SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 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 (219) 470-4600
code):
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 August 31, 2000, 12,687,378 shares of voting common stock were
outstanding.
The exhibit index is located on page 18
ITEM 1. FINANCIAL STATEMENTS
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TOKHEIM CORPORATION AND SUBSIDIARIES
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(Unaudited)
(Debtors-in-Possession) -------------------------------------------------------------
Consolidated Condensed Statement of Earnings Three Months Ended Nine Months Ended
(Amounts in thousands except amounts per share) August 31, August 31,
2000 1999 2000 1999
------------ ----------- ----------- ------------
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Net sales.............................................. $ 122,668 $ 169,170 $ 389,917 $ 512,374
Cost of sales, exclusive of items listed below......... 95,933 128,927 306,147 393,999
Selling, general, and administrative expenses.......... 19,829 25,023 70,005 78,729
Description and amortization........................... 5,867 6,319 18,451 19,279
Merger and acquisitions costs and other unusual items.. 13,146 1,292 18,594 6,115
------------ ----------- ----------- ------------
Operating profit (loss)............................. (12,107) 7,609 (23,280) 14,252
------------ ----------- ----------- ------------
Interest expense, net.................................. 15,103 13,279 44,625 37,944
Foreign currency (gain) loss........................... 650 (483) 453 2,372
Minority interest in subsidiaries...................... 12 (2) 61 88
Other (income) expense, net............................ 553 261 (455) (1,048)
------------ ----------- ----------- ------------
Loss before reorganization costs, income taxes and
extraordinary loss..................................... (28,425) (5,446) (67,964) (25,104)
Reorganization costs................................... 1,450 - 1,450 -
------------ ----------- ----------- ------------
Loss before income taxes and extraordinary loss........ (29,875) (5,446) (69,414) (25,104)
Income tax expense (benefit)........................... 321 2 (1,362) (480)
------------ ----------- ----------- ------------
Loss before extraordinary loss......................... (30,196) (5,448) (68,052) (24,624)
Extraordinary loss on debt extinguishment.............. - - - (6,249)
------------ ----------- ----------- ------------
Net loss............................................... (30,196) (5,448) (68,052) (30,873)
Preferred stock dividends.............................. (382) (376) (1,150) (1,124)
------------ ----------- ----------- ------------
Loss applicable to common stock........................ $ (30,578) $ (5,824) $ (69,202) $ (31,997)
============ =========== =========== ============
Loss per common share:
Basic
Before extraordinary loss........................ $ (2.41) $ (0.46) $ (5.46) $ (2.03)
Extraordinary loss on debt extinguishment........ - - - (0.49)
------------ ----------- ----------- ------------
Net Loss......................................... $ (2.41) $ (0.46) $ (5.46) $ (2.52)
============ =========== =========== ============
Weighted average shares outstanding.............. 12,669 12,670 12,669 12,667
============ =========== =========== ============
Diluted
Before extraordinary loss........................ $ (2.41) $ (0.46) $ (5.46) $ (2.03)
Extraordinary loss on debt extinguishment........ - - - (0.49)
------------ ----------- ----------- ------------
Net Loss......................................... $ (2.41) $ (0.46) $ (5.46) $ (2.52)
------------ ----------- ----------- ------------
Weighted average shares outstanding.............. 12,669 12,670 12,669 12,667
============ =========== =========== ============
</TABLE>
<TABLE>
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TOKHEIM CORPORATION AND SUBSIDIARIES
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(Debtors-in-Possession) Unaudited Audited
Consolidated Condensed Balance Sheet -------------- --------------
(Amounts in thousands) August 31, November 30,
2000 1999
------------- --------------
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ASSETS
Current assets:
Cash and cash equivalents.................................... $ 14,989 $ 14,437
Accounts receivable, net..................................... 104,282 168,565
Inventories:
Raw materials, service parts, and supplies................ 61,306 68,122
Work in process........................................... 12,482 16,389
Finished goods............................................ 5,377 9,017
------------- -------------
79,165 93,528
Other current assets......................................... 13,453 12,598
------------- -------------
Total current assets......................................... 211,889 289,128
Property, plant, and equipment, net.......................... 64,741 71,976
Other tangible assets........................................ 1,643 2,328
Intangible assets, net....................................... 279,345 308,552
Other non-current agents, net................................ 16,971 18,818
------------- -------------
Total assets................................................. $ 574,589 $ 690,802
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities subject to compromise:
Senior subordinated notes................................. $ 189,607 --
Junior subordinated payment in kind notes................. 49,195 --
Accrued interest.......................................... 12,633 --
Other accrued liabilities................................. 13,713 --
------------- -------------
Total liabilities subject to compromise...................... 265,148 --
Liabilities not subject to compromise:
Notes payable, bank credit agreement...................... -- $ 7,500
Current maturities of long-term debt...................... 2,135 3,231
DIP financing............................................. 5,000 --
Cash overdrafts........................................... 14,829 12,321
Accounts payable.......................................... 59,456 84,511
Accrued expense........................................... 68,758 111,507
------------- -------------
Total current liabilities.................................... 413,326 219,070
Notes payable, bank credit agreement......................... 223,858 204,284
Senior subordinated notice................................... -- 198,681
Junior subordinated payment in kind notice................... -- 45,020
Other long-term debt, less current maturities................ 2,641 3,168
Guaranteed Employees' Stock Ownership Plan obligation........ 2,956 4,351
Post-retirement benefit liability............................ 18,519 18,693
Other long-term liabilities.................................. 1,003 4,926
------------- -------------
662,303 698,193
------------- -------------
Redeemable convertible preferred stock....................... 24,000 24,000
Guaranteed Employee's Stock Ownership Plan obligation........ (2,956) (4,351)
Treasury stock, at cost...................................... (4,307) (4,210)
------------- -------------
16,737 15,439
============= =============
Common stock................................................. 90,375 90,375
Common stock warrants........................................ 26,187 20,000
Accumulated comprehensive loss............................... (87,684) (69,077)
Accumulated deficit.......................................... (132,798) (63,597)
(103,920) (22,299)
Less treasury stock, at cost................................. (531) (531)
(104,451) (22,830)
------------- -------------
Total liabilities and shareholders equity (deficit).......... $ 574,589 $ 690,802
============= =============
</TABLE>
<TABLE>
<CAPTION>
TOKHEIM CORPORATION AND SUBSIDIARIES
-----------------------------------------------------------------------------------------------------------
(Debtors-in-Possession) Unaudited
Consolidated Condensed -------------------------------
Statements of Cash Flows Nine Months Ended
(In thousands) August 31, November 30,
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss................................................................ $ (68,052) $ (30,873)
Adjustments to reconcile net loss to cash used in operating activities:
Payment in kind interest............................................. 4,175 3,709
Extraordinary loss on debt extinguishment............................ -- 6,249
Depreciation and amortization........................................ 18,451 19,279
Loss (Gain) on sale of property, plant, and equipment................ 29 (1,240)
Changes in assets and liabilities:
Accounts receivable, net............................................. 51,839 11,686
Inventories.......................................................... 7,937 11,924
Other current assets................................................. (2,047) --
Accounts payable..................................................... (18,996) (17,334)
Accrued expenses..................................................... (14,296) (14,394)
Other non-current assets............................................. 3,530 (684)
Other (386) (6,989)
Net cash used in operating activities................................... (17,816) (18,667)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant, and equipment.................... 1,098 3,842
Property, plant, and equipment additions................................ (7,486) (15,695)
------------- -------------
Net cash used in investing activities................................... (6,388) (11,853)
------------- -------------
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)
Increase in other debt.................................................. 191 (280)
Increase in notes payable, banks........................................ 15,956 21,000
Borrowings under DIP financing.......................................... 5,000 -
Increase in cash overdraft.............................................. 3,866 5,830
Deferred debt issuance costs............................................ (2,324) (9,992)
Proceeds from issuance of common stock.................................. -- 22
Premiums paid on debt extinguishment.................................... -- (555)
Preferred stock dividends (1,150) (1,124)
Other (97) 890
------------- -------------
Net cash provided from financing activities............................. 21,442 32,938
------------- -------------
EFFECT OF TRANSLATION ADJUSTMENTS ON CASH............................... 3,314 (8,234)
Increase (decrease) in cash............................................. 552 (5,816)
CASH AND CASH EQUIVALENTS:
Beginning of year....................................................... 14,437 26,801
------------- -------------
End of period $ 14,989 $ 20,985
============= =============
</TABLE>
Notes to the Consolidated Condensed Financial Statements
1. BASIS OF PRESENTATION
The consolidated condensed financial statements are unaudited for the
periods indicated herein. In accordance with the rules and regulations of
the Securities and Exchange Commission, certain information and footnote
disclosures have been condensed or omitted; therefore, such financial
statements should be read in conjunction with the consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
November 30, 1999. The consolidated condensed financial statements in this
Report reflect all adjustments and accruals that, in the opinion of
management, are necessary for a fair presentation of the results for the
interim periods presented; all such adjustments were of a normal recurring
nature. The results of operations for the nine-month interim period ended
August 31, 2000 are not necessarily indicative of the results of operations
for the year ending November 30, 2000.
Tokheim Corporation (the "Company") filed a Joint Prepackaged Plan of
Reorganization (the "Plan") for the Company and its U.S. subsidiaries
pursuant to Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy
Court for the District of Delaware on August 28, 2000. The Bankruptcy Court
confirmed the Company's Plan on October 4, 2000 and the Plan became
effective as of October 20, 2000 (the "Effective Date"). (See Note 2 for
additional information).
The unaudited consolidated condensed financial statements have been
presented in accordance with the American Institute of Certified Public
Accountants Statement of Position ("SOP") No. 90-7, Financial Reporting by
Entities in Reorganization under the Bankruptcy Code, which provides
guidance for financial reporting by entities that have filed voluntary
petitions for relief under, and have reorganized in accordance with, the
Bankruptcy Code. SOP No. 90-7 requires a segregation of liabilities subject
to compromise by the Bankruptcy Court as of the bankruptcy filing date
(August 28, 2000) and identification of transactions and events that are
directly associated with the reorganization of the Company.
As further discussed in Note 2, the Company operated its business as a
debtor-in-possession under Chapter 11 and was subject to the jurisdiction
and supervision of the Bankruptcy Court during the period from August 28,
2000 to October 20, 2000. Under Chapter 11, certain claims against the
Company in existence prior to the filing of the petition for relief under
the bankruptcy laws were stayed while the Company continued business
operations as a debtor-in-possession. These claims are reflected in the
August 31, 2000 balance sheet as "liabilities subject to compromise" as
more fully described in Note 2. The financial statements have been prepared
using accounting principles applicable to a going concern, which
contemplates the realization of assets and the payment of liabilities in
the ordinary course of business.
In accordance with SOP No. 90-7 the Company will adopt "fresh start
accounting" as of October 20, 2000 and the Company's emergence from its
Chapter 11 proceedings will result in a new reporting entity. The financial
statements prepared as of August 31, 2000 do not give effect to all
adjustments to the carrying value of assets or amounts and classifications
of liabilities that will be necessary when adopting fresh start accounting.
Under fresh start accounting, all assets and liabilities will be recorded
at their estimated fair values and the Company's accumulated deficit will
be eliminated. It is likely that substantial adjustments will be made to
record assets and liabilities at their fair values as of October 20, 2000.
See Note 2 for a balance sheet prepared as of August 31, 2000 on a pro
forma basis to reflect the discharge of the Company's senior and junior
subordinated notes and certain estimated fresh start adjustments.
2. PLAN OF REORGANIZATION
On August 28, 2000, the Company filed a Joint Prepackaged Plan of
Reorganization (the "Plan") for the Company and its U.S. subsidiaries
pursuant to Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy
Court for the District of Delaware. The Bankruptcy Court confirmed the
Company's Plan on October 4, 2000. The Company emerged from bankruptcy as
of October 20, 2000, the effective date of the Plan.
The Plan provided that, among other things, (i) the existing bank credit
agreement was restructured to comprise a four year, eleven month senior
term facility of $140 million and a four year, eleven month trust debt
facility of $100 million on which trust debt interest will be accrued but
not paid until at least December 31, 2002; (ii) the Company's bank group
provided, in addition to the $240 million facilities detailed above, a
debtor-in-possession financing (the "DIP Financing") facility with
available borrowings of $48 million which was converted into a revolving
credit facility upon the Company's emergence from the reorganization; (iii)
members of the bank group received warrants with a five year term to
purchase 678,334 shares of new common stock at an exercise price of $0.01
per share; (iv) in exchange for their Notes and other claims, the holders
of $260 million of senior and junior subordinated notes and certain other
unsecured creditors received 4,500,000 shares of new common stock
representing 90% of the equity value of the restructured Company, subject
to dilution for warrants to existing shareholders and management options;
(v) holders of junior subordinated notes will receive 5 year warrants to
purchase 555,556 shares of the new common stock at $30.00 per share; (vi)
the Company's employees' rights to receive cash redemption of preferred
stock held by the Retirement Savings Plan were preserved; and (vii) the
Company's approximately 12,669,000 shares of outstanding common stock were
cancelled and existing holders of common stock received "out of the money"
warrants with a six year term giving them the right to acquire an aggregate
of 549,451 shares of the new common stock of the reorganized Company at an
exercise price of $49.50 per share.
Liabilities Subject to Compromise
As a result of the Chapter 11 proceedings, certain prepetition liabilities
were reclassified to liabilities subject to compromise at August 31, 2000.
These claims will be settled in accordance with the Plan. The liabilities
subject to compromise are reflected on the consolidated condensed balance
sheet as of August 31, 2000 as follows: (In thousands)
Senior subordinated notes $189,607
Junior subordinated payment in kind notes 49,195
Accrued interest 12,633
Other accrued liabilities 13,713
----------
Total liabilities subject to compromise $265,148
As a result of the Chapter 11 proceedings and the related Plan, an
extraordinary gain on the forgiveness of debt approximating $265.1 million
is expected to be recognized in the consolidated statement of operations in
October 2000, prior to the adoption of fresh start accounting.
Reorganization costs incurred in the period subsequent to Chapter 11
proceedings on August 28, 2000, but before the end of the third quarter at
August 31, 2000 totaled $1.5 million. These costs related to fees to secure
the DIP Financing.
Prior to the Chapter 11 proceedings on August 28, 2000, the Company
incurred certain costs related to the Plan, approximating $4.7 million,
that are classified as merger and acquisition costs and other unusual items
on the Consolidated Condensed Statement of Earnings. These costs consisted
primarily of professional fees. The components of merger and acquisition
costs and other unusual items for the three and nine month periods ended
August 31, 2000 and 1999 are as follows:
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<CAPTION>
Three months ended Nine months ended
August 31, August 31,
2000 1999 2000 1999
------------------------- -----------------------
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Pre-petition reorganization costs $ 4,450 $ -- $ 4,724 $ --
Settlement with former shareholders of MSI 7,000 -- 7,000 --
Employee compensation and expenses related to the
RPS Integration plan 386 649 1,496 3,805
Lease cancellation and other facility expenses 60 75 175 269
Increased warranty and other product related costs 329 1 762 320
Other 921 567 4,437 1,721
---------- ---------- --------- --------
Total $ 13,146 $ 1,292 $ 18,594 $ 6,115
========== ========== ========= ========
</TABLE>
<TABLE>
<CAPTION>
Tokheim Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Balance Sheet
August 31, 2000 Reorganization Adjustments
Pro forma
reorganized
Debt balance sheet
August 31, Discharge Fresh August 31,
2000 & Refinance Start 2000
------------------------------------------------------------------
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ASSETS
Current assets:
Cash and cash equivalents $ 14,989 $ -- $ -- $ 14,989
Accounts receivable, net 104,282 -- -- 104,282
Inventories, net 79,165 -- -- 79,165
Other current assets 13,453 -- -- 13,453
----------- --------------- ------------- -----------
Total current assets 211,889 -- -- 211,889
Property, plant and equipment, net 64,741 -- -- 64,741
Other tangible assets 1,643 -- -- 1,643
Intangible assets, net 279,345 -- (2) (279,345) --
Other non-current assets, net 16,971 -- -- 16,971
Reorganization value in excess of amounts allocable to
identifiable assets -- -- (2) 161,176 161,176
----------- --------------- ------------- -----------
Total assets $ 574,589 $ -- $ (118,169) $ 456,420
=========== =============== ============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities subject to compromise:
Senior subordinated notes $ 189,607 $ (1) (189,607) $ -- $ --
Junior subordinated payment in kind notes 49,195 (1) (49,195) -- --
Accrued interest 12,633 (1) (12,633) -- --
Other accrued liabilities 13,713 (1) (13,713) -- --
----------- --------------- ------------- -----------
Total liabilities subject to compromise 265,148 (265,148) -- --
Liabilities not subject to compromise:
Current maturities of other long term debt 2,135 -- -- 2,135
DIP financing 5,000 (1) (5,000) -- --
Cash overdrafts 14,829 -- -- 14,829
Accounts payable 59,456 -- -- 59,456
Accrued expenses 66,758 -- -- 66,758
----------- --------------- ------------- -----------
Total current liabilities 413,326 (270,148) -- 143,178
Notes payable, bank credit agreement 223,858 (1) (223,858) -- --
Other long term debt, less current maturities 2,641 -- -- 2,641
Guaranteed employees' stock ownership plan obligation 2,956 -- -- 2,956
Post-retirement benefit liability 18,519 -- -- 18,519
Other long-term liabilities 1,003 -- -- 1,003
Term loans and revolving loans -- (1) 145,000 -- 145,000
Special loans -- (1) 100,000 -- 100,000
Debt discount for bank warrants and Series A Senior
Preferred Stock -- (1) (6,877) -- (6,877)
----------- --------------- ------------- -----------
Total liabilities 662,303 (255,883) -- 406,420
Redeemable convertible preferred stock 24,000 -- (2) (13,875) 10,125
Guaranteed employees' stock ownership plan obligation (2,956) -- -- (2,956)
Treasury stock, at cost (4,307) -- (2) 4,307 --
Series A Senior Preferred Stock -- -- (2) 100 100
----------- --------------- ------------- -----------
Total preferred equity 16,737 -- (9,468) 7,269
Common stock 90,375 -- (1) (90,375) --
Common stock warrants 26,187 -- (1) (26,187) --
Accumulated comprehensive loss (87,684) -- (3) 87,684 --
Accumulated deficit (132,798) -- (3) 132,798 --
New common stock -- -- (1) 4,500 4,500
New warrants issued to bank group -- -- (1) 6,777 6,777
New warrants issued for old cancelled shares -- -- (1) 1,422 1,422
Additional paid in capital -- -- (1) 30,032 30,032
----------- --------------- ------------- -----------
(87,183) -- 137,183 50,000
Less treasury stock, at cost (531) -- (1) 531 --
----------- --------------- ------------- -----------
Total shareholders' equity (87,714) -- 137,714 50,000
----------- --------------- ------------- -----------
Total liabilities and shareholders' equity (deficit) $ 574,589 $ (255,883) $ 137,714 $ 456,420
=========== =============== ============= ===========
</TABLE>
The unaudited pro forma consolidated condensed balance sheet prepared as of
August 31, 2000 included above illustrates the effect of the Company's plan
of reorganization and the effect of implementing certain fresh start
accounting adjustments as if the Plan had been effective on August 31,
2000. The adjustments are limited to presenting (a) the Company's
reorganized capital structure, including its new credit agreement, (b) the
effect of discharging the senior and junior subordinated notes, (c) the
elimination of existing goodwill and debt issuance costs associated with
debt that has been discharged or refinanced, (d) the elimination of the
accumulated deficit and comprehensive loss, and (e) the estimated liability
for the discounted present value of the future redemption of preferred
stock under the Company's existing guaranteed ESOP.
The pro forma consolidated condensed balance sheet prepared as of August
31, 2000 does not give effect to all adjustments necessary to state assets
and liabilities at their estimated fair value. The Company will record
these adjustments and allocate the estimated reorganization value to
identifiable tangible and intangible assets based on their estimated fair
value when fresh start accounting is adopted on the effective date of the
Plan and the valuation process is completed.
The reorganization value used in preparing the unaudited consolidated
condensed pro forma balance sheet was assumed to be $50 million for
purposes of fresh start accounting. A description of the reorganization is
as follows:
1. To record the discharge of the senior and junior subordinated
notes and borrowings under the existing credit agreement, the
cancellation of old common stock, warrants and treasury stock, and
the issuance of new common stock, Series A Senior Preferred Stock
and warrants pursuant to the Plan;
2. To record certain adjustments to state assets and liabilities at
their estimated fair value, including the establishment of
reorganization value in excess of amounts allocable to
identifiable assets using the reorganization value discussed
above. As stated above, these adjustments are limited to recording
the elimination of existing goodwill and debt issuance costs
associated with debt that has been discharged or refinanced, and
the estimated liability for the discounted present value of the
future redemption of preferred stock under the Company's existing
guaranteed ESOP;
3. To eliminate the accumulated deficit and accumulated comprehensive
loss (which consists of foreign currency translation losses).
3. DEBTOR-IN-POSSESSION FINANCING AND POST-CONFIRMATION CREDIT AGREEMENT
In connection with the Chapter 11 proceedings discussed above, the Company
entered into a $48 million debtor-in-possession financing agreement (the
"DIP Financing") with its existing bank group led by AMSOUTH BANK and ABN
AMRO BANK N.V. (collectively, the "DIP Lenders"). The Bankruptcy Court
granted final approval of the DIP Financing on August 29, 2000. The DIP
Financing provided for revolving credit based on eligible accounts
receivable, inventory, and property, plant and equipment. The DIP Financing
was used to fund working capital requirements and guarantee letter of
credit obligations during the Chapter 11 proceedings, and to provide funds
for general corporate purposes in the ordinary course of business. Interest
is payable under the DIP Financing at the Company's option at the higher of
the lenders' reference rate or the federal funds effective rate plus 0.5%,
plus 2.50% per annum or the Eurodollar Rate plus 4.00% per annum. At August
31, 2000, the outstanding balance under the DIP Financing was $5 million.
As a result of the confirmation of the Company's Plan by the Bankruptcy
Court, the DIP Financing was replaced by a Post Confirmation Credit
Agreement (the "New Credit Agreement") as of October 20, 2000. The New Credit
Agreement, which was entered into by Tokheim Corporation and certain of its
subsidiaries (the "Borrowers" or the "Company"), consists of a $140 million
term facility (the "term loans") which is divided into a Tranche A term
loan, a Tranche B term loan, and a $100 million trust facility referred to
as the "special loans" in the New Credit Agreement. The New Credit
Agreement also includes a $48 million revolving credit facility (the
"revolving loans" - which includes letters of credit) that was converted
from the DIP Financing discussed above.
Borrowings under the revolving loans are subject to certain borrowing base
limitations related to eligible accounts receivable, inventory, and
property, plant and equipment.
The term loans and revolving loans mature on September 20, 2005 and the
special loans are due in four $25 million installments on November 30,
2002-2004 and September 20, 2005.
Indebtedness under the term loans and revolving loans bears interest based
upon (at the Company's option) (i) the Base Rate (defined as the higher of
the federal funds rate (as adjusted pursuant to the New Credit Agreement)
plus 0.50% and the applicable prime rate) plus an applicable margin of
3.50% for the term loans and 2.50% for the revolving credit loans, or (ii)
the Eurodollar Rate (as defined in the New Credit Agreement) plus an
applicable margin of 5.00% for the term loans and 4.00% for the revolving
credit loans. Interest on the special loans is payable at an annual rate of
16.00%.
Accrued interest on Base Rate loans is payable in arrears on the last day
of each calendar month and at maturity. Accrued interest on each Eurodollar
Rate loan is payable on the last day of each interest period or at the end
of each three-month period with respect to each six-month Interest Period.
Accrued interest on the special loans is capitalized and added to the
unpaid principal on the interest payment date until maturity.
In consideration for the New Credit Agreement, the Company incurred certain
fees in October 2000 approximating $1.5 million to the bank group along
with warrants with a five year term to purchase 678,334 shares of the
Company's common stock at an exercise price of $0.01 per share.
The Company also issued to the bank group shares of preferred stock with a
liquidation preference of $0.10 million with quarterly dividends at an
annual rate of 16.00% (the "New Preferred Stock"). The holders of the New
Preferred Stock are entitled to elect two directors to the Company's board
of directors, voting as a separate class. In the event the Company has a
payment default, as defined under the New Credit Agreement, the holders of
the New Preferred Stock, voting as a separate class, will be entitled to
elect a majority of the directors on the Company's board of directors.
The New Credit Agreement provides for commercial and standby letters of
credit not to exceed $5 million at any time in the aggregate with a
sublimit of $3 million at any time with respect to standby letters of
credit. Interest is due on amounts drawn under letters of credit that are
not reimbursed at the Base Rate plus 2.50% per annum plus an additional
2.00% beginning on the third business day after receipt of notice from the
lender that a payment was made on behalf of the Company. A nonrefundable
fee is due monthly for each outstanding letter of credit equal to 4.00% per
annum of the undrawn amount or 7.00% per annum if an event of default under
the New Credit Agreement exists upon notice of a majority of the revolving
lenders.
The Borrowers may prepay the term loans and special loans in whole or in
part provided that the Company does not make any prepayment of the term
loans if any special loans remain outstanding. The Company may permanently
reduce the revolving loan commitment if no term loans or special loans are
outstanding. The Company is required to make mandatory prepayments of the
term loans, special loans, and revolving loans for excess cash flow (as
defined in the New Credit Agreement, annually commencing with fiscal year
2002 (for fiscal year 2001 and 2002 on a cumulative basis)) and in the case
of the receipt of net cash proceeds from asset sales, tax refunds,
insurance recoveries, or the issuance of debt or equity securities, subject
to certain exceptions. Premiums are charged on voluntary or mandatory
prepayments of the special loans at a range of .50% to 2.00% of the
outstanding principal balance depending on the date of the prepayment.
The New Credit Agreement requires the Company to maintain specified
financial levels and ratios and to meet certain financial tests, including
a minimum level of EBITDA (as defined in the New Credit Agreement), a fixed
charge coverage ratio, an interest coverage ratio, a senior debt to EBITDA
ratio, and a total debt to EBITDA ratio. The New Credit Agreement also
contains covenants which, among other things, limit the amount of capital
expenditures, the incurrence of additional indebtedness, the payment of
dividends, transactions with affiliates, asset sales, acquisitions,
investments, mergers and consolidations, prepayments of certain other
indebtedness, liens and encumbrances and other matters customarily
restricted in such agreements.
At May 31, 2000 and August 31, 2000, the Company was in violation of
several of its financial covenants under its bank credit agreement,
including covenants relating to the senior leverage ratio, total leverage
ratio, interest expense coverage ratio, fixed charge coverage ratio,
minimum EBITDA, and the clean down or availability covenant on the working
capital facility. No waiver for these instances of non-compliance is
necessary because the Company has refinanced its bank credit agreement with
the New Credit Agreement subsequent to August 31, 2000, as described above.
The Company's ability to maintain specified financial levels and meet
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
default, the lenders could elect to declare all amounts borrowed under the
New Credit Agreement to be due and payable.
Indebtedness of the Company under the New Credit Agreement (a) is
collateralized by (i) a first perfected security interest in and lien on
substantially all of the real and personal property assets of the Company
(including claims against certain subsidiaries to which the Company has
made intercompany loans) and the Company's direct and indirect
majority-owned U.S. subsidiaries, (ii) a pledge of 100% of the stock of the
Company's direct and indirect majority-owned U.S. subsidiaries, and (iii) a
pledge of 65% of the stock of the Company's first-tier foreign subsidiaries
and (b) is guaranteed by all of the Company's direct and indirect
majority-owned U.S. subsidiaries.
4. NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (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. Additionally, the Securities and Exchange
Commission has issued Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition", that deals with principles of revenue recognition. Management
has not yet determined the impact of SFAS No. 133 or SAB No. 101 on the
Company's consolidated financial statements.
5. SEGMENT REPORTING
For the three and nine month periods ended August 31, 2000 and 1999,
respectively, 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 three and nine month periods ended August 31, 2000 and 1999
are summarized in the tables below.
<TABLE>
<CAPTION>
Three months ended August 31:
2000
North
America* Europe Africa Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Customer sales......................................... $ 47,252 $ 71,381 $ 4,035 $ 0 $ 122,668
Intercompany sales 1,428 1,012 0 (2,440) 0
Depreciation and amortization 3,055 2,753 59 0 5,867
Operating profit (loss), before merger &
acquisition costs and other
unusual items...................................... (1,368) 2,661 (202) (52) 1,039
Total assets........................................... $ 591,718 315,805 11,644 (344,578) 574,589
1999
Customer sales......................................... $ 61,213 $ 102,605 5,352 0 169,170
Intercompany sales..................................... 800 1,366 (1) (2,165) 0
Depreciation and amortization.......................... 2,622 3,617 80 0 6,319
Operating profit, before merger & acquisition
costs and other unusual items...................... (1,293) 10,373 9 (188) 8,901
Total assets........................................... $ 625,418 $ 435,311 $ 14,924 $ (370,633) $ 705,020
Nine months ended August 31:
2000
North
America* Europe Africa Eliminations Consolidated
Customer sales......................................... $ 148,057 $ 229,364 $ 12,496 $ 0 $ 389,917
Intercompany sales 3,576 2,730 0 (6,306) 0
Depreciation and amortization.......................... 8,611 9,624 216 0 18,451
Operating profit (loss), before merger &
acquisition costs and other unusual items............ (12,035) 7,734 (235) (150) (4,686)
Total assets........................................... $ 591,718 $ 315,805 $ 11,644 $ (344,578) $ 574,589
1999
Customer sales......................................... $ 186,440 $ 310,453 $ 15,481 $ 0 $ 512,374
Intercompany sales..................................... 2,470 3,418 119 (6,007) 0
Depreciation and amortization.......................... 7,256 11,787 236 0 19,279
Operating profit, before merger & acquisition
costs and other unusual items........................ 1,061 19,283 196 (173) 20,367
Total assets........................................... $ 625,418 $ 435,311 $ 14,924 $ (370,633) $ 705,020
* Include corporate expenses.
</TABLE>
Reconciliation from segment reporting to consolidated condensed statement
of earnings:
<TABLE>
<CAPTION>
Three months ended Nine months ended
August 31 August 31
2000 1999 2000 1999
------------ -------------- ----------- -----------
<S> <C> <C> <C> <C>
Segment operating profit (loss) $ 1,039 $ 8,901 $ (4,686) $ 20,367
Merger and acquisition costs and other
unusual items.............................. (13,146) (1,292) (18,594) $ (6,115)
------------ -------------- ----------- -----------
Operating profit (loss).................... $ (12,107) $ 7,609 $ (23,280) $ 14,252
------------ -------------- ----------- -----------
</TABLE>
6. COMPREHENSIVE LOSS
The table below summarizes comprehensive loss for the three and nine month
periods ended August 31, 2000 and 1999.
<TABLE>
<CAPTION>
Three months Nine months
ended ended
August 31 August 31
2000 1999 2000 1999
------------ -------------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss...................................... $ (30,196) $ (5,448) $ (68,052) $ (30,873)
Other comprehensive loss:
Foreign currency translation adjustments...... $ (7,675) (975) (18,607) (36,164)
------------ ------------- ----------- -----------
Comprehensive loss............................ $ (37,871) $ (6,423) $ (86,659) $ (67,037)
============ ============= =========== ===========
</TABLE>
7. 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 substantially completed by the
end of fiscal year 2000. The table below summarizes the accrued liability
activity by major category and initiative for the three and nine month
periods ended August 31, 2000.
<TABLE>
<CAPTION>
Charges Charges
November 30, to May 31, to August 31
1999 Accrual 2000 Accrual 2000
<S> <C> <C> <C> <C> <C>
Involuntary termination benefits................ $ 8,006 $ (1,994) $ 6,012 $ (342) $ 5,670
Facility closure and other closure costs........ 211 (158) 53 (17) 36
Lease and contract termination fees............. 381 (188) 193 (94) 99
------------ ----------- --------- ---------- ---------
Total accrued integration and
rationalization costs......................... $ 8,598 $ (2,340) $ 6,258 $ (453) $ 5,805
============ =========== ========= ========== =========
</TABLE>
During 1999, as a result of the continuing integration and rationalization
of the RPS Division with other business units, the Company accrued
approximately $2.7 million 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 and nine month periods ended August 31, 2000.
<TABLE>
<CAPTION>
Charges Charges
November 30, to May 31, to August 31
1999 Accrual 2000 Accrual 2000
<S> <C> <C> <C> <C> <C>
Involuntary termination benefits................ $ 2,442 $ (896) $ 1,546 $ (1,053) $ 493
Facility closure and other closure costs........ 460 (42) 418 (112) 306
Lease and contract termination fees............. 138 (113) 25 (15) 10
----------- ---------- --------- ---------- ---------
Total accrued integration and
rationalization costs......................... $ 3,040 $ (1,051) $ 1,989 $ (1,180) $ 809
=========== ========== ========= ========== =========
</TABLE>
8. EARNINGS PER SHARE
The Company presents two earnings per share ("EPS") amounts, Basic and
Diluted. Basic EPS is calculated based on earnings available to common
shareholders and the weighted average number of common shares outstanding
during the reported period. Diluted EPS includes additional dilution from
potential common stock, such as stock issuable pursuant to conversion of
preferred stock or the exercise of stock options and warrants outstanding.
The incremental shares from conversions of preferred stock or the exercise
of stock options and warrants were not included in computing diluted EPS
for the three and nine month periods ended August 31, 2000 and 1999 since
the effect is antidilutive during periods when a loss from continuing
operations is reported.
For the three months ended August 31, 2000, the weighted average of
potentially issuable common shares included 787,707 shares of convertible
preferred stock outstanding and 2,499,527 shares related to warrants issued
to Schlumberger. For the nine months ended August 31, 2000, the weighted
average of potentially issuable common shares included 787,707 shares of
convertible preferred stock outstanding and 2,516,216 shares related to
warrants issued to Schlumberger.
9. 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. The senior subordinated 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 unaudited condensed consolidating financial information
presents:
1) Condensed consolidating financial statements as of August 31, 2000, and
November 30, 1999 and for the three and nine month periods ended August 31,
2000 and the nine month period ended August 31, 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.
<TABLE>
<CAPTION>
Consolidated Condensed Statement of Earnings
For the three months ended August 31, 2000
(Amounts in thousands)
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
---------- ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Net sales............................. $ 37,355 $ 13,165 $ 77,794 $ (5,646) $ 122,668
Cost of sales, exclusive of items listed below 29,203 9,547 62,829 (5,646) 95,933
Selling, general, and administrative expenses 6,615 3,601 9,613 -- 19,829
Depreciation and amortization................ 2,243 800 2,824 5,867
Merger and acquisition costs and other
unusual items.............................. 7,276 5,046 824 - 13,146
---------- ----------- ------------ ----------- ---------------
Operating profit (loss)............... (7,982) (5,829) 1,704 -- (12,107)
Interest (income) expense, net........ 1,740 6,567 6,796 -- 15,103
Foreign currency (gain) loss.......... (90) 338 402 -- 650
Equity in (earnings) loss of consolidated 20,499 -- -- (20,499) --
subsidiaries..........................
Minority interest in subsidiaries..... -- -- 12 -- 12
Other (income) expense, net........... 11 (54) 596 -- 553
---------- ----------- ------------ ----------- ---------------
Loss before reorganization costs, income taxes
and extraordinary loss................ (30,142) (12,680) (6,102) 20,499 (28,425)
Reorganization costs.................. -- 1,450 -- -- 1,450
---------- ----------- ------------ ----------- ---------------
Loss before income taxes and extraordinary (30,142) (14,130) (6,l02) 20,499 (29,875)
loss..................................
Income tax expense (benefit).......... 54 -- 267 -- 321
---------- ----------- ------------ ----------- ---------------
Loss before extraordinary loss........ (30,196) (14,130) (6,369) 20,499 (30,196)
Extraordinary loss on debt extinguishment -- -- -- -- --
---------- ----------- ------------ ----------- ---------------
Net (loss)............................ $ (30,196) $ (14,130) $ (6,369) $ 20,499 $ (30,196)
---------- ----------- ------------ ----------- ---------------
</TABLE>
<TABLE>
<CAPTION>
Consolidated Condensed Statement of Earnings
For the nine months ended August 31, 2000
(Amounts in thousands)
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
---------- ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Net sales............................. $ 115,282 $ 41,510 $ 248,512 $ (15,387) $ 389,917
Cost of sales, exclusive of items listed below 90,983 30,243 200,308 (15,387) 306,147
Selling, general, and administrative expenses 21,338 17,478 31,189 -- 70,005
Depreciation and amortization......... 6,483 2,092 9,876 -- 18,451
Merger and acquisition costs and other
unusual items.............................. 7,639 8,346 2,609 -- 18,594
---------- ----------- ------------ ------------ ---------------
Operating profit (loss)............... (11,161) (16,649) 4,530 -- (23,280)
---------- ----------- ------------ ------------ ---------------
Interest expense, net................. 4,453 19,237 20,935 -- 44,625
Foreign currency (gain) loss.......... (225) (56) 734 -- 453
Equity in (earnings) loss of consolidated 52,443 -- -- (52,443) --
subsidiaries..........................
Minority interest in subsidiaries..... -- -- 61 -- 61
Other (income) expense, net........... 59 (245) (269) -- (455)
---------- ----------- ------------ ------------ ---------------
Loss before reorganization costs, income taxes
and extraordinary loss................ (67,891) (35,585) (16,931) 52,443 (67,964)
Reorganization costs.................. -- 1,450 -- -- 1,450
---------- ----------- ------------ ------------ ---------------
Loss before income taxes and extraordinary (67,891) (37,035) (16,931) 52,443 (69,414)
loss..................................
Income tax expense (benefit).......... 161 (1,892) 369 -- (1,362)
---------- ----------- ------------ ------------ ---------------
Loss before extraordinary loss........ (68,052) (35,143) (17,300) 52,443 (68,052)
Extraordinary loss on debt extinguishment -- -- -- -- --
---------- ----------- ------------ ------------ ---------------
Net (loss) $ (68,052) $ (35,143) $ (17,300) $ 52,443 $ (68,052)
---------- ----------- ------------ ------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
Consolidated Condensed Statement of Earnings
For the nine months ended August 31, 1999
(Amounts in thousands)
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
---------- ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Net sales............................. $ 121,653 $ 68,050 $ 332,923 $ (10,252) $ 512,374
---------- ----------- ------------ ------------ ---------------
Cost of sales, exclusive of items listed below 93,104 47,608 263,539 (10,252) 393,999
Selling, general, and administrative expenses 20,429 19,947 38,353 -- 78,729
Depreciation and amortization......... 3,755 3,464 12,060 -- 19,279
Merger and acquisition costs and other
unusual items.......................... 887 687 4,541 -- 6,115
---------- ----------- ------------ ------------ ---------------
Operating profit (loss)............... 3,478 (3,656) 14,430 0 14,252
---------- ----------- ------------ ------------ ---------------
Interest (income) expense, net........ 10,169 (326) 28,101 (0) 37,944
Foreign currency loss................. 316 800 1,256 -- 2,372
Equity in (earnings) loss of consolidated
subsidiaries.......................... 12,874 -- -- (12,874) --
Minority interest in subsidiaries..... -- -- 88 -- 88
Other (income) expense, net........... 4,689 (23,909) 18,172 -- (1,048)
---------- ----------- ------------ ------------ ---------------
Earnings (loss) before income taxes... (24,570) 19,779 (33,187) 12,874 (25,104)
Income taxes.......................... 54 (335) (198) (1) (480)
---------- ----------- ------------ ------------ ---------------
Earnings (loss) before extraordinary item (24,624) 20,114 (32,989) 12,875 (24,624)
Extraordinary loss on debt extinguishment (6,249) -- -- -- (6,249)
---------- ----------- ------------ ------------ ---------------
Net earnings (loss)................... $ (30,873) $ 20,114 $ (32,989) $ 12,875 $ (30,873)
---------- ----------- ------------ ------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
Consolidated Condensed Balance Sheet
As of August 31, 2000
(Amounts In thousands)
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
---------- ----------- ------------- ------------ --------------
ASSETS
Current assets:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents............. $ 2,744 $ 6,293 $ 5,952 $ -- $ 14,989
Accounts receivables, net............. 51,959 53,396 82,069 (83,142) 104,282
Inventories, net...................... 20,209 7,898 51,642 (584) 79,165
Other current asset................... 2,074 801 10,578 -- 13,453
Total current assets.................. 76,986 68,388 150,241 (83,726) 211,889
Investments in subsidiaries........... 71,345 12,350 6,537 (90,232) -
Property, plant, and equipment, net... 26,521 10,559 27,661 0 64,741
Goodwill, net......................... 106,970 27,729 144,646 0 279,345
Other non-current assets and deferred
charges, net.......................... 243,278 257,315 4,898 (486,877) 18,614
Total assets.......................... $525,100 $ 376,341 $ 333,983 $ (660,835) $ 574,589
---------- ----------- ------------- ------------ --------------
LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)
Liabilities subject to compromise
Senior subordinated notes.......... $189,607 $ -- $ -- $ -- $ 189,607
Junior subordinated payment in kind 49,195 -- -- -- 49,195
note
Accrued interest................... 12,633 -- -- -- 12,633
Accrued liabilities................ 13,507 206 -- -- 13,713
Total liabilities subject to compromise 264,942 206 -- -- 265,148
Liabilities not subject to compromise
Notes payable, bank credit agreement -- -- -- -- --
Current maturities of other long-term debt -- -- 2,135 -- 2,135
DIP financing...................... 5,000 -- -- -- 5,000
Cash overdrafts.................... -- 2 14,827 -- 14,829
Accounts payable................... 58,413 34,401 49,784 (83,142) 59,456
Accrued expenses................... 30,359 12,919 23,480 - 66,758
Total current liabilities 358,714 47,528 90,226 (83,142) 413,326
Notes payable, bank credit agreement.. 30,230 193,537 91 -- 223,858
Senior subordinated notes............. -- -- -- -- --
Junior subordinated payment in kind notes -- -- -- -- --
Other long-term debt, less current 6,000 238,802 244,716 (486,877) 2,641
maturitie
Guaranteed Employees' Stock Ownership 2,956 -- -- -- 2,956
Plan obligation....................
Post-retirement benefit liability..... 15,129 -- 3,390 -- 18,519
Other long-term liabilities........... 476 (220) 851 (104) 1,003
413,505 479,647 339,274 (570,123) 662,303
Redeemable convertible preferred stock 24,000 -- -- -- 24,000
Guaranteed Employees' Stock Ownership Plan
obligation......................... (2,956) -- -- -- (2,956)
Treasury stock, at cost............... (4,307) -- -- -- (4,307)
16,737 -- -- -- 16,737
Common stock.......................... 90,375 -- 7,595 (7,595) 90,375
Common stock warrants................. 26 ,187 -- -- -- 26,187
Accumulated comprehensive loss........ (8,023) (53,043) (18,486) (8,132) (87,684)
Accumulated deficit (13,150) (50,263) 5,600 (74,985) (132,798)
95,389 (103,306) (5,291) (90,712) (103,920)
Less treasury stock, at cost.......... (531) -- -- -- (531)
94,858 (103,306) (5,291) (90,712) (104,451)
111,595 (103,306) (5,291) (90,712) (87,714)
Total liabilities and shareholders' equity
(deficit)............................. $ 525,100 $ 376,341 $ 333,983 $ (660,835) $ 574,589
---------- ----------- ------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
Consolidated Condensed Balance Sheet
As of November 30, 1999
(Amounts In thousands)
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
---------- ----------- ------------- ------------ --------------
ASSETS
Current assets:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents........ $ 1,657 $ 2,705 $ 10,075 $ -- $ 14,437
Accounts receivables, net........ 56,905 83,987 132,423 (104,750) 168,565
Inventories, net................. 27,438 10,087 56,068 (65) 93,528
Other current assets............. 1,941 1,066 9,591 -- 12,598
Total current assets............. 87,941 97,845 208,157 (104,815) 289,128
Investments in subsidiaries...... 66,312 250,201 6,527 (323,040) --
Property, plant, and equipment, net 24,665 11,244 36,067 -- 71,976
Goodwill, net.................... 97,673 10,175 181,390 -- 289,238
Other non-current assets and deferred
charges, net..................... 216,588 75,200 5,549 (256,877) 40,460
Total assets..................... $493,179 $444,665 $437,690 $(684,732) $690,802
-------------- ------------ ------------- ------------ --------------
LIABILITIES AND SHAREHOLDERS EQUITY
(DEFICIT)
Current maturities of long-term debt$ -- $ 7,500 $ 2,944 $ -- $ 10,444
Notes payable to banks -- -- 287 -- 287
Cash overdrafts -- 514 11,807 -- 12,321
Accounts payable 79,968 25,303 83,989 (104,749) 84,511
Accrued expenses 45,619 14,943 50,945 -- 111,507
Total current liabilities 125,587 48,260 149,972 (104,749) 219,070
Notes payable, bank credit agreement 19,599 184,685 -- -- 204,284
Senior subordinated notes........ 198,681 -- -- -- 198,681
Junior subordinated Payment In Kind -- 45,020 -- -- 45,020
note.............................
Other long-term debt, less current
maturities....................... 6,000 -- 254,895 (257,727) 3,168
Guaranteed Employees' Stock Ownership
Plan obligation............... 4,351 -- -- -- 4,351
Post-retirement benefit liability 14,842 -- 3,851 -- 18,693
Other long-term liabilities...... 476 (216) 4,764 (98) 4,926
369,536 277,749 413,482 (362,574) 698,193
Redeemable convertible preferred stock 24,000 -- -- -- 24,000
Guaranteed Employees' Stock Ownership
Plan obligation.................. (4,351) -- -- -- (4,351)
Treasury stock, at cost.......... (4,210) -- -- -- (4,210)
15,439 -- -- -- 15,439
Common stock..................... 90,375 234,966 65,046 (300,012) 90,375
Common stock warrants............ 20,000 -- -- -- 20,000
Accumulated comprehensive loss... (8,023) (35,360) (17,013) (8,681) (69,077)
Retained earnings (accumulated deficit) 6,383 (32,690) (23,825) (13,465) (63,597)
108,735 166,916 24,208 (322,158) (22,299)
Less treasury stock, at cost..... (531) -- -- -- (531)
108,204 166,916 24,208 (322,158) (22,830)
Total liabilities and shareholders'
equity (deficit)................. $493,179 $444,665 $437,690 $(684,732) $ 690,802
-------------- ------------ ------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
Consolidated Condensed Statement of Cash
Flows
For the nine months ended August 31, 2000
(Amounts in thousands)
Guarantor Nonguarantor Eliminations Consolidated
Parent Subsidiaries Subsidiaries Total
--------- ------------ ------------ ----------- ------------
Cash flows from operating activities:
<S> <C> <C> <C> <C> <C>
Net cash provided from (used in) operating
activities............................ $ (57,755) $ 9,686 $ (21,896) $ 52,149 $ (17,816)
--------- ------------ ------------ ----------- ------------
Cash flows from investing activities:
Plant and equipment additions/transfers (4,853) (370) (2,263) -- (7,486)
Proceeds from the sale/transfers of property
and equipment....................... (1) -- 1,099 -- 1,098
Investments in and advances to subsidiaries,
net................................... 52,149 -- -- (52,149) --
Net cash provided from (used in) investing
activities............................ 47,295 (370) (1,164) (52,149) (6,388)
--------- ------------ ------------ ----------- ------------
Cash flows from financing activities:
Increase (decrease) in other debt..... -- 976 (785) -- 191
Increase in notes payable banks, bank credit
agreement............................. 10,896 5,060 -- -- 15,956
Increase (decrease) DIP financing. 5,000 -- 5,000
Increase (decrease) in cash overdraft -- (513) 4,379 -- 3,866
Deferred debt issuance costs (2,324) -- -- -- (2,324)
Other (97) -- -- -- (97)
Preferred stock dividends (1,150) -- -- -- (1,150)
--------- ------------ ------------ ----------- ------------
Net cash provided from financing activities 12,325 5,523 3,594 -- 21,442
--------- ------------ ------------ ----------- ------------
Effect of translation adjustments on cash (778) (11,251) 15,343 -- 3,314
--------- ------------ ------------ ----------- ------------
Increase (decrease) in cash 1,087 3,588 (4,123) -- 552
Beginning of year 1,657 2,705 10,075 -- 14,437
--------- ------------ ------------ ----------- ------------
End of period $ 2,744 $ 6,293 $ 5,952 $ -- $ 14,989
--------- ------------ ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
Consolidated Condensed Statement of Cash
Flows
For the nine months ended August 31, 1999
(Amounts in thousands)
Guarantor Nonguarantor Eliminations Consolidated
Parent Subsidiaries Subsidiaries Total
---------- ------------ ------------ ----------- ------------
Cash flows from operating activities:
<S> <C> <C> <C> <C> <C>
Net cash provided from (used in) operating
activities............................ $ (28,377) $ 1,668 $ (4,832) $ 12,874 $ (18,667)
---------- ------------ ------------ ----------- ------------
Cash flows from investing activities:
Plant and equipment additions/transfers (12,180) 2,550 (6,065) -- (15,695)
Proceeds from the sale/transfers of property
and equipment....................... 8,535 (6,950) 2,257 -- 3,842
Investments in and advances to subsidiarie,
net................................... 12,874 -- -- (12,874) -
Net cash provided from (used in) investing
activities............................ 9,229 (4,400) (3,808) (12,874) (11,853)
---------- ------------ ------------ ----------- ------------
Cash flows from financing activities:
Redemption of senior notes............ (22,500) -- -- -- (22,500)
Proceeds from 11.0% senior subordinated 209,647 -- -- -- 209,647
notes.................................
Redemption of senior subordinated notes (170,000) -- -- -- (170,000)
Increase (decrease) in other debt..... -- -- (280) -- (280)
Increase (decrease) in cash overdraft. (131) (6) 5,967 -- 5,830
Increases in term debt................ 17,000 4,000 -- -- 21,000
Deferred debt issuance costs.......... (9,992) -- -- -- (9,992)
Premiums paid on debt extinguishment.. (555) -- -- -- (555)
Other................................. 890 -- -- -- 890
Proceeds from issuance of common stock 22 -- -- -- 22
Preferred stock dividends............. (1,124) -- -- -- (1,124)
---------- ------------ ------------ ----------- ------------
Net cash provided from financing activities 23,257 3,994 5,687 -- 32,938
---------- ------------ ------------ ----------- ------------
Effect of translation adjustments on cash (2,207) (2,717) (3,310) -- (8,234)
---------- ------------ ------------ ----------- ------------
Increase (decrease) in cash........... 1,902 (1,455) (6,263) (5,816)
Beginning of year..................... 849 5,381 20,571 -- 26,801
---------- ------------ ------------ ----------- ------------
End of period......................... 2,751 3,926 14,308 -- 20,985
---------- ------------ ------------ ----------- ------------
</TABLE>
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 August 31, 2000 were
$122.7 million compared to $169.2 million for the comparable 1999 three
month period. Sales for North America decreased 22.8% for the three month
period from $61.2 million in 1999 to $47.3 million in 2000. European sales
decreased 30.4% from $102.6 million in 1999 to $71.4 million in the three
month period ended August 31, 2000. African sales decreased 24.6% from $5.3
million in 1999 to $4.0 million in the 2000 three month period.
Consolidated sales for the nine month period ended August 31, 2000 were
$389.9 million compared to $512.4 million in the comparable 1999 nine month
period. Sales for North America decreased 20.6% from $186.4 million in 1999
to $148.0 million for the nine month period in 2000. European sales
decreased 26.1% from $310.5 million in 1999 to $229.4 million in 2000.
African sales decreased 19.3% from $15.5 million in the 1999 nine month
period to $12.5 million in the comparable 2000 period. Sales for the three
and nine month periods of 2000 were adversely affected by lower POS sales
attributable to Y2K purchases last year, industry declines in the major oil
company, distributor, and commercial channels of distribution and exchange
rate fluctuations. The impact of exchange rate fluctuations, especially the
weakening of the EURO, was a decrease in sales for the three and nine month
periods ended August 31, 2000 of 9.3% and 7.7%, respectively.
Gross margins as a percent of sales (defined as net sales less cost of
sales divided by net sales) decreased from 23.8% in the three month period
ended August 31, 1999 to 21.8% in the 2000 three month period. For the nine
month period ended August 31, gross margins decreased from 23.1% in 1999 to
21.5% in 2000. The decline in gross margin for the three and nine month
periods of 2000 was primarily due to a greater relative proportion of
service contract sales which provide a lower margin than dispenser and POS
sales.
Selling, general, and administrative ("SG&A") expenses as a percent of
sales for the three and nine month periods ended August 31, 2000 were 16.2%
and 18.0%, respectively, compared to 14.8% and 15.4% in the three and nine
month periods of 1999. These percentage increases are due to lower sales in
the three and nine month periods of 2000 compared to 1999. SG&A expenses
have decreased from $25.0 million in the three month period ended August
31, 1999 to $19.8 in the comparable 2000 period. SG&A expenses have
decreased from $78.7 million in the nine month period ended August 31, 1999
to $70.0 in the 2000 period. Variable costs for the three and nine month
periods ended August 31, 2000 were lower than the comparable 1999 period
due to the decrease in sales. The continued integration and rationalization
of the RPS division and the realization of cost savings through these
programs also contributed to this decline.
Depreciation and amortization expense for the three and nine month periods
ended August 31, 2000 was $5.9 million and $18.5 million, respectively,
compared to $6.3 million and $19.3 million in the comparable 1999 periods.
This expense decreased due to the increasing age of the Company's fixed
assets.
Net interest expense for the three and nine month periods ended August 31,
2000 was $15.1 million and $44.6 million, respectively, compared to $13.3
million and $37.9 million in the comparable 1999 periods. This change was
due to increased borrowings, higher interest rates, and increased
amortization of fees associated with amending the Company's credit
agreement.
Foreign currency loss for the three month period ended August 31, 2000 was
$0.7 million compared to a gain of $0.5 million for the comparable period
in 1999. The foreign currency loss for the nine month period ended August
31, 2000 was $0.5 million compared to a loss of $2.4 million in the
comparable 1999 period. Foreign currency gains and losses were caused by
fluctuations in the EURO and other foreign currency exchange rates relative
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 denominated senior subordinated notes.
Income taxes for the three month period ended August 31, 2000 was an
expense of $0.3 million mainly related to taxes on foreign operations. The
comparable period in 1999 was $0.0 million. Income taxes for the nine month
period ended August 31, 2000 was a benefit of $1.4 million compared to a
benefit of $0.5 million for the comparable period in 1999. These benefits
resulted primarily from changes to prior year income tax estimates.
On August 11, 2000, the Company settled a claim made by the former
shareholders of MSI out of court for an amount of $7 million. As a
condition of the settlement document, the former shareholders of MSI, to
whom the award was made have agreed to be treated in a similar fashion to
the holders of the senior and junior subordinated notes in the bankruptcy
proceeding. This award has been accrued for and classified as "a liability
subject to compromise" in the consolidated condensed balance sheet. This
claim will be settled in the form of stock in the newly reorganized
company.
As a result of the above mentioned items, loss applicable to common stock
was $30.6 million or $2.41 per diluted common share for the three months
ended August 31, 2000 compared to a loss applicable to common stock of $5.8
million or $0.46 per diluted common share for the same period in 1999. Loss
applicable to common stock was $69.2 million or $5.46 per diluted common
share for the nine month period ended August 31, 2000, compared to a loss
applicable to common stock of $32.0 million or $2.52 per diluted common
share for the comparable 1999 period. The nine month net loss for 1999
consisted of a loss before extraordinary loss, including preferred stock
dividends, of $25.7 million or $ 2.03 per diluted common share plus an
extraordinary loss from debt extinguishment of $6.2 million or $0.49 loss
per diluted common share.
LIQUIDITY AND CAPITAL RESOURCES
Background and liquidity concerns:
Beginning in early 1999, shortly after the RPS Division acquisition, the
Company's sales slowed as a result of a decrease in sales to major oil
companies (MOCs). During 1999, the MOCs underwent unprecedented
consolidation. During this period of consolidation, the MOCs devoted much
of their resources to corporate and systems integration, divestiture of
redundant operations and reevaluation of global strategies, rather than
capital expenditures on dispensers and POS systems. At the same time,
depressed crude oil prices throughout 1999 decreased MOCs' profitability
and, therefore, reduced their budgeted capital expenditures for equipment.
Due to the decrease in revenues, the Company was not able to make the
interest payment on the Senior Subordinated Notes due on August 1, 2000 and
was also unable to meet certain financial covenants in its bank credit
agreement at August 31, 2000.
On August 28, 2000, the Company filed a Joint Prepackaged Plan of
Reorganization (the "Plan") for the Company and its U.S. subsidiaries
pursuant to Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy
Court for the District of Delaware. The Bankruptcy Court confirmed the
Company's Plan on October 4, 2000. The Company emerged from bankruptcy as
of October 20, 2000, the effective date of the Plan.
The Plan provided that, among other things, (i) the existing bank credit
agreement was restructured to comprise a four year, eleven month senior
term facility of $140 million and a four year, eleven month trust debt
facility of $100 million on which trust debt interest will be accrued but
not paid until at least December 31, 2002; (ii) the Company's bank group
provided, in addition to the $240 million facilities detailed above, a
debtor-in-possession financing (the "DIP Financing") facility with
available borrowings of $48 million which was converted into a revolving
credit facility upon the Company's emergence from the reorganization; (iii)
members of the bank group received warrants with a five year term to
purchase 678,334 shares of new common stock at an exercise price of $0.01
per share; (iv) in exchange for their Notes, the holders of $260 million of
senior and junior subordinated notes and certain other unsecured creditors
received 4,500,000 shares of new common stock representing 90% of the
equity value of the restructured Company, subject to dilution for warrants
to existing shareholders and management options; (v) the Company's
employees' rights to receive cash redemption of preferred stock held by the
Retirement Savings Plan were preserved; and (vi) the Company's
approximately 12,669,000 shares of outstanding common stock were cancelled
and existing holders of common stock received "out of the money" warrants
with a six year term giving them the right to acquire an aggregate of
549,451 shares of the new common stock of the reorganized Company at an
exercise price of $49.50 per share.
Liabilities Subject to Compromise
As a result of the Chapter 11 proceedings, certain prepetition liabilities
were reclassified to liabilities subject to compromise at August 31, 2000.
These claims will be settled in accordance with the Plan. The liabilities
subject to compromise are reflected on the consolidated condensed balance
sheet as of August 31, 2000 as follows: (in thousands)
Senior subordinated notes $189,607
Junior subordinated payment in kind notes 49,195
Accrued interest 12,633
Other accrued liabilities 13,713
----------
Total liabilities subject to compromise $265,148
As a result of the Chapter 11 proceedings and the related Plan, an
extraordinary gain on the forgiveness of debt approximating $265.1 million
is expected to be recognized in the consolidated statement of operations in
October 2000, prior to the adoption of fresh start accounting.
Reorganization costs incurred in the period subsequent to Chapter 11
proceedings on August 28, 2000, but before the end of the third quarter at
August 31, 2000 totaled $1.5 million. These costs related to fees to secure
the DIP Financing.
Prior to the Chapter 11 proceedings on August 28, 2000, the Company
incurred certain costs related to the Plan, approximating $4.7 million,
that are classified as merger and acquisition costs and other unusual items
on the Consolidated Condensed Statement of Earnings. These costs consisted
primarily of professional fees. The components of merger and acquisition
costs and other unusual items for the three and nine month periods ended
August 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
August 31, August 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Pre-petition reorganization costs $ 4,450 $ -- $ 4,724 $ --
Settlement with former shareholders of MSI 7,000 -- 7,000 --
Employee compensation and expenses related to the RPS 386 649 1,496 3,805
Integration plan
Lease cancellation and other facility expenses 60 75 175 269
Increased warranty and other product related costs 329 1 762 320
Other 921 567 4,437 1,721
---------- ---------- -------- --------
Total $ 13,146 $ 1,292 $ 18,594 $ 6,115
---------- ---------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
Tokheim Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Balance Sheet
August 31, 2000 Reorganization Adjustments
Pro forma
Debt reorganized
Discharge Fresh balance sheet
August 31, & Refinance Start August 31,
2000 2000
ASSETS
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 14,989 $ -- $ -- $ 14,989
Accounts receivable, net 104,282 -- -- 104,282
Inventories, net 79,165 -- -- 79,165
Other current assets 13,453 -- -- 13,453
---------- ----------- ----------- ----------
Total current assets 211,889 -- -- 211,889
Property, plant and equipment, net 64,741 -- -- 64,741
Other tangible assets 1,643 -- -- 1,643
Intangible assets, net 279,345 -- (2)(279,345) --
Other non-current assets, net 16,971 -- -- 16,971
Reorganization value in excess of amounts allocable to
identifiable assets -- -- (2) 161,176 161,176
---------- ----------- ----------- ----------
Total assets $ 574,589 $ -- $ (118,169) $ 456,420
---------- ----------- ----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities subject to compromise:
Senior subordinated notes $ 189,607 $ (1)(189,607)$ -- $ --
Junior subordinated payment in kind notes 49,195 (1) (49,195) -- --
Accrued interest 12,633 (1) (12,633) -- --
Other accrued liabilities 13,713 (1) (13,713) -- --
Total liabilities subject to compromise 265,148 (265,148) -- --
Liabilities not subject to compromise:
Current maturities of other long term debt 2,135 -- -- 2,135
DIP financing 5,000 (1) (5,000) -- --
Cash overdrafts 14,829 -- -- 14,829
Accounts payable 59,456 -- -- 59,456
Accrued expenses 66,758 -- -- 66,758
Total current liabilities 413,326 (270,148) -- 143,178
Notes payable, bank credit agreement 223,858 (1)(223,858) -- --
Other long term debt, less current maturities 2,641 -- -- 2,641
Guaranteed employees' stock ownership plan obligation 2,956 -- -- 2,956
Post-retirement benefit liability 18,519 -- -- 18,519
Other long-term liabilities 1,003 -- -- 1,003
Term loans and revolving loans -- (1) 145,000 -- 145,000
Special loans -- (1) 100,000 -- 100,000
Debt discount for bank warrants and Series A Senior Preferred -- (1) (6,877) -- (6,877)
Stock
Total liabilities 662,303 (255,883) -- 406,420
Redeemable convertible preferred stock 24,000 -- (2) (13,875) 10,125
Guaranteed employees' stock ownership plan obligation (2,956) -- -- (2,956)
Treasury stock, at cost (4,307) -- (2) 4,307 --
Series A Senior Preferred Stock -- -- (2) 100 100
---------- ----------- ----------- ----------
Total preferred equity 16,737 -- (9,468) 7,269
Common stock 90,375 -- (1) (90,375) --
Common stock warrants 26,187 -- (1) (26,187) --
Accumulated comprehensive loss (87,684) -- (3) 87,684 --
Accumulated deficit (132,798) -- (3) 132,798 --
New common stock -- -- (1) 4,500 4,500
New warrants issued to bank group -- -- (1) 6,777 6,777
New warrants issued for old cancelled shares -- -- (1) 1,422 1,422
Additional paid in capital -- -- (1) 30,032 30,032
(87,183) -- 137,183 50,000
Less treasury stock, at cost (531) -- (1) 531 --
---------- ----------- ----------- ----------
Total shareholders' equity (87,714) -- 137,714 50,000
---------- ----------- ----------- ----------
Total liabilities and shareholders' equity (deficit) $ 574,589 $ (255,883) $ 137,714 $ 456,420
---------- ----------- ----------- ----------
</TABLE>
The unaudited pro forma consolidated condensed balance sheet prepared as of
August 31, 2000 included above illustrates the effect of the Company's plan
of reorganization and the effect of implementing certain fresh start
accounting adjustments as if the Plan had been effective on August 31,
2000. The adjustments are limited to presenting (a) the Company's
reorganized capital structure, including its new credit agreement, (b) the
effect of discharging the senior and junior subordinated notes, (c) the
elimination of existing goodwill and debt issuance costs associated with
debt that has been discharged or refinanced, (d) the elimination of the
accumulated deficit and comprehensive loss, and (e) the estimated liability
for the discounted present value of the future redemption of preferred
stock under the Company's existing guaranteed ESOP.
The pro forma consolidated condensed balance sheet prepared as of August
31, 2000 does not give effect to all adjustments necessary to state assets
and liabilities at their estimated fair value. The Company will record
these adjustments and allocate the estimated reorganization value to
identifiable tangible and intangible assets based on their estimated fair
value when fresh start accounting is adopted on the effective date of the
Plan and the valuation process is completed.
The reorganization value used in preparing the unaudited consolidated
condensed pro forma balance sheet was assumed to be $50 million for
purposes of fresh start accounting. A description of the reorganization is
as follows:
1. To record the discharge of the senior and junior
subordinated notes and borrowings under the existing
credit agreement, the cancellation of old common
stock, warrants and treasury stock, and the issuance
of new common stock, Series A Senior Preferred Stock
and warrants pursuant to the Plan;
2. To record certain adjustments to state assets and
liabilities at their estimated fair value, including
the establishment of reorganization value in excess
of amounts allocable to identifiable assets using the
reorganization value discussed above. As stated
above, these adjustments are limited to recording the
elimination of existing goodwill and debt issuance
costs associated with debt that has been discharged
or refinanced, and the estimated liability for the
discounted present value of the future redemption of
preferred stock under the Company's existing
guaranteed ESOP;
3. To eliminate the accumulated deficit and accumulated
comprehensive loss (which consists of foreign
currency translation losses).
In connection with the Chapter 11 proceedings discussed above, the Company
entered into a $48 million debtor-in-possession financing agreement (the
"DIP Financing") with its existing bank group led by AMSOUTH BANK and ABN
AMRO BANK N.V. (collectively, the "DIP Lenders"). The Bankruptcy Court
granted final approval of the DIP Financing on August 29, 2000. The DIP
Financing provided for revolving credit based on eligible accounts
receivable, inventory, and property, plant and equipment. The DIP Financing
was used to fund working capital requirements and guarantee letter of
credit obligations during the Chapter 11 proceedings, and to provide funds
for general corporate purposes in the ordinary course of business. Interest
is payable under the DIP Financing at the Company's option at the higher of
the lenders' reference rate or the federal funds effective rate plus 0.5%,
plus 2.50% per annum or the Eurodollar Rate plus 4.00% per annum. At August
31, 2000, the outstanding balance under the DIP Financing was $5 million.
As a result of the confirmation of the Company's Plan by the Bankruptcy
Court, the DIP Financing was replaced by a Post Confirmation Credit
Agreement (the "New Credit Agreement") on October 20, 2000. The New Credit
Agreement, which was entered into by Tokheim Corporation and certain of its
subsidiaries (the "Borrowers" or the "Company"), consists of a $140 million
term facility (the "term loans") which is divided into a Tranche A term
loan, a Tranche B term loan, and a $100 million trust facility referred to
as the "special loans" in the New Credit Agreement. The New Credit
Agreement also includes a $48 million revolving credit facility (the
"revolving loans" - which includes letters of credit) that was converted
from the DIP Financing discussed above.
Borrowings under the revolving loans are subject to certain borrowing base
limitations related to eligible accounts receivable, inventory, and
property, plant and equipment.
The term loans and revolving loans mature an September 20, 2005 and the
special loans are due in $25 million installments on November 30, 2002-2004
and September 20, 2005.
Indebtedness under the term loans and revolving loans bears interest based
upon (at the Company's option) (i) the Base Rate (defined as the higher of
the federal funds rate (as adjusted pursuant to the New Credit Agreement)
plus 0.50% and the applicable prime rate) plus an applicable margin of
3.50% for the term loans and 2.50% for the revolving credit loans, or (ii)
the Eurodollar Rate (as defined in the New Credit Agreement) plus an
applicable margin of 5.00% for the term loans and 4.00% for the revolving
credit loans. Interest on the special loans is payable at an annual rate of
16.00%.
Accrued interest on Base Rate loans is payable in arrears on the last day
of each calendar month and at maturity. Accrued interest on each Eurodollar
Rate loan is payable on the last day of each interest period. Accrued
interest on the special loans is capitalized and added to the unpaid
principal on the interest payment date until maturity.
In consideration for the New Credit Agreement, the Company incurred certain
fees in October 2000 approximating $1.5 million to the bank group along
with warrants with a five year term to purchase 678,334 shares of the
Company's common stock at an exercise price of $0.01 per share.
The Company also issued to the bank group shares of preferred stock with a
liquidation preference of $.10 million with quarterly dividends at an
annual rate of 16.00% (the "New Preferred Stock"). The holders of the New
Preferred Stock are entitled to elect two directors to the Company's board
of directors, voting as a separate class. In the event the Company has a
payment default under the New Credit Agreement, the holders of the New
Preferred Stock, voting as a separate class, will be entitled to elect a
majority of the directors on the Company's board of directors.
The New Credit Agreement provides for commercial and standby letters of
credit not to exceed $5 million and $3 million at any time, respectively.
Interest is due on outstanding letters of credit at the Base Rate plus
2.50% per annum plus an additional 2.00% beginning on the third business
day after receipt of notice from the lender that a payment was made on
behalf of the Company. A nonrefundable fee is due monthly for each letter
of credit equal to 4.00% per annum of the undrawn amount.
The Borrowers may prepay the term loans and special loans in whole or in
part provided that the Company does not make any prepayment of the term
loans if any special loans remain outstanding. The Company is required to
make mandatory prepayments of the term loans, special loans, and revolving
loans for excess cash flow (as defined in the New Credit Agreement,
commencing with fiscal year 2002) and in the case of the receipt of net
cash proceeds from asset sales, federal tax refunds, insurance recoveries,
or the issuance of debt or equity securities, subject to certain
exceptions. Premiums are charged on voluntary or mandatory prepayments of
the term loans and special loans at a range of .50% to 2.00% of the
outstanding principal balance depending an the date of the prepayment.
The New Credit Agreement requires the Company to maintain specified
financial levels and ratios and to meet certain financial tests, including
a minimum level of EBITDA (as defined in the New Credit Agreement), a fixed
charge coverage ratio, an interest coverage ratio, a senior debt to EBITDA
ratio, and a total debt to EBITDA ratio. The New Credit Agreement also
contains covenants which, among other things, limit the amount of capital
expenditures, the incurrence of additional indebtedness, the payment of
dividends, transactions with affiliates, asset sales, acquisitions,
investments, mergers and consolidations, prepayments of certain other
indebtedness, liens and encumbrances and other matters customarily
restricted in such agreements.
At May 31, 2000 and August 31, 2000, the Company was in violation of
several of its financial covenants under its bank credit agreement,
including covenants relating to the senior leverage ratio, total leverage
ratio, interest expense coverage ratio, fixed charge coverage ratio,
minimum EBITDA, and the clean down or availability covenant on the working
capital facility. No waiver for these instances of non-compliance is
necessary because the Company has refinanced its bank credit agreement with
the New Credit Agreement subsequent to August 31, 2000, as described above.
The Company's ability to maintain specified financial levels and meet
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
default, the lenders could elect to declare all amounts borrowed under the
New Credit Agreement to be due and payable.
Indebtedness of the Company under the New Credit Agreement (a) is
collateralized by (i) a first perfected security interest in and lien on
certain of the real and personal property assets of the Company (including
claims against certain subsidiaries to which the Company has made
intercompany loans) and the Company's direct and indirect material
majority-owned U.S. subsidiaries, (ii) a pledge of 100% of the stock of the
Company's direct and indirect material majority-owned U.S. subsidiaries,
and (iii) a pledge of 65% of the stock of the Company's first-tier material
foreign subsidiaries and (b) is guaranteed by all of the Company's direct
and indirect majority-owned U.S. subsidiaries.
Cash used in operations for the nine month period ended August 31, 2000 was
$17.8 million versus $18.7 million in the comparable period of 1999. During
the nine month period for 2000 the Company reduced customer receivables by
$51.2 million. The Company used these funds to reduce accounts payable and
accrued expenses by $19.0 million and $14.3 million, respectively, and to
fund operating losses.
Cash used in investing activities for the nine month period ended August
31, 2000 was $6.4 million compared to $11.9 million in the comparable 1999
period. The reduction in capital expenditures in the nine month period was
caused by restricting capital spending as a result of the liquidity
situation.
Cash provided from financing activities for the nine month period ended
August 31, 2000 was $21.4 million compared to the same time period in 1999
of $32.9 million. The cash provided in the 2000 period is primarily
attributable to increased borrowings from the Company's credit facilities.
The Company believes that operating cash flow and amounts available under
its credit facilities will be sufficient for it to meet its debt service
and other obligations and capital requirements in the future. It is
uncertain, however, whether the Company will be able to generate sufficient
cash flows; the Company's operating cash flow is dependent on factors
beyond the Company's control, moreover, including general economic
conditions in the markets the Company serves, there can be no assurance
that actual operating cash flow will meet expectations.
As part of the purchase price of the RPS Division, the Company 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 $2.8 million of
expenditures in the nine month period ended August 31, 2000 and expects to
incur an additional $5.8 million which consists of $5.7 million of
involuntary termination costs to reduce redundant staffing levels and
approximately $1.0 million associated with lease breakage fees. These costs
have been aggregated and included in accrued liabilities. The Company
estimates the future cash expenditures necessary to close or consolidate
certain of the existing, non-RPS Division locations to approximate $0.8
million.
New Accounting Pronouncements
The company is still considering 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 August 31, 2000.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On October 16, 2000, a notice of appeal of the order of confirmation of
the Plan was filed by Schlumberger. Schlumberger, which is involved in a
dispute with the Company arising out of the Company's 1998 purchase of
Schlumberger's RPS division, is appealing on the grounds that it was
improperly classified as a Class 5A creditor in the Plan rather than as a
Class 3 creditor. The claims of Class 5A creditors, to the extent allowed,
will be satisfied through the receipt of common stock in the reorganized
Company rather than cash, while Class 3 general unsecured creditors are
unimpaired and will be paid in full in cash. Schlumberger made these same
arguments in a formal objection filed prior to the hearing on Plan
confirmation, which arguments were rejected by the bankruptcy court in
confirming the Plan.
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.
On August 11, 2000, the Company settled the claim out of court for an
amount of $7 million. As a condition of the settlement document, the former
shareholders of MSI, to whom the award was made, have agreed to be treated
in a similar fashion to the holders of the senior and junior subordinated
notes in the bankruptcy proceeding. This award has been accrued for and
classified as "a liability subject to compromise" in the consolidated
condensed balance sheet. This claim will be settled in the form of stock in
the newly reorganized company.
New York Stock Exchange
On February 18, 2000, the Company announced that it failed 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 "NYSE Committee") of the
NYSE demonstrating how the Company planned to comply with the newly
effective standards. Based upon management estimates, the Company believed
it would satisfy the new standards of the NYSE.
After reviewing the plan, the NYSE Committee informed the Company in a
letter dated April 6, 2000, that it had agreed to accept the Company's
submitted plan, and that senior NYSE management had acknowledged such
acceptance. As a result, the NYSE was prepared to continue the listing of
the Company at that time. The NYSE would perform quarterly reviews during
the 18 months from receipt of its initial December 30, 1999 letter to the
Company for compliance with the goals and initiatives as outlined in the
Company's plan. Failure to achieve these goals could result in the Company
being subject to NYSE trading suspension at the point the initiative or
goal was not met.
The Company was informed that it would 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 would result in the Company being
suspended by the NYSE with application made to the SEC to delist the
Company's common stock.
During the first quarter of 2000, the Company advised the NYSE that, due to
continuing low levels of business activity, it had decided not to proceed
with a key element of the plan. On July 3, 2000, the Company was notified
that it would be delisted from the NYSE as of July 14, 2000, for failing to
meet the continued listing criteria. The Company's common stock began
trading on the OTC Bulletin Board on Friday July 14, 2000, under the symbol
"TOKM". Following the Effective Date, pursuant to the Plan, the Company common
stock listed under the symbol "TOKM" has been cancelled and no longer trades
on the OTC Bulletin Board.
Item 3. Defaults Upon Senior Securities
Beginning in early 1999, shortly after the RPS Division acquisition, the
Company's sales slowed as a result of a decrease in sales to MOCs. During
1999, the MOCs underwent unprecedented consolidation. During this period of
consolidation, the MOCs devoted much of their resources to corporate and
systems integration, divestiture of redundant operations and reevaluation
of global strategies, rather than capital expenditures on dispensers and
POS systems. At the same time, depressed crude oil prices throughout 1999
decreased MOCs' profitability and, therefore, reduced their budgeted
capital expenditures for equipment. Due to the decrease in revenues, the
Company determined that it would not be able to make the August 1, 2000
interest payment due on approximately $200 million of 11.375% Senior
Subordinated Notes due 2008, comprised $123 million in aggregate
principal amount of dollar notes (the "Dollar Notes") and Euro 75 million
in aggregate principal amount (valued at approximately $75 million) of euro
notes (the "Euro Notes" and, collectively with the Dollar Notes, the
"Senior Subordinated Notes"). The Company also determined that it would be
unable to meet certain financial covenants in the 1998 credit agreement (as
amended, the "Prepetition Credit Agreement") which provided a $120 million
revolving working capital facility due September 30, 2003 and an additional
revolving loan facility in the amount of $10 million which expires on
December 22, 2001. Tokheim was also in arrears with respect to interest
under $40 million of 12.0% junior subordinated payment-in-kind notes due
2008 (the "Junior Subordinated Notes") and a three year $24 million loan
facility granted by the Prepetition Lenders to fund the Company's employee
stock ownership plan ("ESOP"). As of August 28, 2000, an aggregate amount
of approximately $191 million in principal and $13 million in accrued
interest was outstanding under the Senior Subordinated Notes. The aggregate
obligation under the Prepetition Credit Agreement, as of August 28, 2000,
was approximately $230 million, including $116 million on the revolving
facility, including the additional revolving loan facility (both fully
drawn) and a term loan balance of approximately $110 million. As of August
28, 2000, the aggregate obligations under the ESOP loan facility was
approximately $4 million. As of August 28, 2000, an aggregate amount of
approximately $50 million was outstanding under the Junior Subordinated
Notes.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Pursuant to the approval of the Class 7 Solicitation Order by the
Bankruptcy Court, holders of Company common stock outstanding immediately
prior to the petition date were deemed to have rejected the Plan and,
therefore, were not entitled to vote on the Plan.
(b) On August 16, 2000 the Company caused a copy of the disclosure
statement, the Plan and the appropriate ballots to be mailed to holders of
claims in Classes 4, 5A and 5B (as defined in the Plan) entitled to vote on
the Plan (these claims include secured lender claims, senior subordinated
note claims, junior subordinated note claims and certain general impaired
unsecured claims). The Company established August 28, 2000 as the deadline
for receipt of votes to accept or reject the Plan (the "Voting Deadline").
As of the Voting Deadline, each of the above-mentioned Classes had voted
overwhelmingly to accept the Plan in accordance with the requirements of
the Bankruptcy Code. Specifically,
(1) 96.97% in amount and 94.74% in number of those
holders of Class 4 claims voting on the Plan voted to
accept the Plan;
(2) 99.83% in amount and 93.1% in number of those Holders
of Class 5A claims voting on the Plan voted to accept
the Plan; and
(3) 100% in amount and 100% in number of those Holders of
Class 5B claims voting on the Plan voted to accept
the Plan.
(c) Pursuant to the Plan, on the Effective Date, the Board of Directors of
the Company shall have nine (9) members including Douglas K. Pinner, six
(6) directors designated by an ad hoc committee of prepetition noteholders
(the "Bondholder Committee") and two (2) directors designated by the
Prepetition Lenders. The Board of Directors of the Company will be deemed
to have resigned on the Effective Date.
Item 5. Other Information
Certain statements in this filing, including statements preceded by,
followed by or that include the words "may," "will," "should," "could,"
"expects," "plans," "anticipate," "believes," " estimates," "predicts,"
"potential," or "continue" or the negative of such terms and other
comparable terminology and words of similar import, constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act, Section 21C of the Securities Exchange Act of 1934 and the
Private Securities Litigation Reform Act of 1995. These statements involve
known and unknown risks that may cause the actual results of the Company to
differ materially from any results expressed or implied by the
forward-looking statements. These risks include: inability to execute the
restructuring plan as approved by the court; increases in the Company's
cost of borrowing, or a default under any material debt agreement;
inability to achieve anticipated cost savings or revenue growth; dependence
on the retail petroleum industry; business disruptions; material adverse
changes in economic conditions in the markets we serve; inability to
forecast or achieve projected operating results; fluctuations in exchange
rates among various foreign currencies; costs in adjusting to the Euro;
changes in, or failure of the Company to comply with current and future
governmental, environmental or other regulatory actions and conditions in
our operating areas; competition from others in the industry; increases in
labor costs and relations with union bargaining units representing our
employees; the integration of our operations with those of businesses we
have acquired or may acquire in the future and the realization of the
expected benefits; failure to obtain new customers or retain existing
customers; inability to protect proprietary technology or to integrate new
technologies; changes in business strategy or development plans; lack of
funds for capital expenditures or R & D; inability to carry out strategies
to accelerate new product development programs; changed demand for new
products; loss of key management; adverse publicity; contingent and
litigation claims asserted against the Company; and loss of significant
customers or suppliers; and other risks and uncertainties as may be
detailed from time to time in our public announcements and SEC filings.
Given these uncertainties, investors are cautioned not to unduly rely on
such forward-looking statements. The Company disclaims any obligation to
update any such factors or to announce publicly the result of any revisions
to any of the forward-looking statements contained in this filing to
reflect future events or developments.
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 Amended and Restated Articles of Incorporation of Tokheim
Corporation, as filed with the Indiana Secretary of State
as of October 20, 2000.
3.3 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)
3.4 Amended and Restated Bylaws of Tokheim Corporation, as
amended and restated as of October 20, 2000.
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).
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 Second Amended and
Restated Credit Agreement, dated as of January 11, 1999
(incorporated 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 Second 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 (incorporated
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 (incorporated
herein by reference to the Company's Annual Report on
Form 10-K, for the year ended September 30, 1999).
4.19 Amendment No. 6 to Second Amended and Restated Credit
Agreement, dated as of December 22, 1999.
4.20 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).
4.21 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).
4.22 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).
4.23 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).
4.24 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).
4.25 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).
4.26 Post-Confirmation Credit Agreement, dated as of October
20, 2000, among Tokheim Corporation, various subsidiaries
thereof as Borrowers, various financial institutions,
AmSouth Bank, as Documentation Agent, and ABN AMRO Bank
N.V., as Administrative Agent.
4.27 Series A Warrant Agreement, dated as of October 20, 2000,
among Tokheim Corporation and the holders of Series A
Warrant Certificates.
4.28 Series B Warrant Agreement, dated as of October 20, 2000,
among Tokheim Corporation and Computershare Investor
Services, LLC, as Warrant Agent.
4.29 Series C Warrant Agreement, dated as of October 20, 2000,
among Tokheim Corporation and Computershare Investor
Services, LLC, as Warrant Agent.
4.30 Registration Rights Agreement, dated as of October 20,
2000, among Tokheim Corporation and the Holders of Stock
to be listed on Schedule 1.
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).
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 May 15, 2000, between Tokheim
Corporation and Robert L. Macdonald.
10.8 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).
10.9 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).
10.10 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).
10.11 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).
10.12 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).
10.13 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).
10.14 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).
10.15 Tokheim Corporation Management Option Plan.
10.16 Form of Incentive Stock Option Agreement under Tokheim
Corporation Management Option Plan.
10.17 Incentive Stock Option Agreement under Tokheim
Corporation Management Option Plan, dated as of October
20, 2000, among Tokheim Corporation and Douglas K.
Pinner.
27.1 Financial Data Schedule.
b. Reports on Form 8-K
The Company filed a current report on Form 8-K on September 11, 2000
relating to the filing of a Joint Prepackaged Plan of Reorganization for
the Company and its U.S. subsidiaries pursuant to chapter 11 of the United
States Bankruptcy Code with the United States Bankruptcy Court for the
District of Delaware.
The Company filed a current report on Form 8-K on October 16, 2000
relating to the confirmation of the Joint Prepackaged Plan of
Reorganization for the Company and its U.S. subsidiaries pursuant to
chapter 11 of the United States Bankruptcy Code with the United States
Bankruptcy Court for the District of Delaware.
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: October 27, 2000 /s/ DOUGLAS K. PINNER
---------------------
Chairman, President and Chief Executive
Officer
Date: October 27, 2000 /s/ ROBERT L. MACDONALD
-----------------------
Executive Vice-President, Finance and
Chief Financial Officer
EXHIBIT INDEX
3.2 Amended and Restated Articles of Incorporation of Tokheim
Corporation, as filed with the Indiana Secretary of State as of
October 20, 2000.
3.4 Amended and Restated Bylaws of Tokheim Corporation, as amended and
restated as of October 20, 2000.
4.26 Post-Confirmation Credit Agreement, dated as of October 20, 2000,
among Tokheim Corporation, various subsidiaries thereof as
Borrowers, various financial institutions, AmSouth Bank, as
Documentation Agent, and ABN AMRO Bank N.V., as Administrative
Agent.
4.27 Series A Warrant Agreement, dated as of October 20, 2000, among
Tokheim Corporation and the holders of Series A Warrant
Certificates.
4.28 Series B Warrant Agreement, dated as of October 20, 2000, among
Tokheim Corporation and Computershare Investor Services, LLC, as
Warrant Agent.
4.29 Series C Warrant Agreement, dated as of October 20, 2000, among
Tokheim Corporation and Computershare Investor Services, LLC, as
Warrant Agent.
4.30 Registration Rights Agreement, dated as of October 20, 2000, among
Tokheim Corporation and the Holders of Stock to be listed on
Schedule 1.
10.15 Tokheim Corporation Management Option Plan.
10.16 Form of Incentive Stock Option Agreement under Tokheim Corporation
Management Option Plan.
10.17 Incentive Stock Option Agreement under Tokheim Corporation
Management Option Plan, dated as of October 20, 2000, among Tokheim
Corporation and Douglas K. Pinner.
27.1 Financial Data Schedule
