FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended SEPTEMBER 30, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number 1-5599
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GREAT DANE HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 54-0698116
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(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
2016 North Pitcher Street, Kalamazoo, Michigan 49007
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (616) 343-6121
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Indicate by check mark whether Registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
----- -----
There were 1,000 shares of Registrant's only class of common stock outstanding
as of November 9, 1994.
<PAGE-1>
INDEX
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
Page Number
-----------
PART I FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheets at December 31, 1993
and September 30, 1994 . . . . . . . . . . . . . . . . . . . .2-3
Consolidated Statements of Operations for
the Three Months Ended September 30, 1993
and September 30, 1994 . . . . . . . . . . . . . . . . . . . . .4
Consolidated Statements of Operations for
the Nine Months Ended September 30, 1993
and September 30, 1994 . . . . . . . . . . . . . . . . . . . . .5
Consolidated Statements of Cash Flows for
the Nine Months Ended September 30, 1993
and September 30, 1994 . . . . . . . . . . . . . . . . . . . .6-7
Notes to Consolidated Financial Statements . . . . . . . . . 8-10
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . .11-14
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security-Holders. . . . . . 15
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 15
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE-2>
Balance-Sheets
CONSOLIDATED BALANCE SHEETS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except share and per share amounts)
(unaudited)
December 31, September 30,
1993 1994
------------- -----------
ASSETS
Cash and cash equivalents $ 40,078 $ 33,771
Accounts receivable, less allowance for
doubtful accounts of $748 (1993) and
$1,328 (1994) 75,701 100,180
Inventories 94,112 100,669
Other current assets 11,823 12,240
---------- ----------
Total current assets 221,714 246,860
Property, plant and equipment, net 122,355 118,274
Insurance Subsidiary's investments 90,838 89,302
Insurance Subsidiary's reinsurance
receivable 11,378 8,202
Cost in excess of net assets acquired,
net of accumulated amortization of $6,252
(1993) and $7,189 (1994) 43,743 42,806
Trademark, net of accumulated amortization
of $1,750 (1993) and $2,013 (1994) 11,696 11,433
Other assets 15,612 14,243
---------- ----------
Total Assets $ 517,336 $ 531,120
========== ==========
<PAGE-3>
Balance-Sheets--Continued
CONSOLIDATED BALANCE SHEETS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except share and per share amounts)
(unaudited)
December 31, September 30,
1993 1994
------------ -------------
LIABILITIES AND SHAREHOLDERS' DEFICIT:
Accounts payable $ 77,876 $ 83,708
Notes payable 5,000 5,000
Income taxes payable 7,726 9,686
Accrued compensation 15,838 19,480
Accrued interest 11,746 6,224
Other accrued liabilities 38,071 45,977
Current portion of long-term debt 14,321 40,612
---------- ----------
Total current liabilities 170,578 210,687
Long-term debt, excluding current portion:
Shareholders 30,000 30,000
Other 246,952 206,118
---------- ----------
276,952 236,118
Insurance Subsidiary's unpaid losses and
loss adjustment expenses 71,179 69,677
Unearned insurance premiums 9,547 13,796
Deferred income taxes 9,803 2,796
Postretirement benefits other than pensions 49,609 50,703
Other noncurrent liabilities 39,053 41,588
Minority interest 40,132 39,839
---------- ----------
Total liabilities 666,853 665,204
Shareholders' deficit--Note A:
Common stock, par value $1.00:
Authorized 3,000 shares
Outstanding 1,000 shares 1 1
Additional paid-in capital 14,999 14,999
Retained-earnings deficit (36,217) (19,130)
Unrealized appreciation (depreciation) on
Insurance Subsidiary's investments in
certain debt and equity securities--
Note F 73 (1,581)
Notes receivable from shareholders (625) (625)
Amount paid in excess of Checker's
net assets (127,748) (127,748)
---------- ----------
Total shareholders' deficit (149,517) (134,084)
---------- ----------
Total Liabilities and
Shareholders' Deficit $ 517,336 $ 531,120
========== ==========
See notes to consolidated financial statements.
<PAGE-4>
Statements of Operations--3 Months
CONSOLIDATED STATEMENTS OF OPERATIONS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended September 30,
1993 1994
---------- ----------
Revenues $ 230,655 $ 256,679
Cost of revenues (199,529) (217,184)
---------- ----------
Gross profit 31,126 39,495
Selling, general and administrative expense (20,826) (26,683)
Interest expense (10,395) (10,221)
Interest income 1,775 1,813
Other income (expense), net (340) 13
---------- ----------
Income before minority equity and
income taxes 1,340 4,417
Minority equity --- (217)
---------- ----------
Income before income taxes 1,340 4,200
Income tax expense (1,876) (1,890)
---------- ----------
Net income (loss) $ (536) $ 2,310
========== ==========
Weighted average number of shares used in
per share computations--Note A 1,000 1,000
========== ==========
Net income (loss) per share--Note A $ (536) $ 2,310
========== ==========
See notes to consolidated financial statements.
<PAGE-5>
Statements of Operations--9 Months
CONSOLIDATED STATEMENTS OF OPERATIONS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except share and per share amounts)
(unaudited)
Nine Months Ended September 30,
1993 1994
---------- ----------
Revenues $ 660,995 $ 805,981
Cost of revenues (566,759) (680,672)
---------- ----------
Gross profit 94,236 125,309
Selling, general and administrative expense (61,138) (69,400)
Interest expense (31,400) (30,414)
Interest income 5,652 5,214
Other income (expense), net (26) 779
Special charge--Note G (7,500) ---
---------- ----------
Income (loss) before minority equity,
income taxes and accounting changes (176) 31,488
Minority equity --- (420)
---------- ----------
Income (loss) before income taxes
and accounting changes (176) 31,068
Income tax benefit (expense) 246 (13,981)
---------- ----------
Income before accounting changes 70 17,087
Accounting changes, net of income taxes (46,626) ---
---------- ----------
Net income (loss) $ (46,556) $ 17,087
========== ==========
Weighted average number of shares used in
per share computations--Note A 1,000 1,000
========== ==========
Income (loss) per share--Note A:
Before accounting changes $ 70 $ 17,087
Accounting changes (46,626) ---
---------- ----------
Net income (loss) per share $ (46,556) $ 17,087
========== ==========
See notes to consolidated financial statements.
<PAGE-6>
Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands)
(unaudited)
Nine Months Ended September 30,
1993 1994
---------- ----------
Cash flows from operating activities:
Net income (loss) $ (46,556) $ 17,087
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Accounting changes 46,626 ---
Depreciation and amortization 17,192 16,962
Deferred income tax benefit (8,717) (6,381)
Amortization of cost in excess of
net assets acquired 937 937
Amortization of debt discount 1,010 1,175
Net (gain) loss on sale of property,
plant and equipment 82 (483)
Investment gains (317) (265)
Other noncash charges 5,491 7,606
Changes in operating assets and
liabilities:
Accounts receivable (21,203) (25,124)
Finance lease receivables 3,482 1,484
Inventories (10,574) (6,557)
Insurance Subsidiary's reinsurance
receivable 7,117 3,176
Other assets (653) (2,096)
Accounts payable 9,882 5,832
Income taxes (846) 3,060
Unpaid losses and loss adjustment
expenses (5,387) (1,502)
Unearned insurance premiums (289) 4,249
Postretirement benefits other
than pensions --- 1,094
Other liabilities 9,918 2,012
---------- ----------
Net cash flow provided by operating
activities 7,195 22,266
<PAGE-7>
Statements of Cash Flows--Continued
CONSOLIDATED STATEMENTS OF CASH FLOWS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands)
(unaudited)
Nine Months Ended September 30,
1993 1994
---------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment $ (16,862) $ (13,891)
Proceeds from disposal of property, plant
and equipment and other productive assets 2,434 1,493
Purchase of investments available for sale --- (7,420)
Purchases of investments held to maturity (44,820) (90,176)
Proceeds from sale of investments available
for sale --- 2,383
Proceeds from maturity or redemption of
investments held to maturity 48,614 95,060
Other 121 409
---------- ----------
Net cash flow used in investing activities (10,513) (12,142)
Cash flows from financing activities:
Proceeds from borrowings 6,963 ---
Repayments of borrowings (13,335) (15,718)
Return of limited partner's capital (665) (713)
---------- ----------
Net cash flow used in financing activities (7,037) (16,431)
---------- ----------
Decrease in cash and cash equivalents (10,355) (6,307)
Beginning cash and cash equivalents 42,199 40,078
---------- ----------
Ending cash and cash equivalents $ 31,844 $ 33,771
========== ==========
See notes to consolidated financial statements.
<PAGE-8>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SEPTEMBER 30, 1994
(unaudited)
NOTE A--SUBSEQUENT EVENT
On October 19, 1994, International Controls Corp. ("ICC") changed its name
and its jurisdiction of incorporation through a merger into its wholly-owned
subsidiary, Great Dane Holdings Inc. ("the Company"), a Delaware
corporation. Each of the outstanding shares of common stock of ICC was
converted into the pro rata portion of 1,000 shares of common stock, $1.00
par value per share, of the Company. As a result of the above, the Company
has 3,000 shares of $1 par value common stock authorized and 1,000 shares
issued and outstanding. All share and per share data and affected amounts
have been adjusted to reflect these changes as though they had occurred at
the beginning of the earliest period presented.
NOTE B--BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for
interim financial information, the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In Management's opinion, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the nine months
ended September 30, 1994, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1994. For further
information, refer to the audited consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1993.
NOTE C--PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Great Dane
Holdings Inc. and its subsidiaries, including Checker Motors Co., L.P. (the
"Partnership") and the Partnership's wholly-owned subsidiaries, including
American Country Insurance Company ("Insurance Subsidiary" or "Country").
NOTE D--INVENTORIES
Inventories are summarized below (dollars in thousands):
December 31, September 30,
1993 1994
-------------- --------------
Raw materials and supplies $ 53,105 $ 60,898
Work-in-process 10,956 20,779
Finished goods 30,051 18,992
---------- ----------
$ 94,112 $ 100,669
========== ==========
<PAGE-9>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(unaudited)
NOTE E--INCOME TAXES
The Company's estimated effective tax rate differs from the statutory rate
because of state income taxes as well as the impact of the reporting of
certain income and expense items in the financial statements which are not
taxable or deductible for income tax purposes. The values of assets and
liabilities acquired in a transaction accounted for as a purchase are
recorded at estimated fair values which result in an increase in the net
asset value over the tax basis for such net assets.
NOTE F--ACCOUNTING CHANGES
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." In accordance with this
statement, prior period financial statements have not been restated to
reflect the change in accounting principle. The opening balance of total
shareholders' deficit was decreased by $1.4 million (net of $0.8 million in
deferred income taxes) to reflect the net unrealized holding gains on
securities classified as available-for-sale previously carried at amortized
cost or lower of cost or market.
Effective January 1, 1994, the Company adopted the provisions of SFAS No.
112, "Employers' Accounting for Postemployment Benefits." The adoption of
this SFAS did not affect net income. In accordance with this Statement,
prior period financial statements have not been restated to reflect the
change in accounting principle.
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Company recorded a charge of $29.7 million (net of taxes of
$16.5 million), or $29,761 per share, during the quarter ended March 31,
1993 to reflect the cumulative effect of this change in accounting
principle.
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
109, "Accounting for Income Taxes." The Company recorded a charge of $16.9
million, or $16,863 per share, during the quarter ended March 31, 1993, to
reflect the cumulative effect of this change in accounting principle.
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
113, "Accounting and Reporting for Reinsurance of Short Duration and Long
Duration Contracts". Because of the type of insurance contracts the
Company's Insurance Subsidiary provides, the adoption of this statement had
no impact on earnings; however, it requires the disaggregation of various
balance sheet accounts.
<PAGE-10>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(unaudited)
NOTE G--CONTINGENCIES
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
the Company, together with three prior subsidiaries of the Company, as
defendants in Case No. CV89-119MA, United States District Court for the
District of Oregon. In that lawsuit, Boeing sought damages and declaratory
relief for past and future costs resulting from alleged groundwater
contamination at a location in Gresham, Oregon, where the three prior
subsidiaries of the Company formerly conducted business operations. On
December 22, 1993, the Company entered into a settlement with Boeing,
settling all claims asserted by Boeing in the lawsuit. Pursuant to the
settlement terms, the Company will pay Boeing $12.5 million over the course
of five years, at least $5 million of which has been committed by certain
insurance companies in the form of cash or irrevocable letters of credit.
In accordance with the settlement agreement, Boeing's claims against the
Company and the three former subsidiaries have been dismissed with prejudice
and Boeing has released and indemnified the Company with respect to certain
claims. The Company recorded a $7.5 million pre-tax special charge in
connection with this matter.
On March 4, 1992, Checker received notice that the Insurance Commissioner of
the State of California, as Conservator and Rehabilitator of Executive Life
Insurance Company of California ("ELIC"), a limited partner of the
Partnership, had filed an Amendment to the Application for Order of
Conservation filed in Superior Court of the State of California for the
County of Los Angeles (the "Court"). The amendment seeks to add to the
Order, dated April 11, 1991, Checker, the Partnership and Checker Holding
Corp. III ("Holding III"), a limited partner of the Partnership. The
amendment alleges that the action by Checker invoking provisions of the
Partnership Agreement that alter ELIC's rights in the Partnership upon the
occurrence of certain events is improper and constitutes an impermissible
forfeiture of ELIC's interest in the Partnership and a breach of fiduciary
duty to ELIC. The amendment seeks (a) a declaration of the rights of the
parties in the Partnership and (b) damages in an unspecified amount. The
Partnership believes that it has meritorious defenses to the claims of ELIC.
On April 15, 1994, the Company and the Conservator entered into a letter
agreement pursuant to which the Company agreed to purchase ELIC's interest
in the Partnership for $37 million. The letter agreement has been approved
by the Court. If the purchase has not been consummated prior to January 21,
1995, ELIC will be readmitted as a partner. If ELIC was readmitted as a
partner, minority interest would have been approximately $3.0 million higher
as of September 30, 1994, as a result of a corresponding charge to minority
equity in the income statement.
<PAGE-11>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Available cash and cash equivalents, cash flow generated from operations
($7.2 million and $22.3 million for the nine months ended September 30, 1993 and
1994, respectively), proceeds from borrowings and proceeds from disposal of
assets have provided sufficient liquidity and capital resources for the Company
to conduct its operations during the first nine months of 1993 and 1994.
From the time that present management assumed control of the Company in
January 1989, it has been continually reassessing the Company's financial
condition and prospects. The Company was hampered in its efforts to achieve a
refinancing of its debt in recent years, in part because of the Boeing
litigation. That lawsuit has now been settled. The Company has also been
engaged in litigation with the Conservator of ELIC, a limited partner in the
Partnership. A settlement agreement has been entered into with ELIC.
With the settlement of the Boeing litigation and a signed agreement to
settle the ELIC litigation, the ability of the Company to achieve a successful
refinancing was enhanced. Accordingly, the Company filed a Registration
Statement on Form S-1 with the Securities and Exchange Commission in connection
with an overall refinancing of the Company's outstanding indebtedness. On
August 10, 1994, the Company announced that, due to market conditions, it
postponed the proposed refinancing and would not complete the transaction on the
terms described in its registration statement.
Certain costs were incurred in connection with the refinancing efforts
which would have been capitalized and amortized over the life of the new loans.
Because this refinancing was not completed, those costs, which totaled
approximately $3.5 million (pre-tax), have been charged to income in the quarter
ended September 30, 1994.
The Company is a holding company and is, therefore, dependent on cash flow
from its subsidiaries in order to meet its obligations. The Company's operating
subsidiaries are required, pursuant to financing agreements with third parties,
to meet certain covenants, which may have the effect of limiting cash available
to the Company. The operating subsidiaries' plans indicate that sufficient
funds are anticipated to be available to the Company to meet its short-term
obligations.
The Company's Great Dane Subsidiary's debt agreement with certain banks
matures in March 1995. Accordingly, this debt is classified as a current
liability at September 30, 1994. Refinancing is anticipated to be accomplished
prior to maturity, and, accordingly, it is not anticipated that working capital
will be adversely affected.
Effective January 1, 1994, the Company adopted the provisions of SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities." In
accordance with this statement, prior period financial statements have not been
restated to reflect the change in accounting principle. The opening balance of
shareholders' deficit was decreased by $1.4 million (net of $0.8 million in
deferred income taxes) to reflect the net unrealized holding gains on securities
<PAGE-12>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
classified as available-for-sale previously carried at amortized cost or lower
of cost or market.
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
The impact of adopting SFAS No. 106 was a charge to net income of $29.7 million
(net of taxes of $16.5 million) which was recorded as a cumulative effect
adjustment in the quarter ended March 31, 1993.
The Company also adopted the provisions of SFAS No. 109, "Accounting for
Income Taxes," effective January 1, 1993. The impact of adopting SFAS No. 109
was a charge of net income of $16.9 million which was recorded as a cumulative
effect adjustment in the quarter ended March 31, 1993.
During the quarter ended March 31, 1993, the Company adopted the provisions
of SFAS No. 113, "Accounting and Reporting for Reinsurance of Short Duration and
Long Duration Contracts." Because of the type of insurance contracts Country
provides, the adoption of this statement had no impact on earnings; however, it
requires the disaggregation of various balance sheet accounts. For financial
reporting purposes, the 1992 balance sheet and statement of cash flows have been
restated as if SFAS No. 113 were adopted as of the beginning of the earlier
period presented.
Although the adoption of SFAS Nos. 106, 109, 113 and 115 has collectively
had a significant effect on the Company's financial position, it has not
adversely affected liquidity and capital resources.
Purchases of property, plant and equipment have averaged approximately
$18.0 million per year over the past three years and have been funded
principally by cash flow generated from operations as well as proceeds from
disposal of assets. Purchases of property, plant and equipment for 1994 and
1995 are anticipated to be approximately $21.4 million and $45.3 million,
respectively, and are expected to be funded principally by cash flow generated
from operations and borrowings.
During the fourth quarter of 1993, the Company entered into a settlement
of the Boeing litigation. The settlement ($12.5 million over five years) will
be paid by the Company through recoveries from insurance carriers, the sale of
assets of certain of the subsidiaries, cash currently on hand and cash flow
generated from operations.
General Motors Corporation ("GM"), a major customer of the Company's
automotive products segment, is resorting to many measures, including obtaining
significant price reductions from its suppliers, in an effort to reduce its
operating costs. Automotive products segment management believes that it has
adequately provided in its financial plans for any price reductions which may
result from its current discussions with GM. However, price reductions in
excess of those anticipated could have a material adverse effect on the
automotive products operations.
<PAGE-13>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
Three Months Ended September 30, 1994,
Compared to Three Months Ended September 30, 1993
-------------------------------------------------
Revenues increased $26.0 million during the three months ended September
30, 1994, as compared to the same period of 1993. The higher revenues are
principally attributed to higher Trailer Manufacturing revenues ($13.1 million),
primarily associated with higher volume of sales and higher selling prices
within the segment. Automotive Products revenues increased $9.7 million during
the three months ended September 30, 1994, as compared to the same period in
1993. General increases in volume to accommodate automotive customers' demands
and increased revenues from additional jobs were the principal reasons for the
revenue increases.
The Company's operating profit (gross profit less selling, general and
administrative expenses) increased $2.5 million in the 1994 period compared to
the 1993 period. This increase is attributed to an increase of Trailer
Manufacturing operating profits ($5.3 million) which is principally due to
higher sales and improved margins and an increase of Automotive Products
operating profits ($1.8 million) principally due to higher sales and higher
margins. These increases in segment operating profits were offset by higher
corporate costs due to the postponed refinancing ($3.5 million) and other
increases in corporate costs.
During the quarter ended September 30, 1994, a $0.2 million charge was
recorded to reflect minority equity in South Charleston Stamping & Manufacturing
Company ("SCSM"), a subsidiary of Checker Motors Corporation. No minority
equity in SCSM was recorded in the previous year because of SCSM's shareholders'
deficit.
Income tax expense is higher for financial statement purposes than would
be computed if the statutory rate were used because of state income taxes and
the impact of the reporting of certain income and expense items in the financial
statements which are not taxable or deductible for income tax purposes.
Net income was $2.3 million for the three months ended September 30, 1994,
as compared to a $0.5 million net loss for the prior period. The improvement
in net income is attributed to the reasons mentioned above.
Nine Months Ended September 30, 1994
Compared to Nine Months Ended September 30, 1993
------------------------------------------------
Revenues increased $145.0 million during the nine months ended September
30, 1994, as compared to the same period of 1993. The higher revenues are
principally attributed to higher Trailer Manufacturing revenues ($117.0 mil-
lion), primarily associated with a higher volume of sales within the segment.
Automotive Products revenues increased $20.8 million during the nine months
ended September 30, 1994, as compared to the same period in 1993. General
<PAGE-14>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
increases in volumes to accommodate automotive customers' demands and additional
jobs were the principal reasons for the revenue increases.
The Company's operating profit increased $22.8 million in the 1994 period
compared to the 1993 period. This increase is attributed to an increase of
Trailer Manufacturing operating profits ($22.0 million) which is principally due
to improved margins and higher volume of sales and an increase of Automotive
Products operating profits ($4.0 million), which was principally due to higher
volumes of sales. These increases in operating profits were offset by higher
corporate costs due to the postponed refinancing ($3.5 million) and other
increases in corporate costs.
During the nine months ended September 30, 1993, the Company recorded a
$7.5 million pre-tax special charge relating to the Boeing litigation. No
similar charge was incurred in 1994.
During the nine months ended September 30, 1994, a $0.4 million charge was
recorded to reflect a minority equity in SCSM.
Income tax expense is higher for financial statement purposes than would
be computed if the statutory rate were used because of state income taxes as
well as the impact of the reporting of certain income and expense items in the
financial statements which are not taxable or deductible for income tax
purposes.
Net income was $17.1 million for the nine months ended September 30, 1994,
as compared to a $46.6 million net loss for the prior period. The improvement
in net income is attributed to the reasons mentioned above, as well as a one-
time charge ($46.6 million) incurred for the implementation of Statements of
Accounting Standards No. 106 and 109 which was recorded in the first quarter of
1993.
<PAGE-15>
PART II
OTHER INFORMATION
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
Item 4: Submission of Matters to a Vote of Security-Holders
On September 21, 1994, by unanimous written consent, the stockholders
of the Registrant approved a change of name and reincorporation of the
Registrant, which was consummated on October 19, 1994, through the merger
of the Registrant (then International Controls Corp., a Florida
corporation) into its newly-incorporated, wholly-owned subsidiary, Great
Dane Holdings Inc., a Delaware corporation.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
--------
EX-27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
<PAGE-16>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
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.
GREAT DANE HOLDINGS INC.
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(Registrant)
/s/ Marlan R. Smith
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Marlan R. Smith
Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Date: November 9, 1994