-----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, N7bWOQeOpyHfGDmBr8REF9AEW2r1sW+5fd0cCBaOJsS52WQ6Tn81wtCTvf9a5aLD wC55yw5Or2Ipzxbapng/+w== 0000950131-98-006490.txt : 19981215 0000950131-98-006490.hdr.sgml : 19981215 ACCESSION NUMBER: 0000950131-98-006490 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981001 ITEM INFORMATION: FILED AS OF DATE: 19981214 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: 8-K/A SEC ACT: SEC FILE NUMBER: 001-06018 FILM NUMBER: 98769073 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 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT NO. 2 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 1, 1998 TOKHEIM CORPORATION ------------------------------------- (Exact Name of Registrant as Specified in Charter) Indiana 1-6018 35-0712500 ------- ------ ---------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 10501 Corporate Drive, Fort Wayne, IN 46845 - ------------------------------------- ----- (Address of Principal Executive Office) (Zip Code) (219)-470-4600 -------------------------------------------------- Registrant's telephone number, including area code N/A -------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS CERTAIN STATEMENTS CONTAINED IN THIS FORM 8-K/A, INCLUDING, WITHOUT LIMITATION, STATEMENTS CONTAINING THE WORDS "BELIEVES," "ANTICIPATES," "EXPECTS" AND WORDS OF SIMILAR IMPORT, CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD- LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY RESULTS, TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING: INCREASES IN INTEREST RATES OR THE COMPANY'S COST OF BORROWING OR A DEFAULT UNDER ANY MATERIAL DEBT 2 AGREEMENT; INABILITY OF THE COMPANY TO SUCCESSFULLY MAKE AND INTEGRATE ACQUISITIONS; INABILITY TO ACHIEVE ANTICIPATED COST SAVINGS OR REVENUE GROWTH; DEPENDENCE ON THE RETAIL PETROLEUM INDUSTRY; INABILITY TO FORECAST OR ACHIEVE FUTURE SALES LEVELS OR OTHER OPERATING RESULTS; FLUCTUATIONS IN EXCHANGE RATES AMONG VARIOUS FOREIGN CURRENCIES, PRINCIPALLY AMONG DOLLARS, FRENCH FRANC ("FFR") AND THE BRITISH POUND; COSTS IN ADJUSTING TO A NEW COMMON EUROPEAN CURRENCY; INABILITY TO PROTECT PROPRIETARY TECHNOLOGY OR TO INTEGRATE NEW TECHNOLOGIES QUICKLY INTO NEW PRODUCTS; CHANGES IN BUSINESS STRATEGY OR DEVELOPMENT PLANS; BUSINESS DISRUPTIONS; CHANGES IN GENERAL ECONOMIC CONDITIONS OR WITH ECONOMIC CONDITIONS OF PARTICULAR MARKETS IN WHICH THE COMPANY COMPETES; UNAVAILABILITY OF FUNDS FOR CAPITAL EXPENDITURES OR RESEARCH AND DEVELOPMENT; CHANGES IN CUSTOMER SPENDING LEVELS AND DEMAND FOR NEW PRODUCTS; CHANGES IN GOVERNMENTAL, ENVIRONMENTAL OR OTHER REGULATIONS, ESPECIALLY AS THEY MAY AFFECT THE CAPITAL EXPENDITURES OF THE COMPANY'S CUSTOMERS; FAILURE OF THE COMPANY TO COMPLY WITH GOVERNMENTAL REGULATIONS; LOSS OF KEY MEMBERS OF MANAGEMENT; ADVERSE PUBLICITY; CONTINGENT LIABILITIES AND OTHER CLAIMS ASSERTED AGAINST THE COMPANY; LOSS OF SIGNIFICANT CUSTOMERS OR SUPPLIERS; "YEAR 2000" PROBLEMS WITH COMPUTER SYSTEMS OR SOFTWARE OF THE COMPANY OR ITS CUSTOMERS, SUPPLIERS OR RESELLERS; AND OTHER FACTORS. GIVEN THESE UNCERTAINTIES, INDIVIDUALS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS ANY OBLIGATION TO UPDATE ANY SUCH FACTORS OR TO ANNOUNCE PUBLICLY THE RESULT OF ANY REVISIONS TO ANY OF THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT FUTURE EVENTS OR DEVELOPMENTS. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS On September 30, 1998 pursuant to a Master Agreement for the Purchase and Sale of Shares, Assets and Liabilities, dated June 19, 1998, between Tokheim Corporation ("Tokheim") and Schlumberger Limited ("Schlumberger"), as amended by Amendment No. 1 thereto dated as of September 30, 1998 (the "Purchase Agreement"), Tokheim completed, subject to certain foreign legal requirements, the acquisition of the fuel dispenser business (the "RPS Division") of Schlumberger. (the "Acquisition"), as well as a related debt refinancing (the "Refinancing"). Certain information about the transaction has been filed in a Form 8-K dated August 3, 1998. Further information about the transaction was reported on a Form 8-K/A dated October 1, 1998. The required interim period financial statements and interim pro forma information were not available at that time. The following financial statements and financial information are filed as part of this amendment to the Form 8-K/A. (a) Financial Statements of the Business Acquired -- RPS Division combined condensed balance sheets as of September 30, 1998 and December 31, 1997 -- RPS Division unaudited combined condensed statements of income for the nine months ended September 30, 1998 and 1997 -- RPS Division unaudited combined statements of cash flows for the nine months ended September 30, 1998 and 1997 (b) Pro Forma Financial Information -- Unaudited pro forma consolidated condensed statement of earnings for the nine months ended August 31, 1997 -- Unaudited pro forma consolidated condensed balance sheet as of August 31, 1997 -- Notes to unaudited pro forma consolidated condensed financial statements 3 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 thereto duly authorized. TOKHEIM CORPORATION Date: December 14, 1998 By: /s/ Douglas K. Pinner ---------------------------------- Douglas K. Pinner Chairman of the Board, President and Chief Executive Officer and Director Date: December 14, 1998 By: /s/ John A. Negovetich ---------------------------------- John A. Negovetich Executive Vice President, Finance and Administration EXHIBITS (a) Financial Statements of the Business Acquired. -(1) RPS Division audited combined statements of income for the years ended December 31, 1997, 1996 and 1995 (incorporated herein by reference to the Company's Current Report on Form 8-K dated August 3, 1998). -(2) RPS Division audited combined statements of cash flows for the years ended December 31, 1997, 1996 and 1995 (incorporated herein by reference to the Company's Current Report on Form 8-K dated August 3, 1998). 4 -(3) RPS Division audited combined balance sheets as of December 31, 1997 and 1996 (incorporated herein by reference to the Company's Current Report on Form 8-K dated August 3, 1998). -(4) RPS Division audited combined statements of equity for the years ended December 31, 1997, 1996 and 1995 (incorporated herein by reference to the Company's Current Report on Form 8-K dated August 3, 1998). -(5) RPS Division notes to the audited combined financial statements for the years ended December 31, 1997, 1996 and 1995 (incorporated herein by reference to the Company's Current Report on Form 8-K dated August 3, 1998). (b) Pro Forma Financial Information -(1) Unaudited pro forma consolidated condensed statement of earnings for the year ended November 30, 1997 (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(2) Unaudited pro forma consolidated condensed balance sheet as of November 30, 1997 (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(3) Notes to unaudited pro forma consolidated condensed financial statements (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(4) Unaudited pro forma Tokheim Corporation consolidated condensed statement of earnings for the year ended November 30, 1997 (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(5) Unaudited pro forma Tokheim Corporation consolidated condensed balance sheet as of November 30, 1997 (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(6) Notes to unaudited pro forma Tokheim Corporation consolidated condensed financial statements (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 5 (c) Other Exhibits -(1) Master Agreement for Purchase and Sale of Shares, Assets, and Liabilities, dated as of June 19, 1998, between Tokheim and Schlumberger (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(2) Amendment No. 1 to the Master Agreement for Purchase and Sale of Shares, Assets and Liabilities, dated as of September 30, 1998 between Tokheim and Schlumberger (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(3) Securities Purchase Agreement, dated September 30, 1998, by Tokheim and Schlumberger (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(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). -(5) Senior Subordinated Note Indenture, dated as of September 30, 1998, among Tokheim, 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). -(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). -(7) Junior Subordinated Note Indenture, dated as of September 30, 1998, among Tokheim, 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). 6 -(8) Warrant to Purchase up to 19.9% of the Shares of Common Stock of Tokheim (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(9) Form of Roll-Over Note (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(10) Registration Rights Agreement, dated September 30, 1998, by Tokheim and Schlumberger (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(11) Note Purchase Agreement, dated as of September 30, 1998, among Tokheim, the Subsidiaries and the Purchasers (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). -(12) Amended and Restated Credit Agreement, dated as of September 30, 1998, among Tokheim, 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). -(13) Amendment No. 1 to Rights Agreement, dated as of September 30, 1998, between Tokheim 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). 7 RPS Division Combined Condensed Balance Sheets (Amounts in thousands) As of ---------------------------- September 30, December 31, 1998 1997 ------------- ------------ ASSETS: Current assets: Cash and cash equivalents..................... $ 9,728 $ 7,321 Accounts receivables, net..................... 82,181 102,540 Inventory, net................................ 69,317 58,859 Other current assets.......................... 13,669 11,872 -------- -------- Total current assets........................ 174,895 180,592 Property, plant & equipment, net................ 31,735 32,183 Other tangible assets........................... 1,056 1,326 Goodwill........................................ 49,792 51,757 Other noncurrent assets and deferred charges....................................... 2,864 3,576 -------- -------- Total assets................................ $260,342 $269,434 ======== ======== LIABILITIES AND EQUITY: Liabilities: Current liabilities: Current portion long-term debt.............. $ -- $ 46 Cash overdraft.............................. 2,289 12,614 Accounts payable and accruals............... 71,324 94,526 -------- -------- Total current liabilities................. 73,613 107,186 Postretirement benefits....................... 4,571 4,188 Minority interest............................. 162 133 Other long-term liabilities................... 3,191 3,657 -------- -------- Total liabilities......................... 81,537 115,164 Equity.......................................... 200,708 160,578 Equity and retained earnings deficit............ (21,903) (6,308) -------- -------- Total liabilities and stockholders' equity.................... $260,342 $269,434 ======== ======== 8 RPS Division Combined Condensed Statements of Income (Amounts in thousands) Nine Months Ended ---------------------------- September 30, September 30, 1998 1997 ------------- ------------- Unaudited Unaudited ------------- ------------- Net Sales......................................... $231,764 $231,978 Cost of sales..................................... 199,486 194,623 Selling, general, and administrative expenses..... 48,015 47,565 -------- -------- Operating loss.................................... (15,737) (10,210) Interest expense, net............................. 1,586 945 Other expense, net................................ 3,270 3,307 -------- -------- Loss before income taxes.......................... (20,593) (14,462) Income tax benefit................................ (4,863) (5,246) -------- -------- Net loss.......................................... $(15,730) $ (9,216) ======== ======== 9 RPS Division Combined Condensed Statements of Cash Flows (Amounts in thousands)
Nine Months Ended ------------------------------- September 30, September 30, 1998 1997 ------------- ------------- Unaudited Unaudited ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss................................................................. $(15,730) $ (9,216) Adjustment to reconcile net loss to cash provided from (used in) operations: Depreciation and amortization.......................................... 8,766 8,476 Changes in assets and liabilities, net of effect of acquired businesses Receivables, net...................................................... (14,925) 28,108 Inventories........................................................... 10,458 588 Accounts payable and accrued liabilities.............................. (23,065) (34,529) Prepaid and refundable income taxes................................... (1,245) (1,330) Other assets and liabilities, net..................................... 4,309 16,479 -------- -------- Net cash provided from (used in) operations.............................. (31,432) 8,576 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Plant and equipment additions............................................ (4,951) (6,810) Other, net............................................................... (1,319) 4,047 -------- -------- Net cash used in investing activities.................................... (6,270) (2,763) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in equity..................................................... 40,127 (8,677) Decrease in term debt, net............................................... (18) (502) -------- -------- Net cash provided from (used in) financing activities.................... 40,109 (9,179) -------- -------- CASH AND CASH EQUIVALENTS: Increase (decrease) in cash and cash equivalents......................... 2,407 (3,366) Cash and cash equivalents, beginning of year............................. 7,321 5,445 -------- -------- Cash and cash equivalents, end of period................................. $ 9,728 $ 2,079 ======== ========
10 The following unaudited pro forma consolidated condensed financial statements (the "Pro Forma Financial Statements") of the Company are derived from the unaudited interim financial statements of Tokheim and the RPS Division and have been adjusted to illustrate the effects of the Acquisition and related Refinancing. The Pro Forma Financial Statements and accompanying notes should be read in conjunction with the consolidated financial statements of Tokheim and the combined financial statements of the RPS Division, including the notes thereto. The pro forma statement of earnings includes the RPS Division's combined statement of income for the nine months ended August 31, 1998 and Tokheim's consolidated statement of earnings for the nine months ended August 31, 1998. The pro forma balance sheet includes the RPS Division's combined balance sheet as of September 30, 1998 and Tokheim's consolidated balance sheet as of August 31, 1998. These Pro Forma Financial Statements give effect to the Acquisition and related Refinancing, and related purchase accounting adjustments, as if these events had taken place on December 1, 1997 for the statement of earnings and on August 31, 1998 for the balance sheet. The Pro Forma Financial Statements are not necessarily indicative of either future results of operations or the results that might have occurred if the foregoing Acquisition and Debt refinancing had been consummated on the indicated dates. The Acquisition has been accounted for using the purchase method of accounting, therefore the RPS Division's equity has been eliminated in the Pro Forma Financial Statements. The allocation of the aggregate purchase price included in the Pro Forma Financial Statements is preliminary. EXHIBIT (b) Unaudited Pro Forma Consolidated Condensed Statement of Earnings for the nine months ended August 31, 1998 (Amounts in thousands)
Refinancing Tokheim (a) And Pro Forma for RPS RPS Acquisition Refinancing & RPS Division Division Tokheim Pro Forma RPS Division Division Adjustments Adjusted Corporation Adjustments Acquisition -------- ----------- -------- ----------- ----------- ------------- Net sales................................. $249,368 $ -- $249,368 $291,997 $ -- $541,365 Cost of sales, exclusive of items listed below....................... 209,622 (4,725) 204,897 213,975 (638)(b) 418,234 Selling, general, and administrative expenses.................. 45,154 (9,096) 36,058 53,192 -- 89,250 Depreciation and amortization............ 2,926 2,874 5,800 7,799 4,435 (c) 18,034 Merger and acquisition costs and other unusual items............................ -- 475 475 6,596 -- 7,071 --------- --------- -------- -------- -------- -------- Operating profit (loss)................... (8,334) 10,472 2,138 10,435 (3,797) 8,776 Interest expense, net..................... 1,333 -- 1,333 9,882 26,132 (d) 37,347 Other expense (income), net............... 3,509 (25) 3,484 (856) -- 2,628 --------- --------- -------- -------- -------- -------- Loss before income taxes and extraordinary loss................... (13,176) 10,497 (2,679) 1,409 (29,929) (31,199) Income taxes.............................. (4,703) 3,737 (966) 1,658 -- 692 --------- --------- -------- -------- -------- -------- Earnings (loss) before extraordinary loss..................................... $ (8,473) $ 6,760 $ (1,713) $ (249) $(29,929) $(31,891) --------- --------- -------- -------- -------- -------- Preferred stock dividends ($1.94 per share)........................ $ (1,113) $ (1,113) -------- -------- Loss before extraordinary loss applicable to common stock............... $ (1,362) $(33,004) ======== ========
EXHIBIT (b) Unaudited Pro Forma Consolidated Condensed Balance Sheet as of August 31, 1998 (Amounts in thousands)
Refinancing Tokheim (e) And Pro Forma RPS RPS Acquisition Refinancing & RPS Division Division Tokheim Pro Forma RPS Division Division Adjustments Adjusted Corporation Adjustments Acquisition -------- ----------- -------- ----------- ------------ ---------------- ASSETS: Current assets: Cash and cash equivalents...... $ 9,728 $ (9,728) $ -- $ 10,095 $ (1,250)(l) $ 8,845 Accounts receivables, net...... 82,181 (1,270) 80,911 79,243 -- 160,154 Inventory...................... 69,317 -- 69,317 63,580 -- 132,897 Other current assets........... 13,669 -- 13,669 6,691 -- 20,360 -------- -------- -------- -------- --------- -------- Total current assets......... 174,895 (10,998) 163,897 159,609 (1,250) 322,256 Property, plant & equipment, net............................. 31,735 -- 31,735 44,812 -- 76,547 Other tangible assets............ 1,056 -- 1,056 3,368 -- 4,424 Goodwill......................... 49,792 (49,792) -- 71,416 236,515 (f) 307,931 Other noncurrent assets and deferred charges................ 2,864 -- 2,864 17,824 5,086 (g) 25,774 -------- -------- -------- -------- --------- -------- Total assets................. $260,342 $(60,790) $199,552 $297,029 $240,351 $736,932 ======== ======== ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Current liabilities: Current portion long-term debt......................... $ -- $ -- $ -- $ 2,254 $ -- $ 2,254 Notes payable, bank........... -- -- -- 336 -- 336 Cash overdraft................ 2,289 (2,289) -- 12,733 -- 12,733 Accounts payable and accruals..................... 71,324 (527) 70,797 91,918 27,916 (h) 190,631 -------- -------- -------- -------- --------- -------- Total current liabilities.... 73,613 (2,816) 70,797 107,241 27,916 205,954 Long-term debt................. -- -- -- 4,081 4,081 Bank credit agreement.......... -- -- -- 19,259 163,139 (i) 182,398 Senior subordinated notes...... -- -- -- 55,000 137,500 (i) 192,500 Guaranteed ESOP obligation..... -- -- -- 7,615 -- (i) 7,615 Junior subordinated PIK notes......................... -- -- -- -- 40,000 (i) 40,000 Postretirement benefits........ 4,571 -- 4,571 14,216 -- 18,787 Minimum pension liability...... -- -- -- 2,173 -- 2,173 Minority interest.............. 162 -- 162 1,204 -- 1,366 Other Lt. liabilities.......... 3,191 -- 3,191 3,901 -- 7,092 -------- -------- -------- -------- --------- -------- Total liabilities............ 81,537 (2,816) 78,721 214,690 368,555 661,966 Common stock warrants............ -- -- -- -- 20,000 (j) 20,000 Redeemable convertible Preferred stock................. -- -- -- 24,000 -- 24,000 Guaranteed ESOP obligation....... -- -- -- (7,615) -- (7,615) Preferred treasury stock at cost......................... -- -- -- (4,927) -- (4,927) -------- -------- -------- -------- --------- -------- Total preferred equity......... -- -- -- 11,458 11,458 Common stock..................... 200,708 -- 200,708 89,581 (200,708)(k) 89,581 Minimum pension liability........ -- -- -- (2,173) -- (2,173) Foreign currency translation adjustments..................... -- -- -- (19,341) -- (19,341) Retained earnings (accumulated deficit)........................ (21,903) (57,974) (79,877) 3,506 52,504 (m) (23,867) Common treasury stock at cost.... -- -- -- (692) -- (692) -------- -------- -------- -------- --------- -------- Total common equity............ 178,805 (57,974) 120,831 70,881 (148,204) 43,508 -------- -------- -------- -------- --------- -------- Total liabilities and stockholders' equity........ $260,342 $(60,790) $199,552 $297,029 $240,351 $736,932 ======== ======== ======== ======== ======== ========
Note 1: Though not reflected in the Unaudited Pro Forma Consolidated Condensed Statement of Earnings, Tokheim believes that through successful integration and consolidation of the RPS Division estimated cost savings of approximately $47.3 million can be achieved per annum after three years. (a) The adjustments to the RPS Division's financial statements reflect amounts that have been reclassified to conform to Tokheim's presentation and to remove certain costs associated with operations as a division of Schlumberger. The details of these reclassifications and adjustments are as follows: Cost of sales: Reclassification of manufacturing depreciation and amortization to depreciation and amortization........... $ (4,200) Reflects an adjustment to operations of Schlumberger's Abbeville facility for nine months of 1998 which will not be purchased by Tokheim............. (525) -------- Total adjustments and reclassification from cost of sales........................................... (4,725) -------- Selling, general, and administrative expenses: Adjustments to management and technical fees charged by Schlumberger to its subsidiaries net of expenses Tokheim expects to incur.................... (7,021) Reclassification of selling, general and administrative depreciation and amortization to depreciation and amortization........................... (1,600) Reclassification of personnel reductions (restructuring) to merger and acquisition costs and other unusual items..................................... (475) -------- Total adjustments and reclassification from selling, general and administrative expenses................ (9,096) -------- Depreciation and amortization: Reclassification of manufacturing and amortization........ 4,200 Reclassification of selling, general and administrative depreciation and amortization............ 1,600 Elimination of preexisting goodwill amortization that Tokheim is not purchasing.......................... (2,926) -------- Total adjustments and reclassification to depreciation and amortization...................... 2,874 -------- Merger and acquisition costs and other unusual items: Reclassification of personnel reductions (restructuring) from selling, general and administrative expenses................................. 475 -------- Total reclassification to merger and acquisition cost and other unusual items........... 475 -------- Other expense (income), net: Elimination of the minority interest in net earnings. Tokheim acquired 100% of all RPS subsidiaries........... $ 25 -------- Effect of all adjustments on pretax income..................... 10,497 Tax effect on adjustments using the RPS Division's reported tax rate of 35.6%............................................ 3,737 -------- Effect of all adjustments on net earnings............ $ 6,760 ========
(b) Reflects a pro forma adjustment for technology and licensing fees contractually payable by Schlumberger to Tokheim. These fees relate to certain services and licenses provided to Schlumberger by Tokheim. The contract is noncancelable and requires minimum annual payments of $850 per annum to Tokheim over the next 5 years. This amount represents nine months of payments....................................................... $ 638 ======== (c) The pro forma adjustment represents the amortization of purchased goodwill associated with the Acquisition as follows: Anticipated Nine Month Gross Amortization Amortization Amount Period Amount ----------- ------------ ------------ Purchased goodwill (based on a preliminary estimate of purchase price allocation)............... $ 236,515 40 years $ 4,435 ========== ========
(d) The pro forma adjustments to interest expense, net, were calculated as follows: Tokheim's historical interest expense, net........................................................... $ 9,882 RPS Division's historical interest expense, net...................................................... 1,333 ------- Total............................................................................... 11,215 Plus: Interest expense on borrowings under: New Bank Credit Agreement ($188,600 at interest rates ranging from 7.65% to 9.9%, spread between three different Facilities)...................................................................... 13,948 12.0% Senior Subordinated Seller Notes............................................................. 15,442 12.5% Senior Subordinated Notes.................................................................... 2,194 12.0% Junior Subordinated Seller PIK Note.......................................................... 3,633 ------- Total............................................................................... 35,217 Less: Interest expense on: Tokheim debt being refinanced: Existing Bank Credit Agreement................................................................... (1,968) 11 1/2% Senior Subordinated Notes due 2006....................................................... (6,086) RPS Division....................................................................................... (1,333) ------- Total............................................................................... (9,387) ------- Sub-total.................................................................................... 37,045 Amortization of deferred financing costs: Remove: Existing Credit Agreement........................................................................ (880) 11 1/2% Senior Subordinated Notes................................................................ (311) Add: New Credit Agreement............................................................................. 1,199 12.5% Senior Subordinated Notes due 2005......................................................... 294 ------- Pro forma interest expense, net...................................................................... $37,347 =======
Interest expense, net, includes that portion of interest with respect to the Guaranteed ESOP Obligation which is not paid through dividends on, or redemptions of, the ESOP Preferred Stock.
(e) The following table summarizes the adjustments made to the RPS Division's audited financial statements to conform them to the terms and conditions as outlined in the Purchase Agreement. Assets: Cash not being purchased................................................................................ $ (9,728) Reduction of accounts receivable for related party receivables not being purchased...................... (1,270) Pre existing goodwill not being purchased............................................................... (49,792) -------- Total adjustments to assets........................................................................ $(60,790) ======== Liabilities: Cash overdraft not being assumed........................................................................ $ (2,289) Reduction of accounts payable and accruals for related party payables not being assumed................. (527) -------- Total adjustments to liabilities................................................................... $ (2,816) Shareholders' Equity: Net adjustment to retained earnings for the above adjustments of assets and liabilities................. (57,974) -------- Total adjustments to liabilities and shareholders' equity.......................................... $(60,790) ======== (f) This amount represents the excess of cost over the fair value of the net assets (goodwill) of the RPS Division acquired. Total purchase price of the RPS Division.................................................................... $335,000 Purchase price adjustment for personnel reduction expenses to be reimbursed by Schlumberger............... (5,000) -------- Adjusted purchase price................................................................................. 330,000 Book value of the RPS Division net assets, as adjusted, which is expected to approximate fair value....... 120,831 -------- Excess of cost over fair value of net assets acquired..................................................... 209,169 Direct costs associated with the Acquisition: Legal and financial advisory fees....................................................................... 4,000 Direct acquisition costs (see note below)............................................................... 23,346 -------- Total Goodwill.......................................................................................... $236,515 ========
(g) This amount represents the pro forma adjustment necessary to reflect the Company's write-off of previous unamortized debt issuance cost and the capitalization of the new debt issuance costs associated with the new financing plan. The existing issuance costs will be written-off as a charge to extraordinary loss from debt extinguishment in the period incurred. Write-off of deferred issuance costs associated with the Existing Bank Credit Agreement..................... $ (4,467) Write-off of deferred issuance costs associated with the 11 1/2% Senior Subordinated Notes.................. (2,647) -------- Sub-total................................................................................................ (7,114) Capitalization of deferred issuance costs associated with the New Bank Credit Agreement..................... 9,450 Capitalization of deferred issuance costs associated with the 12.5% Senior Subordinated Notes............... 2,750 -------- Net adjustment to reflect the fees associated with the financing of the Acquisition and refinancing of existing debt........................................................................................ $ 5,086 ======== The deferred debt issuance costs associated with the New Credit Agreement and the 12.5% Senior Subordinated Notes due 2005 will be amortized over the life of the respective agreements on a straight line basis. (h) Pro forma adjustment to accounts payable and accruals: Accrued interest on $55.000 of 11 1/2% Senior Subordinated Notes due 2006 to be redeemed.................... $ (2,107) Accruable restructuring expenses............................................................................ 6,677 Accrued integration plan costs.............................................................................. 23,346 -------- $ 27,916 ======== Included in accrued liabilities are certain costs Tokheim believes will be spent to close down redundant operations in connection with the reorganization and rationalization of the RPS Division. The table below summarizes the deferred costs included in goodwill and accrued liabilities as they relate to the integration plan for the RPS Division. The amounts do not include costs associated with consolidation of previously existing Tokheim subsidiaries, which will be expensed as incurred, nor do these costs benefit production in future periods. Personnel reductions........................................................................................ $ 18,466 Closure of redundant facilities............................................................................. 4,880 -------- Total.................................................................................................... $ 23,346 ======== In addition to the above expenditures, the Company expects to spend approximately $900 for capital projects with future benefits. The Company estimates future accruable restructuring charges related to the integration plan at approximately $6,677. In addition, nonaccruable operating charges associated with the plan, which will be expensed as incurred, are estimated at $1,250. These amounts have been aggregated and shown as a reduction of cash of $1,250, an increase in accrued expenses of $6,677 and an aggregate reduction of retained earnings of $7,927. (see also Note below)
(i) This amount reflects the repayment of existing Tokheim debt and RPS Division purchase price with the proceeds of the Senior Notes and borrowings under the New Bank Credit Agreement. Borrowings under the New Bank Credit Agreement............ $182,398 Borrowings under the New Bank Credit Agreement (refinance preferred ESOP obligation).............................. 7,615 Issuance of 12.0% Senior Subordinated Note ............... 170,000 Issuance of 12.0% Junior Subordinated PIK Note due 2008... 40,000 Issuance of 12.5% Senior Note due 2005.................... 22,500 Repay: Borrowings under the Existing Bank Credit Agreement....... (19,259) Borrowings under the Existing Bank Credit Agreement (refinance preferred ESOP obligation)................... (7,615) 11 1/2% Senior Subordinated Notes due 2006.............. (55,000) -------- Net Adjustment to reflect Acquisition financing and the application of proceeds to repay existing debt...................................... $340,639 ======== (j) Amounts represent the elimination of the RPS Division's existing net book value (see also Note below). (k) Per the terms of the letter agreement, the Company has financed $20,000 of the purchase price by issuing Schlumberger a warrant to purchase, for a nominal value, shares of Tokheim common stock. The number of shares for which the warrant may be exercised equals the number of shares whose value of the average closing price thirty days prior to and thirty days after closing equals $20,000 but, not to exceed 19.9% of the total outstanding shares of the Company at the closing date. The Company has the option, subject to bank approval, to repurchase the warrants at Par Value. (l) Adjustments to retained earnings (accumulated deficit) are as follows: Extraordinary loss from debt extinguishment: Write-off deferred issuance costs associated with the Existing Bank Credit Agreement...................... $ (4,467) Write-off deferred issuance costs associated with the 11 1/2% Senior Subordinated Notes....................... (2,647) Premiums paid to redeem 11 1/2% Senior Subordinated Notes at the redemption percentage of 120.473% plus Consent payment......................................... (12,332) -------- Total extraordinary loss from debt extinguishment.... (19,446) Other: Accruable restructuring expenses.......................... (6,677) Non accruable restructuring expenses...................... (1,250) RPS Division accumulated deficit eliminated in consolidation........................................... 79,877 -------- Total adjustment to accumulated deficit.............. $ 52,504 ========
Note: Dividends are payable on the Company's ESOP Preferred Stock, the proceeds of which are used to service the Guaranteed ESOP Obligation -----END PRIVACY-ENHANCED MESSAGE-----