comprehensive loss.......................... (8,520) (7,638) (14,713) (16,985) (47,856)
Retained earnings (accumulated deficit)................. (37,827) 12,586 (15,661) 806 (40,096)
-------- -------- --------- --------- --------
60,871 243,118 (15,416) (269,306) 19,267
Less treasury stock, at cost............................ (695) (695)
-------- -------- --------- --------- --------
60,176 243,118 (15,416) (269,306) 18,572
-------- -------- --------- --------- --------
Total liabilities and shareholders' equity.............. $338,479 $581,095 $ 477,586 $(672,254) $724,906
======== ======== ========= ========= ========
</TABLE>
<PAGE>
Consolidated Condensed Statement of Cash Flows
<TABLE>
<CAPTION>
For the period ended February 29, 2000
-------------------------------------------------------------
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net cash provided from (used in)......................... -------------------------------------------------------------
operations............................................. (6,724) 1,245 8,354 (10,921) (8,046)
-------------------------------------------------------------
Cash flows from investing activities:
Plant and equipment additions/transfers.................. (599) (106) (656) (1,361)
Proceeds from the sale/tranfers of property
and equipment.......................................... (313) 393 80
Investments in and advances to
subsidiaries, net...................................... (532) (5,482) (6,080) 10,921 (1,173)
Net cash provided from (used in) investing............... -------------------------------------------------------------
activities............................................. (1,444) (5,588) (6,343) 10,921 (2,454)
-------------------------------------------------------------
Cash flows from financing activities:
Decrease in other debt................................... 2,851 3,139 (49) 5,941
Increase in cash overdraft............................... (515) 1,745 1,230
Deferred debt issuance costs............................. (521) (521)
Other.................................................... (84) (84)
Preferred stock dividends................................ (388) (388)
-------------------------------------------------------------
Net cash provided from financing activities.............. 1,858 2,624 1,696 0 6,178
-------------------------------------------------------------
-------------------------------------------------------------
Effect of translation adjustments on cash................ 6,712 750 (4,327) 0 3,135
-------------------------------------------------------------
Increase (decrease) in cash.............................. 402 (969) (620) 0 (1,187)
Beginning of year........................................ 1,657 2,705 10,075 14,437
-------------------------------------------------------------
End of period............................................ 2,059 1,736 9,455 0 13,250
=============================================================
</TABLE>
<PAGE>
Consolidated Condensed Statement of Cash Flows
<TABLE>
<CAPTION>
For the three months ended February 28, 1999
-----------------------------------------------------------------
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net cash provided from (used in) -----------------------------------------------------------------
operations........................................ (6,204) 2,914 (4,734) 6,716 (1,308)
-----------------------------------------------------------------
Cash flows from investing activities:
Plant and equipment additions/transfers............. (2,521) (746) (1,729) (4,996)
Investments in and advances to
subsidiaries, net................................. 6,716 0 0 (6,716) 0
Net cash provided from (used in) investing -----------------------------------------------------------------
activities........................................ 4,195 (746) (1,729) (6,716) (4,996)
-----------------------------------------------------------------
Cash flows from financing activities:
Redemption of senior notes.......................... (170,000) (170,000)
Proceeds from 11.375% senior subordinated notes..... 209,647 209,647
Redemption of senior notes.......................... (22,500) (22,500)
Increase in notes payable, banks.................... 2,360 (26) (278) 2,056
Increase in cash overdraft.......................... 217 246 463
Deferred debt issuance costs........................ (6,084) (6,084)
Premiums paid on debt extinguishment................ (555) (555)
Other............................................... 677 677
Preferred stock dividends........................... (374) (374)
-----------------------------------------------------------------
Net cash provided from financing activities......... 13,171 191 (32) 0 13,330
-----------------------------------------------------------------
-----------------------------------------------------------------
Effect of translation adjustments on cash........... (10,231) (4,813) 15,937 0 893
-----------------------------------------------------------------
Increase (decrease) in cash......................... 931 (2,454) 9,442 0 7,919
Beginning of year................................... 849 5,381 20,571 26,801
-----------------------------------------------------------------
End of period....................................... 1,780 2,927 30,013 0 34,720
=================================================================
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Tokheim Corporation, including its subsidiaries ("Tokheim" or the "Company"), is
the world's largest manufacturer and servicer of electronic and mechanical
petroleum dispensing systems. These systems include petroleum dispensers and
pumps, retail automation systems (including point-of-sale ("POS") systems),
dispenser payment or "pay-at-the-pump" terminals, replacement parts and upgrade
kits. The Company provides products and services to customers in more than 80
countries. The Company is the largest supplier of petroleum dispensing systems
in Europe, Africa, Canada and Mexico, and one of the largest in the United
States. The Company also has established operations in Asia and Latin America.
Results of Operations
Consolidated sales for the three month period ended February 29, 2000 were
$132.4 million compared to $166.2 million for the 1999 three month period. Sales
for North America decreased 10.4% for the three month period from $56.3 million
in 1999 to $50.5 million in 2000. European sales decreased 26.3% from $105.6
million in 1999 to $77.8 million in the three month period ended February 29,
2000. African sales decreased 4.0% from $4.3 million in 1999 to $4.1 million in
the 2000 three month period. Sales for the quarter were adversely affected by
exchange rates, especially the weakness of the EURO, less POS sales attributable
to Y2K purchases last year, and industry declines in the distributor and
commercial channels of distribution.
Gross margins as a percent of sales (defined as net sales less cost of sales
divided by net sales) increased from 19.8% in the three month period ended
February 28, 1999 to 21.2% in the 2000 three month period. This improvement is
<PAGE>
driven by continued integration and rationalization of the RPS division and
realization of cost savings through these programs. In addition, the Company's
product mix for the three months ended February 29, 2000 included a higher
proportion of dispenser sales which provide a higher margin than service
contracts.
Selling, general, and administrative ("SG&A") expenses as a percent of sales for
the three month period ended February 29, 2000 were 19.4% compared to 15.5% for
the 1999 three month period. This increase as a percentage of sales is due to
lower sales in the first quarter of 2000 compared to 1999. Comparatively, SG&A
expenses have remained flat in relative dollars year over year.
Net interest expense for the three month period ended February 29, 2000 was
$14.6 million compared to $12.3 million in the comparable 1999 period. This
increase is due to increased amortization of fees associated with amending the
Company's credit agreement, which are charged to interest expense, and increased
borrowings on the Company's revolving credit facility as well as increased
interest rates.
Depreciation and amortization expense for the three month period ended February
29, 2000 was $6.1 million compared to $6.9 million in the comparable 1999
period. This expense decreased due to the increasing age of the Company's fixed
assets and the harmonization of depreciation policies between subsidiaries.
Foreign currency gain for the three month period ended February 29, 2000 was
$0.2 million compared to loss $1.4 million in the comparable 1999 period.
Foreign currency gain was caused by fluctuation in the EURO and other foreign
currency exchange rates with respect to the dollar. The Company adjusted, on a
monthly basis, current obligations payable in foreign currencies, including, but
not limited to, interest owed on 75,000,000 EURO demoninated notes.
Income taxes for the three month period ended February 29, 2000 were a benefit
of $0.1 million compared to a benefit of $0.4 million in the comparable 1999
period. These amounts are due to income tax refunds available in foreign
subsidiaries because of legal structural changes and the availability of net
operating loss carry-forwards to offset pretax book earnings.
As a result of the above mentioned items, net loss, including preferred stock
dividends, was $20.9 million or $1.65 per diluted common share for the three
months ended February 29, 2000 compared to a loss, including preferred stock
dividends, before extraordinary loss of $14.6 million or $1.15 per diluted
common share for the same period in 1999. Loss from extraordinary loss on debt
extinguishment was $6.2 million or $0.49 per diluted common share for the three
months ended February 28, 1999. Net loss for the three months ended February 29,
2000, including preferred stock dividends, was $20.9 million or $1.65 per
diluted common share compared to a net loss of $20.8 million or $1.64 per
diluted common share for the comparable 1999 period.
Liquidity and Capital Resources
Cash used in operations for the three month period ended February 29, 2000 was
$8.0 million versus $1.3 million in the comparable period of 1999. During the
first quarter of 2000 the Company collected $44.3 million in customer
receivables. The Company used the funds to pay down accounts payable by $16.1
million. The Company also reduced its accrued expenses by $14.3 million and used
the remainder for general corporate purposes.
Cash used in investing activities for the three month period ended February 29,
2000 was $2.5 million compared to a cash usage of $5.0 million in the comparable
1999 period. The cash usage in both periods is primarily attributable to capital
spending at maintenance levels.
Cash provided from financing activities for the three month period ended
February 29, 2000 was $6.2 million compared to cash provided in the comparable
1999 period of $13.3 million. The cash provided in the 2000 period is
attributable to increased borrowings from the Company's revolving credit
facility.
On December 22, 1999, the Company amended its New Credit Agreement. Among the
items amended were the removal of the requirement to obtain $50.0 million
through the issuance of equity type securities and the provision for the
mandatory reduction of the term loan by $50.0 million. As such, the Company has
reclassified the $50.0
<PAGE>
million repayment from current to long term liabilities. Other terms of the New
Credit Agreement that were amended include the addition of $5.7 million to the
borrowing availability under the working capital facility; changes to the
consolidated net worth covenant; changes to the leverage and senior leverage
ratio covenants; changes to the minimum EBITDA covenant; the addition of a clean
down or availability covenant on the working capital facility; and an
acceleration of the termination date of the New Credit Agreement from September
24, 2004 to September 30, 2003.
In consideration for the amendment to the New Credit Agreement, the Company paid
certain fees and expenses to the bank group including warrants to purchase 16.5%
of the outstanding common stock of the Company at a purchase price of $3.95 per
share. The warrants are exercisable for an aggregate of 2,097,427 shares. The
Company has the right, subject to the terms and conditions of the New Credit
Agreement, to purchase 100% of the warrants upon termination of the New Credit
Agreement or 50% by meeting specified de-leveraging conditions at various
discount rates. At the date of issuance the fair value of the warrants was $6.2
million.
The term loan under the amended New Credit Agreement calls for equal quarterly
principal payments aggregating $7.3 million in 2000; $9.8 million in 2001; and
$12.2 million in 2002. The principal payments in 2003 include equal quarterly
payments in the first three quarters of $3.7 million each with the remainder due
at maturity on September 30, 2003.
The New Credit Agreement requires the Company to meet certain consolidated
financial tests, including minimum level of consolidated net worth, minimum
level of EBITDA (as defined in the New Credit Agreement), minimum level of
consolidated interest coverage, maximum consolidated leverage ratio and senior
leverage ratio and minimum consolidated fixed charge coverage ratio. The New
Credit Agreement also contains covenants which, among other things, limit the
incurrence of additional indebtedness, dividends, transactions with
affiliates, asset sales, acquisitions, investments, mergers and
consolidations, prepayments of certain other indebtedness, amendments to
certain other indebtedness, liens and encumbrances and other matters
customarily restricted in such agreements. The New Credit Agreement requires
the Company to maintain specified financial ratios and satisfy certain
financial tests. During the year ended November 30, 1999 and in December 1999,
the Company was required to enter into three amendments to the New Credit
Agreement to avoid the occurrence of events of default relating to certain
financial ratios and tests. The Company's ability to meet such amended
financial ratios and tests in the future may be affected by events beyond its
control. While the Company currently expects to be in compliance with the
covenants and satisfy the financial ratios and tests in the future, there can
be no assurance that the Company will meet such financial ratios and tests or
that it will be able to obtain future amendments to the New Credit Agreement,
if so needed, to avoid a default. In the event of a default, the lenders could
elect to declare all amounts borrowed under the New Credit Agreement to be due
and payable.
Indebtedness (other than with respect to the additional availability under
the working capital facility) under the New Credit Agreement bears interest
based upon (at the applicable Borrower's option) (i) the Base Rate in the case
of U.S. dollar denominated loans (defined as the higher of (x) the applicable
prime rate and (y) the federal funds rate (as adjusted pursuant to the New
Credit Agreement) plus 0.50%) plus an applicable margin based upon the
Company's leverage ratio (with a range of 1.50% to 3.50% for revolving loans
and 3.50% for term loans) or (ii) the applicable Eurocurrency Rate (as defined
in the New Credit Agreement) for a deposit in the currency of, and for a
maturity corresponding to, the applicable loan and interest period, plus an
applicable margin based upon the Company's leverage ratio (with a range of
2.50% to 4.50% for revolving loans and 4.50% for term loans). In addition, the
$5.7 million of additional availability under the working capital facility bears
an applicable margin on Base Rate loans of 5.00% and Eurocurrency Rate loans of
6.00%.
The New Credit Agreement requires an amount equal to all net proceeds from
asset sales by the Company or any of its subsidiaries (with certain
<PAGE>
exceptions) to be applied to repay the loans under the New Credit Agreement.
The New Credit Agreement also requires the Company to prepay the loans under
the New Credit Agreement in an amount equal to (i) all net proceeds from the
sale or issuance of debt (with certain exceptions), (ii) all net proceeds from
the sale or issuance of equity (with certain exceptions) and (iii) a
percentage of Excess Cash Flow (as defined in the New Credit Agreement) for
each fiscal year with a range of 50% to 85%, based upon the Company's leverage
ratio, commencing with the Company's fiscal year ending November 30, 1999.
At February 29, 2000, the outstanding borrowings were $102.4 million under the
revolving working capital facility and $115.7 million under the term loan.
Available borrowings under the revolving working capital facility were $13.3
million at February 29, 2000, subject to the Company's borrowing base
calculation and certain other covenants.
The Company has guaranteed loans to the Employees' Stock Ownership Plan ("ESOP")
in the amounts of $3.9 million and $4.4 million at February 29, 2000 and
November 30, 1999, respectively. The Trustee who holds the ESOP Preferred Stock,
may elect to convert each preferred share to one common share in the event of a
redemption by Tokheim, certain consolidations or mergers of Tokheim, or a
redemption by the Trustee that is necessary to provide for distributions under
the Company's Retirement Savings Plan. A participant may elect to receive a
distribution from the plan in cash or common stock. If redeemed by the Trustee,
the Company is responsible for purchasing the preferred stock at the twenty-five
dollar floor value. The Company may elect to pay the redemption price in cash or
an equivalent amount of common stock. Preferred stock dividends paid were $0.4
million for the three month periods ended February 29, 2000 and February 28,
1999.
As part of the purchase price of the RPS Division, the Company has provided for
certain costs it expects to incur to close down redundant operations in
connection with the reorganization and rationalization of the RPS Division's
operations. The Company has incurred $1.6 million of expenditures in the the
three month period ended February 29, 2000 and expects to incur an additional
$7.0 million which consists of $6.6 million of involuntary termination costs to
reduce redundant staffing levels, approximately $0.2 million of facility closure
and other exit costs, and approximately $0.2 million associated with lease
breakage fees. These costs have been aggregated and included in accrued
liabilities. These amounts do not include costs associated with the
consolidation of previously existing Tokheim subsidiaries, which will be
expensed as incurred, nor do these costs benefit future periods. The Company
estimates the cash expenditures necessary to close or consolidate certain of the
existing Tokheim subsidiaries to approximate $3.0 million in 2000, of which $0.2
million was incurred in the three month period ended February 29, 2000. The
remaining $2.8 million of cash expenditures will be funded with cash generated
from operations, working capital improvements and, if needed, borrowings from
the working capital facility.
Beginning in 1996, the Company began to address any possible Year 2000 ("Y2K")
issues related to the Company's software and hardware systems as well as its
product line. The Company prepared an inventory of all systems and equipment,
analyzing risks, determining compliance levels and addressing remediation
tactics. In 1997, a formal Y2K program office was established with a full time
staff to address all aspects on a world wide basis. The program office was
sponsored by and reported to the executive steering committee of the Company
which is comprised of the Company's senior management.
The program office established regional Y2K offices throughout the world in
early 1998. The Y2K project office identified five major sub-projects related to
the Y2K issue: products utilizing embedded technologies; information systems and
technology; external agents consisting primarily of suppliers, distributors and
third party service providers; manufacturing equipment; and infrastructure. The
Y2k program office published a Y2K implementation manual which was distributed
throughout the Company. The Company enlisted the assistance of a third party
consulting firm to verify and validate its Y2K plan.
The program office established a deadline of August 31, 1999 for contingency
planning to be completed. Contingency planning was defined as planning to ensure
<PAGE>
that the continued availability of essential services, programs, and operations
including all the resources necessary to operate the enterprise at a level
acceptable to senior management would be available. Operational stability and
reliability was to be maintained to ensure the survival of the enterprise and to
represent the primary objectives of contingency planning.
Through the planning and corrective actions identified by the Y2K program
office, the Company did not experience any system critical failures. The Company
incurred costs of approximately $4.0 million related to the Y2K program office.
The Y2K program office was officially closed on January 31, 2000.
The Company's principal sources of liquidity in the future are expected to be
cash flow from operations and available borrowings under the New Credit
Agreement. It is expected that the Company's principal uses of liquidity will be
to provide working capital, finance capital expenditures, fund costs associated
with the Company's integration and rationalization plan and meet debt service
requirements. As a result of the acquisition of the RPS Division, the Company
has a significant level of debt. Based upon current levels of operations and
anticipated cost savings and future growth, the Company believes that its
expected cash flows from operations, together with available borrowings under
the New Credit Agreement and its other sources of liquidity, including leases,
will be adequate to meet its anticipated requirements for working capital,
capital expenditures, lease payments and scheduled principal and interest
payments. There can be no assurance, however, that the Company's business will
continue to generate cash flows at or above current levels, that estimated cost
savings or growth will be achieved or that the Company will be able to refinance
its existing indebtedness in whole or in part.
The indentures under which the Dollar Notes and the Euro Notes were issued (the
"Indentures") and the New Credit Agreement contain a number of significant
covenants. The New Credit Agreement requires the Company to maintain specified
financial ratios and satisfy certain financial tests. The Company's ability to
meet such financial ratios and tests may be affected by events beyond its
control. There can be no assurance that the Company will meet such financial
ratios and tests. In addition, the Indentures limit the ability of the Company
and its subsidiaries to, among other things: incur additional debt; pay
dividends on capital stock or repurchase capital stock or make certain other
restricted payments; use the proceeds of certain asset sales; make certain
investments; create liens on assets to secure debt; enter into transactions with
affiliates; merge or consolidate with another company; and transfer or sell
assets.
New Accounting Pronouncements
- -----------------------------
The Company has considered the impact that accounting pronouncements recently
issued by the Financial Accounting Standards Board and American Institute of
Certified Public Accountants will have on the Consolidated Condensed Financial
Statements as of February 29, 2000. None of the pronouncements that have been
issued but not yet adopted by the Company are expected to have a material impact
on the Company's financial position, results of operations or cash flows. See
the Notes to the Consolidated Financial Statements for additional information
regarding recently issued accounting pronouncements.
PART II. OTHER INFORMATION
Item 5. Other Information
Legal Proceedings
- -----------------
On February 29, 2000, a three member arbitration panel ruled in favor of Bennett
Pump Company ("Bennett") concerning arbitration between the Company and Bennett.
The dispute concerned the minimum purchase requirements by the Company for
Bennett's products over a five year period beginning September 1, 1996. The
Company has maintained it could reduce the minimum purchase commitment by not
ordering any
<PAGE>
pumping units and pay Bennett for the lost profit on the pumping units not
ordered. The arbitration panel ruled that the minimum purchase agreement entered
into as part of the Sofitam acquisition could not be reduced. The Company was
required to pay a one time payment of $1.2 million for the shortfall in
purchases in 1998 and 1999 and $1.6 million for the shortfall in purchases in
2000 and 2001, which were discounted to present value. The payment of $2.8
million was charged against this liability. The Company had elected not to
purchase any additional units from Bennett due to quality and delivery problems
that it had experienced with Bennett. The Company is currently building the
required pumping unit in-house.
In December 1997, the Company acquired Management Solutions, Inc. ("MSI"). MSI
develops and distributes retail automation systems (includes POS software),
primarily for the convenience store, petroleum dispensing and fast food service
industries. The Company paid MSI's stockholders an initial amount of $12.0
million. The Company is also obligated to make contingent payments of up to
$13.2 million through 2000 based upon MSI's performance. The Company was not
obligated to make any performance payments in 1999 or 1998 under the purchase
agreement. The four former shareholders of MSI filed a $30.0 million arbitration
claim against the Company with the American Arbitration Association on July 7,
1999 alleging fraud, breach of contract, tortious interference with contractual
relations and breach of implied covenant of good faith and fair dealing. The
claims relate to the Company's acquisition of MSI in 1997 and the termination
for cause of its president and chief executive officer in February 1999. The
Company believes that the claims are without merit and will vigorously defend
against the allegations. The Company has filed counterclaims and is also seeking
damages in excess of $4.0 million for breaches of representations and warranties
in the purchase agreement. Management believes that the outcome of this
arbitration will not materially adversely affect the business, financial
condition or results of operations of the Company.
New York Stock Exchange
- ------------------------------------
On February 18, 2000, the Company announced that it currently fails to meet
newly effective New York Stock Exchange ("NYSE") continued listing standards
requiring total market capitalization and total stockholders equity of not less
than $50.0 million each. The Company submitted a plan on January 31, 2000 to the
Listings and Compliance Committee (the "Committee") of the NYSE demonstrating
how the Company plans to comply with the newly effective standards. Based upon
management estimates, the Company believes it will satisfy the new standards of
the NYSE, however, there can be no assurance that such standards will be met.
After reviewing the plan, the Committee has informed the Company in a letter
dated April 6, 2000, that it has agreed to accept the Company's submitted plan,
and that senior NYSE management has acknowledged such acceptance. As a result,
the NYSE is prepared to continue the listing of the Company at this time. The
NYSE will perform quarterly reviews during the 18 months from receipt of its
December 30, 1999 letter for compliance with the goals and initiatives as
outlined in the Company's plan. Failure to achieve these financial and
operational goals may result in the Company being subject to NYSE trading
suspension at the point the initiative or goal is not met. Should the Company's
shares cease trading on the NYSE, the Company believes that an adequate
alternative trading venue will be available.
The Company will need to achieve the new minimum continued listing standards of
market capitalization of not less than $50.0 million and total stockholders'
equity of not less $50.0 million at the end of the 18 month plan period. Failure
to achieve any of the minimum requirements at the appropriate time will result
in the Company being suspended by the NYSE with application made to the SEC to
delist.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit
No. Document
------- --------
2.1 Stock Purchase Agreement, dated as of December 29, 1997 between
Tokheim Corporation and Arthur S. ("Rusty") Elston, Ronald H. Elston,
Eric E. Burwell and Curt E. Burwell (incorporated herein by reference
to the Company's Current Report on Form 8-K, dated December 31, 1997).
2.2 Master Agreement for Purchase and Sale of Shares, Assets, and
Liabilities, dated as of June 19, 1998, between Tokheim Corporation
and Schlumberger Limited (incorporated herein by reference to the
Company's Current Report on Form 8-K/A dated October 1, 1998).
2.3 Amendment No. 1 to the Master Agreement for Purchase and Sale of
Shares, Assets and Liabilities, dated as of September 30, 1998 between
Tokheim Corporation and Schlumberger Limited (incorporated herein by
reference to the Company's Current Report on Form 8-K/A dated October
1, 1998).
3.1 Restated Articles of Incorporation of Tokheim Corporation, as amended,
as filed with the Indiana Secretary of State on February 5, 1997
(incorporated herein by reference to the Company's Annual Report on
Form 10-K/A for the year ended November 30, 1996).
3.2 Bylaws of Tokheim Corporation, as restated on July 12, 1995 and
amended March 2, 1998 (incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the period ended May 31,
1998).
4.1 Rights Agreement, dated as of January 22, 1997, between Tokheim
Corporation and Harris Trust and Savings Bank, as Rights Agent
(incorporated herein by reference to the Company's Current Report on
Form 8-K, filed February 23, 1997).
<PAGE>
4.2 Amendment No. 1 to Rights Agreement, dated as of September 30, 1998,
between Tokheim Corporation and Harris Trust and Savings Bank
(incorporated herein by reference to the Company's Current Report on
Form 8-K/A dated October 1, 1998).
4.3 Securities Purchase Agreement, dated September 30, 1998, between
Tokheim Corporation and Schlumberger Limited (incorporated herein by
reference to the Company's Current Report on Form 8-K/A dated October
1, 1998).
4.4 12% Senior Subordinated Note due January 28, 1999 in the amount of
$170,000,000 (incorporated herein by reference to the Company's
Current Report on Form 8-K/A dated October 1, 1998).
4.5 Senior Subordinated Note Indenture, dated as of September 30, 1998,
among Tokheim Corporation, Management Solutions, Inc., Tokheim
Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose & Petroleum
Equipment, Inc., Envirotronic Systems, Inc., Gasboy International,
Inc., Tokheim Automation Corporation, Tokheim Investment Corp., as
guarantors, and Harris Trust and Savings Bank, as trustee
(incorporated herein by reference to the Company's Current Report on
Form 8-K/A dated October 1, 1998).
4.6 12% Junior Subordinated Note due 2008 in the amount of $40,000,000
(incorporated herein by reference to the Company's Current Report on
Form 8-K/A dated October 1, 1998).
4.7 Junior Subordinated Note Indenture, dated as of September 30, 1998,
among Tokheim Corporation, Management Solutions, Inc., Tokheim
Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose & Petroleum
Equipment, Inc., Envirotronic Systems, Inc., Gasboy International,
Inc., Tokheim Automation Corporation, Tokheim Investment Corp., as
guarantors, and Harris Trust and Savings Bank, as trustee
(incorporated herein by reference to the Company's Current Report on
Form 8-K/A dated October 1, 1998).
4.8 Amendment No. 1 to Junior Subordinated Note Indenture, dated as of
January 25, 1999 (incorporated herein by reference to the Company's
Annual Report on Form 10-K, for the year ended November 30, 1998).
4.9 Warrant to Purchase up to 19.9% of the Shares of Common Stock of
Tokheim Corporation (incorporated herein by reference to the Company's
Current Report on Form 8-K/A dated October 1, 1998).
4.10 Registration Rights Agreement, dated September 30, 1998, between
Tokheim Corporation and Schlumberger Limited (incorporated herein by
reference to the Company's Current Report on Form 8-K/A dated October
1, 1998).
4.11 Note Purchase Agreement, dated as of September 30, 1998, among
Tokheim Corporation, the Subsidiaries and the Purchasers (incorporated
herein by reference to the Company's Current Report on Form 8-K/A
dated October 1, 1998).
4.12 Amended and Restated Credit Agreement, dated as of September 30,
1998, among Tokheim Corporation, the Borrowing Subsidiaries, the
Lenders and NBD Bank, N.A. as administrative agent and Credit Lyonnais
as documentation and collateral agent and Gleacher NatWest Inc. and
Bankers Trust Company as co-syndication agents (incorporated herein by
reference to the Company's Current Report on Form 8-K/A dated October
1, 1998).
4.13 Second Amended and Restated Credit Agreement, dated as of December 14,
1998, among Tokheim Corporation, the Borrowing Subsidiaries, the
Lenders and NBD Bank, N.A. as administrative agent and Credit Lyonnais
as documentation and collateral agent and Gleacher NatWest Inc. and
Bankers Trust Company as co-syndication agents (incorporated herein by
reference to the Company's Annual Report on Form 10-K, for the year
ended September 30, 1998).
4.14 Consent and Amendment No. 1 to Amended and Restated Credit Agreement,
dated as of January 11, 1999 (incorporated
<PAGE>
herein by reference to the Company's Quarterly Report on Form 10-Q,
for the quarter ended February 28, 1999).
4.15 Amendment No. 2 to Amended and Restated Credit Agreement, dated as of
March 1, 1999 (incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q, for the quarter ended February 28,
1999).
4.16 Amendment No. 3 to Second Amended and Restated Credit Agreement,
dated as of February 27, 1999 (incorpo rated herein by reference to
the Company's Quarterly Report on Form 10-Q, for the quarter ended
February 28, 1999).
4.17 Amendment No. 4 and Waiver to Second Amended and Restated Credit
Agreement, dated as of October 14, 1999 (incorporated herein by
reference to the Company's Quarterly Report on Form 10-Q, for the
quarter ended August 31, 1999).
4.18 Amendment No. 5 to Second Amended and Restated Credit Agreement,
dated as of December 22, 1999 (incorpo rated herein by reference to
the Company's Annual Report on Form 10-K, for the year ended September
30, 1999).
4.19 Warrant and Registration Rights Agreement, dated as of December 22,
1999, among Tokheim Corporation, Bank One, Indiana, National
Association, Credit Lyonnais, Chicago Branch, Bankers Trust Company,
ABN Amro Bank, N.V., Credit Agricole Indosuez, Harris Trust and
Savings Bank, Compagnie Financiere de Cic et de L'Union Europeene,
Mercantile Bank N.A., The Provident Bank, Finova Capital Corporation,
Imperial Bank, Natexis Banque BFCE, Bank Polska Kasa Opieke S.A.--
Pekao S.A. Group, New York Branch, Senior Debt Portfolio, Eaton Vance
Senior Income Trust, Oxford Strategic Income Fund, Octagon Loan Trust,
Octagon Investment Partners II, LLC, Indosuez Capital Funding IIA,
Limited, Indosuez Capital Funding IV, L.P., Alliance Investment
Opportunities Fund, L.L.C., Amsouth Bank and ARES Leveraged Investment
Fund II, L.P. (incorporated herein by reference to the Company's
Annual Report on Form 10-K, for the year ended September 30, 1999).
4.20 Form of Warrant Certificate, dated as of December 22, 1999
(incorporated herein by reference to the Company's Annual Report on
Form 10-K, for the year ended September 30, 1999).
4.21 Dollar Notes Indenture, dated as of January 29, 1999, among Tokheim
Corporation, certain subsidiary guarantors of Tokheim Corporation, and
U.S. Bank Trust National Association, as trustee (incorporated herein
by reference to Amendment No. 140 to the Company's Registration
Statement on Form S-4, dated June 15, 1999, as amended).
4.22 Euro Notes Indenture, dated as of January 29, 1999, among Tokheim
Corporation, certain subsidiary guarantors of Tokheim Corporation, and
U.S. Bank Trust National Association, as trustee (incorporated herein
by reference to Amendment No. 140 to the Company's Registration
Statement on Form S-4, dated June 15, 1999, as amended).
4.23 Dollar Registration Rights Agreement, dated as of January 29, 1999,
among Tokheim Corporation, BT Alex. Brown Incorporated, Credit
Lyonnais Securities (USA) Inc., First Chicago Capital Markets, Inc.,
Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber
Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of
Tokheim Corporation (incorporated herein by reference to the Company's
Annual Report on Form 10-K, for the year ended November 30, 1998).
4.24 Euro Registration Rights Agreement, dated as of January 29, 1999,
among Tokheim Corporation, BT Alex. Brown Incorporated, Credit
Lyonnais Securities (USA) Inc., First Chicago Capital Markets, Inc.,
Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber
Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of
Tokheim Corporation (incorporated herein by reference to the Company's
Annual Report on Form 10-K, for the year ended November 30, 1998).
10.1 Tokheim Corporation 1992 Stock Incentive Plan, established December
15, 1992 (incorporated herein by reference to the Company's
Registration Statement on Form S-8, File No. 33-52167, dated February
4, 1994).
<PAGE>
10.2 Retirement Savings Plan for Employees of Tokheim Corporation and
Subsidiaries (incorporated herein by reference to Amendment No. 1 to
the Company's Registration Statement on Form S-8, File No. 33-29710,
dated August 1, 1989).
10.3 Tokheim Corporation 1996 Key Management Incentive Bonus Plan
(incorporated herein by reference to the Company's Report on Form
10-Q/A, for the quarter ended February 29, 1996).
10.4 Tokheim Corporation Deferred Compensation Plan (incorporated herein
by reference to the Company's Report on Form 10-Q, for the quarter
ended August 31, 1999).
10.5 Tokheim Corporation Supplemental Executive Retirement Plan
(incorporated herein by reference to the Company's Report on Form
10-Q, for the quarter ended August 31, 1999).
10.6 Employment Agreement, dated July 15, 1999, between Tokheim Corporation
and Douglas K. Pinner (incorporated herein by reference to the
Company's Report on Form 10-Q, for the quarter ended August 31, 1999).
10.7 Employment Agreement, dated July 15, 1999, between Tokheim Corporation
and John A. Negovetich (incorporated herein by reference to the
Company's Report on Form 10-Q, for the quarter ended August 31, 1999).
10.8 Employment Agreement, dated July 15, 1999, between Tokheim Corporation
and Jacques St-Denis (incorporated herein by reference to the
Company's Report on Form 10-Q, for the quarter ended August 31, 1999).
10.9 Employment Agreement, dated July 15, 1999, between Tokheim Corporation
and Norman L. Roelke (incorporated herein by reference to the
Company's Report on Form 10-Q, for the quarter ended August 31, 1999).
10.10 Employment Agreement, dated July 15, 1999, between Tokheim Corporation
and Scott A. Swogger (incorporated herein by reference to the
Company's Report on Form 10-Q, for the quarter ended August 31, 1999).
10.11 Technology License Agreement, effective as of December 1, 1997,
between Tokheim Corporation and Gilbarco, Inc. (incorporated herein by
reference to the Company's Annual Report on Form 10-K, for the year
ended November 30, 1997).
10.12 Tokheim Corporation 1997 Incentive Plan (incorporated herein by
reference to the Company's Annual Report on Form 10-K, for the year
ended November 30, 1997).
10.13 Employment Agreement, dated December 31, 1997, between Management
Solutions, Inc. and Arthur S. Elston (incorporated herein by reference
to the Company's Annual Report on Form 10-K, for the year ended
November 30, 1997).
11.1 Statement re computation of per share earnings.
27.1 Financial Data Schedule.
b. Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOKHEIM CORPORATION
Date: April 19, 2000 /s/ Douglas K. Pinner
---------------------
Chairman, President and Chief Executive Officer
Date: April 19, 2000 /s/ John A. Negovetich
----------------------
Executive Vice-President, Finance and
Administration and Chief Financial Officer
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- --------
<C> <S>
11.1 Statement re computation of per share earnings.
27.1 Financial Data Schedule
</TABLE>
<PAGE>
Tokheim Corporation and Subsidiaries
Exhibit (11) - Earnings Per Share
For the three month periods ended February 29, 2000 and February 28, 1999.
Basic earnings per share ("EPS") is calculated based on earnings (loss)
available to common shareholders and the weighted average number of common stock
shares outstanding during each period. Diluted EPS includes additional dilution
from potential common stock equivalents such as stock issued pursuant to the
conversion of preferred stock or the exercise of stock options outstanding.
The following table presents information necessary to calculate EPS for the
three month periods ended February 29, 2000 and February 28, 1999.
<TABLE>
<CAPTION>
Basic Basic
---------------------------- ------------------------
Three Months Ended Nine Months Ended
---------------------------- ------------------------
February 29, February 28, August 31, August 31,
2000 1999 1999 1998
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding................... 12,669 12,662 12,667 10,925
======== ======== ======== ========
Net earnings (loss):
Before extraordinary item...................... $(20,551) $(14,178) $(24,624) $ (249)
Extraordinary loss on debt extinguishment...... -- (6,249) (6,249) (4,965)
-------- -------- -------- --------
Net earnings (loss)............................ (20,551) (20,427) (30,873) (5,214)
Preferred stock dividends...................... (388) (374) (1,124) (1,113)
-------- -------- -------- --------
Earnings (loss) applicable to common stock..... $(20,939) $(20,801) $(31,997) $ (6,327)
======== ======== ======== ========
Net earnings (loss) per common share:
Before extraordinary item...................... $ (1.65) $ (1.15) $ (2.03) $ (0.12)
Extraordinary loss on debt extinguishment...... -- (0.49) (0.49) (0.45)
-------- -------- -------- --------
Net earnings (loss)............................ $ (1.65) $ (1.64) $ (2.52) $ (0.57)
======== ======== ======== ========
</TABLE>
For financial reporting purposes, the loss per share, assuming full dilution, is
considered to be the same as basic since the effect of the common stock
equivalents would be antidilutive.
<TABLE>
<CAPTION>
Diluted Diluted
---------------------------- ------------------------
Three Months Ended Nine Months Ended
---------------------------- ------------------------
February 29, February 28, August 31, August 31,
2000 1999 1999 1998
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding................... 12,669 12,662 12,667 10,925
Share equivalents.............................. 2,520 2,549 403 254
Weighted conversion of preferred stock......... 794 771 794 763
-------- -------- -------- --------
Adjusted outstanding........................... 15,983 15,982 13,864 11,942
======== ======== ======== ========
Net earnings (loss):
Before extraordinary item...................... $(20,551) $(14,178) $(24,624) $ (249)
Extraordinary loss on debt extinguishment...... -- (6,249) (6,249) (4,965)
-------- -------- -------- --------
Net earnings (loss)............................ (20,551) (20,427) (30,873) (5,214)
Incremental RSP expense........................ (388) (374) (1,124) (1,113)
-------- -------- -------- --------
Earnings (loss) applicable to common stock..... $(20,939) $(20,801) $(31,997) $ (6,327)
======== ======== ======== ========
Net earnings (loss) per common share:
Before extraordinary item...................... $ (1.31) $ (0.91) $ (1.86) $ (0.11)
Extraordinary loss on debt extinguishment...... -- (0.39) (0.45) (0.42)
-------- -------- -------- --------
Net earnings (loss)............................ $ (1.31) $ (1.30) $ (2.31) $ (0.53)
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000098559
<NAME> Tokheim Corporation
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-2000
<PERIOD-END> FEB-29-2000
<CASH> 13,250
<SECURITIES> 0
<RECEIVABLES> 126,092
<ALLOWANCES> 6,367
<INVENTORY> 92,854<F1>
<CURRENT-ASSETS> 243,801
<PP&E> 154,962<F2>
<DEPRECIATION> 85,624
<TOTAL-ASSETS> 634,505
<CURRENT-LIABILITIES> 183,515
<BONDS> 195,408
15,759<F3>
0
<COMMON> 116,031<F4>
<OTHER-SE> (158,865)<F5>
<TOTAL-LIABILITY-AND-EQUITY> 636,061
<SALES> 132,412
<TOTAL-REVENUES> 132,412
<CGS> 104,362<F6>
<TOTAL-COSTS> 104,362<F6>
<OTHER-EXPENSES> 32,964
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,648
<INCOME-PRETAX> (20,657)
<INCOME-TAX> (106)
<INCOME-CONTINUING> (20,551)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,551)
<EPS-BASIC> (1.65)
<EPS-DILUTED> (1.65)
<FN>
<F1> Represents gross inventory net of loss reserves.
<F2> Represents gross PP&E.
<F3> Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$3,947 and treasury stock of $4,294.
<F4> Represents common stock of $90,375, common stock warrants of $26,187 less
treasury stock of $531.
<F5> Represents accumulated deficit of $82,979 and foreign currency translation
adjustments of $74,330.
<F6> Includes product development expenses and excludes depreciation and
amortization.
</FN>
</TABLE>
