Exhibit 99(b)
ADESA Corporation
Index to Consolidated Financial Statements
For the Quarter Ended March 31, 1995
Unaudited Consolidated Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statement of Income Statements 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4
ADESA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1995 December 31, 1994
------------ ------------
(Unaudited) (Note)
ASSETS
Current assets:
Cash and cash equivalents $ 23,642,067 $ 10,203,992 $13,438,075
Trade receivables, net 62,606,171 48,790,083 $13,816,088
Other current assets 7,495,616 4,637,150 $ 2,858,466
------------ ------------
Total current assets 93,743,854 63,631,225
Property and equipment, net 79,894,339 71,114,221 $ 8,780,118
Intangible assets, net 37,967,750 38,571,513 (603,763)
Other assets 351,288 407,388 (56,100)
------------ ------------
Total assets $211,957,231 $173,724,347
============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 61,222,070 $ 26,747,798
Notes payable 21,270,829 20,647,135
Current portion of
long-term debt 4,882,102 4,994,649
------------ ------------
Total current liabilities 87,375,001 52,389,582
Long-term liabilities 38,990,958 37,894,509
Deferred income taxes 488,213 452,113
Minority interest in equity
of subsidiary 1,399,035 1,289,280
Shareholders' equity:
Common stock 66,181,978 66,162,853
Retained earnings 17,748,610 15,751,929
Cumulative translation
adjustment (226,564) (215,919)
------------ ------------
Total shareholders' equity 83,704,024 81,698,863
------------ ------------
Total liabilities and
shareholders' equity $211,957,231 $173,724,347
============ ============
Note: The balance sheet at December 31, 1994 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted account principals for completed
financial statements.
See accompanying notes.
1
ADESA CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Ended March 31
1995 1994
------------ -----------
Operating revenues $29,609,345 $21,571,324
Operating expenses:
Direct 11,119,327 8,308,036
Selling, general and administrative:
Operating 12,201,242 7,814,669
Depreciation 1,011,107 744,486
Amortization 749,458 935,314
------------ -----------
Operating income 4,528,211 3,768,819
Other income (expense):
Interest income 115,931 67,292
Interest expense (1,272,034) (676,654)
Other, net (71,642) 71,965
------------ -----------
(1,227,745) (537,397)
------------ -----------
Income before income taxes 3,300,466 3,231,422
Income taxes (1,303,780) (1,257,706)
------------ -----------
Net income $1,996,686 $1,973,716
============ ===========
Weighted average shares outstanding 11,397,557 11,243,628
============ ===========
Net income per share $0.18 $0.18
============ ===========
See accompanying notes.
2
ADESA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31
1995 1994
----------- -----------
Operating activities:
Net income $1,996,686 $1,973,716
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Depreciation 1,011,107 744,486
Amortization 749,458 935,314
Gain on disposal of assets (22,691) (17,471)
Minority interest in subsidiary 109,754 33,267
Changes in operating asset and
liabilities:
Trade receivables (13,816,088) (19,135,445)
Other current assets (2,858,466) (1,651,533)
Accounts payable and accrued
expenses 34,474,274 24,238,820
----------- -----------
Net cash provided (used) by operating
activities 21,644,034 7,121,154
Investing activities:
Purchases of property, and equipment, net (9,780,374) (6,130,640)
Other assets 659,863 (1,228,461)
----------- -----------
Net cash used by investing activities (9,120,511) (7,359,101)
Financing activities:
Proceeds from notes and long-term debt 2,998,697 8,561,193
Payments on notes and long-term debt (2,148,346) (5,357,840)
Proceeds from the issuance of common stock 19,125 0
----------- -----------
Net cash provided by financing activities 869,476 3,203,353
Effect of exchange rate changes on cash 45,076 (92,774)
----------- -----------
Net increase (decrease) in cash 13,438,075 2,872,632
Cash and cash equivalents at beginning of
period 10,203,992 11,902,141
----------- -----------
Cash and cash equivalents at end of period $23,642,067 $14,774,773
=========== ===========
See accompanying notes.
3
ADESA CORPORATION
Notes to Condensed Consolidated Financial Statements - (Unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the Company, all
adjustments (consisting of only normal recurring accruals) considered necessary
to present fairly the consolidated financial statements have been included.
Quarterly results of operations are not necessarily indicative of annual
results. These statements should be read in conjuction with the consolidated
financial statements and footnotes thereto included in the Company's annual
report for the year end December 31, 1994.
2. Business Segments
-----------------
Selected first quarter 1995 income data by business segment is as follows:
Auction Financial
Services Services Total
----------- ---------- -----------
Operating revenues $28,063,574 $1,545,771 $29,609,345
----------- ---------- -----------
Operating income $ 3,544,071 $ 984,140 $ 4,528,211
----------- ---------- -----------
Total assets presented by business segment and inclusive of the Company's
headquarters as of March 31, 1995 were as follows:
Auction services $177,759,511
Financial services 24,558,742
Corporate headquarters 9,638,979
------------
$211,957,232
------------
3. Per-Share Data
--------------
Earnings per share data are based on the weighted average number of shares
outstanding during the applicable periods, including the effect of dilutive
stock options.
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4. Credit Arrangements
-------------------
On April 26, 1995, the company's subsidiary Automotive Finance Corporation
("AFC") established a $40,000,000 revolving line of credit (AFC Revolver) at
200 basis points over LIBOR or 50 basis points over the bank's prime rate.
Borrowing under the AFC Revolver are limited to the lessor of $40,000,000 or a
percentage of eligible receivables, as defined in the credit agreement. The AFC
Revolver is for a term of 364 days and will be used to finance floor plan
receivables. Additional, ADESA provides no parental guarantee of capital. This
line of credit was used to replace $12,000,000 revolving line of credit held
prior thereto.
5. Pending Merger
--------------
On February 23, 1995 the Company announced that its Board of Directors had
approved a definitive agreement with Minnesota Power & Light company (MPL), a
diversified electric utility company headquarted in Duluth, Minnesota. This
agreement provides that, upon consummation of the merger and upon purchase by
MPL of additional newly issued shares of the Company's common stock, MPL will
own 80% of the issued and outstanding capital stock of the Company and certain
officers of the Company will own the remaining 20%. The merger is subject to
approval by the Company's shareholders and the satisfaction of various other
customary conditions. If approved, it is expected that the merger will be
completed in the second quarter of 1995.
6. Other Events
------------
Currently, individual auctions owned by the Company separately contract with
the General Motors ("GM") for the auction of rental repurchase units under
master contracts, which state various sales procedures, pursuant to which they
conduct business with the Company. These contracts do not require GM to sell
any minimum number of vehicles through the Company's auctions and may be
terminated upon 30 days' notice. . ADESA currently has three United States
auctions which sell rental repurchase units under such contracts with GM. In
1995 GM requested that auctions bid for the right to sell rental repurchase
units which will have a term of three years commencing January 1, 1996. GM has
informally announced its intentions to reduce the number auctions in the US it
uses for such sales from 42 to 32. The Company was invited in February 1995 to
take part in this process and on May 10, 1995 submitted a bid for all of the
ADESA's United States auctions including a greenfield auction in Manville, New
Jersey. There can be no assurance as to whether the Company will receive an
increased or decreased number of contracts pursuant to this process but any
change could be expected to impact revenues. During 1994 GM, including their
respective captive finance subsidiaries which are not part of this process and
auction off-lease and repossessed vehicles, accounted for more that 10% of the
Company's revenues. GM has stated that it intends to award the contracts in the
Summer or Fall of 1995.
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