FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
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For the fiscal year ended DECEMBER 31, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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For the transition period from to
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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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Securities Registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Subordinated Discount Debentures American Stock Exchange, Inc.
Due January 1, 2006
12-3/4% Senior Subordinated Debentures American Stock Exchange, Inc.
Due 2001
Securities registered pursuant to Section 12(g) of the Act: None
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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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy of information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. X
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There were 1,000 shares of Registrant's only class of common stock
outstanding as of February 15, 1995.
There are no shares of voting stock held by non-affiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE: None
1
PART I
ITEM 1. BUSINESS
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A. OVERVIEW. Great Dane Holdings Inc. ("Holdings" or the "Company")
is a holding company and its business is conducted by its operating
subsidiaries. Through Great Dane Trailers, Inc. ("Great Dane"), the Company
is one of the largest manufacturer of truck trailers and intermodal
containers and chassis in the United States. In addition, through Checker
Motors Corporation ("Motors"), the Company is one of the leading independent
manufacturers of sheet metal stampings for automotive components and
subassemblies for sale to North American original equipment manufacturers
("OEMs"). The Company's other operations consist of its vehicular
operations, primarily its subsidiary, Yellow Cab Company ("Yellow Cab"),
which is currently the largest owner of taxicabs and provider of taxi-related
services in Chicago, Illinois, and its insurance operation, American Country
Insurance Company ("Country"), which underwrites property and casualty
insurance.
The Company was incorporated in 1959 under the laws of the State of
Florida and subsequently changed its name to International Controls Corp. On
January 1, 1989, the Company's continuing operations consisted solely of
Great Dane's truck trailer manufacturing operations. On January 11, 1989,
the Company acquired all of the outstanding capital stock of Motors.
Immediately following the acquisition of Motors by the Company, Checker
Holding Corp. ("Holding"), a privately-held company owned by substantially
all of the former shareholders of Motors, acquired all of the outstanding
capital stock of the Company (the "Holding Buyout"). Subsequently, Holding
was merged into the Company. The Holding Buyout has been accounted for as if
Motors acquired the Company (a "reverse acquisition"), since there was no
significant change in control of Motors. On October 19, 1994, the Company
changed its name to Great Dane Holdings Inc. and reincorporated in the State
of Delaware through a merger into a newly incorporated wholly-owned
subsidiary.
As of January 17, 1995, pursuant to a Plan of Reorganization (the
"Plan"), all of the assets (subject to the liabilities) of Checker Motors
Co., L.P. ("Checker L.P." or "the Partnership"), a Delaware limited
partnership in which Motors was the general partner, were distributed to
Motors, which contributed substantially all of such assets (subject to the
liabilities), except for the stock of Country, to three newly formed, wholly-
owned subsidiaries, Yellow Cab, Chicago AutoWerks Inc. ("Chicago AutoWerks")
and CMC Kalamazoo Inc. ("CMC Kalamazoo). In accordance with the Plan, Motors
was simultaneously reincorporated in Delaware through a merger with its
wholly-owned subsidiary organized solely for that purpose.
B. INFORMATION CONCERNING INDUSTRY SEGMENTS. Certain financial data
with respect to Registrant's industry segments appear in Note L of Notes to
Consolidated Financial Statements and are incorporated herein by reference.
As of December 31, 1994, the Company employed a total of 5,784 people.
The chart below details the number of persons employed as of that date in
each of the Company's industry segments:
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Administrative
Hourly and Executive
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Truck Trailer Manufacturing 3,756 571
Automotive Products Operations 888 163
Vehicular Operations 220 28
Insurance Operations 11 147
C. NARRATIVE DESCRIPTION OF BUSINESS.
TRUCK TRAILER MANUFACTURING.
Great Dane designs, manufactures and distributes a full line of truck
trailers and containers and chassis. In 1994, Great Dane, one of the largest
manufacturers of truck trailers and intermodal containers and chassis in the
United States, accounted for approximately 13% of the new truck trailer
market, 11.5% of the new van market, 11.5% of the new platform trailer
market, 38.4% of the new refrigerated van ("reefer") market and 18.8% of the
market for intermodal containers and chassis.
The national truck trailer market is fragmented and competitive due to
the relative ease of entrance (with the exception of the higher technology
refrigerated trailers). There are approximately 180 companies in the truck
trailer manufacturing industry. In 1994, the two largest companies, Great
Dane and Wabash National Corporation, accounted for approximately 24% of the
market and the ten largest companies accounted for approximately 66% of
sales. The basis of competition in the truck trailer industry is quality,
durability, price, warranties, service and relationships.
PRODUCTS
GENERAL. Great Dane's principal products include vans, reefers,
platform trailers and intermodal containers and chassis. Great Dane's
trailers and intermodal containers are manufactured in sizes ranging from 28
to 57 feet. In addition to this standard line of products, its flexible
assembly operations enable Great Dane to customize products for its customers
at premium prices.
VANS. Vans are used primarily for the transportation of dry
freight. Great Dane manufactures four primary types: sheet and post,
aluminum plate, ThermaCube and Fiberglass Reinforced Plastic Plywood. Great
Dane sells vans primarily to for-hire truckload carriers, private carriers
and leasing companies.
REEFERS. Great Dane's reefers are specialized products. The
Company believes that it is the only company to offer more than one type of
reefer. Great Dane currently manufactures three types of reefers.
PLATFORM TRAILERS. Platform trailers are flatbeds or open deck
trailers. Great Dane offers a full line of platform trailers, consisting of
drop frame, extendible, curtainside and straight frame trailers. Drop frame
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flatbeds are designed for heavy duty hauling where low deck heights are
required. Extendible flatbeds are used for self-supporting loads (e.g., pre-
stressed concrete). Curtainside flatbeds are used where side loading and
cover is required. The primary customers for Great Dane's platform trailers
are for-hire material haulers, which would include steel haulers, pre-
stressed concrete carriers and builders.
INTERMODAL CONTAINERS AND CHASSIS. In conjunction with the growth
of intermodal container transportation, Great Dane's engineers developed a
specialized container (which can be double stacked during rail transport) and
chassis that allow a trucking company to haul containerized loads which are
similar in size and weight to those carried on conventional over-the-road
trailers. These containers use either aluminum plate or the ThermaCube
technology, which is Great Dane's composite wall construction, to offer
greater inside width, higher cubic capacity and greater strength than can be
obtained by conventional sheet and post construction. Further, these
containers are 500 to 1,000 pounds lighter and the chassis are 1,000 to 1,500
pounds lighter than products now in use with similar carrying capacities.
The Company believes that it is one of the two largest U. S. manufacturers of
intermodal containers and chassis and the only domestic producer of reefer
containers.
MARKETING, DISTRIBUTION AND SALES
GENERAL. Great Dane's business includes aftermarket parts and
accessories sales, used trailer sales and retail services (including repair
and maintenance) which enable it to be a full-service provider. The parts
and service operations have historically been a stable source of higher
margin business.
Great Dane sells replacement parts and accessories through 51 full-
line dealers, 17 parts-only dealers and 17 Great Dane-owned branch
operations. Dealers and branches sell parts either over-the-counter or
through their respective retail services.
To be competitive in the sale of new trailers, it is often
necessary to accept used trailers in trade. Great Dane's larger retail
branches employ individuals who are responsible for trade-in appraisals and
selling used trailers. Great Dane believes that its nationwide distribution
system provides it with superior used trailer marketing capabilities.
Great Dane owns and operates 17 full-service retail branches, which
provide repair and maintenance services. These retail branches also provide
warranty support to Great Dane's customers.
MANUFACTURING AND OPERATIONS
MANUFACTURING. Great Dane has four manufacturing facilities,
located in Savannah, Georgia; Memphis, Tennessee; Wayne, Nebraska; and Brazil,
Indiana, and, in December 1994, acquired property and buildings in Terre
Haute, Indiana, for an additional manufacturing facility which is expected to
commence manufacturing in April 1995. Certain of Great Dane's
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manufacturing operations include flexible assembly lines that allow Great
Dane to customize its products in a cost-efficient manner.
RESEARCH AND DEVELOPMENT. Great Dane makes extensive use of
computer-aided design ("CAD") technology to support production engineering.
Great Dane's use of CAD technology accelerates the development of product
innovations and manufacturing efficiencies. Great Dane's new products must
meet strict quality and durability standards and must pass strenuous road
test procedures. Great Dane believes that it is the only trailer
manufacturer with on-site road simulation testing capability.
Great Dane has developed a new proprietary floor for its ThermaCube and
certain Classic reefers which will eliminate wood components, thereby
increasing the life of the floor, increasing the capacity of the reefer,
simplifying the manufacturing process and reducing the cost to manufacture
the reefer. Great Dane is also developing and testing a new line of ultra-
lightweight flatbeds intended to increase its market share.
SUPPLIES AND RAW MATERIALS. Purchased materials represent approximately
80% of direct cost of goods sold and are purchased on a centralized basis in
order to achieve economies of scale. Great Dane purchases a variety of raw
materials and sub-assemblies from various vendors with short-term contracts.
Aluminum, wood, tires, steel and refrigeration units account for a
significant portion of material costs. Great Dane has not experienced major
shortages in these materials, but prices may fluctuate. However, Great Dane
attempts to minimize purchased material price fluctuations by utilizing just-
in-time inventory systems, thereby coordinating the purchase of certain
materials with customer orders.
PATENTS, LICENSES AND TRADEMARKS
The Company believes its "Great Dane" trademark, which identifies all of
its products, to be of value and to contribute significantly to the wide
acceptance of its products.
BACKLOG
Truck trailer and container backlog was approximately $515 million at
December 31, 1994, and $365 million at December 31, 1993. The increase in
backlog is principally attributed to increased orders for truck trailers.
AUTOMOTIVE PRODUCTS OPERATIONS.
Through South Charleston Stamping & Manufacturing Company ("SCSM") and
CMC Kalamazoo, Motors develops, designs, engineers and manufactures a broad
range of sheet metal automotive components and subassemblies, including
tailgates, fenders, doors, roofs and hoods for sale to North American OEMs.
The majority of Automotive Products' Operations revenues are derived from
complex, value-added products, primarily assemblies containing multiple
stamped parts and various welded or fastened components.
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MANUFACTURING
Unlike certain of its smaller competitors, the Automotive Products
Operations have the equipment and versatility to produce a wide variety of
automotive stamping products, carrying out substantially all phases of a
project. Their principal products include tailgate and liftgate assemblies,
door assemblies, hood assemblies, fender assemblies, wheelhouses, pillars,
back panels, floor panels, deck lids, body side panels, roof outer panels and
related parts.
The major portion of tooling design, build and prototype for the
Automotive Products Operations is performed by selected suppliers under close
supervision.
MARKETING AND CUSTOMERS
The Automotive Products Operations focuses on the higher-growth light
truck, sport utility vehicle and van segments of the market and currently
supplies products primarily for GM which has, historically, accounted for
more than 95% of this segment's revenues. At the present time, Motors is
supplying parts on the following light truck/sport utility and minivan
vehicles: Suburban, Crew Cab, M Van (Astro and Safari), CK Pickup Truck, CK
Sport Side Pickup and Tahoe/Yukon. The automotive segment also supplies
parts for GM's service organization. Motors is also currently supplying
parts to Freightliner Corp. (Class 6 and 7 Truck), Saturn Corporation
(station wagon), Ford Motor Co. (Cougar) and Toyota (Camry and Avalon). In
addition, SCSM was awarded an eight-year contract with Mercedes-Benz to
produce the majority of the stamped parts for its new sports utility vehicle.
Mercedes-Benz is providing the funding necessary for the tooling to produce
these parts.
Shipments of customer orders from both SCSM and CMC Kalamazoo are made
on a daily or weekly basis as required by the customer. GM provides an
estimated 13-week shipping forecast which is used for material and
fabrication planning purposes. Nevertheless, changes in production by the
customer may be reflected in increases or decreases of these forecasts.
CMC Kalamazoo and SCSM are committed to customer satisfaction by
producing parts and providing the necessary support systems to assure
conformity to customer requirements. As evidence of success in these areas,
SCSM has been awarded GM's "Mark of Excellence" Award, and the GM Q.S.P.
(quality, service, price) award for being GM's worldwide Supplier of the Year
1993 for major sheet metal stampings. In addition, SCSM has been awarded ISO
9000 Certification by the International Standards Organization (ISO 9002).
The fabrication business is highly competitive and Motors competes with
numerous other industrial manufacturers, as well as with the in-house
capabilities of its customers (i.e., GM). The failure to obtain future
orders from GM could have a material adverse impact on the Automotive
Products operations despite the fact that the Company is expanding its
customer base. The automotive products industry is experiencing increased
pricing pressure from GM which is continuing its aggressive measures to
reduce its operating costs, including obtaining significant price reductions
from suppliers. Although opportunities for new business may arise as a
result of GM's pressure on other suppliers and, while the Company believes
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that it has adequately provided for any price reductions which may result
from discussions with GM in near-term financial plans, future earnings of the
automotive products operations may be materially adversely affected by
additional price reductions requested or required by GM.
VEHICULAR OPERATIONS.
Yellow Cab is the largest taxicab fleet owner in the City of Chicago
("Chicago") and, as of January 1, 1995, owned 2,271 or 41% of the 5,500
taxicab licenses ("licenses" or "medallions") available in Chicago. Yellow
Cab's primary business is the leasing of its medallions and vehicles to
independent taxi operators. Through its subsidiary, Chicago AutoWerks, the
Company also provides a variety of other services to taxi drivers and non-
affiliated medallion holders, including insurance coverage through Country
and repair and maintenance services.
THE OWNER-OPERATOR AND DAILY LEASE PROGRAMS
Pursuant to Yellow Cab's owner-operator program, an independent, non-
employee taxi operator leases from Yellow Cab a license and vehicle, with an
option to purchase the vehicle beginning at the end of the second year.
During the lease term (generally five years), Yellow Cab receives a weekly
lease payment for the vehicle as well as a weekly fee to cover the use of
Yellow Cab's license and other services provided by Yellow Cab and its
affiliates, including use of its colors and trade name, liability insurance
coverage, radio dispatch, repair and maintenance. Most operators also
purchase the required collision insurance from Country. See "Business--
Insurance Operations." The daily lease program, which allows drivers to
lease a medallion and a vehicle for 12 hours, 24 hours, or for a weekend, has
been used largely as a source and training operation for new owner-operators.
MAINTENANCE, REPAIR AND PARTS SALES
Chicago AutoWerks provides preventive and other maintenance services,
primarily to Yellow Cab and non-affiliated taxi drivers, and also, as a
licensed full-line auto repair shop, to the public. Chicago AutoWerks
maintains a body shop at which major repairs can be made. As an authorized
Chevrolet and Ford warrantor, Chicago AutoWerks also repairs those
manufacturers' vehicles that are under warranty and invoices the
manufacturers directly.
Chicago AutoWerks serves the dispatching needs of Yellow Cab and non-
affiliated drivers, maintains the radio in their taxicabs and supplies the
emergency radio services they required. Chicago AutoWerks also sells
automotive parts.
THE MEDALLIONS
In order to retain its licenses, the Company must comply with the
regulations of Chapter 9-112 of the Municipal Code of Chicago (governing
public passenger vehicles), including the payment of annual taxicab license
fees, currently $500 per vehicle.
Pursuant to a 1988 agreement with the City of Chicago to settle various
lawsuits, Yellow Cab is required to relinquish to the City of Chicago and not
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renew 100 taxicab licenses on January 1 of each year through 1997 (the
"Agreement"). In addition, the Agreement limits to 100 per year the number
of new licenses that the City of Chicago may add to the total medallions
outstanding through 1997, bringing the total number of available licenses to
a maximum of 5,700 on December 31, 1997. At the required surrender rates,
assuming no additional medallions are sold by Yellow Cab, Yellow Cab would
hold approximately 2,070 medallions after January 1, 1997, or approximately
36% of the maximum total then-to-be outstanding. There is no limit on the
number of medallions Chicago may issue after December 31, 1997.
The scheduled decline in the number of licenses allowed to be held by
Yellow Cab pursuant to the Agreement has had, and will continue to have, a
negative effect on the revenue-generating capability of the taxi leasing
operations. Yellow Cab has been able to offset these declines to some extent
through increases in the average lease rates charged to its customers, as
well as through increases in other services provided by Chicago AutoWerks.
At the same time, as the number of medallions held by Yellow Cab declines,
Yellow Cab will require fewer new vehicles to support its taxi leasing
operations and, consequently, a lower level of capital spending.
The Agreement has also had the effect of allowing the Company to
purchase and sell licenses in the open market for the first time since 1982.
Recent sales of these licenses have been recorded at prices of approximately
$37,500 per medallion, and the prices realized by Yellow Cab have been
consistent with the prices realized in license sales by other, non-
affiliated, medallion holders. Although the value of Yellow Cab's fleet of
vehicles is reflected on the Company's balance sheet, the significant value
of its medallions is not.
Although Yellow Cab is the largest provider of taxicab related services
in Chicago, it faces competition from a number of other medallion owners who
lease medallions and vehicles to independent operators. Yellow Cab
management believes that even the most significant of these competitors owns
only approximately 150 to 200 medallions, although each competitor operates
under a variety of individual cab service names and logos. There are also
many associations in the City, the largest of which is the Checker Taxi
Association, an unaffiliated association, which compete with Yellow Cab in
the delivery of taxicab related services to medallion owners and their
agents.
LIABILITY INSURANCE
Yellow Cab currently maintains liability insurance coverage for losses
of up to $350,000 per occurrence, as well as an "excess layer" of coverage
for losses over $600,000 and up to $29,000,000. The initial $350,000 layer
of insurance is issued by Country. See "Business--Insurance Operations."
During several periods in the past, Yellow Cab did not maintain the level of
coverage that Yellow Cab currently maintains for any losses over $350,000 per
occurrence. As a result, there are currently outstanding claims against
Yellow Cab for which it is not fully covered by third-party insurance.
Yellow Cab maintains balance sheet reserves totalling $2.2 million at
December 31, 1994, for these claims. Management believes that these reserves
will be sufficient to cover its outstanding claims.
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REGULATORY
Yellow Cab's operations are regulated extensively by the Department of
Consumer Services of the City of Chicago which regulates Chicago taxicab
operations with regard to certain requirements including vehicle maintenance,
insurance and inspections, among others. The City Council of Chicago has
authority for setting taxicab rates of fare. Effective December 1, 1993,
lessors had the right to increase, until May 1, 1994, the rates paid by
lessee drivers by not more than 2.8% of the lease rate in effect on December
1, 1993. After May 1, 1994, lessors may not charge more than the rates
prescribed by the Commissioner (which, in certain categories, are less than
the rates currently charged by Yellow Cab) without the consent of the City of
Chicago. The rates in effect on May 1, 1994, including the 2.8% increase,
may remain in effect pending a petition and appeal for a higher rate. Yellow
Cab increased its rates by the maximum allowed 2.8% prior to May 1, 1994, and
has filed, in a timely manner, a petition to increase its rates still
further. Yellow Cab intends to pursue that proposal to final hearing.
INSURANCE OPERATIONS. Country underwrites property and casualty
insurance, including taxicab insurance, workers' compensation and other
commercial and personal lines. During 1994, 75% of Country's total premium
revenue was attributable to non-affiliated property/casualty lines, primarily
workers' compensation, commercial automobile and commercial multiple peril.
The remainder of Country's premium revenues was attributable to affiliated
taxi liability and collision insurance in the State of Illinois and workers'
compensation insurance in the States of Illinois and Michigan. Country is
currently rated "A" by A. M. Best.
Country is one of the few voluntary providers of taxi liability
insurance in the industry. Most insurers which have previously written taxi
insurance coverage on a voluntary basis experienced poor underwriting results
and have withdrawn from the business. Management believes that Country's
longstanding relationship with Yellow has provided it with a stable market
for this type of coverage and has enabled it to develop a comprehensive
understanding of the business and to assess more properly the associated
risk.
The taxicab liability coverage which Country writes carries a $350,000
limit of liability for each driver. In addition, Country makes collision
insurance available to licensees and owner-operators at premium rates which
are favorable relative to the rates charged by competitors for equivalent
coverage. Country also writes full lines of commercial and personal property
and casualty insurance for risks located in the City of Chicago and the
surrounding metropolitan area. With the exception of a specialty public
transportation program (excluding limousines), which program policies are
reinsured for amounts above $350,000, all non-affiliate policies are
reinsured for amounts above $150,000.
Country is domiciled in the State of Illinois and is a licensed carrier
in Michigan, as well as being admitted as an excess and surplus lines carrier
in 33 other states. Country is also applying for licenses in other states,
such as Wisconsin, Indiana and Iowa. To the best of management's knowledge,
Country is in compliance with all applicable statutory requirements and
regulations.
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LABOR RELATIONS. Approximately 322 employees in the Company's
automotive products operations, 315 in the Company's truck trailer
manufacturing operations and 60 in the Company's vehicular operations are
covered by collective bargaining agreements. During 1993, Motors entered
into a new contract with the Allied Industrial Workers of America, AFL-CIO,
Local 682 in Kalamazoo--currently known as Local Union No. 7682 of the
United Paperworkers International Union, AFL-CIO--which expires in May 1996.
Motors is party to a contract with D.U.O.C. Local 777, a division of National
Production Workers of Chicago and Vicinity, Local 777 which expires in
November 1995. During February 1993, Great Dane Trailers, Tennessee, Inc.,
a subsidiary of Great Dane, negotiated a new contract (expiring in January
1996) with Talbot Lodge No. 61 of the International Association of Machinists
and Aerospace Workers. In general, the Company believes its relationship
with its employees to be satisfactory. Although there have been attempts to
unionize various of the Company's divisions in the past few years, including
SCSM and the Great Dane plant in Brazil, Indiana, such attempts have, to
date, been unsuccessful.
COMPLIANCE WITH ENVIRONMENTAL PROTECTION PROVISIONS. The Company
believes that future compliance with federal, state and local provisions
which have been enacted or adopted regulating the discharge of materials into
the environment, or otherwise relating to the protection of the environment,
will have no material effect upon the capital expenditures, earnings and
competitive position of the Company.
ITEM 2. PROPERTIES
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The Company currently maintains its principal executive offices at
Motors' facility in Kalamazoo, Michigan.
The location and general description of the principal properties owned
or leased by the Company are as follows:
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Owned or Leased;
Area/Facility If Leased,
Location Type of Facility Square Footage Expiration Year
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TRUCK TRAILERS MANUFACTURING OPERATIONS:
Savannah, Manufacturing Plant 61 acres/ Owned
Georgia and Office 471,000 sq. ft.
Brazil, Manufacturing Plant 80 acres/ Owned
Indiana and Office 564,000 sq. ft.
Memphis, Manufacturing Plant 8 acres/ Leased;
Tennessee 107,000 sq. ft. 2003
3.5 acres/ Owned
13,000 sq. ft.
Wayne, Manufacturing Plant 35 acres/ Owned
Nebraska and Office 197,000 sq. ft. mfg.
Terre Haute, Manufacturing Plant 113 acres/ Owned
Indiana under development 250,000 sq.ft.
14 Locations Sales and Service 98 acres/ Owned
in 10 States Branches 303,000 sq. ft.
18 Locations Sales and Service 36 acres/ Leased; 1995
in 12 states Branches 238,000 sq. ft. to 2015
AUTOMOTIVE PRODUCTS OPERATIONS:
Kalamazoo, Manufacturing Plant 71 acres/ Owned
Michigan and Office 750,000 sq. ft.
South Manufacturing Plant 922,000 sq. ft. Leased;
Charleston, and Office 2028
West Virginia
VEHICULAR OPERATIONS:
Chicago, Garages, Parking 735,000 sq. ft. 14 Owned;
Illinois Lots and Offices 1 Leased - 2012
(15 Loca-
tions)
INSURANCE OPERATIONS:
Chicago, Offices/Storage 39,332 sq. ft. Leased; 1995
Illinois Facility to 2002
(3 Loca-
tions)
The principal facilities owned by the Company and its subsidiaries are
considered by the Company to be well maintained, in good condition and
suitable for their intended use.
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ITEM 3. LEGAL PROCEEDINGS
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EXECUTIVE LIFE LITIGATION. By order of the Superior Court of Los
Angeles County (the "California Court"), on April 11, 1991, Case No. B5-006-
912 (the "California Order"), the California State Insurance Commissioner was
appointed Conservator for Executive Life Insurance Company ("ELIC"), a
limited partner in the Partnership. By letter dated May 20, 1991, Motors and
the Partnership advised ELIC and the Conservator that the appointment of the
Conservator pursuant to the California Order constituted an "Event of
Default" under the Partnership Agreement, and that, therefore, ELIC's rights
under the Partnership Agreement and interest in the Partnership were altered.
More specifically, Motors and the Partnership asserted that ELIC's rights, as
of April 11, 1991, were limited to the right to receive a payout of its
capital account, calculated as of that date, in quarterly installments over
approximately a 23-year period. On June 28, 1991, the Conservator notified
Motors and the Partnership that he did not accept that position set forth in
the May 20 letter and that, in his view, ELIC's status as a limited partner
had not been altered. In March 1992, Motors and the Partnership were added
as parties to the Order which sought damages from them in an unspecified
amount for, among other things, their alleged "forfeiture" of ELIC's
interest, breach of fiduciary duties, interference with the conservatorship
proceedings and waste of conservatorship assets. In this litigation, each of
Motors, the Partnership and the Conservator was also seeking, among other
things, a declaration of its rights under the Partnership Agreement.
On May 26, 1994, the California Court approved a settlement of this
litigation. Pursuant to the Settlement Agreement, on December 22, 1994,
Motors redeemed ELIC's interest in the Partnership for $37.0 million (the
"Minority Interest Redemption") and the litigation was thereafter dismissed
with prejudice. Under certain circumstances, if all or substantially all of
the assets of the Partnership are sold within five years of the consummation
of the Minority Interest Redemption, ELIC may be entitled to receive a
payment equal to the positive difference between (x) the distribution ELIC
would have received upon liquidation of the Partnership as a result of such
transaction, calculated in accordance with the provisions of the Partnership
Agreement as if it had continued to hold its partnership interest, and (y)
the future value of $37.0 million calculated at 15% per annum from the date
of the Minority Interest Redemption to the date of such transaction. The
Company has guaranteed the obligations of its subsidiaries under the
Settlement Agreement.
CERTAIN ENVIRONMENTAL MATTERS. Within the past five years, Great Dane
and Motors have entered into certain decrees with federal and state
governments relating to the cleanup of waste materials. The aggregate
obligations of Great Dane and Motors pursuant to these consent decrees are
not material.
In May 1988, Holdings sold all of the stock of its subsidiaries,
Datron Systems, Inc., and All American Industries, Inc., and in connection
therewith agreed to indemnify the purchasers for, among other things, certain
potential environmental liabilities. The purchaser has put Holdings on notice
of certain alleged environmental and other matters for which it intends to seek
indemnification as costs are incurred. Holdings does not believe that its
bligations, if any, to pay these claims will be material.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
There is no market for Registrant's common stock; all issued and
outstanding common stock is owned of record by David R. Markin, Martin L.
Solomon, Allan R. Tessler and Wilmer J. Thomas, Jr.
ITEM 6. SELECTED FINANCIAL DATA
Summarized below is selected financial data for the years 1990 through
1994. The extraordinary items in all years relate to the gain or loss on the
repurchase of indebtedness. The accounting changes represent the cumulative
effect of changes in accounting principles as a result of adopting, as of
January 1, 1993, the provisions of Statement of Financial Accounting Standard
("SFAS") No. 106, "Employers Accounting for Postretirement Benefits Other
Than Pensions," and SFAS No. 109, "Accounting for Income Taxes" (see Notes H
and J of the Notes to Consolidated Financial Statements). Per share amounts
for all of the years are based on 1,000 shares.
Selected Financial Data
(in thousands, except per share amounts)
Year Ended December 31,
1990 1991 1992 1993 1994
-------- -------- -------- -------- --------
Revenues $ 693,211 $ 555,266 $ 716,733 $ 909,326 $1,096,477
========== ========== ========== ========== ===========
Income (loss) before
extraordinary items
and accounting
changes $ (20,274) $ (27,006) $ (7,555) $ 3,364 $ 24,348
Extraordinary items 27,749 31,188 --- --- ---
Accounting changes --- --- --- (46,626) ---
---------- ---------- ---------- ---------- -----------
Net income (loss) $ 7,475 $ 4,182 $ (7,555) $ (43,262) $ 24,348
========== ========== ========== ========== ===========
Income (loss) per share:
Income (loss) before
extraordinary items
and accounting
changes $ (20,274) $ (27,006) $ (7,555) $ 3,364 $ 24,348
Extraordinary items 27,749 31,188 --- --- ---
Accounting changes --- --- --- (46,626) ---
---------- ---------- ---------- ---------- -----------
Net income (loss) $ 7,475 $ 4,182 $ (7,555) $ (43,262) $ 24,348
========== ========== ========== ========== ===========
Total assets $ 537,677 $ 481,305 $ 493,763 $ 517,336 $ 522,051
========== ========== ========== ========== ===========
Long-term debt, less
debt discount $ 376,692 $ 312,324 $ 305,368 $ 291,273 $ 288,265
========== ========== ========== ========== ===========
Cash dividend
declared per
common share $ --- $ --- $ --- $ --- $ ---
========== ========== ========== ========== ===========
14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES.
Available cash and cash equivalents, cash flow generated from operations
($25.2 million, $30.7 million and $56.4 million for the years ended December
31, 1992, 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 each of these
years.
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 litigation with
the Boeing Company which was settled in December 1993 and in part because of
litigation with the Conservator of ELIC, a limited partner in the
Partnership. A settlement with ELIC, agreed to in principle in early 1994,
was consummated in December 1994 (see "Item 3--LEGAL PROCEEDINGS").
In February 1994, 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 had 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), were expensed against income in
the quarter ended September 30, 1994.
On November 23, 1994, the Company filed a Registration Statement on Form
S-1 with the Securities and Exchange Commission in connection with an initial
public offering ("IPO") of the Company's common stock. The Company is
registering 6,555,000 shares of common stock (including 855,000 shares which
the underwriters have the right to purchase to cover over-allotments) (in
each case, giving effect to a 16,800 to 1 split of the common stock to be
effected prior to consummation of the IPO). It is currently estimated that
the initial public offering price will be between $13 and $15 per share. All
of the net proceeds are intended to be used to redeem approximately $72
million of the Company's 12-3/4% Senior Subordinated Debentures, due 2001,
which will be sufficient to satisfy all remaining sinking fund payments on
this indebtedness. If successfully completed, the principal effect of the
IPO will be to reduce the cash flow necessary from its subsidiaries to meet
the Company's obligations. Any excess proceeds from the IPO as a result of
sale of the over-allotment will be utilized to retire additional debentures
or for working capital.
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
15
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.
In December 1994, the Company purchased ELIC's interest in the
Partnership for $37 million. $30 million of this payment was provided by a
subsidiary through borrowings on its revolving credit facility and the
balance was paid from available cash.
In January 1995, Motors and its subsidiaries finalized a refinancing
with a bank whereby Motors entered into a loan agreement providing for a $45
million term loan and a $20 million revolving credit facility. The funds
from the term loan were used to repay approximately $27 million of bank debt
including the Partnership term loan, the equipment term loan and the notes
payable to the bank, provide $15 million to the Company to retire a portion
of certain notes outstanding to the Company's shareholders and pay fees and
expenses. Availability under the revolving credit facility is based on the
amount of eligible trade accounts receivable and inventory, and may be used
for working capital needs, as well as for general corporate purposes.
The new term loan requires twenty quarterly principal payments of
approximately $2.3 million, commencing June 30, 1995, plus interest at either
the bank's prime rate plus 1.25% (subject to reductions of up to 0.5% upon
the occurrence of certain events) or a selected Eurodollar contract rate plus
300 basis points (subject to reductions of up to 50 basis points upon the
occurrence of certain events). The new term loan is secured by substantially
all of Motors's assets including the stock of the Insurance Subsidiary. The
new term loan agreement requires Motors to, among other things, comply with
certain financial covenants, limits additions to and sales of Motors' fixed
assets and limits additional borrowings by Motors.
In February 1995, Great Dane Trailers amended its loan and security
agreement. Pursuant to the amended agreement, the Lenders have loaned $28
million as a term loan and have agreed to provide, at any given time, up to
$150 million (less amounts then outstanding as a term loan) as a revolving
credit facility (subject to availability based on the amount of eligible
trade accounts receivable and inventory) to be used as working capital by
Great Dane and for general corporate purposes. The term loan is subject to
further increases as final collateral appraisals are completed and as
equipment for the new facility in Terre Haute is purchased. The Company
believes that the term loan will be increased to between $33 million and $38
million. The initial term loan proceeds, which were drawn immediately upon
closing, were used, together with drawings under the revolver, to repay
approximately $17 million of bank debt, provide $15 million to the Company to
retire the balance of the shareholder notes and pay fees and expenses. The
term loan requires monthly principal payments of $0.3 million plus interest
on the unpaid principal amount of the loan in arrears at a rate equal to 1%
above the prime rate of interest charged from time to time by Bank of America
or a rate equal to 2.5% above a selected Eurodollar contract rate with the
unpaid principal balance due five years after the closing date. The loans
are secured by substantially all of the assets of Great Dane and its
subsidiaries. The Agreement requires Great Dane to, among other things,
comply with certain financial covenants, and limits the amount of loans and
transfers to the Company, limits additions to and sales of Great Dane's fixed
assets and limits additional Great Dane borrowings.
16
The refinancing of the Motors and Great Dane bank debt, as well as the
expansion of each of these entities' availabilities under their respective
credit facilities, improves the Company's liquidity.
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 classified as available-for-sale previously carried at
amortized cost or lower of cost of market. The adoption of this SFAS has not
adversely affected liquidity and capital resources.
Purchases of property, plant and equipment have averaged approximately
$18.6 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 1995 are
anticipated to be approximately $38.3 million and are expected to be funded
principally by cash flow generated from operations and borrowings.
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.
RESULTS OF OPERATIONS.
1994 COMPARED TO 1993:
Revenues increased $187.2 million and gross profit increased $36.7
million during the year ended December 31, 1994, as compared to the same
period of 1993. The higher revenues are principally attributed to higher
Trailer Manufacturing revenues ($147.2 million), primarily associated with a
higher volume of sales within the segment. Automotive Products revenues
increased $29.6 million during the year ended December 31, 1994, as compared
to the same period in 1993. General increases in volumes to accommodate
automotive customers' demands and additional jobs were the principal reasons
for the revenue increases.
The Company's operating profit (gross profit less selling, general and
administrative expenses) increased $28.3 million in 1994 compared to 1993.
This increase is attributed to an increase of Trailer Manufacturing operating
profits ($26.2 million) which is principally due to higher volumes of sales
and higher margins, and an increase of Automotive Products operating profits
($4.3 million) principally due to higher sales and higher margins. These
increases in operating profits were offset by higher corporate costs due
principally to the refinancing which was not completed ($3.5 million).
17
Sales, general and administrative ("SG&A") expenses were $8.4 million
higher in 1994 as compared to 1993, but as a percentage of sales, SG&A was
0.8 percentage points lower in 1994 as compared to 1993.
During the year ended December 31, 1994, a $0.6 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 $24.3 million for the year ended December 31, 1994, as
compared to a $43.3 million net loss for the prior year. 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 SFAS Nos. 106
and 109 which was recorded in the first quarter of 1993.
1993 COMPARED TO 1992:
During 1993, revenues increased $192.6 million and gross profit
increased $24.7 million as compared to 1992. The Truck Trailer Manufacturing
and the Automotive Products segment operations benefited from increased
demand for their products. Truck Trailer Manufacturing revenues increased by
$175.5 million as compared to 1992, primarily due to the sale of containers
and chassis which were introduced in late 1992 and sold principally to one
customer, and a higher volume of truck trailer sales. Automotive Products
revenues increased $15.3 million as compared to 1992. Increased production
of the General Motors Blazer and Suburban models and crew cab products and
other general increases in volumes to accommodate automotive customers'
demands are the principle reasons for the increase. Vehicular Operations
revenues increased $1.5 million in 1993 as compared to 1992. The increase
was attributed to lease rate increases obtained in 1993 to cover certain
Vehicular Operations cost increases. The revenue increase was somewhat
offset by the impact of tendering medallions to the City of Chicago.
The factors impacting sales, as discussed previously, had the effect of
increasing the Company's 1993 operating profit by $18.4 million as compared
to 1992. Truck Trailer Manufacturing operating profit increased by $14.8
million as compared to 1992. This increase is principally due to higher
volumes, partly offset by SG&A expenses. Higher volumes were also the
principal reason for an increase of $3.7 million of Automotive Products
operating profits as compared to 1992.
S G & A expenses were $6.3 million higher in 1993 as compared to 1992,
but as a percentage of sales, S G & A expense is 1.7 percentage points lower
in 1993 as compared to 1992.
Other expenses decreased $5.5 million in 1993 as compared to 1992. The
decrease in expense resulted primarily from $1.4 million income from the
settlement of a dispute in 1993 and $2.8 million income from sales of taxi
medallions in 1993.
18
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. CV89-199MA, 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 carriers in the form of cash or irrevocable letters of credit.
Accordingly, the Company recorded a $7.5 million special charge during 1993
to provide for the cost associated with this legal proceeding. In accordance
with the settlement agreement, Boeing's claims against the Company and the
three former subsidiaries have been dismissed and Boeing has released and
indemnified the Company with respect to certain claims.
Net loss was $43.3 million for the year ended December 31, 1993, as
compared to a $7.6 million net loss for the year ended December 31, 1992.
The fluctuations in net loss between the years are attributed to the reasons
discussed above, as well as the one-time charge ($46.6 million) incurred for
the implementation of SFAS Nos. 106 and 109 which was recorded in 1993.
IMPACT OF INFLATION
Recently, due to competitive market conditions, the Company has been
unable to factor all cost increases into selling prices for its products and
services. The Company does not believe that the impact of inflation affects
the Company any more than it affects the Company's competitors.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Registrant's response to this item is incorporated herein by reference
to the consolidated financial statements and consolidated financial statement
schedules, and the report thereon of independent auditors, listed in Item
14(a)1 and 2 and appearing after the signature page to this Annual Report on
Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
19
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
David R. Markin, age 64, President and Chief Executive Officer of the
Company since January 11, 1989, has been President and Chief Executive
Officer of Motors since 1970. Mr. Markin serves on the Boards of Directors
of Jackpot Enterprises, Inc., an operator of gaming machines, Enhance
Financial Services Group Inc., a reinsurance company, and Data Broadcasting
Corporation, a provider of market data services to the investment community.
Allan R. Tessler, age 58, Chairman of the Board of Holdings since
January 11, 1989, is also Chairman of the Boards of Directors of
International Financial Group, Inc., a merchant banking firm ("IFG"), Enhance
Financial Services Group Inc., a reinsurance company, Allis-Chalmers
Corporation, a manufacturer of miscellaneous fabricated textile products
("Allis-Chalmers"), and Jackpot Enterprises, Inc., an operator of gaming
machines, and has been Chief Executive Officer of IFG since 1987 and of
Allis-Chalmers since 1994. Mr. Tessler serves on the Board of Directors of
The Limited, Inc., a manufacturer and retailer of apparel. Mr. Tessler is
also an attorney and from 1976 through 1988, he was a member of the Executive
Committee of the law firm of Shea & Gould; from 1989 through March 1, 1993,
he was of counsel to that firm. Beginning in 1990, Mr. Tessler and another
person were retained by Infotechnology, Inc. and Financial News Network Inc.
as a restructuring team and to serve as Co-Chief Executive Officers during
the restructuring of those companies. As part of the plan implemented by the
restructuring team, those companies were placed in bankruptcy, from which
they emerged in 1992 as Data Broadcasting Corporation, a provider of market
data services to the investment community. Mr. Tessler continues to serve as
Co-Chairman of the Board and Co-Chief Executive Officer of the restructured
company.
Martin L. Solomon, age 58, Vice Chairman and Secretary of the Company
since January 11, 1989, is a private investor. Mr. Solomon was employed as
a securities and portfolio analyst at Steinhardt Partners, an investment
firm, from 1985 through 1987. From 1988 through September 1990, he was the
Managing Partner and Director at Value Equity Associates I, Limited
Partnership, an investment firm. Mr. Solomon serves on the Board of
Directors of XTRA Corporation, a truck leasing company.
Wilmer J. Thomas, Jr., age 68, Vice Chairman of the Company since
January 11, 1989, is a private investor. Mr. Thomas served as Treasurer of
the Company from January 1989 to January 1994. Mr. Thomas serves on the
Boards of Directors of Moore Medical Corp., a pharmaceutical and surgical
supply company, and Oak Hills Sportswear Corp., a clothing company.
The executive officers of the Registrant, in addition to Messrs. Markin,
Tessler, Solomon and Thomas, are:
Jay H. Harris, age 58, has been Executive Vice President and Chief
Operating Officer of the Company for more than the past five years and a Vice
President of Motors since 1991. Mr. Harris was a director of the Company
from 1978 until January 11, 1989.
20
Marlan R. Smith, age 51, has been Treasurer of the Company since January
1994 and Vice President and Treasurer of Motors since March 1988. Prior to
being elected Treasurer of the Company, he served as Assistant Treasurer
since January 1989.
Kevin J. Hanley, age 39, has been Controller of the Company since
January 1994 and Secretary and Controller of Motors since December 1989.
Willard R. Hildebrand, age 55, was elected as President and Chief
Executive Officer of Great Dane effective January 1, 1992. Mr. Hildebrand
had served as President and Chief Operating Officer of Fiatallis North
America, Inc., a manufacturer of heavy construction and agricultural
equipment, for more than five years prior thereto.
Larry D. Temple, age 48, has been Group Vice President of Motors since
September 1989. Mr. Temple served as Vice President of Manufacturing from
1988 to 1989.
John T. Wise, age 49, has been President of SCSM since July 1992. He
was Vice President - General Manager from 1989 to 1992.
Jeffrey M. Feldman, age 44, has been President of Yellow Cab since 1983.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION
The following table sets forth the 1994 annual compensation for the
Company's Chief Executive Officer and the five highest paid executive
officers, as well as the total compensation paid to each individual for the
Company's two previous fiscal years:
SUMMARY COMPENSATION TABLE
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
------------------ ---- ------ ----- ------------ ------------
David R. Markin 1994 $1,230,000 $300,000 $247,007<F1> $1,500<F5>
President, Chief 1993 1,230,000 250,000 246,519<F1> 2,249<F5>
Executive Officer 1992 1,230,000 150,000 239,594<F1> 2,182<F5>
and Director
Jay H. Harris 1994 431,250 250,000 0 1,500<F5>
Executive Vice 1993 350,000 250,000 0 2,249<F5>
President and Chief 1992 326,016 125,000 0 2,182<F5>
Operating Officer
Willard R. Hildebrand 1994 287,725 225,000 15,463<F2> 0
President and Chief 1993 203,500 150,000 7,304<F2> 0
Executive Officer 1992 190,175 105,000 4,133<F2> 106,368<F6>
of Great Dane
21
SUMMARY COMPENSATION TABLE--Continued
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
------------------ ---- ------ ----- ------------ ------------
Jeffrey M. Feldman 1994 $ 220,500 $150,000 86,263<F3> 1,500<F5>
President of 1993 210,000 150,000 85,008<F3> 2,249<F5>
Yellow Cab 1992 186,667 150,000 77,755<F3> 2,182<F5>
Martin L. Solomon 1994 0 0 400,000<F4> 0
Vice Chairman and 1993 0 0 400,000<F4> 0
Secretary 1992 0 0 400,000<F4> 0
Allan R. Tessler 1994 0 0 400,000<F4> 0
Chairman of the 1993 0 0 400,000<F4> 0
Board 1992 0 0 400,000<F4> 0
Wilmer J. Thomas, Jr. 1994 0 0 400,000<F4> 0
Vice Chairman 1993 0 0 400,000<F4> 0
1992 0 0 400,000<F4> 0
- ---------------
<FN>
<F1>Other compensation for Mr. Markin includes:
1992 1993 1994
------ ------ ------
Consulting fees $190,000 $190,000 $190,000
Life insurance 37,023 41,027 41,710
Automobile 5,100 8,125 9,750
Club dues 7,471 7,367 5,547
-------- -------- --------
$239,594 $246,519 $247,007
======== ======== ========
<F2>Other compensation for Mr. Hildebrand includes:
1992 1993 1994
------ ------ ------
Life insurance $ 806 $ 1,560 $ 3,474
Automobile 927 2,324 3,316
Club dues 2,400 3,420 5,887
Other 0 0 2,786
-------- -------- --------
$ 4,133 $ 7,304 $ 15,463
======== ======== ========
<F3>Other compensation for Mr. Feldman includes:
1992 1993 1994
------ ------ ------
Consulting fees $ 57,000 $ 57,000 $ 59,000
Life insurance 10,739 11,253 11,973
Automobile 1,537 1,748 4,335
Club dues 8,479 15,007 10,955
-------- -------- --------
$ 77,755 $ 85,008 $ 86,263
======== ======== ========
<F4>Consulting fees.
<F5>Matching contributions under Motors 401(k) plan.
<F6>Relocation expenses.
22
COMPENSATION PURSUANT TO PLANS
GREAT DANE PENSION AND EXCESS BENEFIT PLANS
Great Dane has in effect a defined benefit employee pension plan
entitled Retirement Plan For Great Dane Trailers, Inc. (the "Retirement
Plan") covering substantially all of its employees. Pension benefits are
subject to limitations imposed by the Internal Revenue Code of 1986, as
amended (the "Code"), and the Employee Retirement Income Security Act of
1974, as amended, with respect to the annual amount of benefits provided by
employer contributions. Effective January 1, 1994, Great Dane adopted the
Supplemental Retirement Income Plan (the "Great Dane Excess Benefit Plan")
for officers of Holdings who are participants in the Checker Motors Pension
Plan and officers of Great Dane, in each case whose annual compensation
exceeds $150,000. The Great Dane Excess Benefit Plan provides benefits which
cannot be provided under the Retirement Plan because of the $150,000
compensation limit under the Code. Considered compensation under the Great
Dane Excess Benefit Plan is limited to $235,840 (adjusted for inflation) per
year. The benefits under the Great Dane Excess Benefit Plan are not funded
and will be paid from Great Dane's general assets.
Effective as of July 1, 1988, the assets and the liabilities
attributable to active and former employees under the Amended and Restated
International Controls Corp. Pension Plan as of June 30, 1988 were
transferred to the Retirement Plan and Holdings adopted the Retirement Plan
for the benefit of its employees. With respect to benefits accruing after
June 30, 1984, to a participant who was a participant under the Amended and
Restated International Controls Corp. Pension Plan as of June 30, 1988, the
following table shows the estimated annual benefits payable upon retirement
at age 65 under the plan to specified average annual compensation and years
of benefit service classifications. The following amounts would be reduced
by a Social Security offset:
Years of Benefit Service
--------------------------------------------------------
Average
Annual
Compensation 1 5 10 15 20
- ------------ --- --- ---- ---- ----
$100,000 $2,000 $10,000 $ 20,000 $ 30,000 $ 40,000
150,000 3,000 15,000 30,000 45,000 60,000
200,000 4,000 20,000 40,000 60,000 80,000
250,000 5,000 25,000 50,000 75,000 100,000
300,000 5,000 25,000 60,000 90,000 118,800*
400,000 5,000 25,000 80,000 118,800* 118,800*
500,000 5,000 25,000 100,000 118,800* 118,800*
- --------------------
<FN>
*Maximum permitted in 1994
For Mr. Hildebrand, the following are credited years of service under
the Retirement Plan and 1994 salary covered by the Retirement Plan:
23
Expected 1994 Salary
Credited Credited Covered by
Years of Years of Retirement
Service Service at 65 Plan
--------- ------------- ----------
Willard R. Hildebrand 4 14 $150,000
Mr. Harris has an aggregate of 24 years of benefit service under the
Retirement Plan (8 years) and the Amended and Restated International Controls
Corp. Pension Plan (16 years) and will receive benefits of approximately
$74,000 per year at age 65.
MOTORS PENSION AND EXCESS BENEFIT PLANS
Motors maintains a defined benefit employee pension plan entitled
Checker Motors Pension Plan (the "Pension Plan") covering substantially all
of its non-union employees of Motors and its subsidiaries other than SCSM,
and, effective January 1, 1992, the employees of the Company.
Motors, as the successor in interest to the Partnership, also maintains
the Checker Motors Co., L.P. Excess Benefit Retirement Plan (the "Partnership
Excess Benefit Plan"). The Partnership Excess Benefit Plan provides benefits
which cannot be provided under the Retirement Plan because of the $150,000
compensation limit under the Code. At the present time, David R. Markin and
Jeffrey M. Feldman are the only individuals named above who would receive
benefits under the Partnership Excess Benefit Plan. Considered compensation
under the Partnership Excess Benefit Plan is limited to $300,000. The
benefits under the Partnership Excess Benefit Plan are not funded and will be
paid from Motors' general assets.
Set forth below are the estimated annual benefits for participants in
the Pension Plan (including benefits payable under the Partnership Excess
Benefit Plan) who have been employed by Motors for the indicated number of
years prior to retirement, assuming retirement at age 65 in 1994:
Average
Compensation Estimated Annual Benefits for Years of Service Indicated
(as defined in --------------------------------------------------------
plan) 10 20 30 40 50
------------- ---- ---- ---- ---- ----
$100,000 $ 13,864 $ 28,670 $ 46,938 $ 66,073 $ 75,784
150,000 21,364 46,170 74,438 103,573 118,284
200,000 28,864 63,670 101,938 141,073 160,784
250,000 36,364 81,170 129,438 178,573 203,284
300,000 43,864 98,670 156,938 216,073 245,784
400,000 43,864 98,670 156,938 216,073 245,784
500,000 43,864 98,670 156,938 216,073 245,784
The above benefit projections were prepared on the assumption that the
participant made participant contributions to the Pension Plan for all years
in which he was eligible to contribute, and that Social Security covered
compensation is $1,893.
24
For those executive officers named above, the following are credited
years of service under the Pension Plan and Excess Benefit Plans and 1994
salary covered by the Pension Plan:
Expected 1994 Salary
Credited Credited Covered
Years Year of by
of Service Pension
Service at 65 Plan
------- ------- -------
David R. Markin 40 41 $150,000
Jay H. Harris 3 10 150,000
Jeffrey M. Feldman 16 37 150,000
SALARY CONTINUATION PLAN
Motors entered into Stated Benefit Salary Continuation Agreements (the
"Agreements") with certain officers and employees (the "Salary Plan")
pursuant to which such participants will receive benefits upon attaining age
65 (or their beneficiaries will receive benefits upon their death prior to or
within 120 months after such executives or employees attain age 65).
For those executive officers named above, the following table sets forth
the benefits payable pursuant to the Salary Plan:
Annual
Survivorship
Benefit
Annual Payable Total
Benefit Total Upon Survivorship
Payable Benefit Death Benefit
Upon Payable Prior to Payable
Attaining Over Attaining Over Three
Age 65 Ten Years Age 65 Years
--------- --------- --------- ----------
David R. Markin $240,000 $2,400,000 $368,000 $1,104,000
Jeffrey M. Feldman 19,950 199,500 79,800 239,400
1994 OPTION PLAN
On November 16, 1994, the Board of Directors adopted the 1994 Option
Plan, subject to approval by the Compensation Committee (the composition of
which committee is described below) and by the stockholders at the first
annual meeting of stockholders after the consummation of the IPO. The 1994
Option Plan provides for the granting of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") to employees of the Company and for the granting of nonstatutory
25
stock options and stock appreciation rights ("Rights") to employees,
consultants, non-employee directors and other persons providing goods or
services to the Company. Under the 1994 Option Plan, a total of 1,680,000
shares of Common Stock (after giving effect to a 16,800 to 1 stock split to
be effectuated prior to the consummation of the IPO) have been reserved for
issuance. The maximum number of shares of Common Stock with respect to which
options or Rights may be granted during the life of the 1994 Option Plan to
any employee cannot exceed 400,000. On January 25, 1995, the Board of
Directors granted nonstatutory options under the 1994 Option Plan to certain
employees to purchase 174,500 shares of Common Stock at 50% of the IPO price.
The grants are subject to the consummation of the IPO, approval of the 1994
Option Plan by the Compensation Committee and the stockholders and
ratification of the grants by the Compensation Committee. The options will
be exercisable for five years commencing one year from the date on which the
IPO is consummated.
The 1994 Option Plan will be administered by the Compensation Committee
which, when constituted, will consist of persons who are "disinterested
persons" within the meaning of Rule 16(b) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation
Committee will have the power, subject to the terms of the 1994 Option Plan,
to determine the recipients and terms of any options or Rights granted,
including the exercise price, number of shares subject to the option or
Rights and the exercisability thereof. Options and Rights granted under the
1994 Option Plan may not be transferred except by will or the laws of descent
and distribution and, during the lifetime of the optionee, may be exercised
only by such optionee or such optionee's guardian or legal representative.
If an optionee's employment or other relationship with the Company terminates
for any reason, the employee's options and Rights shall immediately
terminate, except that: (i) upon termination of employment due to disability
or retirement, an optionee may generally exercise options or Rights that have
not expired on such date for a period of two years after the date of
termination of employment; and (ii) upon termination of employment as a
result of death, or in the event of the employee's death within the periods
described in (i), above, an optionee's legal representative may generally
exercise options or Rights that have not expired on such date for a period of
12 months after the date of death. Options granted to non-employee
directors, consultants and other persons providing goods and services to the
Company will be subject to such terms as the Compensation Committee shall
determine.
The exercise price of all incentive stock options granted under the 1994
Option Plan must be at least equal to the fair market value of the shares of
Common Stock subject to the option on the date the option is granted. The
exercise price of all nonstatutory stock options granted under the 1994
Option Plan is to be determined by the Compensation Committee but cannot be
less than the minimum required to comply with any applicable law, rule or
regulation. The term of options granted under the 1994 Option Plan may not
exceed 10 years. Notwithstanding the above, incentive stock options granted
to an employee that owns more than 10% of the voting power of all classes of
stock of the Company must have an exercise price at least equal to 110% of
the fair market value of the stock subject to the option on the date the
option is granted and must have a term that does not exceed five years.
26
Options may be exercised either in cash or with Common Stock having a
fair market value equal to the exercise price of the option on the date the
option is exercised.
Each option and Right granted under the 1994 Option Plan is exercisable
in whole or in part at any time, or from time to time, as determined by the
Compensation Committee, provided that the election to exercise an option or
a Right is made in accordance with applicable federal and state laws and
regulations, and, unless the optionee dies or becomes disabled, the option or
Right cannot be exercised during the first six months of the option period.
An option is vested and becomes immediately exercisable if: any person within
the meaning of Sections 13(d) and 14(d) of the Exchange Act, other than the
Company or the current stockholders of the Company, becomes the beneficial
owner, within the meaning of Rule 13d-3 of the Exchange Act, of 75% or more
of the Company's outstanding voting securities, unless such ownership has
been approved by the Board of Directors of the Company; the first day on
which shares of Common Stock are purchased pursuant to a tender offer or
exchange offer, unless the offer is made by the Company or approved by its
Board of Directors; the stockholders of the Company have approved an
agreement to merge or consolidate with or into another corporation (and the
Company is not the survivor of the merger or consolidation), or an agreement
to sell or otherwise dispose of all or substantially all of the Company's
assets (which includes a plan of liquidation), unless the Board of Directors
has resolved that options do not automatically vest; or during any period of
two consecutive years, individuals who at the beginning of the period
constituted a majority of the Board of Directors cease to constitute a
majority thereof, unless the election or the nomination for the election by
the Company's stockholders of each new director was approved by a vote of at
least a majority of the directors then still in office who were directors at
the beginning of the period. In addition, the Compensation Committee has the
authority at any time or from time to time to accelerate the vesting of any
individual option and to permit any option not yet exercisable to become
immediately exercisable.
Unless terminated sooner, the 1994 Option Plan will terminate 10 years
from the Effective Date. The Board of Directors has authority to amend or
terminate the 1994 Option Plan, provided no such action may impair the rights
of the holder of any outstanding option or Rights.
No Right can be exercised by an optionee unless the Company has been
subject to the reporting requirements of Section 12 of the Exchange Act for
at least one year prior to the date of exercise and has filed all reports and
statements required to be filed during that period, and the Company on a
regular basis releases for publication quarterly and annual summary
statements of sales and earnings. No Common Stock can be delivered by the
Company pursuant to the exercise of an option or a Right until qualified for
delivery under applicable securities laws and regulations, as determined by
the Compensation Committee, until the Common Stock is listed on each
securities exchange on which the Common Stock may then be listed, and until
the exercise price of the option is received by the Company either in cash or
in Common Stock.
27
COMPENSATION OF DIRECTORS
The directors did not receive any fees for their services as directors
in 1994. See "Compensation Committee Interlocks and Insider Participation."
EMPLOYMENT AGREEMENTS
Motors, as a successor to the Partnership, is party to an Amended and
Restated Employment Agreement dated as of November 1, 1985, as further
amended, with David R. Markin pursuant to which Mr. Markin is to serve as
President, Chief Executive Officer and Chief Operating Officer of the
Partnership until April 30, 1996, subject to extension (the "Termination
Date"), at a minimum salary of $600,000 per annum, together with the payment
of certain insurance premiums, the value of which have been included in the
Summary Compensation Table above. The beneficiaries of these insurance
policies are designated by Mr. Markin. Mr. Markin continues to be eligible
to participate in profit sharing, pension or other bonus plans of the Motors.
Pursuant to the Amended and Restated Employment Agreement, in the event of
Mr. Markin's death, the Company shall pay Mr. Markin's estate the
compensation which would otherwise be payable to him for the period ending on
the last day of the month in which death occurs. In addition, Motors shall
pay to Mr. Markin's beneficiaries deferred compensation from the date of his
death through the Termination Date in an annual amount equal to one-third of
his base salary at the date of his death. In the event of termination of the
Amended and Restated Employment Agreement for any reason other than cause,
disability or death, Mr. Markin shall continue to serve as a consultant to
Motors for a period of five years, for which he shall receive additional
compensation in the amount of $50,000 per annum. Motors has agreed to
indemnify Mr. Markin from certain liabilities arising out of his service to
Motors, except for liabilities resulting from his gross negligence or willful
misconduct. Effective January 1, 1994, Mr. Markin and the Company
memorialized in writing their agreement, pursuant to which Mr. Markin has
been compensated by the Company since January 11, 1989, on substantially the
same terms as are set forth above.
The Company entered into an employment agreement as of July 1, 1992,
with Jay H. Harris pursuant to which Mr. Harris serves as Executive Vice
President and Chief Operating Officer of the Company until June 30, 1995,
subject to extension or earlier termination, at a minimum salary of $350,000
per annum, an incentive bonus to be determined by the Board of Directors, and
such other fringe benefits and plans as are available to other executives of
the Company. Upon the happening of certain events, including a change in
control (as defined therein) of the Company or retirement after June 30,
1994, Mr. Harris is entitled to compensation in an amount equal to the
greater of (a) five percent of the increase in the Company's retained
earnings, subject to certain adjustments, during the period commencing on
March 31, 1992, and ending on the last day of the month preceding the event
which triggers the payment (the "Termination Payment") and (b) 2.99 times his
then base salary. If Mr. Harris were to die or become disabled, he or his
estate would receive the greater of (a) one year's base compensation or (b)
the Termination Payment. Payments in either case would be made over a period
of time, the length of which would be dependent on the amount due to Mr.
Harris. Mr. Harris has agreed to serve as a consultant to the Company during
the first year after termination for no compensation beyond his expenses
incurred in connection with rendering such services. The Company has agreed
28
to indemnify Mr. Harris to the full extent allowed by law. Motors has
guaranteed the Company's obligations. Mr. Harris' current salary is
$500,000.
Yellow Cab is party to an Amended and Restated Employment Agreement
dated as of June 1, 1992, with Jeffrey Feldman pursuant to which Mr. Feldman
serves as President of Yellow Cab until February 1, 1996, subject to
extension (the "Termination Date"), at a minimum salary of $200,000 per
annum, together with certain insurance premiums, the value of which have been
included in the Summary Compensation Table above. The beneficiaries of
these insurance policies are designated by Mr. Feldman. Mr. Feldman is
eligible to participate in profit sharing, pension or other bonus plans
implemented by Yellow Cab or Motors. Pursuant to the Amended and Restated
Employment Agreement, in the event of Mr. Feldman's death, Yellow Cab shall
pay Mr. Feldman's estate the amount of compensation which would otherwise be
payable to him for the period ending on the last day of the month in which
death occurs. In addition, Yellow Cab shall pay to Mr. Feldman's estate
deferred compensation from the date of his death to the Termination Date in
an annual amount equal to one-third of his base salary at the date of his
death. In the event of the termination of the Amended and Restated
Employment Agreement for any reason other than cause, disability or death,
Mr. Feldman shall continue to serve as a consultant to Yellow Cab for a
period of five years (if terminated by Mr. Feldman) or seven years if
terminated by Yellow Cab, for which he shall receive compensation in the
amount of $75,000 per annum. Yellow Cab has agreed to indemnify Mr. Feldman
from certain liabilities arising out of his service to Yellow Cab, except for
liabilities resulting from his gross negligence or willful misconduct.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has had no separate compensation committee or other
committee providing equivalent functions. Each of Messrs. Markin, Solomon,
Tessler and Thomas is an executive officer of Holdings and participates, as
a director, in the deliberations concerning executive officer compensation.
During 1994, Mr. Markin served on the compensation committee of Enhance
Financial Services Group Inc. and Data Broadcasting Corporation and Mr.
Tessler served as an executive officer of each of these companies.
As of December 31, 1994, Country holds $0.6 million principal amount of
7% Notes due December 1, 1996, issued by Enhance Financial Services Group
Inc. Mr. Markin is a director of and served on the compensation committee of
that company.
During 1994, the Company used, on a month-to-month basis, an airplane
owned by a corporation of which Mr. Tessler is the sole shareholder. The
Company paid $90,000 per month for such use.
Each of Messrs. Markin, Solomon, Tessler and Thomas provides consulting
services to Yellow Cab and each received for such services $10,000 per month
29
in 1994. Messrs. Solomon, Tessler and Thomas also provide consulting
services (a) to Motors for which they each received monthly fees
of $5,000 and (b) to Country for which they each received monthly fees of
approximately $18,300 in 1994. Mr. Markin serves as a consultant to Chicago
AutoWerks for which he received monthly fees of approximately $1,200, and to
Country, for which he received monthly fees of approximately $4,600 in 1994.
Upon consummation of the IPO, these fees will be reduced to a fee of $50,000
per year for each of Messrs. Markin, Solomon, Tessler and Thomas, in payment
for consulting services to Country.
On September 24, 1992, American Country Financial Services Corp.
("AFSC"), a subsidiary of Country, purchased from The Mid City National Bank
of Chicago the promissory note dated July 30, 1992, made by Checker Services,
Inc., formerly King Cars, Inc. ("Services"), in the principal amount of
$381,500 plus accrued interest in the amount of $3,560. The note, which was
renewed several times, had outstanding principal and accrued interest as of
September 30, 1994, of approximately $430,000 and matured in December 1994.
Until October 1994 when Checker Taxi Association purchased 45% of Services
for $250,500 (which amount was used by Services to pay accrued interest and
to reduce the principal amount of the note), Services was owned by Messrs.
Markin, Solomon, Tessler, Thomas and Feldman. The balance of the note
(except for $57,309 which was forgiven) was paid prior to December 31, 1994.
Services is a party to an agreement dated December 15, 1992, with Yellow Cab
pursuant to which Yellow Cab purchases from Services display frames for
installation in its taxicabs and Services furnishes Yellow Cab advertising
copy for insertion into the frames. Services receives such advertising copy
as an agent in Chicago for an unrelated company which is in the business of
selling and arranging for local and national advertising. Of the revenues
generated from such advertising, 30% will be retained by Services and the
balance will be delivered to Yellow Cab until such time as Yellow Cab has
recovered costs advanced by it for the installation of advertising frames in
500 of its taxicabs (approximately $78,000). The terms of Yellow Cab are the
same or more favorable than those offered by Services to unrelated third
parties.
Each of Messrs. Markin, Solomon, Tessler and Thomas received from
Holdings interest payments of $790,428 in 1994 pursuant to the terms of the
senior notes held by them (see Note F of the Notes to Consolidated Financial
Statements - December 31, 1994).
Jeffrey M. Feldman is the nephew of David R. Markin.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Common Stock, which is the only class of stock of the Company, is
owned as follows:
30
No. of Shares of Common Stock Percent of
Name of Record and Beneficially Owned Class
- ---- -------------------------------- ----------
David R. Markin 325 32.5
Martin L. Solomon 225 22.5
Allan R. Tessler 225 22.5
Wilmer J. Thomas, Jr. 225 22.5
The address of each of the shareholders is c/o Great Dane Holdings Inc.,
2016 North Pitcher Street, Kalamazoo, Michigan 49007.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Item 11. EXECUTIVE COMPENSATION - COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION."
31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1 and 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES:
The following consolidated financial statements and consolidated
financial statement schedules of Great Dane Holdings Inc. and subsidiaries
and the report thereon of independent auditors are filed as part of this
Annual Report on Form 10-K and are incorporated by reference in Item 8:
A. Report of Independent Auditors.
B. Consolidated Financial Statements.
Consolidated Balance Sheets as of December 31, 1993 and 1994.
Consolidated Statements of Shareholders' Deficit for the years
ended December 31, 1992, 1993 and 1994.
Consolidated Statements of Operations for the years ended
December 31, 1992, 1993 and 1994.
Consolidated Statements of Cash Flows for the years ended
December 31, 1992, 1993 and 1994.
Notes to Consolidated Financial Statements - December 31, 1994.
C. Consolidated Financial Statement Schedules.
Schedule III - Condensed Financial Information of Registrant
Schedule VIII - Valuation and Qualifying Accounts
Schedule XIV - Supplemental Information Concerning Property-
Casualty Insurance Operations
See the accompanying Index to Financial Statements and Financial
Statement Schedules Covered by Report of Independent Auditors appearing after
the signature page to this Annual Report on Form 10-K.
3. See the accompanying Index to Exhibits which precedes the Exhibits
filed with this Annual Report on Form 10-K.
(b) REPORTS ON FORM 8-K:
None
(c) EXHIBITS:
See the accompanying Index to Exhibits which precedes the Exhibits filed
with this Annual Report on Form 10-K.
32
(d) FINANCIAL STATEMENT SCHEDULES REQUIRED BY REGULATION S-X:
See the accompanying Index to Financial Statements and Financial
Statement Schedules Covered by Report of Independent Auditors which
appears after the signature page to this Annual Report on Form 10-K.
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
February 15, 1995 GREAT DANE HOLDINGS, INC.
By: /s/ David R. Markin
------------------------------------------
David R. Markin
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons, including at least a
majority of the members of its Board of Directors, on behalf of Registrant
and in the capacities and on the dates indicated.
/s/ Allan R. Tessler Chairman of the Board February 15, 1995
- --------------------------
Allan R. Tessler
/s/ David R. Markin President, Chief Executive February 15, 1995
- -------------------------- Officer and Director
David R. Markin
/s/ Jay H. Harris Executive Vice President February 15, 1995
- -------------------------- and Chief Operating Officer
Jay H. Harris
/s/ Marlan R. Smith Treasurer (Principal February 15, 1995
- -------------------------- Financial Officer and
Marlan R. Smith Principal Accounting Officer)
/s/ Martin L. Solomon Vice Chairman of the Board February 15, 1995
- -------------------------- and Secretary
Martin L. Solomon
Vice Chairman of the Board
- --------------------------
Wilmer J. Thomas, Jr.
34
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
COVERED BY REPORT OF INDEPENDENT AUDITORS
The following consolidated financial statements of Great Dane Holdings Inc.
and subsidiaries are submitted herewith in response to Item 8:
Page
----
- - Report of Independent Auditors F-1
- - Consolidated Balance Sheets as of December 31, 1993 and 1994 F-2
- - Consolidated Statements of Shareholders' Deficit for the
Years Ended December 31, 1992, 1993 and 1994 F-4
- - Consolidated Statements of Operations for the Years Ended
December 31, 1992, 1993 and 1994 F-5
- - Consolidated Statements of Cash Flows for the Years Ended
December 31, 1992, 1993 and 1994 F-6
- - Notes to Consolidated Financial Statements--December 31, 1994 F-8
The following consolidated financial statement schedules of Great Dane
Holdings Inc. and subsidiaries are submitted herewith in response to Item
14(d):
Schedule III - Condensed Financial Information of Registrant S-1
Schedule VIII - Valuation and Qualifying Accounts S-4
Schedule XIV - Supplemental Information Concerning Property-
Casualty Insurance Operations S-6
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been
omitted.
F-1
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Great Dane Holdings Inc.
We have audited the accompanying consolidated balance sheets of Great Dane
Holdings Inc. and subsidiaries as of December 31, 1993 and 1994, and the
related consolidated statements of operations, shareholders' deficit and cash
flows for each of the three years in the period ended December 31, 1994. Our
audits also included the financial statement schedules listed in the Index at
Item 14(a). These financial statements and schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Great Dane
Holdings Inc. and subsidiaries at December 31, 1993 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
/s/ Ernst & Young LLP
Kalamazoo, Michigan
February 14, 1995
F-2
CONSOLIDATED BALANCE SHEETS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
December 31,
1993 1994
-------- --------
ASSETS:
Cash and cash equivalents $ 40,078 $ 34,875
Accounts receivable, less allowance for doubtful
accounts of $748 (1993) and $1,342 (1994)
(Note F) 75,701 90,076
Inventories (Notes C and F) 94,112 96,580
Other current assets 11,823 19,729
---------- ----------
Total current assets 221,714 241,260
Property, plant and equipment, net (Notes D,
F and G) 122,355 113,948
Insurance Subsidiary's investments (Note E) 90,838 91,094
Cost in excess of net assets acquired, net of
accumulated amortization of $6,252 (1993)
and $7,502 (1994) 43,743 42,493
Trademark, net of accumulated amortization
of $1,750 (1993) and $2,100 (1994) 11,696 11,346
Other assets 26,990 21,910
---------- ----------
Total assets $ 517,336 $ 522,051
========== ==========
F-3
CONSOLIDATED BALANCE SHEETS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
December 31,
1993 1994
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT:
Accounts payable $ 77,876 $ 80,863
Notes payable (Note F) 5,000 5,000
Income taxes payable (Note J) 7,726 12,663
Accrued compensation 15,838 17,955
Accrued interest 11,746 11,802
Customer deposits 730 14,113
Other accrued liabilities 37,341 36,402
Current portion of long-term debt 14,321 13,613
---------- ----------
Total current liabilities 170,578 192,411
Long-term debt, excluding current portion
(Note F):
Shareholders 30,000 30,000
Other 246,952 244,652
---------- ----------
276,952 274,652
Insurance Subsidiary's unpaid losses and loss
adjustment expenses 71,179 69,318
Unearned insurance premiums 9,547 12,203
Deferred income taxes 9,803 2,750
Postretirement benefits other than pensions
(Note H) 49,609 51,061
Other noncurrent liabilities 39,053 46,372
Minority interest (Notes G and I) 40,132 586
---------- ----------
Total liabilities 666,853 649,353
Shareholders' deficit (Notes A, E and F):
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) (11,869)
Unrealized appreciation (depreciation) on
Insurance Subsidiary's investments in
certain debt and equity securities 73 (2,060)
Notes receivable from shareholders (625) (625)
Amount paid in excess of Motors's net assets (127,748) (127,748)
---------- ----------
Total shareholders' deficit (149,517) (127,302)
Commitments and contingencies (Note G)
---------- ----------
Total liabilities and
shareholders' deficit $ 517,336 $ 522,051
========== ==========
See notes to consolidated financial statements.
F-4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(dollars in thousands)
Unrealized
Appreciation
(Depreciation) Amount
on Notes Paid in
Additional Investments Receivable Excess of
Common Paid-In Retained in Certain from Motors's
Stock Capital Earnings Securities Share- Net Assets
(Note A) (Note A) (Deficit) (Note E) holders (Note A)
-------- ---------- -------- ---------- ---------- ----------
Balances at January 1, 1992 $ 1 $14,999 $ 14,600 $ 399 $(625) $(127,748)
Unrealized depreciation on
investment in equity
securities --- --- --- (367) --- ---
Net loss --- --- (7,555) --- --- ---
----- ------- --------- -------- ------ ----------
Balances at December 31, 1992 1 14,999 7,045 32 (625) (127,748)
Unrealized appreciation on
investment in equity
securities --- --- --- 41 --- ---
Net loss --- --- (43,262) --- --- ---
----- ------- --------- -------- ------ ----------
Balances at December 31, 1993 1 14,999 (36,217) 73 (625) (127,748)
Unrealized depreciation on
investment in certain debt
and equity securities --- --- --- (2,133) --- ---
Net income --- --- 24,348 --- --- ---
----- ------- --------- -------- ------ ----------
Balances at December 31, 1994 $ 1 $14,999 $(11,869) $(2,060) $(625) $(127,748)
===== ======= ========= ======== ====== ==========
See notes to consolidated financial statements.
F-5
CONSOLIDATED STATEMENTS OF OPERATIONS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except share and per share amounts)
Year Ended December 31,
1992 1993 1994
-------- -------- --------
Revenues:
Trailer manufacturing and distribution $ 536,336 $ 711,862 $ 859,089
Automotive products manufacturing 112,631 127,925 157,568
Vehicular operations including rental
income of $37,382 (1992); $38,360
(1993) and $38,712 (1994) 40,580 42,103 43,653
Insurance premiums earned 27,186 27,436 36,167
---------- ---------- -----------
Total revenues 716,733 909,326 1,096,477
Cost of revenues:
Cost of sales (561,546) (728,471) (870,656)
Cost of vehicular operations (30,120) (30,916) (32,066)
Cost of insurance operations (19,204) (19,418) (26,510)
---------- ---------- -----------
Total cost of revenues (610,870) (778,805) (929,232)
---------- ---------- -----------
Gross profit 105,863 130,521 167,245
Selling, general and administrative
expense (76,877) (83,176) (91,600)
Interest expense (42,726) (41,614) (40,165)
Interest income 8,895 7,396 7,101
Other income (expense), net (2,023) 3,494 1,002
Special charge--Note G --- (7,500) ---
---------- ---------- -----------
Income (loss) before minority equity,
income taxes, and accounting changes (6,868) 9,121 43,583
Minority equity (Notes B and I) --- --- (586)
---------- ---------- -----------
Income (loss) before income taxes
and accounting changes (6,868) 9,121 42,997
Income tax expense (Note J) (687) (5,757) (18,649)
---------- ---------- -----------
Income (loss) before accounting changes (7,555) 3,364 24,348
Accounting changes (Notes H and J) --- (46,626) ---
---------- ---------- -----------
Net income (loss) $ (7,555) $ (43,262) $ 24,348
========== ========== ===========
Weighted average number of shares used
in per share computations (Note A) 1,000 1,000 1,000
========== ========== ===========
Income (loss) per share:
Income (loss) before accounting
changes $ (7,555) $ 3,364 $ 24,348
Accounting changes --- (46,626) ---
---------- ---------- -----------
Net income (loss) per share $ (7,555) $ (43,262) $ 24,348
========== ========== ===========
See notes to consolidated financial statements.
F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(dollars in thousands)
Year Ended December 31,
1992 1993 1994
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (7,555) $ (43,262) $ 24,348
Adjustment to reconcile net income
(loss) to net cash provided by
operating activities:
Accounting changes --- 46,626 ---
Depreciation and amortization 21,054 23,295 22,594
Deferred income tax benefit (4,311) (8,512) (9,044)
Amortization of cost in excess of net
assets acquired 1,250 1,250 1,250
Amortization of debt discount 1,181 1,372 1,595
(Gain) loss on sale of property,
plant and equipment 217 207 (376)
Investment gains (690) (1,079) (276)
Increase in minority equity --- --- 586
Other noncash charges 6,386 7,562 10,203
Changes in operating assets and
liabilities:
Accounts receivable (12,788) (11,970) (15,140)
Finance lease receivables 5,131 4,408 1,511
Inventories (7,820) (22,251) (2,468)
Other assets (5,634) 679 (2,463)
Accounts payable 8,281 21,193 2,987
Income taxes 4,489 824 6,037
Unpaid losses and loss
adjustment expenses 5,046 (4,601) (1,861)
Unearned insurance premiums 4,673 (917) 2,656
Postretirement benefits other
than pension --- 4,497 1,452
Other liabilities 6,288 11,359 12,760
---------- ---------- ----------
NET CASH FLOW PROVIDED BY OPERATING
ACTIVITIES 25,198 30,680 56,351
F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(dollars in thousands)
Year Ended December 31,
1992 1993 1994
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment $ (17,549) $ (20,006) $ (18,209)
Proceeds from disposal of property,
plant and equipment and other
productive assets 2,783 2,599 1,979
Purchase of investments available for
sale --- --- (10,124)
Purchase of investments held to maturity (32,190) (64,052) (13,220)
Proceeds from sale of investments
available for sale --- --- 2,769
Proceeds from maturity and redemption
of investments held to maturity 31,617 65,019 17,567
---------- ---------- ----------
NET CASH FLOW USED IN INVESTING
ACTIVITIES (15,339) (16,440) (19,238)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 32,090 2,500 10,069
Repayments of borrowings (39,772) (17,967) (14,672)
Return of limited partner's capital (1,035) (894) (37,713)
---------- ---------- ----------
NET CASH FLOW USED IN FINANCING
ACTIVITIES (8,717) (16,361) (42,316)
---------- ---------- ----------
Increase (decrease) in cash and cash
equivalents 1,142 (2,121) (5,203)
Beginning cash and cash equivalents 41,057 42,199 40,078
---------- ---------- ----------
ENDING CASH AND CASH EQUIVALENTS $ 42,199 $ 40,078 $ 34,875
========== ========== ==========
See notes to consolidated financial statements.
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
December 31, 1994
NOTE A--ORGANIZATION
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 a pro rata portion of 1,000 shares of common stock, $1 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. On November 16, 1994, the
Company's Board of Directors approved a resolution, subject to shareholder
approval, to be effective prior to the consummation of an initial public
offering, increasing the number of authorized shares of common stock to 50
million, reducing the par value to $0.01 per common share and splitting the
shares 16,800 for 1. This resolution also authorized 5 million shares of
$1 par value preferred stock.
The Company has two operating subsidiaries, Great Dane Trailers, Inc.
("Great Dane") and Checker Motors Corporation ("Motors"). During 1989, the
Company purchased all of the common stock of Motors, the general partner of
Checker Motors Co., L.P. (the "Partnership), a Delaware limited partnership
(the "Motors acquisition").
Immediately after the Motors acquisition, substantially all of Motors'
former shareholders purchased, through Checker Holding Corp. ("Holding"),
all of the outstanding common stock of the Company (the "Holding buyout").
Holding was created solely for the purpose of acquiring the stock of the
Company and was subsequently merged into the Company. The Holding buyout
has been accounted for as if Motors acquired the Company (a "reverse
acquisition"), since there was no significant change in control of Motors.
Under generally accepted accounting principles for reverse acquisitions,
the net assets of Motors acquired in the Motors acquisition cannot be
revalued to estimated fair value. Accordingly, the $127.7 million excess
of the amount paid over the historical book value of Motors net assets has
been accounted for as a separate component reducing shareholders' equity
and is not subject to amortization. The fair value of Motors net assets,
as estimated by management, is significantly greater than historical book
value, but no appraisal of fair value is available.
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Great Dane Holdings Inc. and its subsidiaries, including
the Partnership and the Partnership's wholly-owned subsidiaries, including
American Country Insurance Company ("Insurance Subsidiary"). All
significant intercompany accounts and transactions have been eliminated.
CASH EQUIVALENTS: The Company considers all highly liquid investments,
other than Insurance Subsidiary investments, with a maturity of three
months or less when purchased to be cash equivalents.
F-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued. . .
INVENTORIES: Inventories are stated at the lower of cost or market. The
cost of inventories is determined principally on the last-in, first-out
("LIFO") method.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at
cost. Depreciation is provided based on the assets' estimated useful
lives, principally by the straight-line method.
Estimated depreciable lives are as follows:
Buildings 10-40 years
Transportation equipment 2-6 years
Machinery, equipment, furniture and fixtures 3-12 years
INTANGIBLE ASSETS: Intangible assets, principally cost in excess of net
assets acquired and a trademark, are being amortized on the straight-line
basis over periods of 5 to 40 years.
CUSTOMER DEPOSITS: Substantially all customer deposits represent advanced
payments from a customer in connection with tooling production for this
customer.
MINORITY INTEREST: Minority interest represents the limited partner's
allocable share of the Partnership's net assets (see Notes G and I) and the
share of net assets of South Charleston Stamping & Manufacturing Company
("SCSM") allocable to the minority interest holder.
REVENUE RECOGNITION: Revenues from sales of trailers that are manufactured
in response to customers' orders are recorded when such products are
completed and invoiced. Rental income from vehicle leases is recognized as
earned. Vehicles are generally leased on a daily or weekly basis to
unaffiliated operators. Insurance Subsidiary premiums are recognized as
income ratably over the period covered by the policies. Unearned premium
reserves are calculated on the monthly pro-rata basis. Realized gains and
losses on investments are determined on a specific identification basis and
are included in the determination of net income.
DEBT ISSUE EXPENSE: Expenses incurred in connection with the issuance of
debt are capitalized and amortized as interest expense over the life of the
debt.
LOSSES AND LOSS ADJUSTMENT EXPENSES: The Insurance Subsidiary's liability
for unpaid losses and loss adjustment expenses represents an estimate of
the ultimate net costs of all losses which are unpaid at the balance sheet
dates, and is determined using case-basis evaluations and statistical
analysis. These estimates are continually reviewed and any adjustments
which become necessary are included in current operations. Since the
liability is based on estimates, the ultimate settlement of losses and the
related loss adjustment expenses may vary from the amounts included in the
consolidated financial statements.
F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued. . .
RECLASSIFICATION: Certain 1993 amounts have been reclassified to conform
to the 1994 classifications.
NOTE C--INVENTORIES
Inventories are summarized below (dollars in thousands):
December 31,
1993 1994
-------- --------
Raw materials $ 53,105 $ 60,998
Work-in-process 10,956 15,877
Finished goods 30,051 19,705
---------- ----------
$ 94,112 $ 96,580
========== ==========
Inventories would not differ materially if the first-in, first-out costing
method were used for inventories costed by the LIFO method.
NOTE D--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized below (dollars in thousands):
December 31,
1993 1994
-------- --------
Land and buildings $ 54,167 $ 56,430
Transportation equipment 32,830 31,597
Machinery, equipment, furniture and fixtures 125,067 129,085
---------- ----------
212,064 217,112
Less accumulated depreciation and amortization (89,709) (103,164)
---------- ----------
$ 122,355 $ 113,948
========== ==========
NOTE E--INVESTMENTS
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
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE E--INVESTMENTS--Continued. . .
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.
Insurance company management evaluated the investment portfolio and, based
on the Insurance Subsidiary's ability and intent, has classified securities
between the held-to-maturity and available-for-sale categories. Held-to-
maturity securities are stated at amortized cost. Debt securities not
classified as held-to-maturity and marketable equity securities are
classified as available-for-sale. Available-for-sale securities are stated
at fair value, with the unrealized gains and losses, net of tax, reported
as a separate component of shareholders' deficit.
Following is a summary of held-to-maturity and available-for-sale
securities of the Insurance Subsidiary, which are generally reserved for
Insurance Subsidiary operations, as of December 31, 1994:
Held-To-Maturity
---------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
U.S. Treasury securities
and obligations of U.S.
Government corporations
and agencies $ 7,285 $ 73 $ 143 $ 7,215
Obligations of states and
political subdivisions 8,828 51 367 8,512
Mortgage-backed securities 3,142 --- 200 2,942
Corporate and other debt
securities 25,943 88 1,005 25,026
-------- -------- -------- --------
$ 45,198 $ 212 $ 1,715 $ 43,695
======== ======== ======== ========
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE E--INVESTMENTS--Continued. . .
Available-For-Sale
---------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
Obligations of states and
political subdivisions $ 9,958 $ 10 $ 689 $ 9,279
Corporate and other debt
securities 23,198 272 1,148 22,322
-------- -------- -------- --------
Total debt securities 33,156 282 1,837 31,601
Equity securities 15,994 227 1,926 14,295
-------- -------- -------- --------
Total available-for-
sale $ 49,150 $ 509 $ 3,763 $ 45,896
======== ======== ======== ========
The amortized cost and estimated market value of debt securities at
December 31, 1994, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
Held-To-Maturity
---------------------
Estimated
Fair
Cost Value
-------- --------
Due in one year or less $ 7,300 $ 7,314
Due after one year through five years 28,338 27,512
Due after five years through ten years 4,424 4,074
Due after ten years 1,994 1,853
-------- --------
42,056 40,753
Mortgage-backed securities 3,142 2,942
-------- --------
$ 45,198 $ 43,695
======== ========
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE E--INVESTMENTS--Continued. . .
Available-For-Sale
---------------------
Estimated
Fair
Cost Value
-------- --------
Due in one year or less $ 289 $ 284
Due after one year through five years 2,847 2,833
Due after five years through ten years 19,296 18,132
Due after ten years 10,724 10,352
-------- --------
$ 33,156 $ 31,601
======== ========
The proceeds from sales of available-for-sale securities was $2.8 million
for the year ended December 31, 1994. No gross gains or gross losses were
realized on those sales during the year ended December 31, 1994.
Bonds with an amortized cost of $2.3 million at December 31, 1994, were on
deposit to meet certain regulatory requirements.
NOTE F--BORROWINGS
Long-term debt is summarized below (dollars in thousands) (see Note O):
December 31,
1993 1994
-------- --------
12-3/4% Senior Subordinated Debentures less
debt discount of $11,124 (1993) and
$9,725 (1994) $ 120,916 $ 122,315
14-1/2% Subordinated Discount Debentures less
debt discount of $6,531 (1993) and
$6,335 (1994) 54,816 55,012
Notes payable to shareholders 30,000 30,000
Great Dane term loan payable 21,511 17,411
Great Dane Revolving credit line 17,132 27,201
Partnership term loan payable 22,500 16,500
Equipment term loan 5,500 3,500
Economic Development term loan 10,909 10,375
Installment notes 979 ---
Other debt 7,010 5,951
---------- ----------
291,273 288,265
Less current portion (14,321) (13,613)
---------- ----------
$ 276,952 $ 274,652
========== ==========
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE F--BORROWINGS--Continued. . .
Interest on the $132 million face value of 12-3/4% Senior Subordinated
Debentures is payable semiannually at the stated rate. The recorded debt
discount is being amortized as interest expense over the expected life of
the debentures using an imputed interest rate of approximately 15%
compounded semiannually. Under the terms of the debentures, the Company's
payment of dividends is limited to, among other things, 50% of consolidated
net income subsequent to June 30, 1986, plus $12 million. At December 31,
1994, the Company was restricted from paying a dividend. The debentures
are redeemable at the option of the Company in whole or in part at a
decreasing premium. The debentures are subject to redemptions through a
sinking fund whereby the Company is required to make five annual sinking
fund payments of $18 million commencing August 1, 1996, with the final
payment due August 1, 2001.
Interest on the $61 million face value of 14-1/2% Subordinated Discount
Debentures is payable semiannually at the stated rate. The recorded debt
discount is being amortized as interest expense over the expected life of
the debentures using an imputed interest rate of approximately 16.7%
compounded semiannually. The 14-1/2% debentures are subject to redemption
through a sinking fund whereby the Company is required to redeem, at their
face value, on January 1 in each of the years 1997 through 2005, 7-1/2% of
the principal amount of the debentures outstanding on January 1, 1997. The
balance of debentures are due January 1, 2006. The debentures are callable
any time at their face value and are subordinated to all present or future
indebtedness of the Company not expressly subordinated to, or on a parity
with, the debentures.
The notes payable to shareholders, which were paid off in February 1995
(see Note O), bore interest payable quarterly in arrears at an annual rate
equal to the prime rate of a New York bank (8.5% at December 31, 1994) plus
3-1/2%.
In March 1990, Great Dane entered into a five year loan and security
agreement ("Agreement") with certain banks. The Agreement made available
to Great Dane a $33 million five-year term loan and a $47 million revolving
credit line. In 1993, the maximum revolving credit line was increased to
$65 million. The amount available under the revolving credit line is based
upon the amount of Great Dane's eligible trade accounts receivable and
inventory as defined in the Agreement. The additional amount available
under the revolving credit line under the borrowing base terms of the
Agreement totaled $30.2 million at December 31, 1994. The term loan is
payable in equal monthly installments of $0.34 million plus interest at the
bank's prime interest rate (8.5% at December 31, 1994) plus 1-1/2%, with
the balance due in March 1995. The revolving credit line is due in 1995
and requires interest payments at the bank's prime rate (8.5% at December
31, 1994) plus 1-1/2%. In February 1995, Great Dane entered into an
amended and restated loan and security agreement with certain banks (See
Note O). Accordingly, since these obligations have been refinanced on a
long-term basis, the amounts have been classified as long-term debt as of
December 31, 1994.
F-15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE F--BORROWINGS--Continued. . .
All borrowings under the Agreement are fully secured by substantially all
of the Great Dane assets. The Agreement requires Great Dane to, among
other things, comply with certain financial covenants, and limits the
amount of loans and transfers to the Company, limits additions to and sales
of Great Dane's fixed assets and limits additional Great Dane borrowings.
Under the most restrictive covenant, no additional transfers of funds to
the Company are available until after December 31, 1994.
During 1992, the Partnership entered into a Loan and Guaranty Agreement
with a bank pursuant to which the bank provided a $30 million term loan to
the Partnership. The term loan requires twenty quarterly principal
payments of $1.5 million, plus interest at the bank's prime rate (8.5% at
December 31, 1994) plus 1-1/4%, which payments commenced December 31, 1992.
The term loan is secured by substantially all of the Partnership's assets,
excluding the stock of the Insurance Subsidiary. The term loan agreement,
which is guaranteed by Motors, requires Motors to, among other things,
comply with certain financial covenants and limits additional loans to
Motors.
The equipment term loan requires quarterly payments of $0.5 million plus
interest at the bank's prime rate (8.5% at December 31, 1994) plus 1-1/4%.
The obligation is secured by certain machinery and equipment with a net
carrying amount of $5.9 million at December 31, 1994.
In connection with the Partnership term loan and the equipment term loan,
Motors is required to comply with certain financial covenants.
The economic development term loan, which is guaranteed by Motors, is
payable by SCSM to the West Virginia Economic Development Authority, and
requires monthly payments of $0.1 million, including interest at 5% with
the unpaid balance due 2008. The interest rate will be adjusted in April
1998 and 2003, so as to remain equal to 75% of the base rate, as defined,
plus 1/2%. The loan is secured by certain machinery and equipment with a
net carrying amount of $22.5 million at December 31, 1994.
Maturities of long-term debt for the four years subsequent to 1995, after
giving effect to the payoff of the notes payable to shareholders and to the
refinancing of Great Dane and Motors debt, are as follows: $14.2 million
in 1996, $32.2 million in 1997, $32.2 million in 1998 and $29.0 million in
1999.
Interest paid totaled $42.4 million in 1992, $39.8 million in 1993 and
$38.5 million in 1994.
SCSM has a line of credit with a bank totaling $7.5 million at December 31,
1994. Borrowing under the line ($5.0 million at December 31, 1994) bears
interest at the bank's prime rate (8.5% at December 31, 1994) plus 1%.
The Partnership has $3.8 million available under a line of credit with a
bank. Borrowings under the line ($0 at December 31, 1994) bear interest at
the bank's prime rate (8.5% at December 31, 1994) plus 1%.
The weighted average interest rate on short-term borrowings outstanding as
of December 31, 1993 and 1994 was 7.25% and 9.75% respectively.
F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE G--COMMITMENTS AND 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. Accordingly, a $7.5 million special charge was recorded
in 1993, to provide for the cost associated with this legal proceeding.
On March 4, 1992, Motors received notice that the Insurance Commissioner of
the State of California, as Conservator and Rehabilitator of 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 amendment seeks to add to
the Order, dated April 11, 1991, Motors, the Partnership and Checker
Holding Corp. III, a limited partner of the Partnership. The amendment
alleges that the action by Motors 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. On May 26, 1994, the
California Court approved a settlement of this litigation. Pursuant to the
Settlement Agreement, on December 22, 1994, Motors redeemed ELIC's interest
in the Partnership for $37.0 million (the "Minority Interest Redemption")
and the litigation was thereafter dismissed with prejudice. Under certain
circumstances, if all or substantially all of the assets of the Partnership
are sold within five years of the consummation of the Minority Interest
Redemption, ELIC may be entitled to receive a payment equal to the positive
difference between (x) the distribution ELIC would have received upon
liquidation of the Partnership as a result of such transaction, calculated
in accordance with the provisions of the Partnership Agreement as if it had
continued to hold its partnership interest, and (y) the future value of
$37.0 million calculated at 15% per annum from the date of the Minority
Interest Redemption to the date of such transaction.
F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE G--COMMITMENTS AND CONTINGENCIES--Continued. . .
In 1988, Great Dane entered into an operating agreement with the purchaser
of a previously wholly-owned finance company ("Finance"). Under the terms
of the agreement, the purchaser is given the opportunity to finance certain
sales of Great Dane. The 1988 operating agreement requires that Great
Dane, among other things, (i) not finance the sale of its products for the
first eight years and (ii) maintain a minimum net worth as defined in the
agreement. In addition, under this operating agreement, Great Dane is
liable to the purchaser for 50% of losses incurred in connection with the
realization of certain new receivables financed by the purchaser subsequent
to the sale of Finance subject to certain maximums. Failure to comply with
these requirements of the agreement would result in Great Dane having to
repay the purchaser varying amounts reducing to $5 million during the year
ending September 8, 1996. At December 31, 1994, Great Dane was in
compliance with the provisions of the operating agreement.
In addition, at December 31, 1994, Great Dane Trailers has guaranteed the
realization of receivables of approximately $0.6 million in connection with
the sale of Finance and is partially responsible for the realization of new
receivables of approximately $156.9 million financed by the purchaser under
the operating agreement subject to certain maximums. In addition to Great
Dane's guarantee, these receivables are also collateralized by a security
interest in the respective trailers originally sold by Great Dane. A loss
reserve of $3.1 million, for potential losses that may be incurred on the
ultimate realization of these receivables, is included in other accrued and
other non-current liabilities in the December 31, 1994, consolidated
balance sheet.
To secure certain obligations, the Company and its subsidiaries had
outstanding letters of credit aggregating approximately $3.4 million at
December 31, 1994, which letters of credit were fully secured by cash
deposits included in other assets in the consolidated balance sheets. In
addition, Great Dane has standby letters of credit aggregating
approximately $7.6 million and the Partnership has standby letters of
credit aggregating approximately $1.2 million outstanding at December 31,
1994.
The Company and certain of its subsidiaries have employment agreements with
three officers of the Company that provide for minimum annual compensation
of approximately $1.8 million. The contracts expire on various dates from
June 1995 to February 1997.
The Company and its subsidiaries lease real estate and equipment. Certain
leases are renewable and provide for monthly rentals, real estate taxes and
other operating expenses. The Company believes that, in the normal course
of business, leases that expire will be renewed or replaced by other
leases. Rental expense under operating leases was approximately $3.8
million in 1992, $4.8 million in 1993, and $5.5 million in 1994. Minimum
rental obligations for all noncancelable operating leases at December 31,
1994 are as follows: $3.0 million in 1995, $2.8 million in 1996, $2.6
million in 1997, $2.5 million in 1998, $2.4 million in 1999, and $14.6
million thereafter.
F-18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE G--COMMITMENTS AND CONTINGENCIES--Continued. . .
Management believes that none of the above legal actions, guarantees or
commitments will have a material adverse effect on the Company's
consolidated financial position.
NOTE H--RETIREMENT PLANS
The Company and its subsidiaries have defined benefit pension plans
applicable to substantially all employees. The contributions to these
plans are based on computations by independent actuarial consultants. The
Company's general funding policy is to contribute amounts required to
maintain funding standards in accordance with the Employee Retirement
Income Security Act. Employees' benefits are based on years of service and
the employees' final average earnings, as defined by the plans.
Net periodic pension cost includes the following components (dollars in
thousands):
Year Ended December 31,
1992 1993 1994
-------- -------- --------
Service cost--benefits earned
(normal cost) $ 1,473 $ 1,752 $ 2,384
Interest on projected benefit
obligation 3,565 3,972 4,384
Return on investments (2,718) (2,867) (1,007)
Net amortization and deferral 129 328 (1,459)
-------- -------- --------
Net periodic pension cost
charged to expense $ 2,449 $ 3,185 $ 4,302
======== ======== ========
Gains and losses and prior service cost are amortized over periods ranging
from seven to fifteen years. Other assumptions used in the calculation of
the actuarial present value of the projected benefit obligation were as
follows:
1992 1993 1994
---- ---- ----
Discount rate 8-1/4% 7-1/2% 7-1/2% - 8%
Rate of increase in compensa-
tion levels 4% - 5% 4% - 4-1/4% 4% - 4-1/4%
Long-term rate of return on
assets 5% - 9-1/2% 5% - 9-1/2% 5% - 9%
F-19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE H--RETIREMENT PLANS--Continued. . .
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets (dollars in
thousands):
December 31,
1993 1994
---------- ----------
Actuarial present value of benefit obligations:
Vested benefit obligations $ 41,846 $ 44,642
========== ==========
Accumulated benefit obligation $ 44,731 $ 47,836
========== ==========
Plan assets (principally guaranteed investment
contracts with insurance companies) $ 41,664 $ 43,541
Projected benefit obligation 54,568 60,655
---------- ----------
Projected benefit obligation in excess of
plan assets (12,904) (17,114)
Unrecognized prior service cost 1,115 778
Unrecognized net loss 1,687 6,353
Minimum liability (1,450) (2,351)
Unrecognized net obligation at transition 1,819 1,591
---------- ----------
Pension liability recognized in
the balance sheets (9,733) (10,743)
Less noncurrent liability 6,442 6,943
---------- ----------
Current pension liability $ (3,291) $ (3,800)
========== ==========
Relative positions and undertakings in multiemployer pension plans covering
certain of the Partnership's employees are not presently determinable.
Expenses related to multiemployer pension plans totaled $0.2 million, $0.2
million and $0.3 million for the years ended December 31, 1992, 1993 and
1994, respectively.
Expense related to defined contribution plans, which is based on a
stipulated contribution for hours worked or employee contributions,
approximated $0.3 million in 1992, $0.5 million in 1993 and $0.5 million in
1994.
The Company and its subsidiaries provide postretirement health care and
life insurance benefits to eligible retired employees. The Company's
policy is to fund the cost of medical benefits as paid. Prior to 1993, the
Company recognized expense in the year the benefits were provided. The
amount charged to expense for these benefits was approximately $2.5 million
in 1992. Effective January 1, 1993, the Company adopted SFAS No.106,
"Employers Accounting for Postretirement Benefits Other Than Pensions."
This statement requires the accrual of the cost of providing postretirement
F-20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE H--RETIREMENT PLANS--Continued. . .
benefits, including medical and life insurance coverage, during the active
service period of the employee. The Company recorded a charge of $29.7
million (net of taxes of $16.5 million), or $29,762 per share, during 1993
to reflect the cumulative effect of this change in accounting principle.
The following table sets forth the plan's funded status reconciled with
amounts recognized in the Company's consolidated balance sheets (in
thousands):
December 31,
1993 1994
---------- ----------
Accumulated post retirement obligation:
Retirees $ (34,040) $ (32,473)
Fully eligible active plan participants (4,319) (5,315)
Other active plan participants (11,218) (9,751)
---------- ----------
(49,577) (47,539)
Unrecognized net (gain) loss 1,119 (2,568)
Unrecognized prior service cost (3,432) (3,146)
---------- ----------
Accrued postretirement benefit liability
recorded in balance sheet (51,890) (53,253)
Less noncurrent liability 49,609 51,061
---------- ----------
Current postretirement benefit
liability $ (2,281) $ (2,192)
========== ==========
Net periodic postretirement benefit cost includes the following components
(in thousands):
Year Ended
December 31,
1993 1994
---------- ----------
Service cost $ 634 $ 541
Interest cost 3,888 3,625
Unrecognized prior service cost --- (286)
---------- ----------
$ 4,522 $ 3,880
========== ==========
The health care cost trend rate as of December 31, 1994, ranges from 12.6%
down to 5.5% over the next 20 years and remains level thereafter. The
F-21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE H--RETIREMENT PLANS--Continued. . .
health care cost trend rate assumption has a significant effect on the
amounts reported. For example, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1994, by
$2.9 million. The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.5% and 8.0% at December
31, 1993 and 1994, respectively.
The effect of adopting SFAS No. 106 decreased 1993 pre-tax income by $2.0
million as compared to 1992.
NOTE I--MINORITY EQUITY
On April 11, 1991, ELIC was placed in conservatorship. In accordance with
the provisions of the Partnership Agreement, the Partnership continues, but
ELIC's interest in the Partnership and rights under the Partnership
Agreement are limited to the right to receive the balance of its capital
account as calculated and on the terms set forth in the Partnership
Agreement. On December 22, 1994, the Company purchased ELIC's interest in
the Partnership for $37 million.
Minority equity for the year ended December 31, 1994, represents the
minority interest holder's allocable share of SCSM's net income for the
period.
NOTE J--INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
As permitted under the new rules, prior years financial statements have not
been restated. The Company recorded a charge of $16.9 million, or $16,864
per share, during 1993 to reflect the cumulative effect of this change in
accounting principle. Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for
income tax purposes.
Significant components of the Company's deferred tax assets and
liabilities as of December 31, 1993 and 1994 are as follows (dollars in
thousands):
F-22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE J--INCOME TAXES--Continued. . .
December 31,
1993 1994
---------- ----------
Deferred tax assets:
Other postretirement benefits $ 18,961 $ 19,675
Pension 3,377 2,799
Reserves 10,986 13,143
Bad debt reserve 1,601 1,769
Other 5,555 6,868
---------- ----------
40,480 44,254
Valuation allowance (1,000) (1,000)
---------- ----------
39,480 43,254
Deferred tax liabilities:
Property, plant and equipment 31,646 28,519
Finance lease receivables 517 ---
Debenture discount 4,647 4,354
Intangible assets 5,249 4,525
Inventory 3,624 2,530
Other 645 76
---------- ----------
46,328 40,004
---------- ----------
Net deferred tax assets (liabilities) $ (6,848) $ 3,250
========== ==========
The components of income tax expense are as follows (dollars in thousands):
Deferred Method Liability Method
--------------- ----------------
Year Ended Year Ended
December 31, December 31,
1992 1993 1994
---------- ---------- ----------
Current taxes:
Federal $ (3,296) $ (10,244) $ (23,395)
State (1,702) (4,025) (4,298)
---------- ---------- ----------
(4,998) (14,269) (27,693)
Deferred taxes 4,311 8,512 9,044
---------- ---------- ----------
Income tax expense $ (687) $ (5,757) $ (18,649)
========== ========== ==========
F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE J--INCOME TAXES--Continued. . .
The components of the deferred tax benefit are as follows (dollars in
thousands):
Year Ended
December 31,
1992
--------
Tax depreciation less than book depreciation $ 1,742
Finance leases (37)
Inventory reserves 505
Financing costs (75)
Warranty reserves 22
Other reserves 602
Partnership allocation 1,469
Other 83
--------
Deferred tax benefit $ 4,311
========
Income tax expense differs from the amount computed by applying the
statutory federal income tax rate to income (loss) before income taxes.
The reasons for these differences are as follows (dollars in thousands):
F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE J--INCOME TAXES--Continued. . .
Deferred Method Liability Method
--------------- ----------------
Year Ended Year Ended
December 31, December 31,
1992 1993 1994
---------- ---------- ----------
Computed expected tax benefit
(expense) $ 2,335 $ (3,192) $ (15,049)
(Increase) decrease in taxes
resulting from:
State income taxes, net of
federal income tax
benefit (1,123) (2,616) (2,794)
Appraisal depreciation (1,024) --- ---
Amortization of goodwill
and other items (530) (643) (714)
Nontaxable Partnership
income 574 446 286
Other (919) 248 (378)
---------- ---------- ----------
Actual tax expense $ (687) $ (5,757) $ (18,649)
========== ========== ==========
Income taxes paid totaled $3.9 million in 1992, $13.4 million in 1993 and
$24.5 million in 1994.
NOTE K--RELATED PARTY TRANSACTIONS
The Company leases an airplane owned by a corporation of which a director
is the sole shareholder. Lease expenses totaled $0.7 million each year in
1992 and 1993 and $1.1 million in 1994.
NOTE L--INDUSTRY SEGMENT INFORMATION
The Company operates in four principal segments:
F-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE L--INDUSTRY SEGMENT INFORMATION--Continued. . .
TRAILER MANUFACTURING SEGMENT--Manufacturing and distribution of highway
truck trailers.
AUTOMOTIVE PRODUCTS SEGMENT--Manufacturing metal stampings and assemblies
and coordination of related tooling production for motor vehicle
manufacturers.
VEHICULAR OPERATIONS SEGMENT--Leasing taxicabs.
INSURANCE OPERATIONS SEGMENT--Providing property and casualty insurance
coverage to the Partnership and to outside parties.
Trailer Manufacturing segment sales to J. B. Hunt totaled approximately
$50.0 million in 1992, $92.3 million in 1993 and $85.3 million in 1994.
Automotive product net sales to General Motors Corporation totaled
approximately $109.1 million in 1992, $121.5 million in 1993 and $145.9
million in 1994 (includes accounts receivable of $8.9 million, $8.9 million
and $13.0 million at December 31, 1992, 1993 and 1994, respectively).
Industry segment data is summarized as follows (dollars in thousands):
F-26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE L--INDUSTRY SEGMENT INFORMATION--Continued. . .
Trailer Automotive Vehicular Insurance
Manufacturing Products Operations Operations Eliminations Consolidated
------------- -------- ---------- ---------- ------------ ------------
1992
Revenues:
Outside customers $ 536,336 $ 112,631 $ 40,580 $ 27,186 $ --- $ 716,733
Intersegment sales --- 1 4,043 13,161 (17,205) ---
---------- ---------- ---------- ---------- ---------- ----------
$ 536,336 $ 112,632 $ 44,623 $ 40,347 $ (17,205) $ 716,733
========== ========== ========== ========== ========== ==========
Operating profit (loss) $ 17,590 $ 11,622 $ 5,727 $ (1,557) $ 33,382
Corporate expenses (4,396)
Interest income:
Segment 1,168 6,321 7,489
Corporate 1,406
Interest expense:
Segment (5,852) (5,852)
Corporate (36,874)
Other expenses, net (2,023)
----------
Loss before income taxes $ (6,868)
==========
Identifiable assets $ 230,465 $ 66,561 $ 25,516 $ 117,960 $ 440,502
Partnership assets 38,712
Corporate assets 14,549
----------
Total assets at December 31, 1992 $ 493,763
==========
Depreciation and amortization:
Segment $ 6,303 $ 4,148 $ 10,099 $ 462 $ 21,012
Other 42
Capital expenditures 4,996 1,889 10,412 252 17,549
F-27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE L--INDUSTRY SEGMENT INFORMATION--Continued. . .
Trailer Automotive Vehicular Insurance
Manufacturing Products Operations Operations Eliminations Consolidated
------------- -------- ---------- ---------- ------------ ------------
1993
Revenues:
Outside customers $ 711,862 $ 127,925 $ 42,103 $ 27,436 $ --- $ 909,326
Intersegment sales --- --- 4,346 13,400 (17,746) ---
---------- ---------- ---------- ---------- ---------- ----------
$ 711,862 $ 127,925 $ 46,449 $ 40,836 $ (17,746) $ 909,326
========== ========== ========== ========== ========== ==========
Operating profit (loss) $ 32,381 $ 15,306 $ 6,251 $ (1,947) $ --- $ 51,991
Corporate expense (4,646)
Interest income:
Segment 428 5,877 6,305
Corporate 1,091
Interest expense:
Segment (4,811) (4,811)
Corporate (36,803)
Special charge (7,500)
Other income, net 3,494
----------
Income before income taxes $ 9,121
==========
Identifiable assets $ 259,837 $ 67,937 $ 20,493 $ 116,692 $ 464,959
Partnership assets 37,701
Corporate assets 14,676
----------
Total assets at December 31, 1993 $ 517,336
==========
Depreciation and amortization $ 8,280 $ 4,991 $ 9,530 $ 494 $ 23,295
Capital expenditures 7,265 4,728 7,913 100 20,006
F-28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE L--INDUSTRY SEGMENT INFORMATION--Continued. . .
Trailer Automotive Vehicular Insurance
Manufacturing Products Operations Operations Eliminations Consolidated
------------- -------- ---------- ---------- ------------ ------------
1994
Revenues:
Outside customers $ 859,089 $ 157,568 $ 43,653 $ 36,167 $ --- $1,096,477
Intersegment sales --- --- 3,648 12,145 (15,793) ---
---------- ---------- ---------- ---------- ---------- -----------
$ 859,089 $ 157,568 $ 47,301 $ 48,312 $ (15,793) $1,096,477
========== ========== ========== ========== ========== ===========
Operating profit (loss) $ 58,619 $ 19,652 $ 6,824 $ (916) $ --- $ 84,179
Corporate expenses (8,534)
Interest income:
Segment 5,510 5,510
Corporate 1,591
Interest expense:
Segment (3,784) (3,784)
Corporate (36,381)
Other expenses, net 1,002
Minority equity (586)
-----------
Income before income taxes $ 42,997
===========
Identifiable assets $ 264,147 $ 81,976 $ 17,827 $ 116,062 $ 480,012
Partnership assets 36,776
Corporate assets 5,263
-----------
Total assets at December 31, 1994 $ 522,051
===========
Depreciation and amortization:
Segment $ 7,876 $ 5,294 $ 8,992 $ 409 $ 22,571
Other 23
Capital expenditures:
Segment 8,937 1,152 7,580 215 17,884
Other 325
Intersegment sales are accounted for at prices comparable to normal unaffiliated customer sales. Corporate and Partnership
assets consist of short-term investments, savings deposits and certain other assets.
F-29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE M--FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating the fair value of financial instruments:
CASH AND CASH EQUIVALENTS: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
INDEBTEDNESS: The carrying amounts of the Company's notes payable to
shareholders, Great Dane term loan payable, Great Dane revolving credit
line, Partnership term loan payable, equipment term loan, economic
development term loan and line of credit approximate their fair value. The
fair values of the Company's 12-3/4% Senior Subordinated Debentures and 14-
1/2% Subordinated Discount Debentures are based on quoted market prices.
The fair values of the Company's other indebtedness is estimated using
discounted cash flow analyses based on current market rates.
The carrying amount and fair value of the Company's indebtedness at
December 31, 1994, are as follows (dollars in thousands):
Carrying Amount Fair Value
--------------- ----------
Long-term debt and notes payable $ 293,265 $ 292,000
F-30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE N--SELECTED QUARTERLY DATA (UNAUDITED)
(dollars in thousands, except per share amounts)
1993 QUARTER ENDED 1994 QUARTER ENDED
----------------------------------------------- -----------------------------------------------
March 31 June 30 September 30 December 31 March 31 June 30 September 30 December 31
-------- ------- ------------ ----------- -------- ------- ------------ -----------
Revenues $ 204,933 $ 225,407 $ 230,655 $ 248,331 $ 271,680 $ 277,622 $ 256,679 $ 290,496
Gross profit 29,302 33,808 31,126 36,285 40,845 44,969 39,495 41,936
Income (loss) before
accounting changes (744) 1,350 (536) 3,294 6,386 8,391 2,310 7,261
Accounting changes (46,626) --- --- --- --- --- --- ---
Net income (loss) (47,370) 1,350 (536) 3,294 6,386 8,391 2,310 7,261
Income (loss) per share:
Income (loss) before
accounting changes $ (744) $ 1,350 $ (536) $ 3,294 $ 6,386 $ 8,391 $ 2,310 $ 7,261
Accounting changes (46,626) --- --- --- --- --- --- ---
Net income (loss) (47,370) 1,350 (536) 3,294 6,386 8,391 2,310 7,261
F-31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE O--SUBSEQUENT EVENTS
In January 1995, Motors and its subsidiaries finalized a refinancing with
a bank whereby Motors entered into a loan agreement providing for a $45
million term loan and a $20 million revolving credit facility. The funds
from the term loan were used to repay approximately $27 million of bank
debt including the Partnership term loan, the equipment term loan and the
notes payable to the bank, provide $15 million to the Company to retire a
portion of certain notes outstanding to the Company's shareholders and pay
fees and expenses. Availability under the revolving credit facility is
based on the amount of eligible trade accounts receivable and inventory and
may be used for working capital needs, as well as for general corporate
purposes.
The new term loan requires twenty quarterly principal payments of
approximately $2.3 million, commencing June 30, 1995, plus interest at
either the bank's prime rate plus 1.25% (subject to reductions of up to
0.5% upon the occurrence of certain events) or a selected Eurodollar
contract rate plus 300 basis points (subject to reductions of up to 50
basis points upon the occurrence of certain events). The new term loan is
secured by substantially all of Motors' assets including the stock of the
Insurance Subsidiary. The new term loan agreement requires Motors to,
among other things, comply with certain financial covenants, limits
additions to and sales of Motors' fixed assets and limits additional
borrowings by Motors.
In February 1995, Great Dane Trailers amended its loan and security
agreement. Pursuant to the amended agreement, the Lenders have loaned $28
million as a term loan and have agreed to provide, at any given time, up to
$150 million (less amounts then outstanding as a term loan) as a revolving
credit facility (subject to availability based on the amount of eligible
trade accounts receivable and inventory) to be used as working capital by
Great Dane and for general corporate purposes. The initial term loan
proceeds, which were drawn immediately upon closing, were used, together
with drawings under the revolver, to repay approximately $17 million of
bank debt, provide $15 million to the Company to retire the balance of the
shareholder notes and pay fees and expenses. The term loan requires
monthly principal payments of $0.3 million plus interest on the unpaid
principal amount of the loan in arrears at a rate equal to 1% above the
prime rate of interest charged from time to time by Bank of America or a
rate equal to 2.5% above a selected Eurodollar contract rate with the
unpaid principal balance due five years after the closing date. The loans
are secured by substantially all of the assets of Great Dane and its
subsidiaries. The Agreement requires Great Dane to, among other things,
comply with certain financial covenants, and limits the amount of loans and
transfers to the Company, limits additions to and sales of Great Dane's
fixed assets and limits additional Great Dane borrowings.
In January 1995, Motors liquidated the Partnership.
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTE O--SUBSEQUENT EVENTS--Continued. . .
On November 23, 1994, the Company filed a Registration Statement on Form S-
1 with the Securities and Exchange Commission in connection with an initial
public offering ("IPO") of the Company's common stock. The Company is
registering 6,555,000 shares of common stock (including 855,000 shares
which the underwriters have the right to purchase to cover over-allotments)
(in each case, giving effect to a 16,800 to 1 split of the common stock to
be effected upon consummation of the IPO). It is currently estimated that
the initial public offering price will be between $13 and $15 per share.
All of the net proceeds are intended to be used to redeem approximately $72
million of the Company's 12-3/4% Senior Subordinated Debentures, due 2001,
which will be sufficient to satisfy all remaining sinking fund payments on
this indebtedness.
S-1
SCHEDULE III
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
GREAT DANE HOLDINGS INC.
CONDENSED BALANCE SHEETS
(dollars in thousands)
December 31,
1993 1994
---------- ----------
ASSETS:
Cash and cash equivalents $ 1,468 $ 1,401
Accounts receivable 566 535
Other current assets 4,345 1,481
---------- ----------
Total Current Assets 6,379 3,417
Equipment, net --- 302
Investments in subsidiaries 91,388 152,873
Other assets 16,331 15,022
---------- ----------
TOTAL ASSETS $ 114,098 $ 171,614
========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT:
Accounts payable $ 34 $ 869
Income taxes payable (recoverable) (1,702) 9,062
Accrued compensation 256 257
Accrued interest 11,468 11,468
Other accrued liabilities 9,565 7,041
---------- ----------
Total Current Liabilities 19,621 28,697
Long-term debt 205,732 207,327
Other noncurrent liabilities 31,713 29,489
Intercompany accounts with subsidiaries 6,622 31,343
Shareholders' deficit:
Common stock 1 1
Paid-in capital 14,999 14,999
Retained earnings deficit (36,217) (11,869)
Amount paid in excess of Motors'
net assets (127,748) (127,748)
Notes receivable from shareholders (625) (625)
---------- ----------
Total Shareholders' Deficit (149,590) (125,242)
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 114,098 $ 171,614
========== ==========
S-2
SCHEDULE III
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--CONTINUED
GREAT DANE HOLDINGS INC.
CONDENSED STATEMENTS OF OPERATIONS
(dollars in thousands)
Year Ended December 31,
1992 1993 1994
---------- ---------- ----------
Selling, general and
administrative expenses $ (4,396) $ (4,646) $ (8,534)
Interest expense (30,138) (30,216) (30,812)
Equity in earnings of
subsidiaries 14,959 29,376 48,323
Other income (expense) (99) 211 307
Special charge --- (7,500) ---
Intercompany income:
Corporate charges 1,008 1,008 1,008
Interest 305 --- ---
---------- ---------- ----------
Income (loss) before income
taxes and accounting changes (18,361) (11,767) 10,292
Income tax benefit 10,806 15,131 14,056
---------- ---------- ----------
Income (loss) before accounting
changes (7,555) 3,364 24,348
Accounting changes --- (46,626) ---
---------- ---------- ----------
NET INCOME (LOSS) $ (7,555) $ (43,262) $ 24,348
========== ========== ==========
S-3
SCHEDULE III
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--CONTINUED
GREAT DANE HOLDINGS INC.
CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Year Ended December 31,
1992 1993 1994
---------- ---------- ----------
NET CASH FLOW USED IN OPERATING
ACTIVITIES $ (20,973) $ (47,640) $ (11,317)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equipment --- --- (325)
Investment in subsidiaries --- --- (30,000)
Other (334) 5,900 16
---------- ---------- ----------
NET CASH FLOW PROVIDED BY
(USED IN) INVESTING
ACTIVITIES (334) 5,900 (30,309)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Advances from subsidiaries 21,284 38,278 41,559
---------- ---------- ----------
NET CASH FLOW PROVIDED BY
FINANCING ACTIVITIES 21,284 38,278 41,559
---------- ---------- ----------
DECREASE IN CASH AND CASH
EQUIVALENTS (23) (3,462) (67)
Beginning cash and cash
equivalents 4,953 4,930 1,468
---------- ---------- ----------
ENDING CASH AND CASH
EQUIVALENTS $ 4,930 $ 1,468 $ 1,401
========== ========== ==========
The Registrant's subsidiaries declared dividends totaling $120.9 million in
1992, $22 million in 1993 and $15 million in 1994. These dividends were
declared to offset certain intercompany account balances at the respective
dates.
S-4
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(dollars in thousands)
- -----------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------
Additions Charged to:
Balance at --------------------- Balance at
Description Beginning Cost and Other Deductions<F1> End of
of Period Expenses Accounts Period
- -----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992:
Deducted from assets:
Allowance for doubtful accounts
--trade $ 606 $ 183 $ --- $ (166) $ 623
======== ======== ======== ======== ========
Allowance for doubtful accounts
--finance lease receivables $ 944 $ 52 $ --- $ (317) $ 679
======== ======== ======== ======== ========
Contract & warranty reserves $ 8,263 $ 3,564 $ --- $(3,452) $ 8,375
======== ======== ======== ======== ========
Workers' compensation $ 265 $ 4,584 $ --- $(3,008) $ 1,841
======== ======== ======== ======== ========
Claims $ 2,717 $ 783 $ --- $ (168) $ 3,332
======== ======== ======== ======== ========
YEAR ENDED DECEMBER 31, 1993:
Deducted from assets:
Allowance for doubtful accounts
--trade $ 623 $ 234 $ --- $ (109) $ 748
======== ======== ======== ======== ========
Allowance for doubtful accounts
--finance lease receivables $ 679 $ 52 $ --- $ (572) $ 159
======== ======== ======== ======== ========
Contract & warranty reserves $ 8,375 $ 5,439 $ --- $(3,429) $10,385
======== ======== ======== ======== ========
Workers' compensation $ 1,841 $ 1,200 $ --- $(1,927) $ 1,114
======== ======== ======== ======== ========
Claims $ 3,332 $ 1,103 $ --- $(1,106) $ 3,329
======== ======== ======== ======== ========
S-5
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(dollars in thousands)
- -----------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------
Additions Charged to:
Balance at --------------------- Balance at
Description Beginning Cost and Other Deductions<F1> End of
of Period Expenses Accounts Period
- -----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994:
Deducted from assets:
Allowance for doubtful accounts
--trade $ 748 $ 804 $ --- $ (210) $ 1,342
======== ======== ======== ======== ========
Allowance for doubtful accounts
--finance lease receivables $ 159 $ (172) $ --- $ 13 $ 0
======== ======== ======== ======== ========
Contract & warranty reserves $10,385 $ 8,076 $ --- $(4,016) $14,445
======== ======== ======== ======== ========
Workers' compensation $ 1,114 $ 956 $ --- $ (435) $ 1,635
======== ======== ======== ======== ========
Claims $ 3,329 $ 1,078 $ --- $(2,103) $ 2,304
======== ======== ======== ======== ========
- ---------------
<FN>
<F1> Reclassification to other reserves and utilization of reserves.
S-6
SCHEDULE XIV
SUPPLEMENTAL INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(dollars in thousands)
- ----------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F COL. G COL. H COL. I COL. J COL. K
- ----------------------------------------------------------------------------------------------------------------------------------
Reserves Claims and
for Claim
Unpaid Adjustment Amortiza-
Claims Expenses tion Paid
and Discount, Incurred or Claims
Deferred Claim if any, Related to: Deferred and
Policy Adjust- Deducted Net------------------ Policy Claim
Affiliation Acquisi- ment in Unearned Earned Invest- (1) (2) Acquisi- Adjust-
with tion Expense Column Premiums Premiums ment Current Prior tion ment Premium
Registrant Costs <F1> C <F2> <F3> Income Year Years Costs Expenses Written
- ----------------------------------------------------------------------------------------------------------------------------------
WHOLLY-OWNED INSURANCE SUBSIDIARY:
- ----------------------------------
Year Ended:
December 31, 1992 $ 1,832 $ 75,780 $ --- $10,463 $ 40,347 $ 8,227 $ 30,322 $ 2,043 $ (241) $ 27,319 $ 39,238
======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
December 31, 1993 $ 1,893 $ 71,179 $ --- $ 9,547 $ 40,836 $ 7,838 $ 33,193 $ (269) $ 61 $ 30,832 $ 39,920
======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
December 31, 1994 $ 2,258 $ 69,318 $ --- $12,203 $ 48,312 $ 6,890 $ 39,517 $ (592) $ 365 $ 37,010 $ 50,652
======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
- ---------------
<FN>
<F1> Excludes reinsurance recoverable on unpaid claims and claims adjustment expense of $13,888, $7,195 and $3,419 in 1992, 1993
and 1994, respectively, in connection with the restatement of the balance sheet loss reserve amounts as reported in
accordance with SFAS No. 113.
<F2> Excludes net ceded premiums of $286, $286 and $603 in 1992, 1993 and 1994, respectively, in connection with the restatement
of the balance sheet unearned premium amounts as reported in accordance with SFAS No. 113.
<F3> Includes premiums earned of $13,161, $13,400 and $12,145 in 1992, 1993 and 1994, respectively, in connection with
coverage provided to other entities in the consolidated group which have been eliminated in consolidation.
E-1
INDEX TO EXHIBITS
The following Exhibits required by Item 601 of Regulation S-K (and
numbered in conformity therewith) are filed herewith or incorporated by
reference herein:
3.1 - Certificate of Incorporation of the Company (incorporated herein
by reference to Exhibit 3.1 to Registration Statement No. 033-
56595 filed with the Securities and Exchange Commission on
November 23, 1994 (the "1994 S-1").
3.2 - Bylaws of the Company (incorporated herein by reference to
Exhibit 3.2 to the 1994 S-1).
4.1 - Form of Indenture between the Company and First Fidelity Bank,
National Association, New Jersey, as trustee ("First Fidelity")
relating to the 12-3/4% Senior Subordinated Debentures due August
1, 2001, of International Controls Corp ("ICC") (incorporated
herein by reference to Exhibit 4.1 to Registration Statement No.
33-7212 filed with the Securities and Exchange Commission on July
15, 1986).
4.2 - First Supplemental Indenture, dated as of October 19, 1994, among
ICC, the Company and First Fidelity relating to the 12-3/4%
Senior Subordinated Debentures due August 1, 2001 (incorporated
herein by reference to Exhibit 4.2 to the 1994 S-1).
4.3 - Form of Indenture between the Company and Midlantic National
Bank, as trustee ("Midlantic"), relating to the 14-1/2% Sub-
ordinated Discount Debentures due January 1, 2006, of ICC
(incorporated herein by reference to Exhibit 4.1 to Registration
Statement No. 33-1788 filed with the Securities and Exchange
Commission on November 26, 1985).
4.4 - First Supplemental Indenture, dated October 19, 1994, among ICC,
the Company and Midlantic relating to the 14-1/2% Subordinated
Discount Debentures due January 1, 2006 (incorporated herein by
reference to Exhibit 4.4 to the 1994 S-1).
4.5 - Agreement to furnish additional documents upon request by the
Securities and Exchange Commission (incorporated herein by
reference to Exhibit 4.3 to the Company's Annual Report on Form
10-K for the year ended December 31, 1989 (the "1989 10-K").
10.1 - Amended and Restated Employment Agreement, dated as of November
1, 1985, between Motors and David R. Markin ("Markin Employment
Agreement") (incorporated herein by reference to Exhibit 10.18 to
the 1989 10-K).
10.2 - Amendment, dated as of March 4, 1992, to Markin Employment
Agreement (incorporated herein by reference to Exhibit 10.3 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 (the "1991 10-K")).
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10.3 - Extension, dated July 12, 1993, of Amended and Restated Employ-
ment Agreement between Motors and David R. Markin (incorporated
herein by reference to Exhibit 10.6 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 (the
"1993 10-K").
10.4 - Amended and Restated Employment Agreement, dated as of June 1,
1992, between Yellow Cab and Jeffrey Feldman (incorporated herein
by reference to Exhibit 28.2 of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992 (the "June 1992 10-
Q")).
10.5 - Form of Stated Benefit Salary Continuation Agreement (incorpo-
rated herein by reference to Exhibit 10.21 to the 1989 10-K).
10.6 - Employment Agreement, dated as of July 1, 1992, between the
Company and Jay H. Harris (incorporated herein by reference to
Exhibit 28.1 to the June 1992 10-Q).
10.7 - Amendment, dated April 6, 1994, to Harris Employment Agreement
(incorporated herein by reference to Exhibit 10.10 to the 1994 S-
1).
10.8 - Lease, dated December 1, 1988, between SCSM and Park Corporation
(incorporated herein by reference to Exhibit 10.25 to the 1989
10-K).
10.9 - Assumption Agreement, dated as of August 1, 1989, by and between
Motors and the West Virginia Economic Development Authority
(incorporated herein by reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the year ended December
31, 1990).
10.10 - Agreement, dated as of September 1, 1991, between Yellow Cab
Company and Jerry E. Feldman (incorporated herein by reference to
Exhibit 10.12 to the 1991 10-K).
10.11 - Form of Checker Motors Corporation Excess Benefit Retirement
Plan, effective January 1, 1983 (incorporated herein by reference
to Exhibit 19.9 to the 1991 10-K).
10.12 - Amended and Restated License Agreement, dated December 30, 1992,
between Motors and Checker Taxi Association, Inc. (incorporated
herein by reference to Exhibit 10.28 to the Company's Annual
Report on Form 10-K for the year ended December 31 1992 (the
"1992 10-K")).
10.13 - Employment Agreement, dated as of January 1, 1994, between the
Company and David R. Markin (incorporated herein by reference to
Exhibit 10.36 to the 1994 S-1).
10.14 - Great Dane Holdings Inc. 1994 Stock Option Plan.*
10.16 - Settlement Agreement, dated as of June 21, 1994, among John
Garamendi, as Insurance Commissioner of the State of California,
E-3
Base Assets Trust, the Partnership, Motors, Checker Holding
Corp.III and Holdings (incorporated herein by reference to
Exhibit 10.38 to the 1994 S-1).
10.17 - Form of Indemnification Agreement (incorporated herein by
reference to Exhibit 10.39 to the 1994 S-1).
10.18 - Sale, Installation and Technical Assistance Agreement, dated
November 14, 1983, between Graaff KG and Great Dane Trailers,
Inc. (incorporated herein by reference to Exhibit 10.40 to the
1994 S-1).
10.19 - Form of Great Dane Trailers, Inc., Supplemental Retirement Income
Plan, effective January 1, 1994 (incorporated herein by reference
to Exhibit 10.41 to the 1994 S-1).
10.20 - Amended and Restated Operating Agreement, dated as of August 31,
1988, between Associates Commercial Corporation (as successor to
Great Dane Finance Company) and Great Dane Trailers, Inc. (the
"Associates Agreement") (incorporated herein by reference to
Exhibit 10.43 to the 1994 S-1).
10.21 - Amendment, dated February 7, 1994, to the Associates Agreement
(incorporated herein by reference to Exhibit 10.44 to the 1994 S-
1).
10.22 - Amendment, dated May 18, 1994, to the Associates Agreement
(incorporated herein by reference to Exhibit 10.45 to the 1994 S-
1).
10.23 - Loan Agreement, dated as of January 26, 1995, by and among
Motors, Yellow Cab, Chicago AutoWerks, CMC Kalamazoo, SCSM, the
Lenders named therein and NBD Bank, as Agent ("NBD").*
10.24 - Pledge Agreement and Irrevocable Proxy, dated as of January 26,
1995, given by Motors to NBD.*
10.25 - Security Agreement, dated as of January 26, 1995, made by Motors,
Yellow Cab, Chicago AutoWerks and CMC Kalamazoo to NBD.*
10.26 - Amended and Restated Loan and Security Agreement, dated as of
February 14, 1995, among Great Dane Trailers, Inc., Great Dane
Los Angeles, Inc., and Great Dane Trailers Tennessee, Inc., the
financial institutions named therein, and BankAmerica Business
Credit, Inc., as Agent ("BABC").*
10.27 - Amended and Restated Pledge Agreement, dated as of February 14,
1995, made by Great Dane Trailers, Inc., in favor of BABC.*
10.28 - Amended and Restated Agreement Regarding Stock and Other Matters,
dated as of February 14, 1995, between the Company and BABC.*
21.1 - Subsidiaries of the Company.*
27.1 - Financial Data Schedule.*
E-4
28.1 - Schedule P of Annual Statements provided by Country to Illinois
Regulatory Authorities (filed under cover of Form SE filed with
the Securities and Exchange Commission on February 17, 1995).
________________
*Filed herewith.