-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M6kU/LKMNkWR4gRlx2mvebKObWS1ZvLYzWCaK9uR02qJb+n9rADb5HvSJDGSTTTb BtWF7aFV6k2IYGAorl3vMQ== 0000051200-96-000019.txt : 19960513 0000051200-96-000019.hdr.sgml : 19960513 ACCESSION NUMBER: 0000051200-96-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT DANE HOLDINGS INC CENTRAL INDEX KEY: 0000051200 STANDARD INDUSTRIAL CLASSIFICATION: TRUCK TRAILERS [3715] IRS NUMBER: 540698116 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02934 FILM NUMBER: 96559153 BUSINESS ADDRESS: STREET 1: 2016 N PITCHER ST CITY: KALAMAZOO STATE: MI ZIP: 49007 BUSINESS PHONE: 6163436121 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL CONTROLS CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CRYOGENICS INC DATE OF NAME CHANGE: 19690819 FORMER COMPANY: FORMER CONFORMED NAME: WILLKIE FARR GALLAGHER WALTON & FITZGIBB DATE OF NAME CHANGE: 19680904 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended March 31, 1996 --------------------------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _____________________ Commission file number 1-5599 ---------------------- GREAT DANE HOLDINGS INC. - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 54-0698116 - ----------------------------------------------------------------------------- (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 2016 North Pitcher Street, Kalamazoo, Michigan 49007 - ----------------------------------------------------------------------------- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (616) 343-6121 ------------------------ - ----------------------------------------------------------------------------- Indicate by check mark whether Registrant (1) 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 Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- There were 1,002.083 shares of Registrant's only class of common stock outstanding as of May 8, 1996. INDEX GREAT DANE HOLDINGS INC. AND SUBSIDIARIES Page Number ----------- PART I FINANCIAL INFORMATION Item 1 Consolidated Financial Statements (Unaudited): Consolidated Balance Sheets at December 31, 1995 and March 31, 1996 . . . . . . . . . . . . . . . . . . . 2-3 Consolidated Statements of Operations for the Three Months Ended March 31, 1995 and March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1995 and March 31, 1996 . . . . . . . . . . . . . . . . . . . . . 5-6 Notes to Consolidated Financial Statements . . . . . . . 7-8 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . 9-10 PART II OTHER INFORMATION Item 4 Submission of Matters to a Vote of Security Holders. . . . 11 Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 11 SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Balance-Sheets
CONSOLIDATED BALANCE SHEETS GREAT DANE HOLDINGS INC. AND SUBSIDIARIES (in thousands, except per share amounts) (unaudited) December 31, March 31, 1995 1996 ------------- ----------- ASSETS Cash and cash equivalents $ 41,086 $ 34,163 Accounts receivable, less allowance for doubtful accounts of $1,564 (1995) and $1,582 (1996) 101,138 96,184 Inventories 84,686 88,792 Other current assets 26,574 37,543 ---------- ---------- Total current assets 253,484 256,682 Property, plant and equipment, net 123,864 131,818 Insurance Subsidiary's investments 110,058 106,331 Cost in excess of net assets acquired, net of accumulated amortization of $8,752 (1995) and $9,064 (1996) 41,243 40,931 Trademark, net of accumulated amortization of $2,450 (1995) and $2,537 (1996) 10,996 10,909 Other assets 30,960 36,083 ---------- ---------- Total Assets $ 570,605 $ 582,754 ========== ==========
Balance-Sheets--Continued
CONSOLIDATED BALANCE SHEETS--CONTINUED GREAT DANE HOLDINGS INC. AND SUBSIDIARIES (in thousands, except per share amounts) (unaudited) December 31, March 31, 1995 1996 ------------ ------------- LIABILITIES AND SHAREHOLDERS' DEFICIT: Accounts payable $ 71,989 $ 62,236 Notes payable 3,133 --- Income taxes payable 9,305 13,926 Accrued compensation 18,490 15,700 Accrued interest 11,049 5,087 Customer deposits 14,315 16,427 Other accrued liabilities 43,390 39,312 Current portion of long-term debt 16,260 18,958 ---------- ---------- Total current liabilities 187,931 171,646 Long-term debt, excluding current portion 276,918 287,289 Insurance Subsidiary's unpaid losses and loss adjustment expenses 78,151 78,975 Unearned insurance premiums 12,545 25,753 Deferred income taxes 1,675 1,935 Postretirement benefits other than pensions 52,766 53,208 Other noncurrent liabilities 46,930 44,635 Minority interest 1,748 2,108 ---------- ---------- Total liabilities 658,664 665,549 Shareholders' deficit: Common stock, par value $1.00: Authorized 3,000 shares Outstanding 1,000 (1995) 1,001.042 (1996) shares 1 1 Additional paid-in capital 14,999 15,024 Retained earnings 23,128 29,774 Unrealized appreciation on Insurance Subsidiary's investments in certain debt and equity securities 2,186 779 Amount paid in excess of Motors' net assets (128,373) (128,373) ---------- ---------- Total shareholders' deficit (88,059) (82,795) ---------- ---------- Total Liabilities and Shareholders' Deficit $ 570,605 $ 582,754 ========== ==========
See notes to consolidated financial statements. Statements of Operations--3 Months
CONSOLIDATED STATEMENTS OF OPERATIONS GREAT DANE HOLDINGS INC. AND SUBSIDIARIES (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 1995 1996 ---------- ---------- Revenues $ 322,393 $ 265,547 Cost of revenues (276,531) (229,135) ---------- ---------- Gross profit 45,862 36,412 Selling, general and administrative expense (23,376) (22,377) ---------- ---------- Operating profit 22,486 14,035 Interest expense (10,464) (9,424) Interest income 2,277 2,156 Other income, net 712 909 Special credit--Note F --- 4,300 ---------- ---------- Income before minority equity and income taxes 15,011 11,976 Minority equity (413) (360) ---------- ---------- Income before income taxes 14,598 11,616 Income tax expense (6,305) (4,970) ---------- ---------- Net income $ 8,293 $ 6,646 ========== ========== Weighted average number of shares used in per share computations 1,000 1,001 ========== ========== Net income per share $ 8,293 $ 6,639 ========== ==========
See notes to consolidated financial statements. Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS GREAT DANE HOLDINGS INC. AND SUBSIDIARIES (in thousands) (unaudited) Three Months Ended March 31, 1995 1996 ---------- ---------- Cash flows from operating activities: Net income $ 8,293 $ 6,646 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 5,398 4,899 Deferred income tax benefit (3,055) --- Amortization of cost in excess of net assets acquired 312 312 Amortization of debt discount 439 240 Gain on sale of property, plant and equipment (182) (155) Investment gains (80) (679) Increase in minority equity 413 360 Other noncash charges 4,068 1,475 Changes in operating assets and liabilities: Accounts receivable (17,147) 4,903 Inventories (9,716) (4,106) Other assets (6,261) (15,303) Accounts payable 13,554 (9,753) Income taxes 5,375 4,618 Unpaid losses and loss adjustment expenses 1,636 824 Unearned insurance premiums 6,162 13,208 Postretirement benefits other than pensions 299 442 Other liabilities (9,405) (14,112) ---------- ---------- Net cash flow provided by (used in) operating activities 103 (6,181)
Statements of Cash Flows--Continued
CONSOLIDATED STATEMENTS OF CASH FLOWS--CONTINUED GREAT DANE HOLDINGS INC. AND SUBSIDIARIES (in thousands) (unaudited) Three Months Ended March 31, 1995 1996 ---------- ---------- Cash flows from investing activities: Purchases of property, plant and equipment $ (13,370) $ (12,979) Proceeds from disposal of property, plant and equipment and other productive assets 352 281 Purchase of investments available for sale (7,697) (7,511) Purchases of investments held to maturity --- 5 Proceeds from sale of investments available for sale 4,411 5,298 Proceeds from maturity and redemption of investments held to maturity 5,054 4,450 ---------- ---------- Net cash flow used in investing activities (11,250) (10,456) Cash flows from financing activities: Proceeds from borrowings 90,822 20,172 Repayments of borrowings (74,996) (10,476) Proceeds from issuance of common stock --- 18 ---------- ---------- Net cash flow provided by financing activities 15,826 9,714 ---------- ---------- Increase (decrease) in cash and cash equivalents 4,679 (6,923) Beginning cash and cash equivalents 34,875 41,086 ---------- ---------- Ending cash and cash equivalents $ 39,554 $ 34,163 ========== ==========
See notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS GREAT DANE HOLDINGS INC. AND SUBSIDIARIES MARCH 31, 1996 (unaudited) NOTE A--BASIS OF PRESENTATION The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In Management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1996, are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. NOTE B--PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Great Dane Holdings Inc. and its subsidiaries, including Great Dane Trailers, Inc. ("Great Dane") and Checker Motors Corporation ("Motors") and Motors' wholly- owned subsidiaries, including American Country Insurance Company ("Insurance Subsidiary"). NOTE C-INVENTORIES Inventories are summarized below (dollars in thousands):
December 31, March 31, 1995 1996 ------------ ------------ Raw materials and supplies $ 53,097 $ 53,165 Work-in-process 10,501 11,670 Finished goods 21,088 23,957 ---------- ---------- $ 84,686 $ 88,792 ========== ==========
NOTE D--INCOME TAXES The Company's estimated effective tax rate differs from the statutory rate because of state income taxes as well as the impact of the reporting of certain income and expense items in the financial statements which are not taxable or deductible for income tax purposes. NOTE E--STOCK ISSUANCE On January 4, 1996, 1.042 shares of common stock were issued to an executive officer of the Company in connection with an agreement between this executive officer and the Company. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED GREAT DANE HOLDINGS INC. AND SUBSIDIARIES (unaudited) NOTE F--SPECIAL CREDIT On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming the Company, together with three prior subsidiaries of the Company, as defendants in Case No. CV89-119MA, United States District Court for the District of Oregon. On December 22, 1993, the Company entered into a settlement with Boeing, settling all claims asserted by Boeing in the lawsuit. Pursuant to the settlement terms, the Company agreed to pay Boeing $12.5 million over the course of five years, $5 million of which had been committed by certain insurance companies in the form of cash or irrevocable letter of credit as of that date. Accordingly, a $7.5 million special charge was recorded in 1993 to provide for the cost associated with this legal proceeding. Since the date of the settlement with Boeing, and as a result of agreements negotiated with insurance companies, the total cost to the Company related to the Boeing lawsuit has decreased to $3.2 million. The lower cost principally related to an insurance settlement negotiated in the quarter ended March 31, 1996. Accordingly, a special credit of $4.3 million was recorded in the quarter ended March 31, 1996, relating to the finalization of insurance settlements. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GREAT DANE HOLDINGS INC. AND SUBSIDIARIES FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Available cash and cash equivalents, cash flow generated from (used in) operations ($0.1 million and $(6.2) million for the three months ended March 31, 1995 and 1996, respectively) and proceeds from borrowings have provided sufficient liquidity and capital resources for the Company to conduct its operations during the first three months of 1995 and 1996. The Company is a holding company and is, therefore, dependent on cash flow from its operating subsidiaries in order to meet its obligations. The Company's operating subsidiaries are required, pursuant to financing agreements with third parties, to meet certain covenants, which may have the effect of limiting cash available to the Company. Further, the payment of dividends by the Insurance Subsidiary is currently subject to the notification, reporting and disapproval requirements of the Insurance Code of the State of Illinois Department of Insurance. The operating subsidiaries' plans indicate that sufficient funds are anticipated to be available to the Company to meet its short-term obligations. RESULTS OF OPERATIONS Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995 ------------------------------------------------- Revenues decreased $56.8 million during the three months ended March 31, 1996, as compared to the same period in 1995. The lower revenues are principally attributed to lower Trailer Manufacturing revenues ($67.1 million) primarily associated with lower volume in trailer sales. The volume decline represents the effect of weakened demand for the movement of freight resulting in decreased sales of truck trailers. Automotive Products revenues increased $8.9 million during the three months ended March 31, 1996, as compared to the same period in 1995. Increased revenues for the segment associated with the production of tooling for certain customers, partially offset by lower production of certain contract parts due partly to a strike at its major customer, accounted for the increased revenues. The Company's operating profit decreased $8.5 million in the 1996 period compared to the 1995 period. This decrease is attributed to a decrease of Trailer Manufacturing operating profits ($7.0 million) which is principally due to lower volume of trailer sales indicated above and slightly lower margins. The volume decline represents the effect of weakened demand for the movement of freight resulting in decreased sales of truck trailers. The margins were impacted by certain raw material price increases. The Automotive Products operating profits decreased ($0.8 million) primarily due to the mix of sales and a strike at its major customer, as well as certain raw material price in- creases. The profit margins on tooling programs are lower than margins on contract parts production. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED GREAT DANE HOLDINGS INC. AND SUBSIDIARIES On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming the Company, together with three prior subsidiaries of the Company, as defendants in Case No. CV89-119MA, United States District Court for the District of Oregon. On December 22, 1993, the Company entered into a settlement with Boeing, settling all claims asserted by Boeing in the lawsuit. Pursuant to the settlement terms, the Company agreed to pay Boeing $12.5 million over the course of five years, $5 million of which had been committed by certain insurance companies in the form of cash or irrevocable letter of credit as of that date. Accordingly, a $7.5 million special charge was recorded in 1993 to provide for the cost associated with this legal proceeding. Since the date of the settlement with Boeing, and as a result of agreements negotiated with insurance companies, the total cost to the Company related to the Boeing lawsuit has decreased to $3.2 million. The lower cost principally related to an insurance settlement negotiated in the quarter ended March 31, 1996. Accordingly, a special credit of $4.3 million was recorded in the quarter ended March 31, 1996, relating to the finalization of insurance settlements. During the quarters ended March 31, 1996 and 1995, a $0.4 million charge was recorded to reflect minority equity in South Charleston Stamping & Manufacturing Company ("SCSM"), a subsidiary of Checker. Income tax expense is higher for financial statement purposes than would be computed if the statutory rate were used because of state income taxes and the impact of the reporting of certain income and expense items in the financial statements which are not taxable or deductible for income tax purposes. Net income was $6.6 million for the three months ended March 31, 1996, as compared to $8.3 million for the comparable period in 1995. The decline in net income is attributed to the reasons mentioned above. PART II OTHER INFORMATION GREAT DANE HOLDINGS INC. AND SUBSIDIARIES Item 4: Submission of Matters to a Vote of Security Holders --------------------------------------------------- By unanimous written consent dated January 16, 1996, the stockholders re- elected David R. Markin, Martin L. Solomon, Allan R. Tessler and Wilmer J. Thomas, Jr., to serve as directors. Item 6: Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- 10.1 Amendment, dated as of March 31, 1996, to the Employment Agreement dated as of January 1, 1994, between Great Dane Holdings Inc. and David R. Markin. 10.2 Third Amendment, dated as of March 31, 1996, to the Amended and Restated Employment Agreement dated as of November 1, 1985, between Checker Motors Corporation and David R. Markin. 27.1 Financial Data Schedule (b) Reports on Form 8-K ------------------- None GREAT DANE HOLDINGS INC. AND SUBSIDIARIES SIGNATURE 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. GREAT DANE HOLDINGS INC. ------------------------------ (Registrant) /s/ Marlan R. Smith ---------------------------------------- Marlan R. Smith Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: May 8, 1996 EX-27 2
5 0000051200 GREAT DANE HOLDINGS INC. 1,000 3-MOS DEC-31-1996 MAR-31-1996 34,163 0 97,766 1,582 88,792 256,682 248,533 116,715 582,754 171,646 287,289 0 0 1 (82,796) 582,754 242,693 265,547 211,709 229,135 0 0 9,424 11,616 4,970 6,646 0 0 0 6,646 6,639.000 6,639.000
EX-10.1 3 10.1-1 AMENDMENT, dated as of March 31, 1996, to the Employment Agreement, dated as of January 1, 1994, between GREAT DANE HOLDINGS INC., as the successor to International Controls Corp. ("Holdings") and DAVID R. MARKIN ("Markin") (the "Employment Agreement;" all capitalized terms used without definition herein being used with the meanings ascribed thereto in the Employment Agreement). WHEREAS, the parties desire to provide for certain events not contemplated at the time of the execution of the Employment Agreement; NOW, THEREFORE, the parties hereto agree as follows: 1. All references in the Employment Agreement to ICC are hereby amended to read "Holdings." 2. The following is added as paragraph 15 to the Employment Agreement: "15. In the event of a disposition of all or substantially all of the assets of Holdings in one or a series of transactions (whether by sale of the stock or assets of its direct or indirect subsidiaries, or by merger, consolidation or otherwise) or in the event that at least 50% of the common stock of Holdings is owned or controlled by one or more persons or entities other than the current stockholders of Holdings or entities related to or controlled by them (any of the foregoing, a "Sale Transaction") then, notwithstanding anything to the contrary in this Agreement, Markin shall have the option, exercisable prior to or for six months following the closing of the Sale Transaction, to terminate this Agreement. If the option is exercised, Markin shall be paid in a lump sum the compensation (at his then annual rate pursuant to paragraph 3) that would have been due to him through the Termination Date. Such payment shall be made no later than the later of (a) ten days after notice has been given and (b) the date of closing of the Sale Transaction. The parties agree that upon 10.1-2 the sale of the stock or assets of Great Dane Trailers, Inc. in one or a series of transactions, Holdings shall be deemed to have sold substantially all its assets." 3. As so amended, the Employment Agreement remains in full force and effect. 4. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties here to have executed this Amendment as of the date and year first above written. GREAT DANE HOLDINGS INC. By: /s/ Allan R. Tessler -------------------------------- /s/ David R. Markin ----------------------------------- David R. Markin EX-10.2 4 10.2-1 THIRD AMENDMENT, dated as of March 31, 1996, to the Amended and Restated Employment Agreement, dated as of November 1, 1985, between CHECKER MOTORS CORPORATION, a Delaware corporation ("Checker") and DAVID R. MARKIN ("Markin") (as amended on March 4, 1992 and July 12, 1993, the "Employment Agreement;" all capitalized terms used without definition herein being used with the meanings ascribed thereto in the Employment Agreement). WHEREAS, the parties hereto wish to clarify certain ambiguities in the Employment Agreement; NOW, THEREFORE, the parties hereto agree as follows: 1. Paragraph 9 of the Employment Agreement is hereby amended in its entirety to read as follows: "9. In the event of a disposition of all or substantially all of the assets of Checker in one or a series of transactions (whether by sale of the stock or assets of its subsidiaries, or by merger, consolidation or otherwise) or in the event that Checker ceases to be owned by Great Dane Holdings Inc. ("Holdings") or in the event at least 50% of the common stock of Holdings is owned or controlled by any persons or entities other than the current stockholders of Holdings or persons or entitles related to or controlled by them (any of the foregoing, a "Sale Transaction") then, notwithstanding anything to the contrary in this Agreement, Markin shall have the option, exercisable prior to or for six months following the closing of the Sale Transaction, to terminate this Agreement. If the option is exercised, Markin shall be paid in a lump sum at the closing of the Sale Transaction the compensation (at his then annual rate pursuant to paragraph 3) that would have been due to him through the Termination Date. Such payment shall be made no later than the later of (a) ten days after notice has been given and (b) the date of the closing of the Sale 10.2-2 Transaction. The parties agree that only upon the sale of the stock of assets of both South Charleston Stamping & Manufacturing Company and Yellow Cab Company, in one or a series of transactions, shall Checker be deemed to have sold substantially all its assets." 2. As so amended, the Employment Agreement remains in full force and effect. 3. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties here to have executed this Amendment as of the date and year first above written. CHECKER MOTORS CORPORATION By: /s/ Allan R. Tessler -------------------------------- /s/ David R. Markin ----------------------------------- David R. Markin -----END PRIVACY-ENHANCED MESSAGE-----