-----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, P1Neq3+SqDfbjAv1FVBeb554X+LKkvJ9ALdMm2A1Olw6uYhhGMvgcV+TlgouZBzm HiMxTokrtSZA8pT5FCO2EQ== 0000950131-00-002636.txt : 20000417 0000950131-00-002636.hdr.sgml : 20000417 ACCESSION NUMBER: 0000950131-00-002636 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOKHEIM CORP CENTRAL INDEX KEY: 0000098559 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 350712500 STATE OF INCORPORATION: IN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06018 FILM NUMBER: 602505 BUSINESS ADDRESS: STREET 1: 10501 CORPORATE DRIVE CITY: FORT WAYNE STATE: IN ZIP: 46845 BUSINESS PHONE: 2194704600 MAIL ADDRESS: STREET 1: 10501 CORPORATE DRIVE CITY: FORT WAYNE STATE: IN ZIP: 46845 10-Q 1 FORM 10-Q 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 February 29, 2000 Commission File Number 1-6018 TOKHEIM CORPORATION (Exact name of Registrant as specified in its charter) INDIANA 35-0712500 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10501 CORPORATE DRIVE, FORT WAYNE, IN 46845 (Address of principal executive offices) (Zip Code) (Registrant's telephone number including area code): (219) 470-4600 NOT APPLICABLE (Former name, former address, and former fiscal year if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No As of February 29, 2000, 12,669,377 shares of voting common stock were outstanding. The exhibit index is located on page 12.
========================================================================================================== Consolidated Condensed Statement of Earnings (Amounts in thousands except amounts per share) Three Months Ended Three Months Ended February 29, February 28, 2000 1999 ------------------------------------------ Net sales................................................... $ 132,412 $ 166,193 Cost of sales, exclusive of items listed below.............. 104,362 133,297 Selling, general, and administrative expenses............... 25,721 25,767 Depreciation and amortization............................... 6,074 6,892 Merger and acquisition costs and other unusual items........ 2,725 1,123 ----------- ----------- Operating loss........................................... (6,470) (886) ----------- ----------- Interest expense, net....................................... 14,648 12,307 Foreign currency (gain) loss .............................. (169) 1,438 Minority interest in subsidiaries........................... (2) 94 Other income, net .......................................... (290) (154) ----------- ----------- Loss before income taxes and extraordinary loss............. (20,657) (14,571) Income taxes................................................ (106) (393) ----------- ----------- Loss before extraordinary loss.............................. (20,551) (14,178) Extraordinary loss on debt extinguishment................... -- (6,249) ----------- ----------- Net loss.................................................... (20,551) (20,427) Preferred stock dividends ($1.94 per share)................. (388) (374) ----------- ----------- Loss applicable to common stock............................. $ (20,939) $ (20,801) =========== =========== Loss per common share: Basic Before extraordinary loss.............................. $ (1.65) $ (1.15) Extraordinary loss on debt extinguishment.............. -- (0.49) ----------- ----------- Net loss............................................... $ (1.65) $ (1.64) =========== =========== Weighted average shares outstanding.................... 12,669 12,662 =========== =========== Diluted Before extraordinary loss.............................. $ (1.65) $ (1.15) Extraordinary loss on debt extinguishment.............. -- (0.49) ----------- ----------- Net loss............................................... $ (1.65) $ (1.64) =========== =========== Weighted average shares outstanding.................... 12,669 12,662 =========== ===========
TOKHEIM CORPORATION AND SUBSIDIARIES
========================================================================================================== Consolidated Condensed Balance Sheet (Amounts In thousands) February 29, November 30, 2000 1999 ------------------------------------------ ASSETS Current assets: Cash and cash equivalents................................... $ 13,250 $ 14,437 Accounts receivable, net.................................... 119,725 168,565 Inventories: Raw materials, service parts, and supplies.............. 67,779 68,122 Work in process.......................................... 16,971 16,389 Finished goods........................................... 8,104 9,017 ----------- ----------- 92,854 93,528 Other current assets........................................ 17,972 12,598 ----------- ----------- Total current assets........................................ 243,801 289,128 Property, plant, and equipment, net......................... 69,338 71,976 Other tangible assets....................................... 2,071 2,328 Intangible assets, net...................................... 303,401 308,552 Other non-current assets, net............................... 15,894 18,818 ----------- ----------- Total assets................................................ $ 634,505 $ 690,802 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current maturities of long-term debt........................ 8,647 10,731 Cash overdrafts............................................. 13,068 12,321 Accounts payable............................................ 66,320 84,511 Accrued expenses............................................ 95,480 111,507 ----------- ----------- Total current liabilities................................... 183,515 219,070 Notes payable, bank credit agreement........................ 206,763 204,284 Senior subordinated notes................................... 195,408 198,681 Junior subordinated payment in kind notes................... 46,371 45,020 Other long-term debt, less current maturities............... 2,960 3,168 Guaranteed Employees' Stock Ownership Plan obligation....... 3,947 4,351 Post-retirement benefit liability........................... 18,711 18,693 Other long-term liabilities................................. 3,905 4,926 ----------- ----------- 661,580 698,193 ----------- ----------- Redeemable convertible preferred stock...................... 24,000 24,000 Guaranteed Employees' Stock Ownership Plan obligation....... (3,947) (4,351) Treasury stock, at cost..................................... (4,294) (4,210) ----------- ----------- 15,759 15,439 ----------- ----------- Common stock................................................ 90,375 90,375 Common stock warrants....................................... 26,187 20,000 Accumulated comprehensive loss.............................. (74,330) (69,077) Accumulated deficit......................................... (84,535) (63,597) ----------- ----------- (42,303) (22,299) Less treasury stock, at cost................................ (531) (531) ----------- ----------- (42,834) (22,830) ----------- ----------- Total liabilities and shareholders' equity.................. $ 634,505 $ 690,802 =========== ===========
TOKHEIM CORPORATION AND SUBSIDIARIES
========================================================================================================== Consolidated Condensed Statement of Cash Flows (In thousands) February 29, February 28, 2000 1999 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss.................................................... $ (20,551) $ (20,427) Adjustments to reconcile net loss to cash used in operating activities: Payment in kind interest............................... 1,351 1,200 Extraordinary loss on debt extinguishment.............. 6,249 Depreciation and amortization.......................... 6,074 6,892 Gain on sale of property, plant, and equipment......... (30) (18) Deferred income taxes.................................. (21) (135) Changes in assets and liabilities: -- Accounts receivable, net............................... 44,291 20,529 Inventories............................................ (1,477) 4,247 Other current assets................................... (5,826) (2,774) Accounts payable....................................... (16,128) (17,921) Accrued expenses....................................... (14,328) 1,222 Other.................................................. (1,401) (372) ----------- ----------- Net cash used in operating activities....................... (8,046) (1,308) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property, plant, and equipment........ 80 -- Property, plant, and equipment additions.................... (1,361) (4,996) Other....................................................... (1,173) -- ----------- ----------- Net cash used in investing activities....................... (2,454) (4,996) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of senior notes.................................. -- (22,500) Proceeds from 11.375% senior subordinated notes............ -- 209,647 Redemption of senior subordinated notes..................... -- (170,000) Decrease in other debt...................................... (2,312) (438) Increase in notes payable, banks........................... 8,253 3,001 Increase in cash overdraft.................................. 1,230 463 Deferred debt issuance costs................................ (521) (6,084) Premiums paid on debt extinguishment........................ -- (555) Other....................................................... (84) 170 Preferred stock dividends................................... (388) (374) ----------- ----------- Net cash provided from financing activities................. 6,178 13,330 ----------- ----------- EFFECT OF TRANSLATION ADJUSTMENT ON CASH.................... 3,135 893 CASH AND CASH EQUIVALENTS: Increase (decrease) in cash................................ (1,187) 7,919 Beginning of year........................................... 14,437 26,801 ----------- ----------- End of period............................................... $ 13,250 $ 34,720 =========== ===========
Notes to the Consolidated Condensed Financial Statements The interim financial statements are unaudited and reflect all adjustments (consisting solely of normal recurring adjustments) that, in the opinion of management, are necessary for a fair statement of the interim periods presented. This report includes information in a condensed format and should be read in conjunction with the audited consolidated financial statements included in Tokheim Corporation's (the "Company") Annual Report to Shareholders filed on form 10-K for the year ended November 30, 1999. The results of operations for the three months ended February 29, 2000 are not necessarily indicative of the results to be expected for the full year or any other interim period. New Accounting Pronouncements - ----------------------------- SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June 1998 and is effective for the year ending November 30, 2001. SFAS No. 133 establishes a new model for accounting for derivatives in the balance sheet as either assets or liabilities and measures them at fair value. Certain disclosures concerning the designation and assessment of hedging relationships are also required. Management has not yet determined the impact of this statement on the Company's consolidated financial statements. Segment Reporting - ----------------- For the periods ended February 29, 2000 and February 28, 1999, the Company had only one reportable industry segment-the design, manufacture and servicing of petroleum dispensing systems. The Company has three reportable operating segments: North America; Europe; and Africa. The accounting policies of these segments are the same as described in the summary of significant accounting policies in the Company's form 10-K for the year ended November 30, 1999. The Company evaluates the performance of each operating segment based upon income from operations before merger and acquisition costs and other unusual items. The Company's selling, general, and administrative expenses are charged to each segment based upon the operating segment where the costs are incurred. Segment results for the periods ended February 29, 2000 and February 28, 1999 are summarized in the table below.
2000 North Europe Africa Eliminations Consolidated America * Customer sales.............................. $ 50,463 $ 77,776 $ 4,173 $ 0 $132,412 Intercompany sales.......................... 754 945 0 (1,699) 0 Depreciation and amortization............... 2,758 3,250 66 0 6,074 Operating profit (loss), before merger & acquisition costs and other unusual items............................. (5,689) 1,481 510 (47) (3,745) Total assets................................ $609,098 $373,972 $12,614 $(361,129) $634,505 1999 Customer sales.............................. $ 56,293 $105,551 $ 4,349 $ 0 $166,193 Intercompany sales.......................... 811 831 3 (1,645) 0 Depreciation and amortization............... 2,376 4,440 76 0 6,892 Operating profit (loss), before merger & acquisition costs and other unusual items............................. $ (2,057) 2,225 101 (32) 237 Total assets................................ $641,447 $460,264 $14,791 $(391,596) $724,906 Reconciliation from segment reporting to consolidated condensed statement of earnings: for the three month periods ended February 29 and February 28, respectively. 2000 1999 ---- ---- Segment operating profit (loss)...................... $ (3,745) $ 237 Merger and acquisition costs and other unusual items...................................... (2,725) (1,123) Operating loss..................................... $ (6,470) $ (886)
* Includes corporate expenses. Comprehensive Loss - ------------------ The table below summarizes comprehensive loss for the three month periods ended February 29, 2000 and February 28, 1999.
2000 1999 ---------- ---------- Net loss.................................... $ (18,995) $ (20,427) Other comprehensive loss: Foreign currency translation adjustments.... (5,253) (25,257) Comprehensive loss.......................... $ (24,248) $ (45,684)
Bank Credit Agreement - --------------------- On December 22, 1999, the Company amended its New Credit Agreement. Among the items amended were the removal of the requirement to obtain $50.0 million through the issuance of equity type securities and the provision for the mandatory reduction of the term loan by $50.0 million. Other terms of the New Credit Agreement that were amended include the addition of $5.7 million to the borrowing availability under the working capital facility; changes to the consolidated net worth covenant; changes to the leverage and senior leverage ratio covenants; changes to the minimum EBITDA covenant; the addition of a clean down or availability covenant on the working capital facility; and an acceleration of the termination date of the New Credit Agreement from September 24, 2004 to September 30, 2003. In consideration for the amendment to the New Credit Agreement, the Company paid certain fees and expenses to the bank group including warrants to purchase 16.5% of the outstanding common stock of the Company at a purchase price of $3.95 per share. The warrants are exercisable for an aggregate of 2,097,427 shares. The Company has the right, subject to the terms and conditions of the New Credit Agreement, to purchase 100% of the warrants upon termination of the New Credit Agreement or 50% by meeting specified de-leveraging conditions at various discount rates. At the date of issuance the fair value of the warrants was $6.2 million. The term loan under the amended New Credit Agreement calls for equal quarterly principal payments aggregating $7.3 million in 2000; $9.8 million in 2001; and $12.2 in 2002. The principal payments in 2003 include equal quarterly payments in the first three quarters of $3.7 million each with the remainder due at maturity on September 30, 2003. The New Credit Agreement requires the Company to meet certain consolidated financial tests, including minimum level of consolidated net worth, minimum level of EBITDA (as defined in the New Credit Agreement), minimum level of consolidated interest coverage, maximum consolidated leverage ratio and senior leverage ratio and minimum consolidated fixed charge coverage ratio. The New Credit Agreement also contains covenants which, among other things, limit the incurrence of additional indebtedness, dividends, transactions with affiliates, asset sales, acquisitions, investments, mergers and consolidations, prepayments of certain other indebtedness, amendments to certain other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. The New Credit Agreement requires the Company to maintain specified financial ratios and satisfy certain financial tests. During the year ended November 30, 1999 and in December 1999, the Company was required to enter into three amendments to the New Credit Agreement to avoid the occurrence of events of default relating to certain financial ratios and tests. The Company's ability to meet such amended financial ratios and tests in the future may be affected by events beyond its control. While the Company currently expects to be in compliance with the covenants and satisfy the financial ratios and tests in the future, there can be no assurance that the Company will meet such financial ratios and tests or that it will be able to obtain future amendments to the New Credit Agreement, if so needed, to avoid a default. In the event of a default, the lenders could elect to declare all amounts borrowed under the New Credit Agreement to be due and payable. Indebtedness (other than with respect to the additional availability under the working capital facility) under the New Credit Agreement bears interest based upon (at the applicable Borrower's option) (i) the Base Rate in the case of U.S. dollar denominated loans (defined as the higher of (x) the applicable prime rate and (y) the federal funds rate (as adjusted pursuant to the New Credit Agreement) plus 0.50%) plus an applicable margin based upon the Company's leverage ratio (with a range of 1.50% to 3.50% for revolving loans and 3.50% for term loans) or (ii) the applicable Eurocurrency Rate (as defined in the New Credit Agreement) for a deposit in the currency of, and for a maturity corresponding to, the applicable loan and interest period, plus an applicable margin based upon the Company's leverage ratio (with a range of 2.50% to 4.50% for revolving loans and 4.50% for term loans). In addition, the $5.7 million of additional availability under the working capital facility bears an applicable margin on Base Rate loans of 5.00% and Eurocurrency Rate loans of 6.00%. The New Credit Agreement requires an amount equal to all net proceeds from asset sales by the Company or any of its subsidiaries (with certain exceptions) to be applied to repay the loans under the New Credit Agreement. The New Credit Agreement also requires the Company to prepay the loans under the New Credit Agreement in an amount equal to (i) all net proceeds from the sale or issuance of debt (with certain exceptions), (ii) all net proceeds from the sale or issuance of equity (with certain exceptions) and (iii) a percentage of Excess Cash Flow (as defined in the New Credit Agreement) for each fiscal year with a range of 50% to 85%, based upon the Company's leverage ratio, commencing with the Company's fiscal year ending November 30, 1999. Restructuring Charges - --------------------- Included in accrued liabilities are certain costs the Company will incur to effect an integration and rationalization plan for the RPS Division's operations. These costs represent involuntary termination and other closure costs in connection with closing redundant manufacturing and service operations. These accrued costs do not include costs associated with consolidation of previously existing Tokheim subsidiaries, which will be expensed as incurred or separately accrued once all criteria for accrual are met, nor do these costs benefit future periods. The Company expects the integration and rationalization plan to be completed by the end of year 2000. The table below summarizes the accrued liability activity by major category and initiative during the three month period ended February 29, 2000.
November 30, Charges to February 29, 1999 Accrual 2000 Involuntary termination benefits.............. $8,006 $(1,398) $6,608 Facility closure and other closure costs...... 211 (41) 170 Lease and contract termination fees........... 381 (141) 240 Total accrued integration and rationalization costs....................... $8,598 $(1,580) $7,018
During 1999, as a result of the continuing integration and rationalization of the RPS Division with other business units, the Company accrued approximately $2,700 as a charge to operations to establish an accrual for involuntary termination benefits and related costs for approximately 69 employees that served in primarily service and administration roles at various service facilities in France. This amount also included amounts for lease termination and other exit costs and was added to an amount of $0.3 million that remained accrued at November 30, 1999 for pension payments due to retirees who formerly worked at the Company's Glenrothes Scotland facility. The table below summarizes the accrued liability activity by major category and initiative for the three month period ended February 29, 2000.
November 30, Charges to February 29, 1999 Accrual 2000 Involuntary termination benefits............. $2,442 $(164) $2,278 Facility closure and other closure costs..... 460 (37) 423 Lease and contract termination fees.......... 138 (25) 113 Total accrued integration and rationalization costs...................... $3,040 $(226) $2,814
Guarantor and Nonguarantor Financial Statements - ----------------------------------------------- In connection with the RPS Division acquisition and as part of the subsequent financing, the Company issued $123.0 million of 11.375% U.S. dollar denominated senior subordinated notes and 75.0 million of 11.375% Euro denominated senior subordinated notes (together the "Outstanding Notes"). The Outstanding Notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future senior indebtedness of the Company, and guaranteed on a full, unconditional, joint and several basis by the Company's wholly owned domestic subsidiaries. The following condensed consolidating financial information presents: 1) Condensed consolidating financial statements as of February 29, 2000, and November 30, 1999 and for the three month periods ended February 29, 2000 and February 28, 1999, of (a) Tokheim Corporation, the parent; (b) the guarantor subsidiaries; (c) the nonguarantor subsidiaries; and (d) the Company on a consolidated basis. 2) Elimination entries necessary to consolidate Tokheim Corporation, the parent, with guarantor and nonguarantor subsidiaries. Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor and nonguarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany transactions and balances. Separate financial statements for the guarantor subsidiaries and the nonguarantor subsidiaries are not presented because management believes that such financial statements would not be meaningful. Consolidated Condensed Statement of Earnings For the three months ended February 29, 2000 (Amounts in thousands)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------ ------------ ------------ Net sales.................................................. $ 38,584 $ 12,528 $ 83,909 $ (2,609) $ 132,412 Cost of sales, exclusive of items listed below............. 30,352 8,760 67,859 (2,609) 104,362 Selling, general, and administrative expenses.............. 7,789 6,932 11,000 25,721 Depreciation and amortization.............................. 2,087 658 3,329 6,074 Merger and acquisition costs and other unusual items....... 1,770 955 2,725 ------------ ------------ ------------ ------------ ------------ Operating profit (loss).................................... (3,414) (3,822) 766 (6,470) Interest (income) expense, net............................. 6,680 754 7,214 14,648 Foreign currency loss ..................................... (75) (42) (52) (169) Equity in (earnings) loss of consolidated subsidiaries..... 10,921 (10,921) Minority Interest.......................................... (2) (2) Other (income) expense, net ............................... (2,138) 6,860 (5,012) (290) ------------ ------------ ------------ ------------ ------------ Earnings (loss) before income taxes........................ (18,802) (11,394) (1,382) 10,921 (20,657) Income taxes............................................... 1,749 (1,967) 112 (106) ------------ ------------ ------------ ------------ ------------ Earnings (loss) before extraordinary item.................. (20,551) (9,427) (1,494) 10,921 (20,556) Extraordinary loss on debt extinguishment.................. ------------ ------------ ------------ ------------ ------------ Net earnings (loss)........................................ $ (20,551) $ (9,427) $ (1,494) $ 10,921 $ (20,556) ============ ============ ============ ============ ============
Consolidated Condensed Statement of Earnings For the three months ended February 29, 1999 (Amounts in thousands)
Guarantor Nonguarantor Parent Subsidiaries Subsidiaries ----------- ------------ ------------ Net sales.................................................. $ 27,546 $ 29,875 $ 111,067 Cost of sales, exclusive of items listed below............. 22,335 22,381 90,876 Selling, general, and administrative expenses.............. 6,017 6,108 13,642 Depreciation and amortization.............................. 1,268 1,097 4,527 Merger and acquisition costs and other unusual items....... 106 1,017 ------------ ------------ ------------ Operating profit (loss).................................... (2,074) 183 1,005 Interest (income) expense, net............................. 6,683 5,214 410 Foreign currency loss .................................... 193 (3,330) 4,575 Equity in (earnings) loss of consolidated subsidiaries..... 6,716 Minority Interest.......................................... 94 Other (income) expense, net ............................... (1,505) 6,364 (5,013) ------------ ------------ ------------ Earnings (loss) before income taxes........................ (14,161) (8,065) 939 Income taxes............................................... 17 (361) (49) ------------ ------------ ------------ Earnings (loss) before extraordinary item.................. (14,178) (7,704) 988 Extraordinary loss on debt extinguishment.................. 6,249 ------------ ------------ ------------ Net earnings (loss)........................................ $ (20,427) $ (7,704) $ 988 ============ ============ ============
Consolidated Eliminations Total ------------ ------------ Net sales.................................................. $ (2,295) $ 166,193 Cost of sales, exclusive of items listed below............. (2,295) 133,297 Selling, general, and administrative expenses.............. 25,767 Depreciation and amortization.............................. 6,892 Merger and acquisition costs and other unusual items....... 1,123 ------------ ------------ Operating profit (loss).................................... (886) Interest (income) expense, net............................. 12,307 Foreign currency loss .................................... 1,438 Equity in (earnings) loss of consolidated subsidiaries..... (6,716) Minority Interest.......................................... 94 Other (income) expense, net ............................... (154) ------------ ------------ Earnings (loss) before income taxes........................ 6,716 (14,571) Income taxes............................................... (393) ------------ ------------ Earnings (loss) before extraordinary item.................. 6,716 (14,178) Extraordinary loss on debt extinguishment.................. 6,249 ------------ ------------ Net earnings (loss)........................................ $ 6,716 $ (20,427) ============ ============
Consolidated Condensed Balance Sheet As of February 29, 2000 (Amounts In thousands)
Guarantor Nonguarantor Parent Subsidiaries Subsidiaries ------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents.................................. $ 2,059 $ 1,734 $ 9,457 Accounts receivables, net.................................. 33,215 66,366 91,019 Inventories, net........................................... 26,372 9,257 57,448 Other current assets....................................... 2,051 1,478 14,443 ------------ ------------ ------------ Total current assets....................................... 63,697 78,835 172,367 Investments in subsidiaries................................ 66,767 250,201 6,635 Property, plant, and equipment, net........................ 24,592 10,978 33,768 Goodwill, net.............................................. 119,595 10,111 173,695 Other non-current assets and deferred charges, net......... 190,121 71,640 5,473 ------------ ------------ ------------ Total assets............................................... $ 464,772 $ 421,765 $ 391,938 ============ ============ ============ LIABILITIES AND SHAREHOLDERS EQUITY Current maturities of long-term debt....................... 5,625 2,766 Notes payable to banks..................................... 256 Cash overdrafts............................................ 13,068 Accounts payable........................................... 65,044 6,952 65,198 Accrued expenses........................................... 39,447 12,112 43,921 ------------ ------------ ------------ Total current liabilities.................................. 104,491 24,689 125,209 Notes payable, bank credit agreement....................... 17,064 189,699 Senior subordinated notes.................................. 195,408 Junior subordinated Payment In Kind note................... 46,371 Other long-term debt, less current maturities.............. 6,000 245,523 Guaranteed Employees' Stock Ownership Plan obligation...... 3,947 Post-retirement benefit liability.......................... 15,025 3,686 Minimum pension liability.................................. Other long-term liabilities................................ 189 (239) 4,115 ------------ ------------ ------------ 342,124 260,520 378,533 ---------- ---------- ------------ Redeemable convertible preferred stock..................... 24,000 Guaranteed Employees' Stock Ownership Plan obligation...... (3,947) Treasury stock, at cost.................................... (4,294) ------------ ------------ ------------ 15,759 Common stock............................................... 90,375 234,966 65,578 Common stock warrants...................................... 26,187 Minimum pension liability.................................. Foreign currency translation adjustments................... (8,023) (40,093) (17,512) Retained earnings (accumulated deficit).................... (1,119) (33,628) (34,661) ------------ ------------ ------------ 107,420 161,245 13,405 Less treasury stock, at cost............................... (531) ------------ ------------ ------------ 106,889 161,245 13,405 ------------ ------------ ------------ Total liabilities and shareholders' equity................. $ 464,772 $ 421,765 $ 391,938 ============ ============ ============
Consolidated Eliminations Total ------------ ------------ ASSETS Current assets: Cash and cash equivalents.................................. $ $ 13,250 Accounts receivables, net.................................. (70,875) 119,725 Inventories, net........................................... (223) 92,854 Other current assets....................................... 17,972 ------------ ------------ Total current assets....................................... (71,098) 243,801 Investments in subsidiaries................................ (323,603) Property, plant, and equipment, net........................ 69,338 Goodwill, net.............................................. 303,401 Other non-current assets and deferred charges, net......... (247,713) 19,521 ------------ ------------ Total assets............................................... $ (642,414) $ 636,061 ============ ============ LIABILITIES AND SHAREHOLDERS EQUITY Current maturities of long-term debt....................... 8,391 Notes payable to banks..................................... 256 Cash overdrafts............................................ 13,068 Accounts payable........................................... (70,874) 66,320 Accrued expenses........................................... 95,480 ------------ ------------ Total current liabilities.................................. (70,874) 183,515 Notes payable, bank credit agreement....................... 206,763 Senior subordinated notes.................................. 195,408 Junior subordinated Payment In Kind note................... 46,371 Other long-term debt, less current maturities.............. (248,563) 2,960 Guaranteed Employees' Stock Ownership Plan obligation...... 3,947 Post-retirement benefit liability.......................... 18,711 Minimum pension liability.................................. Other long-term liabilities................................ (160) 3,905 ------------ ------------ (319,597) 661,580 ------------ ------------ Redeemable convertible preferred stock..................... 24,000 Guaranteed Employees' Stock Ownership Plan obligation...... (3,947) Treasury stock, at cost.................................... (4,294) ------------ ------------ 15,759 Common stock............................................... (300,544) 90,375 Common stock warrants...................................... 26,187 Minimum pension liability.................................. Foreign currency translation adjustments................... (8,702) (74,330) Retained earnings (accumulated deficit).................... (13,571) (82,979) ------------ ------------ (322,817) (40,747) Less treasury stock, at cost............................... (531) ------------ ------------ (322,817) (41,278) ------------ ------------ Total liabilities and shareholders' equity................. $ (642,414) $ 636,061 ============ ============
Consolidated Condensed Balance Sheet As of February 28, 1999 (Amounts In thousands)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents............................... $ 1,780 $ 2,927 $ 30,013 $ $ 34,720 Accounts receivables, net............................... 60,175 60,819 106,773 (80,821) 146,946 Inventories, net........................................ 16,452 15,383 80,716 (116) 112,435 Other current assets.................................... 1,562 1,478 18,092 21,132 -------- -------- --------- --------- -------- Total current assets.................................... 79,969 80,607 235,594 (80,937) 315,233 Investments in subsidiaries............................. 110,351 142,584 3,250 (256,185) Property, plant, and equipment, net..................... 23,734 11,035 41,105 75,874 Goodwill, net........................................... 16,451 92,029 192,009 300,489 Other non-current assets and deferred charges, net...... 107,974 254,840 5,628 (335,132) 33,310 -------- -------- --------- --------- -------- Total assets............................................ $338,479 $581,095 $ 477,586 $(672,254) $724,906 ======== ======== ========= ========= ======== LIABILITIES AND SHAREHOLDERS EQUITY Current maturities of long-term debt.................... 1,911 1,911 Notes payable to banks.................................. 383 383 Cash overdrafts......................................... 238 14,774 15,012 Accounts payable........................................ 40,878 39,157 78,676 (83,803) 74,908 Accrued expenses........................................ 17,892 42,598 73,661 134,151 -------- -------- --------- --------- -------- Total current liabilities............................... 58,770 81,993 169,405 (83,803) 226,365 Notes payable, bank credit agreement.................... 134,635 50,511 185,146 Senior subordinated notes............................... 205,690 205,690 Junior subordinated Payment In Kind note................ 41,200 41,200 Other long-term debt, less current maturities........... 6,000 316,618 (319,048) 3,570 Guaranteed Employees' Stock Ownership Plan obligation... 6,347 6,347 Post-retirement benefit liability....................... 14,799 14,799 Minimum pension liability............................... 3,135 3,135 Other long-term liabilities............................. 476 (217) 6,979 (97) 7,141 -------- -------- --------- --------- -------- 265,362 337,977 493,002 (402,948) 693,393 -------- -------- --------- --------- -------- Redeemable convertible preferred stock.................. 24,000 24,000 Guaranteed Employees' Stock Ownership Plan obligation... (6,347) (6,347) Treasury stock, at cost................................. (4,712) (4,712) -------- -------- --------- --------- -------- 12,941 12,941 Common stock............................................ 90,353 238,170 14,958 (253,127) 90,354 Common stock warrants................................... 20,000 20,000 Minimum pension liability............................... (3,135) (3,135) Foreign currency translation adjustments................ (8,520) (7,638) (14,713) (16,985) (47,856) Retained earnings (accumulated deficit)................. (37,827) 12,586 (15,661) 806 (40,096) -------- -------- --------- --------- -------- 60,871 243,118 (15,416) (269,306) 19,267 Less treasury stock, at cost............................ (695) (695) -------- -------- --------- --------- -------- 60,176 243,118 (15,416) (269,306) 18,572 -------- -------- --------- --------- -------- Total liabilities and shareholders' equity.............. $338,479 $581,095 $ 477,586 $(672,254) $724,906 ======== ======== ========= ========= ========
For the period ended February 29, 2000 ------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------------------------------------------------------- Cash flows from operating activities: Net cash provided from (used in)......................... ------------------------------------------------------------- operations............................................. (6,727) 1,245 8,354 (10,921) (6,490) ------------------------------------------------------------- Cash flows from investing activities: Plant and equipment additions/transfers.................. (599) (106) (656) (1,361) Proceeds from the sale/tranfers of property.............. 0 and equipment.......................................... (313) 393 80 Investments in and advances to........................... 0 subsidiaries, net...................................... (532) (5,482) (6,080) 10,921 (1,173) Net cash provided from (used in) investing............... ------------------------------------------------------------- activities............................................. (1,444) (5,588) (6,343) 10,921 (2,454) ------------------------------------------------------------- Cash flows from financing activities: Decrease in other debt................................... 2,851 3,139 (49) 5,941 Increase in cash overdraft............................... (515) 1,745 1,230 Deferred debt issuance costs............................. (521) (521) Premiums paid on debt extinguishment..................... 0 Other.................................................... (84) (84) Preferred stock dividends................................ (388) (388) ------------------------------------------------------------- Net cash provided from financing activities.............. 1,858 2,624 1,696 0 6,178 ------------------------------------------------------------- ------------------------------------------------------------- Effect of translation adjustments on cash................ 6,715 747 (4,327) 0 3,135 ------------------------------------------------------------- Increase (decrease) in cash.............................. 402 (969) (620) 0 (1,187) Beginning of year........................................ 1,657 2,706 10,075 14,437 ------------------------------------------------------------- End of period............................................ 2,059 1,736 9,455 0 13,250 =============================================================
Consolidated Condensed Statement of Cash Flows
For the three months ended February 28, 1999 ----------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ----------------------------------------------------------------- Cash flows from operating activities: Net cash provided from (used in) ----------------------------------------------------------------- operations........................................ (6,204) 2,914 (4,734) 6,716 (1,308) ----------------------------------------------------------------- Cash flows from investing activities: Plant and equipment additions/transfers............. (2,521) (746) (1,729) (4,996) Investments in and advances to 0 subsidiaries, net................................. 6,716 0 0 (6,716) 0 Net cash provided from (used in) investing ----------------------------------------------------------------- activities........................................ 4,195 (746) (1,729) (6,716) (4,996) ----------------------------------------------------------------- Cash flows from financing activities: Redemption of senior notes.......................... (170,000) (170,000) Proceeds from 11.375% senior subordinated notes..... 209,647 209,647 Redemption of senior notes.......................... (22,500) (22,500) Increase in notes payable, banks.................... 2,360 (26) (278) 2,056 Increase in cash overdraft.......................... 217 246 463 Deferred debt issuance costs........................ (6,084) (6,084) Premiums paid on debt extinguishment................ (555) (555) Other............................................... 677 677 Preferred stock dividends........................... (374) (374) ----------------------------------------------------------------- Net cash provided from financing activities......... 13,171 191 (32) 0 13,330 ----------------------------------------------------------------- ----------------------------------------------------------------- Effect of translation adjustments on cash........... (10,231) (4,813) 15,937 0 893 ----------------------------------------------------------------- Increase (decrease) in cash......................... 931 (2,454) 9,442 0 7,919 Beginning of year................................... 849 5,381 20,571 26,801 ----------------------------------------------------------------- End of period....................................... 1,780 2,927 30,013 0 34,720 =================================================================
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Tokheim Corporation, including its subsidiaries ("Tokheim" or the "Company"), is the world's largest manufacturer and servicer of electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (including point-of-sale ("POS") systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts and upgrade kits. The Company provides products and services to customers in more than 80 countries. The Company is the largest supplier of petroleum dispensing systems in Europe, Africa, Canada and Mexico, and one of the largest in the United States. The Company also has established operations in Asia and Latin America. Results of Operations Consolidated sales for the three month period ended February 29, 2000 were $132.4 million compared to $166.2 million for the 1999 three month period. Sales for North America decreased 10.4% for the three month period from $56.3 million in 1999 to $50.5 million in 2000. European sales decreased 26.3% from $105.6 million in 1999 to $77.8 million in the three month period ended February 29, 2000. African sales decreased 4.0% from $4.3 million in 1999 to $4.1 million in the 2000 three month period. These decreases in sales from the prior year are primarily attributable to decreased sales to major oil companies ("MOC's"). The continued MOC merger activity has resulted in a delay of capital spending by these customers. Additionally, weakening foreign currency rates, relative to the US dollar, have negatively impacted the Company's sales for the three months ended February 29, 2000. Gross margins as a percent of sales (defined as net sales less cost of sales divided by net sales) increased from 19.8% in the three month period ended February 28, 1999 to 21.2% in the 2000 three month period. This improvement is driven by continued integration and rationalization of the RPS division and realization of cost savings through these programs. In addition, the Company's product mix for the three months ended February 29, 2000 included a higher proportion of dispenser sales which provide a higher margin than service contracts. Selling, general, and administrative ("SG&A") expenses as a percent of sales for the three month period ended February 29, 2000 were 19.4% compared to 15.5% for the 1999 three month period. This increase as a percentage of sales is due to lower sales in the first quarter of 2000 compared to 1999. Comparatively, SG&A expenses have remained flat in relative dollars year over year. Net interest expense for the three month period ended February 29, 2000 was $14.6 million compared to $12.3 million in the comparable 1999 period. This increase is due to increased amortization of fees associated with amending the Company's credit agreement, which are charged to interest expense, and increased borrowings on the Company's revolving credit facility as well as increased interest rates. Depreciation and amortization expense for the three month period ended February 29, 2000 was $6.1 million compared to $6.9 million in the comparable 1999 period. Foreign currency gain for the three month period ended February 29, 2000 was $0.2 million compared to loss $1.4 million in the comparable 1999 period. Income taxes for the three month period ended February 29, 2000 were a benefit of $0.1 million compared to a benefit of $0.4 million in the comparable 1999 period. These amounts are due to income tax refunds available in foreign subsidiaries because of legal structural changes and the availability of net operating loss carry-forwards to offset pretax book earnings. As a result of the above mentioned items, net loss, including preferred stock dividends, was $20.9 million or $1.65 per diluted common share for the three months ended February 29, 2000 compared to a loss, including preferred stock dividends, before extraordinary loss of $14.6 million or $1.15 per diluted common share for the same period in 1999. Loss from extraordinary loss on debt extinguishment was $6.2 million or $0.49 per diluted common share for the three months ended February 28, 1999. Net loss for the three months ended February 29, 2000, including preferred stock dividends, was $20.9 million or $1.65 per diluted common share compared to a net loss of $20.4 million or $1.64 per diluted common share for the comparable 1999 period. Liquidity and Capital Resources Cash used in operations for the three month period ended February 29, 2000 was $6.5 million versus $1.3 million in the comparable period of 1999. During the first quarter of 2000 the Company collected $44.3 million in customer receivables. The Company used the funds to pay down accounts payable by $16.1 million. The Company also reduced its accrued expenses by $14.3 million and used the remainder for general corporate purposes. Cash used in investing activities for the three month period ended February 29, 2000 was $2.5 million compared to a cash usage of $5.0 million in the comparable 1999 period. The cash usage in both periods is primarily attributable to capital spending at maintenance levels. Cash provided from financing activities for the three month period ended February 29, 2000 was $4.6 million compared to cash provided in the comparable 1999 period of $13.3 million. The cash provided in the 2000 period is attributable to increased borrowings from the Company's revolving credit facility. On December 22, 1999, the Company amended its New Credit Agreement. Among the items amended were the removal of the requirement to obtain $50.0 million through the issuance of equity type securities and the provision for the mandatory reduction of the term loan by $50.0 million. As such, the Company has reclassified the $50.0 million repayment from current to long term liabilities. Other terms of the New Credit Agreement that were amended include the addition of $5.7 million to the borrowing availability under the working capital facility; changes to the consolidated net worth covenant; changes to the leverage and senior leverage ratio covenants; changes to the minimum EBITDA covenant; the addition of a clean down or availability covenant on the working capital facility; and an acceleration of the termination date of the New Credit Agreement from September 24, 2004 to September 30, 2003. In consideration for the amendment to the New Credit Agreement, the Company paid certain fees and expenses to the bank group including warrants to purchase 16.5% of the outstanding common stock of the Company at a purchase price of $3.95 per share. The warrants are exercisable for an aggregate of 2,097,427 shares. The Company has the right, subject to the terms and conditions of the New Credit Agreement, to purchase 100% of the warrants upon termination of the New Credit Agreement or 50% by meeting specified de-leveraging conditions at various discount rates. At the date of issuance the fair value of the warrants was $6.2 million. The term loan under the amended New Credit Agreement calls for equal quarterly principal payments aggregating $7.3 million in 2000; $9.8 million in 2001; and $12.2 million in 2002. The principal payments in 2003 include equal quarterly payments in the first three quarters of $3.7 million each with the remainder due at maturity on September 30, 2003. The New Credit Agreement requires the Company to meet certain consolidated financial tests, including minimum level of consolidated net worth, minimum level of EBITDA (as defined in the New Credit Agreement), minimum level of consolidated interest coverage, maximum consolidated leverage ratio and senior leverage ratio and minimum consolidated fixed charge coverage ratio. The New Credit Agreement also contains covenants which, among other things, limit the incurrence of additional indebtedness, dividends, transactions with affiliates, asset sales, acquisitions, investments, mergers and consolidations, prepayments of certain other indebtedness, amendments to certain other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. The New Credit Agreement requires the Company to maintain specified financial ratios and satisfy certain financial tests. During the year ended November 30, 1999 and in December 1999, the Company was required to enter into three amendments to the New Credit Agreement to avoid the occurrence of events of default relating to certain financial ratios and tests. The Company's ability to meet such amended financial ratios and tests in the future may be affected by events beyond its control. While the Company currently expects to be in compliance with the covenants and satisfy the financial ratios and tests in the future, there can be no assurance that the Company will meet such financial ratios and tests or that it will be able to obtain future amendments to the New Credit Agreement, if so needed, to avoid a default. In the event of a default, the lenders could elect to declare all amounts borrowed under the New Credit Agreement to be due and payable. Indebtedness (other than with respect to the additional availability under the working capital facility) under the New Credit Agreement bears interest based upon (at the applicable Borrower's option) (i) the Base Rate in the case of U.S. dollar denominated loans (defined as the higher of (x) the applicable prime rate and (y) the federal funds rate (as adjusted pursuant to the New Credit Agreement) plus 0.50%) plus an applicable margin based upon the Company's leverage ratio (with a range of 1.50% to 3.50% for revolving loans and 3.50% for term loans) or (ii) the applicable Eurocurrency Rate (as defined in the New Credit Agreement) for a deposit in the currency of, and for a maturity corresponding to, the applicable loan and interest period, plus an applicable margin based upon the Company's leverage ratio (with a range of 2.50% to 4.50% for revolving loans and 4.50% for term loans). In addition, the $5.7 million of additional availability under the working capital facility bears an applicable margin on Base Rate loans of 5.00% and Eurocurrency Rate loans of 6.00%. The New Credit Agreement requires an amount equal to all net proceeds from asset sales by the Company or any of its subsidiaries (with certain exceptions) to be applied to repay the loans under the New Credit Agreement. The New Credit Agreement also requires the Company to prepay the loans under the New Credit Agreement in an amount equal to (i) all net proceeds from the sale or issuance of debt (with certain exceptions), (ii) all net proceeds from the sale or issuance of equity (with certain exceptions) and (iii) a percentage of Excess Cash Flow (as defined in the New Credit Agreement) for each fiscal year with a range of 50% to 85%, based upon the Company's leverage ratio, commencing with the Company's fiscal year ending November 30, 1999. At February 29, 2000, the outstanding borrowings were $102.4 million under the revolving working capital facility and $115.7 million under the term loan. Available borrowings under the revolving working capital facility were $13.3 million at February 29, 2000, subject to the Company's borrowing base calculation and certain other covenants. The Company has guaranteed loans to the Employees' Stock Ownership Plan ("ESOP") in the amounts of $3.9 million and $4.4 million at February 29, 2000 and November 30, 1999, respectively. The Trustee who holds the ESOP Preferred Stock, may elect to convert each preferred share to one common share in the event of a redemption by Tokheim, certain consolidations or mergers of Tokheim, or a redemption by the Trustee that is necessary to provide for distributions under the Company's Retirement Savings Plan. A participant may elect to receive a distribution from the plan in cash or common stock. If redeemed by the Trustee, the Company is responsible for purchasing the preferred stock at the twenty-five dollar floor value. The Company may elect to pay the redemption price in cash or an equivalent amount of common stock. Preferred stock dividends paid were $0.4 million for the three month periods ended February 29, 2000 and February 28, 1999. As part of the purchase price of the RPS Division, the Company has provided for certain costs it expects to incur to close down redundant operations in connection with the reorganization and rationalization of the RPS Division's operations. The Company has incurred $1.6 million of expenditures in the the three month period ended February 29, 2000 and expects to incur an additional $7.0 million which consists of $6.6 million of involuntary termination costs to reduce redundant staffing levels, approximately $0.2 million of facility closure and other exit costs, and approximately $0.2 million associated with lease breakage fees. These costs have been aggregated and included in accrued liabilities. These amounts do not include costs associated with the consolidation of previously existing Tokheim subsidiaries, which will be expensed as incurred, nor do these costs benefit future periods. The Company estimates the cash expenditures necessary to close or consolidate certain of the existing Tokheim subsidiaries to approximate $3.0 million in 2000, of which $0.2 million was incurred in the three month period ended February 29, 2000. The remaining $2.8 million of cash expenditures will be funded with cash generated from operations, working capital improvements and, if needed, borrowings from the working capital facility. Beginning in 1996, the Company began to address any possible Year 2000 ("Y2K") issues related to the Company's software and hardware systems as well as its product line. The Company prepared an inventory of all systems and equipment, analyzing risks, determining compliance levels and addressing remediation tactics. In 1997, a formal Y2K program office was established with a full time staff to address all aspects on a world wide basis. The program office was sponsored by and reported to the executive steering committee of the Company which is comprised of the Company's senior management. The program office established regional Y2K offices throughout the world in early 1998. The Y2K project office identified five major sub-projects related to the Y2K issue: products utilizing embedded technologies; information systems and technology; external agents consisting primarily of suppliers, distributors and third party service providers; manufacturing equipment; and infrastructure. The Y2k program office published a Y2K implementation manual which was distributed throughout the Company. The Company enlisted the assistance of a third party consulting firm to verify and validate its Y2K plan. The program office established a deadline of August 31, 1999 for contingency planning to be completed. Contingency planning was defined as planning to ensure that the continued availability of essential services, programs, and operations including all the resources necessary to operate the enterprise at a level acceptable to senior management would be available. Operational stability and reliability was to be maintained to ensure the survival of the enterprise and to represent the primary objectives of contingency planning. Through the planning and corrective actions identified by the Y2K program office, the Company did not experience any system critical failures. The Company incurred costs of approximately $4.0 million related to the Y2K program office. The Y2K program office was officially closed on January 31, 2000. The Company's principal sources of liquidity in the future are expected to be cash flow from operations and available borrowings under the New Credit Agreement. It is expected that the Company's principal uses of liquidity will be to provide working capital, finance capital expenditures, fund costs associated with the Company's integration and rationalization plan and meet debt service requirements. As a result of the acquisition of the RPS Division, the Company has a significant level of debt. Based upon current levels of operations and anticipated cost savings and future growth, the Company believes that its expected cash flows from operations, together with available borrowings under the New Credit Agreement and its other sources of liquidity, including leases, will be adequate to meet its anticipated requirements for working capital, capital expenditures, lease payments and scheduled principal and interest payments. There can be no assurance, however, that the Company's business will continue to generate cash flows at or above current levels, that estimated cost savings or growth will be achieved or that the Company will be able to refinance its existing indebtedness in whole or in part. The indentures under which the Dollar Notes and the Euro Notes were issued (the "Indentures") and the New Credit Agreement contain a number of significant covenants. The New Credit Agreement requires the Company to maintain specified financial ratios and satisfy certain financial tests. The Company's ability to meet such financial ratios and tests may be affected by events beyond its control. There can be no assurance that the Company will meet such financial ratios and tests. In addition, the Indentures limit the ability of the Company and its subsidiaries to, among other things: incur additional debt; pay dividends on capital stock or repurchase capital stock or make certain other restricted payments; use the proceeds of certain asset sales; make certain investments; create liens on assets to secure debt; enter into transactions with affiliates; merge or consolidate with another company; and transfer or sell assets. New Accounting Pronouncements - ----------------------------- The Company has considered the impact that accounting pronouncements recently issued by the Financial Accounting Standards Board and American Institute of Certified Public Accountants will have on the Consolidated Condensed Financial Statements as of February 29, 2000. None of the pronouncements that have been issued but not yet adopted by the Company are expected to have a material impact on the Company's financial position, results of operations or cash flows. See the Notes to the Consolidated Financial Statements for additional information regarding recently issued accounting pronouncements. PART II. OTHER INFORMATION Item 5. Other Information Legal Proceedings - ----------------- On February 29, 2000, a three member arbitration panel ruled in favor of Bennett Pump Company ("Bennett") concerning arbitration between the Company and Bennett. The dispute concerned the minimum purchase requirements by the Company for Bennett's products over a five year period beginning September 1, 1996. The Company has maintained it could reduce the minimum purchase commitment by not ordering any pumping units and pay Bennett for the lost profit on the pumping units not ordered. The arbitration panel ruled that the minimum purchase agreement entered into as part of the Sofitam acquisition could not be reduced. The Company was required to pay a one time payment of $1.2 million for the shortfall in purchases in 1998 and 1999 and $1.6 million for the shortfall in purchases in 2000 and 2001, which were discounted to present value. The payment of $2.8 million was charged against this liability. The Company had elected not to purchase any additional units from Bennett due to quality and delivery problems that it had experienced with Bennett. The Company is currently building the required pumping unit in-house. In December 1997, the Company acquired Management Solutions, Inc. ("MSI"). MSI develops and distributes retail automation systems (includes POS software), primarily for the convenience store, petroleum dispensing and fast food service industries. The Company paid MSI's stockholders an initial amount of $12.0 million. The Company is also obligated to make contingent payments of up to $13.2 million through 2000 based upon MSI's performance. The Company was not obligated to make any performance payments in 1999 or 1998 under the purchase agreement. The four former shareholders of MSI filed a $30.0 million arbitration claim against the Company with the American Arbitration Association on July 7, 1999 alleging fraud, breach of contract, tortious interference with contractual relations and breach of implied covenant of good faith and fair dealing. The claims relate to the Company's acquisition of MSI in 1997 and the termination for cause of its president and chief executive officer in February 1999. The Company believes that the claims are without merit and will vigorously defend against the allegations. The Company has filed counterclaims and is also seeking damages in excess of $4.0 million for breaches of representations and warranties in the purchase agreement. Management believes that the outcome of this arbitration will not materially adversely affect the business, financial condition or results of operations of the Company. New York Stock Exchange - ------------------------------------ On February 18, 2000, the Company announced that it currently fails to meet newly effective New York Stock Exchange ("NYSE") continued listing standards requiring total market capitalization and total stockholders equity of not less than $50.0 million each. The Company submitted a plan on January 31, 2000 to the Listings and Compliance Committee (the "Committee") of the NYSE demonstrating how the Company plans to comply with the newly effective standards. Based upon management estimates, the Company believes it will satisfy the new standards of the NYSE, however, there can be no assurance that such standards will be met. After reviewing the plan, the Committee has informed the Company in a letter dated April 6, 2000, that it has agreed to accept the Company's submitted plan, and that senior NYSE management has acknowledged such acceptance. As a result, the NYSE is prepared to continue the listing of the Company at this time. The NYSE will perform quarterly reviews during the 18 months from receipt of its December 30, 1999 letter for compliance with the goals and initiatives as outlined in the Company's plan. Failure to achieve these financial and operational goals may result in the Company being subject to NYSE trading suspension at the point the initiative or goal is not met. Should the Company's shares cease trading on the NYSE, the Company believes that an adequate alternative trading venue will be available. The Company will need to achieve the new minimum continued listing standards of market capitalization of not less than $50.0 million and total stockholders' equity of not less $50.0 million at the end of the 18 month plan period. Failure to achieve any of the minimum requirements at the appropriate time will result in the Company being suspended by the NYSE with application made to the SEC to delist. Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit No. Document ------- -------- 2.1 Stock Purchase Agreement, dated as of December 29, 1997 between Tokheim Corporation and Arthur S. ("Rusty") Elston, Ronald H. Elston, Eric E. Burwell and Curt E. Burwell (incorporated herein by reference to the Company's Current Report on Form 8-K, dated December 31, 1997). 2.2 Master Agreement for Purchase and Sale of Shares, Assets, and Liabilities, dated as of June 19, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 2.3 Amendment No. 1 to the Master Agreement for Purchase and Sale of Shares, Assets and Liabilities, dated as of September 30, 1998 between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 3.1 Restated Articles of Incorporation of Tokheim Corporation, as amended, as filed with the Indiana Secretary of State on February 5, 1997 (incorporated herein by reference to the Company's Annual Report on Form 10-K/A for the year ended November 30, 1996). 3.2 Bylaws of Tokheim Corporation, as restated on July 12, 1995 and amended March 2, 1998 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended May 31, 1998). 4.1 Rights Agreement, dated as of January 22, 1997, between Tokheim Corporation and Harris Trust and Savings Bank, as Rights Agent (incorporated herein by reference to the Company's Current Report on Form 8-K, filed February 23, 1997). 4.2 Amendment No. 1 to Rights Agreement, dated as of September 30, 1998, between Tokheim Corporation and Harris Trust and Savings Bank (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.3 Securities Purchase Agreement, dated September 30, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.4 12% Senior Subordinated Note due January 28, 1999 in the amount of $170,000,000 (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.5 Senior Subordinated Note Indenture, dated as of September 30, 1998, among Tokheim Corporation, Management Solutions, Inc., Tokheim Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose & Petroleum Equipment, Inc., Envirotronic Systems, Inc., Gasboy International, Inc., Tokheim Automation Corporation, Tokheim Investment Corp., as guarantors, and Harris Trust and Savings Bank, as trustee (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.6 12% Junior Subordinated Note due 2008 in the amount of $40,000,000 (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.7 Junior Subordinated Note Indenture, dated as of September 30, 1998, among Tokheim Corporation, Management Solutions, Inc., Tokheim Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose & Petroleum Equipment, Inc., Envirotronic Systems, Inc., Gasboy International, Inc., Tokheim Automation Corporation, Tokheim Investment Corp., as guarantors, and Harris Trust and Savings Bank, as trustee (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.8 Amendment No. 1 to Junior Subordinated Note Indenture, dated as of January 25, 1999 (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended November 30, 1998). 4.9 Warrant to Purchase up to 19.9% of the Shares of Common Stock of Tokheim Corporation (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.10 Registration Rights Agreement, dated September 30, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.11 Note Purchase Agreement, dated as of September 30, 1998, among Tokheim Corporation, the Subsidiaries and the Purchasers (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.12 Amended and Restated Credit Agreement, dated as of September 30, 1998, among Tokheim Corporation, the Borrowing Subsidiaries, the Lenders and NBD Bank, N.A. as administrative agent and Credit Lyonnais as documentation and collateral agent and Gleacher NatWest Inc. and Bankers Trust Company as co-syndication agents (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.13 Second Amended and Restated Credit Agreement, dated as of December 14, 1998, among Tokheim Corporation, the Borrowing Subsidiaries, the Lenders and NBD Bank, N.A. as administrative agent and Credit Lyonnais as documentation and collateral agent and Gleacher NatWest Inc. and Bankers Trust Company as co-syndication agents (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1998). 4.14 Consent and Amendment No. 1 to Amended and Restated Credit Agreement, dated as of January 11, 1999 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999). 4.15 Amendment No. 2 to Amended and Restated Credit Agreement, dated as of March 1, 1999 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999). 4.16 Amendment No. 3 to Second Amended and Restated Credit Agreement, dated as of February 27, 1999 (incorpo rated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999). 4.17 Amendment No. 4 and Waiver to Second Amended and Restated Credit Agreement, dated as of October 14, 1999 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 1999). 4.18 Amendment No. 5 to Second Amended and Restated Credit Agreement, dated as of December 22, 1999 (incorpo rated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1999). 4.19 Warrant and Registration Rights Agreement, dated as of December 22, 1999, among Tokheim Corporation, Bank One, Indiana, National Association, Credit Lyonnais, Chicago Branch, Bankers Trust Company, ABN Amro Bank, N.V., Credit Agricole Indosuez, Harris Trust and Savings Bank, Compagnie Financiere de Cic et de L'Union Europeene, Mercantile Bank N.A., The Provident Bank, Finova Capital Corporation, Imperial Bank, Natexis Banque BFCE, Bank Polska Kasa Opieke S.A.-- Pekao S.A. Group, New York Branch, Senior Debt Portfolio, Eaton Vance Senior Income Trust, Oxford Strategic Income Fund, Octagon Loan Trust, Octagon Investment Partners II, LLC, Indosuez Capital Funding IIA, Limited, Indosuez Capital Funding IV, L.P., Alliance Investment Opportunities Fund, L.L.C., Amsouth Bank and ARES Leveraged Investment Fund II, L.P. (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1999). 4.20 Form of Warrant Certificate, dated as of December 22, 1999 (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1999). 4.21 Dollar Notes Indenture, dated as of January 29, 1999, among Tokheim Corporation, certain subsidiary guarantors of Tokheim Corporation, and U.S. Bank Trust National Association, as trustee (incorporated herein by reference to Amendment No. 140 to the Company's Registration Statement on Form S-4, dated June 15, 1999, as amended). 4.22 Euro Notes Indenture, dated as of January 29, 1999, among Tokheim Corporation, certain subsidiary guarantors of Tokheim Corporation, and U.S. Bank Trust National Association, as trustee (incorporated herein by reference to Amendment No. 140 to the Company's Registration Statement on Form S-4, dated June 15, 1999, as amended). 4.23 Dollar Registration Rights Agreement, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown Incorporated, Credit Lyonnais Securities (USA) Inc., First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended November 30, 1998). 4.24 Euro Registration Rights Agreement, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown Incorporated, Credit Lyonnais Securities (USA) Inc., First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended November 30, 1998). 10.1 Tokheim Corporation 1992 Stock Incentive Plan, established December 15, 1992 (incorporated herein by reference to the Company's Registration Statement on Form S-8, File No. 33-52167, dated February 4, 1994). 10.2 Retirement Savings Plan for Employees of Tokheim Corporation and Subsidiaries (incorporated herein by reference to Amendment No. 1 to the Company's Registration Statement on Form S-8, File No. 33-29710, dated August 1, 1989). 10.3 Tokheim Corporation 1996 Key Management Incentive Bonus Plan (incorporated herein by reference to the Company's Report on Form 10-Q/A, for the quarter ended February 29, 1996). 10.4 Tokheim Corporation Deferred Compensation Plan (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.5 Tokheim Corporation Supplemental Executive Retirement Plan (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.6 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Douglas K. Pinner (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.7 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and John A. Negovetich (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.8 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Jacques St-Denis (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.9 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Norman L. Roelke (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.10 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Scott A. Swogger (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.11 Technology License Agreement, effective as of December 1, 1997, between Tokheim Corporation and Gilbarco, Inc. (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended November 30, 1997). 10.12 Tokheim Corporation 1997 Incentive Plan (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended November 30, 1997). 10.13 Employment Agreement, dated December 31, 1997, between Management Solutions, Inc. and Arthur S. Elston (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended November 30, 1997). 11.1 Statement re computation of per share earnings. 27.1 Financial Data Schedule. b. Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TOKHEIM CORPORATION Date: April 14, 2000 /s/ Douglas K. Pinner --------------------- Chairman, President and Chief Executive Officer Date: April 14, 2000 /s/ John A. Negovetich ---------------------- Executive Vice-President, Finance and Administration and Chief Financial Officer Exhibit Index
Exhibit No. Document - ------- -------- 11.1 Statement re computation of per share earnings. 27.1 Financial Data Schedule
EX-11.1 2 STATEMENT RE COMPUTATION PER SHARE EARNINGS Tokheim Corporation and Subsidiaries Exhibit (11) - Earnings Per Share For the three month periods ended February 29, 2000 and February 28, 1999. Basic earnings per share ("EPS") is calculated based on earnings (loss) available to common shareholders and the weighted average number of common stock shares outstanding during each period. Diluted EPS includes additional dilution from potential common stock equivalents such as stock issued pursuant to the conversion of preferred stock or the exercise of stock options outstanding. The following table presents information necessary to calculate EPS for the three month periods ended February 29, 2000 and February 28, 1999.
Basic Basic ---------------------------- ------------------------ Three Months Ended Nine Months Ended ---------------------------- ------------------------ February 29, February 28, August 31, August 31, 2000 1999 1999 1998 ------------ ------------ ---------- ---------- Shares outstanding (in thousands): Weighted average outstanding................... 12,669 12,662 12,667 10,925 ======== ======== ======== ======== Net earnings (loss): Before extraordinary item...................... $(20,551) $(14,178) $(24,624) $ (249) Extraordinary loss on debt extinguishment...... -- (6,249) (6,249) (4,965) -------- -------- -------- -------- Net earnings (loss)............................ (20,551) (20,427) (30,873) (5,214) Preferred stock dividends...................... (388) (374) (1,124) (1,113) -------- -------- -------- -------- Earnings (loss) applicable to common stock..... $(20,939) $(20,801) $(31,997) $ (6,327) ======== ======== ======== ======== Net earnings (loss) per common share: Before extraordinary item...................... $ (1.65) $ (1.15) $ (2.03) $ (0.12) Extraordinary loss on debt extinguishment...... -- (0.49) (0.49) (0.45) -------- -------- -------- -------- Net earnings (loss)............................ $ (1.65) $ (1.64) $ (2.52) $ (0.57) ======== ======== ======== ========
For financial reporting purposes, the loss per share, assuming full dilution, is considered to be the same as basic since the effect of the common stock equivalents would be antidilutive.
Diluted Diluted ---------------------------- ------------------------ Three Months Ended Nine Months Ended ---------------------------- ------------------------ February 29, February 28, August 31, August 31, 2000 1999 1999 1998 ------------ ------------ ---------- ---------- Shares outstanding (in thousands): Weighted average outstanding................... 12,669 12,662 12,667 10,925 Share equivalents.............................. 2,520 2,549 403 254 Weighted conversion of preferred stock......... 794 771 794 763 -------- -------- -------- -------- Adjusted outstanding........................... 15,983 15,982 13,864 11,942 ======== ======== ======== ======== Net earnings (loss): Before extraordinary item...................... $(20,551) $(14,178) $(24,624) $ (249) Extraordinary loss on debt extinguishment...... -- (6,249) (6,249) (4,965) -------- -------- -------- -------- Net earnings (loss)............................ (20,551) (20,427) (30,873) (5,214) Incremental RSP expense........................ (388) (374) (1,124) (1,113) -------- -------- -------- -------- Earnings (loss) applicable to common stock..... $(20,939) $(20,801) $(31,997) $ (6,327) ======== ======== ======== ======== Net earnings (loss) per common share: Before extraordinary item...................... $ (1.31) $ (0.91) $ (1.86) $ (0.11) Extraordinary loss on debt extinguishment...... -- (0.39) (0.45) (0.42) -------- -------- -------- -------- Net earnings (loss)............................ $ (1.31) $ (1.30) $ (2.31) $ (0.53) ======== ======== ======== ========
EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Form 10-Q and is qualified in its entirety by reference to such financial statements. 0000098559 Tokheim Corporation 1,000 3-MOS NOV-30-2000 FEB-29-2000 13,250 0 126,092 6,367 92,854 243,801 154,962 85,624 634,505 183,515 195,408 15,759 0 116,031 (158,865) 636,061 132,412 132,412 104,362 104,362 32,964 0 14,648 (20,657) (106) (20,551) 0 0 0 (20,551) (1.65) (1.65) Represents gross inventory net of loss reserves. Represents gross PP&E. Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of $3,947 and treasury stock of $4,294. Represents common stock of $90,375, common stock warrants of $26,187 less treasury stock of $531. Represents accumulated deficit of $82,979 and foreign currency translation adjustments of $74,330. Includes product development expenses and excludes depreciation and amortization.
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