-----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, G70WFxuez6oUIeYx7gRoMr+Ih8meB3nmWelboiFj6HOmlFlKpnajC6Pf9iAb+iBx WZnZdUI7A75IVjxlFFQNcg== 0000928385-98-002556.txt : 19981217 0000928385-98-002556.hdr.sgml : 19981217 ACCESSION NUMBER: 0000928385-98-002556 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981002 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAREY INTERNATIONAL INC CENTRAL INDEX KEY: 0000747201 STANDARD INDUSTRIAL CLASSIFICATION: LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRAINS [4100] IRS NUMBER: 521171965 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22551 FILM NUMBER: 98770645 BUSINESS ADDRESS: STREET 1: 4530 WISCONSIN AVE NW CITY: WASHINGTON STATE: DC ZIP: 20016 BUSINESS PHONE: 2028951200 MAIL ADDRESS: STREET 1: 4530 WISCONSIN AVE NW CITY: WASHINGTON STATE: DC ZIP: 20016 8-K 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K Current Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 October 2, 1998 ---------------- (Date of Report) (Date of earliest event reported) Carey International, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 000-22551 52-1171965 (State or other juris- (Commission (IRS Employer diction of incorporation) File Number No.) Identification)
4530 Wisconsin Avenue, NW, Washington, DC 20016 ----------------------------------------------- (Address of principal executive offices) Registrant's telephone number: (202) 895-1200 -------------- INFORMATION TO BE INCLUDED IN THE REPORT ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. AMERICAN AIRPORT LIMOUSINE CORPORATION As disclosed in the Form 10-Q for the period ending August 31, 1998, on October 2, 1998, the Company through a wholly-owned subsidiary, Airport Limousine Acquisition Corp., acquired certain assets and the business of Airport Limousine Partners, Inc. d/b/a American Airport Limousine Corporation ("American") and its affiliate, American Limousine Repair Service, Inc., as well as all outstanding shares of capital stock of American's other affiliates, Syd's Limousine, Inc., Limos "R" Us, Inc. and A.L. Transportation, Inc. (the "Acquisition"). American and its affiliated companies operated a chauffeured vehicle services business in Chicago. The Acquisition was effected pursuant to the terms of the amended and Restated Purchase Agreement dated as of October 2, 1998 among the Company, Airport Limousine Acquisition Corp., American, American Limousine Repair Service, Inc., George Jacobs, Aurbrey Jacobs, Hyma Levin and Harriet Jacobs. The purchase price in the Acquisition was determined by negotiations between the parties and consisted of $20 million paid in the form of a Note, $19 million which has been paid and $1 million of which is due on January 2, 1999. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired Audited Combined Balance Sheet as of December 31, 1997, and Related Combined Statements of Operations, Changes in Stockholders' Equity, and Cash Flows for the year ended December 31, 1997 (b) Combined Balance Sheet as of August 31, 1998 and Related Combined Statements of Operations, Changes in Stockholders' Equity and Cash Flows for the eight month period ended August 31, 1998 (c) Pro Forma Financial information Unaudited Pro Forma Condensed Combined Financial Statements and Notes (d) Consent of PricewaterhouseCoopers LLP -2- 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 hereunto duly authorized. CAREY INTERNATIONAL, INC. (Registrant) Date: December 16, 1998 /S/ David H. Haedicke --------------------------------------------- David H. Haedicke Executive Vice President and Chief Financial Officer (as both a duly authorized officer of the registrant and the principal financial officer of the registrant) -3- EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 1) Audited Combined Balance Sheet as of December 31, 1997, and Related Combined Statements of Operations, Changes in Stockholders' Equity, and Cash Flows for the year ended December 31, 1997 2) Combined Balance Sheet as of August 31, 1998 and Related Combined Statements of Operations, Changes in Stockholders' Equity, and Cash Flows for the eight-month period ended August 31, 1998 3) Unaudited Pro Forma Condensed Combined Financial Statements and Notes 23) Consent of PricewaterhouseCoopers LLP -4- EX-1 2 EXHIBIT 1 AIRPORT LIMOUSINE PARTNERS, INC. D/B/A AMERICAN AIRPORT LIMOUSINE CORPORATION _______ COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1997 AND REPORT THEREON _______ AIRPORT LIMOUSINE PARTNERS, INC. ________ TABLE OF CONTENTS
Page(s) ------- Report of Independent Accountants 1 Financial Statements: Combined Balance Sheet as of December 31, 1997 2 Combined Statement of Operations for the year ended December 31, 1997 3 Combined Statement of Changes in Stockholders' Equity for the year ended December 31, 1997 4 Combined Statement of Cash Flows for the year ended December 31, 1997 5 Notes to Combined Financial Statements 6-12
August 28, 1998, except for the second paragraph of Note 9, as to which the date is October 2, 1998 REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Stockholders of Airport Limousine Partners, Inc. In our opinion, the accompanying combined balance sheet and the related combined statements of operations, of changes in stockholders' equity, and of cash flows present fairly, in all material respects, the combined financial position of Airport Limousine Partners, Inc. (d/b/a American Airport Limousine Corporation) and its combined companies (the Company) as of December 31, 1997, and the combined results of their operations and their cash flows for the year ended December 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. PricewaterhouseCoppers LLP 1 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES COMBINED BALANCE SHEET AS OF DECEMBER 31, 1997 _______
ASSETS Cash $ 116,082 Trade and credit card receivables 964,929 Other receivables 196,989 Prepaid expenses and other current assets 275,539 ------------ Total current assets 1,553,539 ------------ Fixed assets: Automobiles 4,374,153 Equipment & furniture 1,438,855 ------------ 5,813,008 Accumulated depreciation (2,917,793) ------------ Net fixed assets 2,895,215 Deposits 120,641 ------------ Total assets $ 4,569,395 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Line of credit $ 391,803 Current portion of long-term debt 901,451 Accounts payable 172,002 Accrued expenses 88,596 Accrued corporate income taxes 15,539 Due to owners/operators 1,195 ------------ Total current liabilities 1,570,586 Long-term debt, net of current portion 119,045 Note payable to stockholder 24,250 Owner/operator deposits 105,075 ------------ Total liabilities 1,818,956 ------------ Stockholders' equity (Note 4): Common stock 54,000 Retained earnings 2,696,439 ------------ Total stockholders' equity 2,750,439 ------------ Total liabilities and stockholders' equity $ 4,569,395 ============
The accompanying notes are an integral part of these combined financial statements. 2 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 _______ Revenue, net $ 20,174,517 Cost of revenue 13,623,211 ------------ Gross profit 6,551,306 Selling expenses 1,122,917 General and administrative expenses 4,708,883 ------------ Operating income 719,506 Other income (expense): Interest expense (91,206) Gain on sale of fixed assets 96,112 Other income, primarily insurance recovery 232,784 ------------ Income before provision for income taxes 957,196 Provision for state income taxes 15,539 ------------ Net income $ 941,657 ============
The accompanying notes are an integral part of these combined financial statements. 3 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1997 ________
Common Stock Total ------------------ Retained Stockholders' Shares Amount Earnings Equity ------ --------- ------------- ------------- Balance at December 31, 1996 5,000 $ 50,000 $ 2,170,992 $ 2,220,992 Issuance of common stock 4,000 4,000 - 4,000 Net income - - 941,657 941,657 Stockholder distributions - - (416,210) (416,210) ------ --------- ------------- ------------- Balance at December 31, 1997 9,000 $ 54,000 $ 2,696,439 $ 2,750,439 ====== ========= ============= =============
The accompanying notes are an integral part of these combined financial statements. 4 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES COMBINED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1997 _______
Cash flows from operating activities: Net income $ 941,657 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,014,006 Gain on sale of assets (96,112) Change in operating assets and liabilities: Trade and credit card receivables (2,070) Other receivables (91,614) Prepaid expenses and other current assets (177,156) Accounts payable (13,522) Accrued expenses (79,550) Accrued corporate income taxes (1,554) Due to owners/operators (79,385) Decrease in owner/operator deposits (2,950) ------------ Net cash provided by operating activities 1,411,750 ------------ Cash flows from investment activities: Purchases of fixed assets (2,694,569) Proceeds from dispositions of fixed assets 389,745 ------------ Net cash used in investing activities (2,304,824) ------------ Cash flows from financing activities: Borrowings on line of credit 709,988 Payments on line of credit (498,037) Proceeds from long-term debt 1,487,277 Principal payments on long-term debt (617,881) Distributions to stockholders (416,210) Proceeds from issuance of common stock 4,000 ------------ Net cash provided by financing activities 669,137 ------------ Net decrease in cash (223,937) Cash at beginning of year 340,019 ------------ Cash at end of year $ 116,082 ============ Supplemental Disclosure of Cash Flow Information: Interest paid $ 91,206 Income taxes paid $ 17,093
The accompanying notes are an integral part of these combined financial statements. 5 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ------------ 1. BACKGROUND AND ORGANIZATION Airport Limousine Partners, Inc., doing business as American Airport Limousine Corporation, and its combined companies (the "Company"), provide limousine services in the greater Chicago area. This includes transportation services through the use of limousines, vans, and buses. The Company also has entities that own the vehicles, as well as maintain and repair the vehicles. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The combined financial statements include the financial statements of Airport Limousine Partners, Inc., Syd's Limousine, Inc., Limos R Us, Inc., A.L. Transportation, Inc., and A.L. Repair Service, Inc., all with identical common ownership. All significant intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Concentration of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of accounts receivable. The Company's customers are primarily based within the greater Chicago area. Accounts receivable are generally diversified due to the large number of entities comprising the Company's customer base. No single customer accounted for more Continued 6 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ------------ than five percent of the Company's revenues and there were no accounts receivable from a single customer greater than $106,000 as of December 31, 1997. Fixed Assets Fixed assets are carried at cost. Depreciation is provided using an accelerated method. Gains or losses on sales and retirements of fixed assets are reflected in results of operations. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments that materially extend the life of the assets are capitalized Revenue recognition The Company's principal source of revenue is from chauffeured vehicle services. Such revenue, net of discounts, is recorded when services are provided. Income taxes The management of the Company has elected S status corporation under the Internal Revenue Code. Under this statute, profits are taxable to the stockholders based on their percentage of ownership for the purpose of federal income tax. The Company is liable for state taxes based on income. Continued 7 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ------------ 3. LINE OF CREDIT AND LONG- TERM DEBT The Company has a line of credit at Oakbrook Bank which provides for borrowings up to $750,000 with interest at 1.0% over an index (a total of 8.5% as of December 31, 1997), payable monthly. The line of credit is due on demand and collateralized by limousines. The balance outstanding as of December 31, 1997, was $391,803. Long-term notes payable as of December 31, 1997, consist of the following: Notes payable to Harris Bank Westchester with interest at 7.9% per annum, payable monthly, with various due dates ranging from April 30, 1998 to April 4, 1999, collateralized by eighteen (18) limousines $ 304,553 Notes payable to Hinsdale Bank and Trust with interest at 0.5% over an index (a total of 8.0% as of December 31, 1997), payable monthly, with various due dates ranging from March 5, 1999 to October 1, 2000, collateralized by five (5) limousines and computer equipment 215,943 Note payable to Harris Bank Westchester with interest at 8.5% per annum, payable in periodic installments, due May 1, 1999, collateralized by accounts receivable 500,000 ------------ Total long-term debt 1,020,496 Less: Current maturities 901,451 ------------ Long-term debt $ 119,045 ============
Maturities of long-term debt are as follows:
Year Ending December 31 Amount ----------------------------- ------------ $ 1998 901,451 1999 83,998 2000 35,047 ------------ $ 1,020,496 ============
Continued 8 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ------------ 4. COMMON STOCK AND RETAINED EARNINGS Common stock as of December 31, 1997 consists of: Airport Limousine Partners, Inc., no par value, 6,000 shares authorized; 5,000 issued and outstanding $ 50,000 Syd's Limousine, Inc., no par value, 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 Limo's R Us, Inc., no par value, 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 A.L. Transportation, Inc., no par value, 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 A.L. Repair Service, Inc., no par value, 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 ----------- $ 54,000 =========== Retained earnings (deficit) as of December 31, 1997 consists of: Airport Limousine Partners, Inc. $ 1,874,377 Syd's Limousine, Inc. (17,110) Limo's R Us, Inc. 810,796 A.L. Transportation, Inc. (24,519) A.L Repair Service, Inc. 52,895 ------------ $ 2,696,439 ============
5. RELATED PARTY TRANSACTIONS The Company has a $24,250 note payable to a stockholder. This note is non- interest-bearing, with no maturity date. The Company has various notes payable to Harris Bank amounting to $804,553 to finance the purchase of limousines. The Company's principal stockholder and President is a member of the board of directors of Harris Bank. Continued 9 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ------------ 6. CONTINGENCIES An insurance company has filed suit against the Company seeking back workers' compensation premiums of approximately $290,000. The Company is vigorously defending said action. The insurance company's original and first amended complaints have been stricken and the insurance company is now seeking summary judgment on the second amended complaint. If the insurance company's motion is denied, which the Company believes is possible, the case will be tried before a jury in 1999. Another of the Company's insurance carriers has also filed suit. It, too, is seeking back workers' compensation insurance premiums in the amount of approximately $2,940,000. The Company is also vigorously defending this action. Based on the information currently available, no estimate of the potential loss, if any, on either of these claims can be made at this time. The Company has also filed for an administrative tax hearing against a local taxing authority concerning the underpayment of taxes collected. As a result of a tax audit, the local taxing authority claims that the Company over-collected $670,000, including interest and penalties. The Company believes that the local taxing authority's position is unfounded, and has asked for a summary judgment in this case. The losing party in this case has the right to appeal to the Circuit Court, but it is unknown at this time if this will occur. Based on the information currently available, no estimate of the potential loss, if any, on either of these claims can be made at this time. Continued 10 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ------------ 7. LEASING ARRANGEMENTS The Company conducts its operations from facilities that are leased under a five year, cancelable operating lease expiring April 30, 2002. The Company also leases a garage and warehouse facility under a five year, noncancelable lease, expiring September 30, 2002. The following is a schedule of future minimum rental payments required under the above operating leases as of December 31, 1997:
Year Ending December 31 Amount ------------------------ ------------ 1998 $ 294,485 1999 302,589 2000 311,883 2001 321,406 2002 264,775 ------------ $ 1,495,138 ============
Rental expense totaled $178,526 in 1997. 8. PROFIT SHARING PLAN The Company sponsors a 401(k) Profit Sharing Plan covering substantially all of its employees. The Company makes a matching contribution of $1.00 for every $3.00 on the first 3% of employee contributions. The Company may also make an additional contribution at the discretion of the board of directors based on the Company's profitability. Matching Company contributions totaled $65,963 for the year ended December 31, 1997. Continued 11 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ------------ 9. SUBSEQUENT EVENTS In January of 1998, the Company acquired Hinsdale Limousine for $600,000 in cash. The acquisition was accounted for under the purchase method, whereby the purchase price was allocated to the underlying assets and liabilities based on their respective estimated fair values at the date of the acquisition, resulting in goodwill of approximately $460,000. On October 2, 1998, the Company sold substantially all of its assets to and certain liabilities were assumed by Airport Limousine Acquisition Corp., a wholly owned subsidiary of Carey International, Inc. ("Carey"). 12 EX-2 3 EXHIBIT 2 AIRPORT LIMOUSINE PARTNERS, INC. _______ TABLE OF CONTENTS
Page(s) --------- Financial Statements: Combined Balance Sheet as of August 31, 1998 1 Combined Statement of Operations for the eight-month period ended August 31, 1998 2 Combined Statement of Changes in Stockholders' Equity for the eight-month period ended August 31, 1998 3 Combined Statement of Cash Flows for the eight-month period ended August 31, 1998 4 Notes to Combined Financial Statements 5-11
AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES COMBINED BALANCE SHEET AS OF AUGUST 31, 1998 (unaudited) _______ ASSETS Cash $ 165,175 Trade and credit card receivables 1,099,503 Other receivables 214,037 Prepaid expenses and other current assets 472,697 ------------ Total current assets 1,951,412 ------------ Fixed assets: Automobiles 4,268,086 Equipment & furniture 1,853,089 ------------ 6,121,175 Accumulated depreciation (3,565,570) ------------ Net fixed assets 2,555,605 Goodwill, net of accumulated amortization of $20,441 439,471 Deposits 8,841 ------------ Total assets $ 4,955,329 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Line of credit $ 339,809 Current portion of long-term debt 653,066 Accounts payable 116,926 Accrued expenses 610,208 Due to owners/operators 198,470 ------------ Total current liabilities 1,918,479 Long-term debt, net of current portion 157,907 Owner/operator deposits 121,463 ------------ Total liabilities 2,197,849 ------------ Stockholders' equity (Note 4): Common stock 54,000 Retained earnings 2,703,480 ------------ Total stockholders' equity 2,757,480 ------------ Total liabilities and stockholders' equity $ 4,955,329 ============
The accompanying notes are an intregral part of these combined financial statements. 1 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES COMBINED STATEMENT OF OPERATIONS FOR THE EIGHT MONTH PERIOD ENDED AUGUST 31, 1998 (unaudited) _______ Revenue, net $ 14,291,755 Cost of revenue 9,955,279 ------------ Gross profit 4,336,476 Selling expenses 456,752 General and administrative expenses 3,415,988 ------------ Operating income 463,736 Other income (expense): Interest expense (72,757) Gain on sale of fixed assets 50,494 Other income 14,467 ------------ Income before provision for state income taxes 455,940 Provision for income taxes - ------------ Net income $ 455,940 ============
The accompanying notes are an integral part of these combined financial statements. 2 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE EIGHT MONTH PERIOD ENDED AUGUST 31, 1998 (unaudited) _______
Common Stock Total ---------------- Retained Stockholders' Shares Amount Earnings Equity ------ -------- ------------ ------------- Balance at December 31, 1997 9,000 $ 54,000 $ 2,696,439 $ 2,750,439 Net income - - 455,940 455,940 Stockholder distributions - - (448,899) (448,899) ------ -------- ----------- ----------- Balance at August 31, 1998 9,000 $ 54,000 $ 2,703,480 $ 2,757,480 ====== ======== =========== ===========
The accompanying notes are an integral part of these combined financial statements. 3 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES COMBINED STATEMENT OF CASH FLOWS FOR THE EIGHT MONTH PERIOD ENDED AUGUST 31, 1998 (unaudited) _______ Cash flows from operating activities: Net income $ 455,940 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 832,642 Gain on sale of assets (50,494) Change in operating assets and liabilities: Trade and credit card receivables 5,514 Other receivables 57,952 Prepaid expenses and other assets (85,358) Accounts payable (55,076) Accrued expenses 521,612 Accrued corporate income taxes (15,539) Due to owners/operators 197,275 Owner/operator deposits 16,388 ------------ Net cash provided by operating activities 1,880,856 ------------ Cash flows from investment activities: Purchases of fixed assets (482,373) Proceeds from dispositions of fixed assets 60,276 Acquisition of chauffeured vehicle service company (600,000) Advance to officer (75,000) ------------ Net cash used in investing activities (1,097,097) ------------ Cash flows from financing activities: Borrowings on line of credit 400,000 Payments on line of credit (451,994) Proceeds from long-term debt 377,818 Principal payments on long-term debt (587,341) Payment of note payable to stockholder (24,250) Distributions to stockholders (448,899) ------------ Net cash used in financing activities (734,666) ------------ Net increase in cash 49,093 Cash at beginning of year 116,082 ------------ Cash at end of year $ 165,175 ============ Supplemental Disclosure of Cash Flow Information: Interest paid $ 72,757 Income taxes paid $ 15,539
The accompanying notes are an integral part of these combined financial statements. 4 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ---------------- 1. BACKGROUND AND ORGANIZATION Airport Limousine Partners, Inc., doing business as American Airport Limousine Corporation, and its combined companies (the "Company"), provide limousine services in the greater Chicago area. This includes transportation services through the use of limousines, vans, and buses. The Company also has entities that own the vehicles, as well as maintain and repair the vehicles. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The combined financial statements include the financial statements of Airport Limousine Partners, Inc., Syd's Limousine, Inc., Limo's R Us, Inc., A.L. Transportation, Inc., and A.L. Repair Service, Inc., all with identical ownership. All significant intercompany balances and transactions have been eliminated. The combined financial statements included herein have not been audited. However, in the opinion of management, the combined financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the period reflected. The results for the period are not necessarily indicative of the results for the full fiscal year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of accounts receivable. The Company's customers are primarily based within the greater Chicago area. Accounts receivable are generally diversified due to the large number of entities comprising the Company's customer base. No single customer accounted for a more than five percent of the Company's revenues and there were no accounts receivable greater than $120,000 from a single customer as of August 31, 1998. Continued 5 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ---------------- FIXED ASSETS Fixed assets are carried at cost. Depreciation is provided using an accelerated method. Gains or losses on sales and retirements of fixed assets are reflected in results of operations. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments that materially extend the life of the assets are capitalized. GOODWILL Goodwill represents the excess of cost over the fair value of the net assets of acquired businesses. Goodwill is amortized over 15 years using the straight-line method. Such amortization is included in general and administrative expenses in the statement of operations. The Company evaluates the recoverability of goodwill at least annually based on estimated undiscounted cash flows over the remaining amortization period, giving consideration to revenue expected to be realized. The determination is based on an evaluation of such factors as the occurrence of a significant change in the environment in which the business operates or the expected future net cash flows (undiscounted and without interest). There have been no adjustments to the carrying value of intangible assets resulting from this evaluation. REVENUE RECOGNITION The Company's principal source of revenue is from chauffeured vehicle services. Such revenue, net of discounts, is recorded when services are provided. INCOME TAXES The management of the Company has elected S corporation status under the Internal Revenue Code. Under this statute, profits are taxable to the stockholders based on their percentage of ownership for the purpose of federal income tax. The Company is liable for state taxes based on income. Continued 6 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ---------------- 3. LINE OF CREDIT AND LONG- TERM DEBT The Company has a line of credit at Oakbrook Bank which provides for borrowings up to $750,000 with interest at 1.0% over an index (a total of 8.5% as of August 31, 1998) payable monthly. The line of credit is due on demand and collateralized by limousines. The balance outstanding as of August 31, 1998 is $339,809. Long-term notes payable at August 31, 1998, consist of the following: Notes payable to Harris Bank Westchester with interest at 7.9% per annum, payable monthly, with various due dates ranging from October 17, 1998 to July 1, 2000, collateralized by fifteen (15) limousines and accounts receivable $ 170,333 Notes payable to Hinsdale Bank and Trust with interest at 0.5% over an index (a total of 8.0% as of August 31, 1998), payable monthly, with various due dates ranging from March 5, 1999 to October 1, 2000, collateralized by five (5) limousines and computer equipment 140,640 Note payable to Oakbrook Bank with interest at 8.5% payable monthly, due February 1, 1999, collateralized by accounts receivable 100,000 Note payable to Harris Bank Westchester with interest at 8.5% per annum, payable in periodic installments, due May 1, 1999, collateralized by accounts receivable 400,000 --------- Total long-term debt 810,973 Less: Current maturities 653,066 --------- Long-term debt $ 157,907 =========
Continued 7 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ---------------- Maturities of long-term debt as of August 31, 1998 are as follows: 1998 $ 372,092 1999 391,980 2000 46,901 ---------- $ 810,973 ==========
4. COMMON STOCK AND RETAINED EARNINGS Common stock as of August 31, 1998 consists of: Airport Limousine Partners, Inc., no par value, 6,000 shares authorized; 5,000 issued and outstanding $ 50,000 Syd's Limousine, Inc., no par value, 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 Limo's R Us, Inc., no par value, 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 A.L. Transportation, Inc., no par value, 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 A.L. Repair Service, Inc., no par value, 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 -------- $ 54,000 ========
Retained earnings (deficit) as of August 31, 1998 consists of: Airport Limousine Partners, Inc. $ 2,124,815 Syd's Limousine, Inc. (22,464) Limo's R Us, Inc. 553,416 A.L. Transportation, Inc. (61,364) A.L Repair Service, Inc. 109,077 ----------- $ 2,703,480 ===========
Continued 8 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ---------------- 5. RELATED PARTY TRANSACTIONS The current Company has a $75,000 advance to an officer of the Company included in other current assets as of August 31, 1998. As of August 31, 1998, the Company has various notes payable to Harris Bank amounting to $570,333 to finance the purchase of limousines and provide for working capital needs. The Company's principal stockholder and President is a member of the board of directors of Harris Bank. 6. CONTINGENCIES An insurance company has filed suit against the Company seeking back workers' compensation premiums of approximately $290,000. The Company is vigorously defending said action. The insurance company's original and first amended complaints have been stricken and the insurance company is now seeking summary judgment on the second amended complaint. If the insurance company's motion is denied, which the Company believes is possible, the case will be tried before a jury in 1999. Another of the Company's insurance carriers has also filed suit. It, too, is seeking back workers' compensation insurance premiums in the amount of approximately $2.94 million. The Company is also vigorously defending this action. Based on the information currently available, no estimate of the potential loss, if any, on either of these claims can be made at this time. The Company has also filed for an administrative tax hearing against a local taxing authority concerning the underpayment of taxes collected. As a result of a tax audit, the local taxing authority claims that the Company over-collected approximately $670,000 including interest and penalties. The Company believes that the the local taxing authority's position is unfounded, and has asked for a summary Continued 9 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ---------------- judgment in this case. The losing party in this case has the right to appeal to the Circuit Court, but it is unknown at this time if this will occur. Based on the information currently available, no estimate of the potential loss, if any, on either of these claims can be made at this time. 7. LEASING ARRANGEMENTS The Company conducts its operations from facilities that are leased under a five year, cancelable operating lease expiring April 30, 2002. The Company also leases a garage and warehouse facility under a five year, noncancelable lease, expiring September 30, 2002. The following is a schedule of future minimum rental payments required under the above operating leases as of August 31, 1998: 1998 $ 86,738 1999 302,589 2000 311,883 2001 321,406 2002 264,775 ----------- $ 1,287,391 ===========
Rental expense totaled $204,179 for the eight-month period ended August 31, 1998. 8. PROFIT SHARING PLAN The Company sponsors a 401(k) Profit Sharing Plan covering substantially all of its employees. The Company makes a matching contribution of $1.00 for every $3.00 on the first 3% of employee contributions. The Company may also make an additional contribution at the discretion of the board of directors based on the Company's profitability. Matching Company contributions totaled $33,333 for the eight-month period ended August 31, 1998. Continued 10 AIRPORT LIMOUSINE PARTNERS, INC. AND COMBINED COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS ---------------- 10. ACQUISITION In January of 1998, the Company acquired Hinsdale Limousine for $600,000 in cash. The acquisition was accounted for under the purchase method, whereby the purchase price was allocated to the underlying assets and liabilities based on their respective estimated fair values at the date of the acquisition, resulting in goodwill of approximately $460,000. 11. SUBSEQUENT EVENT On October 2, 1998, the Company sold substantially all of its assets to and certain liabilities were assumed by Airport Limousine Acquistion Corp., a wholly owned subsidiary of Carey International, Inc. ("Carey"). 11 EX-3 4 EXHIBIT 3 PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS BASIS OF PRESENTATION The Pro Forma Consolidated Balance Sheet as of August 31, 1998 and the Pro Forma Consolidated Statement of Operations for the year ended November 30, 1997 and for the nine-month period ended August 31, 1998 are based on the historical consolidated financial statements of Carey International, Inc. and subsidiaries (the "Company") and historical combined financial statements of American Limousine Partners, Inc. The Pro Forma Consolidated Balance Sheet has been prepared assuming the acquisition of American Limousine Partners, Inc. occurred on August 31, 1998. The Pro Forma Consolidated Statement of Operations for the year ended November 30, 1997 and for the nine-month period ended August 31, 1998 have been prepared assuming the acquisition of American Limousine Partners, Inc. occurred on December 1, 1996. For purposes of the Pro Forma Consolidated Statements of Operations for the year ended November 30, 1997 and the nine-month period ended August 31, 1998, American Limousine Partners, Inc.'s Combined Statement of Operations for the year ended December 31, 1997 has been consolidated with the Consolidated Statement of Operations of the Company for the year ended November 30, 1997 and American Limousine Partners, Inc.'s Combined Statement of Operations for the eight-month period ended August 31, 1998 has been combined with American Limousine Partners, Inc.'s Statement of Operations for the month ended December 31, 1997 and the Consolidated Statement of Operations of the Company for the nine-month period ended August 31, 1998. The Pro Forma Consolidated Statement of Operations also reflects the issuance of an aggregate of 940,623 shares of Common Stock (net of underwriting discounts) to repay certain debt incurred in connection with the acquisition of American Limousine Partners, Inc. These 940,623 shares, based on the Company's secondary public offering in June of 1998, are assumed to have been issued and the debt repaid at the beginning of the period presented, and thus interest expense attributable to such debts have been excluded. The Pro Forma Consolidated Financial Statements do not purport to represent what the Company's actual results of operations or financial position would have been had the acquisitions occurred as of such dates, or to project the Company's results of operations or financial position for any period or date, nor does it give effect to any matters other than those described in the notes thereto. In addition, the allocation of purchase price to the assets and liabilities of American Limousine Partners, Inc. is preliminary and the final allocation may differ from the amounts reflected herein. The Pro Forma Consolidated Financial Statements should be read in conjunction with the other financial statements and notes thereto previously filed by the Company. CAREY INTERNATIONAL, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET
August 31, 1998 ---------------------------------------------------------------- American Limousine Acquisition Company Partners, Inc. Adjustment Pro Forma ------------- ------------- -------------- ------------- Assets Cash and cash equivalents $ 31,497,934 $ 165,175 $ (165,175)(1) $ 31,497,934 Accounts receivable, net 16,142,947 1,313,540 (214,037)(1) 17,242,450 Notes receivable from contracts, current portion 913,651 913,651 Prepaid expenses and other current assets 1,709,604 472,697 (411,852)(1) 1,770,449 ------------- ------------- -------------- ------------- Total current assets 50,264,136 1,951,412 (791,064) 51,424,484 Fixed assets, net 9,095,343 2,555,605 (226,705)(1) 11,424,243 Notes receivable from contracts, excluding current portion 9,349,879 9,349,879 Franchise rights, net 10,656,665 10,656,665 Trade name, trademark and contract rights, net 6,353,220 6,353,220 Goodwill and other intangible assets, net 35,001,603 439,471 (439,471)(1) 53,563,325 18,561,722 (2) Deferred tax assets 480,379 480,379 Deposits and other current assets 1,465,049 8,841 1,473,890 ------------- ------------- -------------- ------------- Total assets $ 122,666,274 $ 4,955,329 $ 17,104,482 $ 144,726,085 ============= ============= ============== ============= Liabilities and Stockholders' Equity Curent portion of notes payable $ 1,020,587 $ 992,875 $ 20,000,000 (2) $22,013,462 Current portion of capital leases 400,948 400,948 Accounts payable and accrued expenses 16,832,139 925,604 (380,038)(1) 17,619,705 242,000 (2) ------------- ------------- -------------- ------------- Total current liabilities 18,253,674 1,918,479 19,861,962 40,034,115 Notes payable, excluding current portion 1,769,689 157,907 1,927,596 Capital leases, excluding current portion 830,393 830,393 Deferred tax and long-term liabilities 264,974 121,463 386,437 Deferred revenue 14,623,264 14,623,264 Commitments and contingencies Stockholders' equity: Common stock, $.01 par value; 20,000,000 authorized shares, 9,448,834 issued and outstanding shares 94,488 54,000 (54,000)(2) 94,488 Additional paid-in capital 78,730,451 78,730,451 Retained earnings 8,099,341 2,703,480 (1,077,202)(1) 8,099,341 (1,626,278)(2) ------------- ------------- -------------- ------------- Total stockholders' equity 86,924,280 2,757,480 (2,757,480) 86,924,280 ------------- ------------- -------------- ------------- Total liabilities and stockholders' equity $ 122,666,274 $ 4,955,329 $ 17,104,482 $ 144,726,085 ============= ============= ============== =============
CAREY INTERNATIONAL, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended November 30, 1997 ----------------------------------------------------------------------------------- American Limousine Pro Forma Company Partners, Inc Adjustment Pro Forma ------------- ------------- ------------- ------------- Revenue, net $ 86,378,313 $ 20,174,517 $ 3,000,000 (4) $ 109,552,830 Cost of revenue 57,890,393 13,623,211 2,026,000 (4) 73,539,604 ------------- ------------- ------------- ------------- Gross profit 28,487,920 6,551,306 974,000 36,013,226 Selling, general and administrative expense 20,111,590 5,831,800 619,000 (3) 25,805,390 (650,000)(4) (72,000)(4) (86,000)(4) (113,000)(4) (460,000)(4) 624,000 (4) ------------- ------------- ------------- ------------- Operating income 8,376,330 719,506 1,112,000 10,207,836 Other income (expense) Interest expense (1,141,946) (91,206) 91,206 (5) (1,141,946) Interest and other income 451,388 328,896 (200,340)(4) 579,944 ------------- ------------- ------------- ------------- Income before provision for income taxes 7,685,772 $ 957,196 $ 1,002,866 9,645,834 ============= ============= Provision for income taxes 3,162,282 4,051,250 (6) ------------- ------------- Net income $ 4,523,490 $ 5,594,584 ============= ============= Net income per common share - basic $1.00 $1.03 (7) ============= ============= Net income per common share - diluted $0.77 $0.82 (7) ============= ============= Weighted average common shares used in computing net income per common share- basic 4,506,108 5,446,731 (7) ============= ============= Weighted average common shares used in computing net income per common share- diluted 6,137,418 7,078,041 (7) ============= ============= Pro forma net income per common share - basic $0.81 $0.85 (7) ============= ============= Pro forma net income per common share - diluted $0.76 $0.81 (7) ============= ============= Pro forma weighted average common shares outstanding used in computing net income per common share - basic 5,819,145 6,759,768 (7) ============= ============= Pro forma weighted average common shares outstanding used in computing net income per common share - diluted 6,180,773 7,121,396 (7) ============= =============
CAREY INTERNATIONAL, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the nine-month period ended August 31, 1998 ------------------------------------------------------------------------------------------- American Limousine Partners, Inc ------------------------------------------- For the For the eight-month month period ended ended August 31, December 31, Pro Forma Company 1998 1997 Subtotal Adjustment Pro Forma ------------- ----------- --------------- ----------- ------------ ------------ Revenue, net $84,797,598 $14,291,755 $ 1,553,807 $15,845,562 $ - $100,643,160 Cost of revenue 57,160,077 9,955,279 1,072,563 11,027,842 - 68,187,919 ------------- ----------- --------------- ----------- ------------ ------------ Gross profit 27,637,521 4,336,476 481,244 4,817,720 - 32,455,241 Selling, general and administrative expense 19,628,479 3,872,740 526,900 4,399,640 464,000 (3) 23,805,119 (337,000)(4) (100,000)(4) (250,000)(4) ------------- ----------- --------------- ----------- ------------ ------------ Operating income 8,009,042 463,736 (45,656) 418,080 223,000 8,650,122 Other income (expense) Interest expense (328,257) (72,757) (7,850) (80,607) 80,607 (5) (328,257) Interest and other income 852,121 64,961 199,035 263,996 (200,340)(4) 748,777 (167,000)(5) ------------- ----------- --------------- ---------- ------------ ------------ Income before provision for income taxes 8,532,906 $ 455,940 $ 145,529 $ 601,469 $ (63,733) 9,070,642 =========== =============== ========== ============ Provision for income taxes 3,541,156 3,764,316(6) ------------ ------------ Net income $ 4,991,750 $ 5,306,326 ============ ============ Net income per common share - basic $0.60 $0.59(7) ============ ============ Net income per common share - diluted $0.56 $0.56(7) ============ ============ Weighted average common shares used in computing net income per common share - basic 8,362,096 8,989,178(7) ============ ============ Weighted average common shares used in computing net income per common share - diluted 8,894,827 9,521,909(7) ============ ============
CAREY INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (1) Pro forma adjustment to give effect to the exclusion of certain assets and liabilities, primarily cash, fixed assets, and owners' notes, from the entities and assets acquired. (2) Pro forma adjustment to give effect to the purchase of Airport Limousine Partners, Inc. for $20.0 million, as if the acquisition occurred on August 31, 1998. The adjustment reflects a promissary note issued in the aggregate amount of $20.0 million, $19 million of which is due on November 4, 1998 and $1 million of which is due on January 2, 1999. The allocation of the purchase price to the estimated fair value of the assets and liabilities assumed will result in the recognition by the Company of $18.6 million in goodwill. As part of the fair market value allocation, the Company determined that certain reserves and liabilities were required as part of the acquisition, primarily for severance pay for certain members of management and to accrue costs specific to completion of the operating systems, approximately $242,000. (3) Pro forma adjustment to give effect to the amortization of goodwill. (4) Pro forma adjustments for certain nonrecurring expenses and other income for the period and year ended August 31, 1998 and November 30, 1997, respectively. Adjustment for (1) excess owners bonuses of $337,000 and $650,000, respectively; (2) professional fees incurred in connection with the sale of Airport Limousine Partners, Inc. and the purchase of Hindsdale of $100,000 and $72,000, respectively; (3) salaries of terminated individuals of $0 and $86,000, respectively, who are not to be replaced; (4) cost of settling previous acquisitions expensed by Airport Limousine Partners, Inc. of $0 and $113,000, respectively; (5) advertising costs which are to be discontinued or reduced as a result of consolidation with the Company of $250,000 and $460,000, respectively; and (6) additional revenue and cost of revenue had the Hindsdale Acquisition occurred at December 1, 1996; and (7) reduce other income which is nonrecurring in the amount of $200,340. (5) Pro forma adjustment's to (1) reduce interest earned on the $20.0 million of net proceeds from the secondary public offering assumed to be used to payoff acquisition debt and (2) reduce outstanding debt and related interest expense of Airport Limousine Partners, Inc. as of the date of the acquisition through working capital (approximately $1.1 million of debt as of August 31, 1998). (6) Pro forma adjustment to reflect the incremental provision for federal and state income taxes at a consolidated effective tax rate of 41.5%, and 42% for the nine months ended August 31, 1998, and the year ended November 30, 1997, respectively. The companies acquired were "Subchapter S" prior to the acquisitions. No material operating loss carry forwards existed at the date of acquisition. (7) Net income per common share, for both the "Company" column and the "Pro forma" column, was computed by dividing the net income for the nine-month period ended August 31, 1998 and the year ended November 30, 1997 by the weighted average number of common shares including common share equivalents. The weighted average number of common shares, under the "Pro forma" column, gives retroactive effect for the issuance of common stock in a quantity sufficient to raise the acquisition proceeds to meet the needs of the promissary note, 627,082 and 940,623, respectively. Net income used in calculating Pro forma net income per common share has been adjusted for (i) the elimination of interest expense, net of taxes, resulting from the conversion of $4,867,546 of subordinated debt into common stock and (ii) increasing the weighted average common shares outstanding by the number of common shares resulting from the conversion of such debt, as well as the partial conversion of the Series A Preferred Stock. EX-23 5 EXHIBIT 23 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of Carey International, Inc. on Form S-8 (File Nos. 333-66155, 333-59631, 333-59629 and 333-32335) and on Forms S-4 (File No. 333-59599) of our report dated August 28, 1998, except as to Note 9, for which the date is October 2, 1998, on our audit of the combined financial statements of Airport Limousine Partners, Inc. (d/b/a American Airport Limousine Corporation) and its combined companies as of December 31, 1997, and for the year then ended, which report is included in this Report on Form 8-K. PricewaterhouseCoopers LLP Washington, D.C. December 16, 1998 -----END PRIVACY-ENHANCED MESSAGE-----