SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commissions file number: 333-18957
CLARK Material Handling Company
(Exact name of registrant as specified in its charter)
Delaware 61-1312827
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
172 Trade Street
Lexington, Kentucky 40511
(Address of registrant's principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (606) 288-1200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ x ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]
As of January 1, 1998, there were 1,000 shares of the registrant's
common stock outstanding, all of which were owned by an affiliate of the
registrant.
Documents incorporated by reference: None
1
CLARK Material Handling Company
Index to Annual Report on Form 10-K
Page
----
PART I..........................................................................................................3
Item 1 -- BUSINESS...........................................................................................3
Item 2 -- PROPERTIES.........................................................................................8
Item 3 -- LEGAL PROCEEDINGS..................................................................................8
Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................................9
PART II.........................................................................................................9
Item 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............................9
Item 6 -- SELECTED FINANCIAL DATA............................................................................9
Item 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.........................................................................11
Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................................................15
Item 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE..........................................................................15
PART III.......................................................................................................15
Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...............................................15
Item 11 -- EXECUTIVE COMPENSATION...........................................................................16
Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................17
Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................20
PART IV........................................................................................................20
Item 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.................................21
2
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
(including notes thereto) included elsewhere in this report. Unless otherwise
indicated or the context otherwise requires, references to the "Company" or
"CLARK" are to CLARK Material Handling Company (including its predecessors) and
the other material handling operations acquired from certain subsidiaries of
Terex Corporation ("the Predecessor's Parent") pursuant to the Acquisition (as
defined) for periods prior to the Acquisition and to CLARK Material Handling
Company and its subsidiaries for periods from and after the Acquisition, after
giving effect thereto.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. Certain matters discussed in
this filing could be characterized as forward looking statements, such as
statements relating to plans for future expansion, capital spending, financing
sources and effects of regulation and competition. Such forward looking
statements involve important risks and uncertainties that could cause actual
results to differ materially from those expressed in such forward looking
statements.
PART I
Item 1 -- BUSINESS
General
CLARK is a leading international designer, manufacturer, and marketer of a
complete line of forklift trucks including internal combustion trucks, electric
riders, narrow aisle stackers and powered hand trucks. The Company invented the
platform truck in 1917, the tow tractor in 1924, and the forklift in 1928, and
produced the first electric forklift in 1942. As a result of this innovation and
the production of more than one million forklifts in its 80-year history,
management believes CLARK(R) is one of the most recognized brand names of
forklift trucks in North America.
Management believes that CLARK has a large installed fleet in North America
with over 250,000 units, and has a total of approximately 350,000 units in
operation worldwide. This large installed fleet has allowed CLARK to generate
significant ongoing replacement parts sales, which typically generate
substantially higher gross margins and provide a more stable revenue base than
new truck sales. CLARK's North American operations generally account for
approximately 70% of its net sales and its European operations account for the
remaining 30%. CLARK distributes its products to a diverse customer base through
a global network of more than 290 dealers, with more than 560 locations, in more
than 80 countries.
For information concerning the Company's backlog orders, see "Item
7--Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Backlog." Information about industry and geographic segments is
included in notes 1 and 13, respectively, to the Company's consolidated
financial statements included under "Item 8 -- Financial Statements and
Supplementary Data."
The Acquisition
The Company and CMH Holdings Corporation, a Delaware corporation
("Holdings"), were formed by Citicorp Venture Capital Ltd. ("CVC"), and certain
members of management of CLARK (the "Management Investors") to effect the
acquisition (the "Acquisition") of substantially all the assets and certain
liabilities of Clark Material Handling Company, a Kentucky corporation, and all
of the outstanding capital stock of certain of its affiliates, including its
German, Korean, Brazilian and Canadian affiliates. The Acquisition was
consummated on November 27, 1996 pursuant to a Stock and Asset Purchase and Sale
Agreement dated as of November 9, 1996 among the Predecessor's Parent and
certain of its subsidiaries, as sellers, and the Company, as buyer (the
"Acquisition Agreement"). The aggregate consideration for the Acquisition was
$139.5 million, which was subject to certain post-closing adjustments. To
finance the Acquisition (including the payment of related fees and expenses):
(i) CVC, Dr. Martin M. Dorio, President and Chief Executive Officer of the
Company, and Thomas J. Snyder, who was elected to the Board of Directors of the
Company in connection with the Acquisition, purchased $17.0 million of preferred
stock (the "Holdings Preferred Stock"), $1.0 million of voting common stock (the
"Holdings Class A Stock") and non-voting common stock (the "Holdings Class B
Stock", and together with the
3
Holdings Class A Stock, the "Holdings Common Stock"), and $7.0 million of junior
subordinated debentures (the "Holdings Debentures") from Holdings for $25.0
million in cash; (ii) Holdings contributed such $25.0 million to the Company in
exchange for all of the capital stock of the Company; and (iii) the Company
issued and sold $130 million of 10 3/4% Senior Notes due 2006 (the "Notes").
During 1997 CLARK acquired, in purchase business combinations,
Hydroelectric Lift Trucks, Inc., ("HLT"), Blue Giant USA Corporation and Blue
Giant Canada Limited ("Blue Giant"). On February 28, 1997, the Company purchased
substantially all of the assets of HLT, a supplier of upright material handling
equipment. The Company's acquisition of Blue Giant was effective November 1,
1997, when it purchased, in two separate business combinations, substantially
all of the assets and certain liabilities of Blue Giant. See note 4 to the
Company's consolidated financial statements.
Products
CLARK currently offers over 100 truck designs within five major product
lines: light internal combustion ("IC") trucks (with a capacity of 1.0 to 5.0
tons), heavy IC trucks (with a capacity of 5.5 to 16.5 tons), narrow-aisle
trucks (with a capacity of 1.5 to 2.5 tons), electric counterbalanced riders
(with a capacity of 1.3 to 6.0 tons), and manual and powered hand trucks (with a
capacity of 2.0 to 4.0 tons).
Light IC trucks, used for general warehousing needs, are generally powered
by liquid propane. Such trucks are well suited for manufacturing and
distribution applications that require a high degree of maneuverability. Heavy
IC trucks are specialty products designed for use in more demanding situations
such as heavy manufacturing or container handling applications. Narrow-aisle
trucks provide solutions for high density storage needs and operate in six to
eight foot aisles and reach heights of more than 30 feet. Electric
counterbalanced riders, designed for indoor use in warehousing, manufacturing,
distribution and other applications, are powered by a rechargeable electric
battery. Management estimates that light IC trucks, heavy IC trucks,
narrow-aisle trucks and electric counterbalanced riders represent approximately
58%, 3%, 15% and 24% of the unit volume of the forklift rider truck industry,
respectively. Powered hand trucks are generally used in the transportation and
order-selecting businesses.
CLARK tailors its products to meet customers' particular material handling
needs. To further meet these needs, CLARK adds attachments such as container
handlers, side shifters, roll clamps, block handlers, carton clamps, push-pulls
(slip-sheet) and fork positioners.
Rapid development and introduction of new and redesigned products
incorporating the latest materials handling technology is a key component of
CLARK's strategy. Management believes that CLARK has introduced more new and
redesigned models in the last three years than any other major forklift truck
manufacturer and plans to continue a rapid pace of new product introduction.
CLARK maintains an engineering staff that is responsible for designing new
products and improving existing product lines.
Since 1993, CLARK has redesigned a substantial portion of its product line.
In December 1994, CLARK introduced the 2-3 ton Genesis(R) IC truck targeting the
light IC market. CLARK invested approximately $15.0 million to develop the
Genesis(R) truck. The Genesis(R) truck provides improved ergonomics,
performance, reliability, serviceability, and provides higher gross margins than
its predecessor, primarily due to its lower production cost.
CLARK's European subsidiaries ("CLARK Europe") introduced the Genesis(R)
2-3 ton gas and diesel MegaStat(TM) model in April 1995. The Genesis(R) 2-3 ton
MegaStat(TM) IC received the "General Lift Truck Innovation" award in 1996 from
the Fork Truck Association in the United Kingdom.
In 1996, CLARK continued to expand its Genesis(R) family with the addition
of a 4-5.5 ton pneumatic tired IC lift truck, and a 2 - 3.2 ton electric four
wheel sit down rider. CLARK also made significant additions to its narrow aisle
stacker product line, which was expanded to include double reach and straddle
models.
4
During 1997, CLARK added three more trucks to its Genesis(R) family, a 4.0
- - 5.0 ton cushion tired IC lift truck , a 6.0 - 7.0 ton cushion tired IC lift
truck, and a 1.2 - 2.5 ton three wheel electric sit down rider. CLARK also
expanded its Genesis(R) heart-of -the-line 2-3 ton IC trucks by increasing the
capacity to 3.2 tons and adding a 3.0 liter GM engine option.
In 1997, CLARK purchased Blue Giant and HLT. Blue Giant will produce a full
line of CLARK branded manual and powered walkie pallet trucks and stackers as
well as continue to produce and sell under the Blue Giant name. HLT produces
forklift masts mainly for CLARK's own use.
Aftermarket Parts
Since the Company's inception, more than one million forklift trucks have
been manufactured by CLARK and its predecessors, and it currently has in service
approximately 350,000 trucks worldwide, with approximately 250,000 in North
America, 70,000 in Europe, and 30,000 in other international markets, generating
a substantial aftermarket parts business for CLARK. CLARK's worldwide installed
fleet of approximately 350,000 forklift trucks generates an estimated $240.0
million in annual global aftermarket parts sales, of which CLARK has
historically captured an estimated 40% share. Clark supplies both original
equipment parts to fit CLARK brand forklifts and Totalift (R) parts to fit other
brands.
CLARK's parts distribution operation undertakes purchasing and customer
services for aftermarket parts. CLARK distributes its aftermarket parts in North
America through a distribution center in Southaven, Mississippi, (the "Southaven
Facility"), in Europe through a warehouse located in Saarn, Germany and for the
International Operations of CLARK, through two sales and distribution facilities
located in Seoul, Korea and the State of Sao Paulo, Brazil, respectively. CLARK
shares the Southaven Facility with the Predecessor's Parent and, pursuant to the
Acquisition, CLARK and the Predecessor's Parent entered into a Service Agreement
providing for the continued use by CLARK of such facility. For information
regarding the Service Agreement, see "Item 13--Certain Relationships and Related
Transactions--Service Agreement."
Manufacturing Operations
CLARK's Lexington, KY facility produces both IC and electric forklifts with
lift capacities ranging from 1-17.5 tons and is equipped with five assembly
lines and two heavy IC assembly bays. The Lexington facility is primarily an
assembly operation with welding and painting capabilities, operates one shift
per day, and produces an average of 60 lift trucks per day. In 1996, the Company
made a commitment to achieve ISO-9001 certification for the Lexington facility.
A formal audit was conducted in June 1997. Certification was awarded in August
1997, indicating that the Company has achieved and sustained a high degree of
quality and consistency with respect to its products.
CLARK Europe's Mulheim manufacturing facility produces both IC forklifts
(Diesel, LP gas and natural gas) with hydrodynamic as well as electronically
controlled hydrostatic drive (MegaStat(TM)) and electric powered forklifts
equipped with D/C as well as frequency-controlled A/C motors (MegaAC(TM)) in the
capacity range of 1-5 tons. The Mulheim facility is equipped with four assembly
lines, one for electric trucks, two for IC trucks and one for uprights. The
manufacturing process includes pre-production and welding production of frames
and uprights and a powder dry paint system was recently installed to ensure
high-quality painting of frames and uprights. CLARK Europe's facility currently
operates one shift per day and produces an average of 25 lift trucks per day.
The Mulheim facility has also been awarded ISO-9001 certification.
Blue Giant has two locations, one in Pell City, Alabama, and one in
Brampton, Ontario, Canada. The Pell City, Alabama facility produces tow
tractors, pallet trucks and dock equipment and its capabilities include
machining, welding, paint and assembly. The Brampton, Ontario facility, produces
dock equipment, walkie and walkie stacker forklifts and scissor lifts and its
primary operations include machining, welding, assembly and painting. The
Brampton facility is ISO-9001 certified. HLT is located in Wilmington, Ohio, and
produces forklift mast in support of the CLARK Lexington plant's forklift
production. HLT's primary operations are welding, painting and assembly and the
facility operates two shifts per day.
5
Dealer Network
CLARK markets both original equipment and parts through a worldwide dealer
network. CLARK currently has approximately 100 independent dealers in each of
North America and Europe and owns three dealers in Europe. In addition, outside
of North America and Europe, CLARK markets and distributes its export products
through 95 distributors operating in the Asian, African, Middle Eastern,
Caribbean and Latin American markets. CLARK's dealers and distributors generally
market the full CLARK product line and maintain comprehensive service
capabilities. CLARK's sales organization coordinates sales and promotional
activities, provides ongoing dealer training and facilitates dealer
communications. CLARK sells to a diversified customer base, with no single
customer accounting for more than 5% of total sales.
Suppliers
The Company strategically relies upon outside suppliers for a vast majority
of the individual components of a lift truck. Management believes that such
outsourcing allows CLARK greater flexibility in varying its cost structure in
response to changing market conditions.
Principal materials used by CLARK in its various manufacturing processes
include steel, castings, engines, tires, electric controls, uprights, transaxles
and motors, and a variety of other fabricated or manufactured items. While
substantially all such materials are typically available from multiple
suppliers, CLARK depends exclusively upon certain suppliers of key parts used in
its lift trucks. From time to time, certain of CLARK's suppliers have
experienced difficulties in meeting CLARK's production schedules. The failure of
a key supplier to meet the Company's requirements on a timely basis or the loss
of a key supplier could lead to delays in the Company's manufacturing operations
and have a material adverse effect on the Company.
Competition
CLARK produces one of the leading forklift truck brands in North America,
although NACCO Industries, Inc., ("NACCO"), through its Hyster and Yale
divisions, produces more forklift trucks annually. In addition to NACCO, other
major North American competitors include Toyota Industrial Equipment/TMS,
Mitsubishi Caterpillar Forklift America Inc., Nissan Forklift Corp. North
America, Komatsu Forklift USA Inc. and Daewoo in both IC trucks and electric
riders, and Crown Equipment Corp. and Raymond Corporation in electric riders
alone. In Europe, CLARK competes with Linde AG, the European market leader, as
well as Jungheinreich AG, Toyota Industrial Equipment/TMS, and NACCO. CLARK also
competes with a number of specialty manufacturers.
The truck market in which the Company competes is highly competitive. The
Company encounters significant competition particularly from lower cost foreign
competitors, including manufacturers located in Japan and Korea. The Company
competes on the basis of quality, price, on-time delivery, product line, ease of
use, safety, comfort and customer service. Many of the Company's competitors
have greater financial resources than the Company. Additionally, certain of the
Company's products are subject to changing technology that could place the
Company at a competitive disadvantage relative to product innovations by
competitors. There can be no assurance that the Company will be able to achieve
the technological advances that may be necessary to remain competitive.
Intellectual Property
The Company relies on a combination of trademarks, service marks, trade
names, patents, licensing arrangements, trade secrets, know-how and proprietary
technology to secure and protect its intellectual property rights. In
particular, the Company's CLARK(R), Clarklift(R), Powrworker(R), Genesis(R), and
Blue Giant(R) trademarks are of particular importance to the Company's business.
The Company is currently undertaking to obtain trademark registrations for its
MegaValve (TM), MegaStat (TM), MegaPro (TM), and MegaAC (TM) marks. The loss of
the Company's rights under one or more of the Company's trademarks could have a
material adverse effect on the Company's business.
There can be no assurance that the Company will be successful in obtaining
approval of any present or future patent or trademark applications; that any
patents, patent applications and patent licenses will adequately cover the
Company's technologies or protect the Company from potential infringements by
third parties; that any nondisclosure and confidentiality agreements will
provide meaningful protection for the Company's trade secrets, know-how or
proprietary technology in the event of any unauthorized use or disclosure of
such information; or that
6
others will not obtain access to, or independently develop technologies or
know-how similar to, that of the Company. There also can be no assurance that
future litigation by the Company will not be necessary to enforce its trademark,
patent and other proprietary rights, or to defend the Company against claimed
infringement of the rights of others, adverse determinations in which could have
a material adverse effect on the Company.
Employees
As of December 31, 1997, CLARK's total work force consisted of
approximately 1,450 salaried, hourly and temporary employees. Of these employees
1,000 are in the Company's North American operations and 450 work in the foreign
operations.
In Europe, the Mulheim facility at Saarn is represented by the German Metal
Workers (Industrie Gewerkschaft Metal) and the aftermarket parts facility at
Saarn is represented by the German Union for Trading, Banking and Insurance
(Gewerkschaft Handel, Banken und Versicherungen). The Mulheim facility has a
total work force of approximately 350, of which approximately 200 are members of
the German Metal Workers, and the aftermarket parts facility at Saarn has a
total workforce of approximately 65, of which approximately 20 are members of
the German Union for Trading, Banking and Insurance. There are no contracts
between CLARK and the unions, but CLARK follows standard practices by complying
with contracts between the unions and the employers' association.
The union employees of the Predecessor's Parent at the Southaven Facility
engaged in a labor dispute beginning in 1995, which had a short-term effect on
the Company's distribution operations at the facility but had no appreciable
effect on the conduct of business or results of operations. See "Item 1 -
Business - Aftermarket Parts". Although such union employees filed a petition
with the National Labor Relations Board in May 1996 for decertification of the
union, there can be no assurance that similar labor disputes will not occur in
the future which, depending upon the timing and duration of such disputes, could
have a material adverse effect on the Company.
Management believes that its relationships with its employees and unions
are good.
Environmental Matters
As with most industrial companies, the Company's facilities and operations
are required to comply with and are subject to liability under federal, state,
local and foreign environmental and worker health and safety laws, regulations
and ordinances, including those relating to air emissions, wastewater discharges
and the management and disposal of certain materials, substances and wastes
("Environmental Laws"). Certain of these Environmental Laws hold owners or
operators of land or businesses liable for their own and for previous owners' or
operators' releases of hazardous or toxic substances, materials or wastes,
pollutants or contaminants, including, in some instances, petroleum and
petroleum products. Compliance with Environmental Laws also may require the
acquisition of permits or other authorizations for certain activities and
compliance with various standards or procedural requirements. Although the
Company believes that its operations are in substantial compliance with current
regulatory requirements under material applicable Environmental Laws, the nature
of the Company's operations and the history of industrial uses at some of its
facilities expose the Company to the risk of liabilities or claims with respect
to environmental and worker health and safety matters. The Company may also have
contingent responsibility for liabilities with respect to environmental matters
arising in connection with the prior operations of the material handling
business of CLARK Equipment Company, a predecessor of the Company ("CEC"). There
can be no assurance that material costs or liabilities will not be incurred in
connection with such liabilities or claims.
In connection with the Acquisition, the Company agreed to indemnify the
Predecessor's Parent and hold it harmless from and against all losses which are
incurred or suffered by the Predecessor's Parent with respect to or arising out
of the Company's business and assets except for such losses which arise from or
are in connection with any real property, business entities or assets which were
not acquired as part of the Acquisition (which the Predecessor's Parent agreed
to retain responsibility for and indemnified the Company against). No specific
environmental losses were identified by the parties in the Acquisition Agreement
nor are there any known material losses which have been asserted by the
Predecessor's Parent pursuant to the environmental indemnity provisions of the
Acquisition Agreement or incurred by the Company. The environmental indemnities
are subject to certain deductibles, caps and time limitations depending on the
nature of the environmental claim.
7
Based upon the Company's experience to date and the indemnities obtained in
connection with the Acquisition, the Company believes that the future cost of
compliance with existing Environmental Laws (or liability for known
environmental liabilities or claims) should not have a material adverse effect
on the Company's business, financial condition or results of operations.
Compliance with such laws has, and will, require expenditures by the Company on
a continuing basis. Future events, such as changes in existing laws and
regulations or their interpretation, may give rise to additional compliance
costs or liabilities that could have a material adverse effect on the Company's
business, financial condition or results of operations. Compliance with more
stringent laws or regulations, as well as more vigorous enforcement policies of
regulatory agencies or stricter or different interpretations of existing laws,
may require additional expenditures by the Company that may be material.
Item 2 -- PROPERTIES
The Company's headquarters are located in Lexington, Kentucky. The Company
currently owns or leases 13 facilities in North America, Europe, Brazil and
Korea which are used for manufacturing, distribution, sales, warehousing and
service center activities.
The following table outlines the principal facilities owned or leased by
CLARK or its subsidiaries:
Facility Location Type of Facility
----------------- ----------------
Lexington, Kentucky Manufacturing, warehouse and office
Lexington, Kentucky * Sales, training and engineering
Lexington, Kentucky Warehouse
Mulheim-Ruhr, Germany ** Manufacturing, engineering, power generation, maintenance and office
Saarn, Germany Warehouse
Barcelona, Spain Sales branch
Paris, France Sales branch
Lyon, France Sales branch
State of Sao Paulo, Brazil Parts distribution
Seoul, Korea Parts distribution and office
Wilmington, Ohio Manufacturing, warehouse and office
Pell City, Alabama Manufacturing, warehouse and office
Brampton Ontario, Canada * Manufacturing, warehouse and office
- ----------
* Owned.
** A portion of the facility is owned.
CLARK also owns a manufacturing facility in Banwaal, Korea, which was
closed in the fourth quarter of 1994 and is presently held for sale. CLARK
Europe also presently leases unoccupied office space in Mulheim-Ruhr, Germany.
Management believes that the Company's facilities are suitable for its
operations and provide sufficient capacity to meet the Company's requirements
for the foreseeable future.
Item 3 -- LEGAL PROCEEDINGS
From time to time product liability claims are asserted against the Company
for various injuries alleged to have resulted from defects in the manufacture
and/or design of its products. As of December 31, 1997, the Company had 76
pending lawsuits relating to claims arising from accidents involving its
products. Most of these lawsuits are in various stages of pretrial completion,
and certain plaintiffs are seeking punitive as well as compensatory damages. The
Company is self-insured, up to certain limits, for these product liability
claims, as well as certain exposures related to general workers' compensation
and automobile liability. The Company has
8
recorded and maintains on its balance sheet reserves relating to the estimated
liability, based in part upon actuarial determinations, of the Company's
aggregate exposure for such self-insured risks. The Company is involved in
various other legal proceedings, which have arisen in the normal course of its
operations. The Company has recorded provisions for estimated losses in
circumstances where a loss is probable and the amount or range of possible
amounts of the losses is estimable. There can be no assurance that any of the
foregoing reserves are adequate.
The Company is contingently liable as a guarantor for certain of its
dealers' and customers' financing arrangements with financial institutions. The
guarantees under these financing arrangements aggregated approximately $137,000
at December 31, 1997, which is consistent with prior years. Historically, the
Company and the Predecessor have incurred only minimal losses relating to these
arrangements. The unfavorable resolution of product liability claims or any
other contingencies or uncertainties in the future could have a material adverse
effect on the Company.
Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders for the
period ended December 31, 1997.
PART II
Item 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common equity is not publicly traded and, accordingly, an
established market does not exist for such common equity. The Company is a
wholly owned subsidiary of Holdings. For certain information concerning the
ownership of Holdings Preferred Stock and Holdings Common Stock, see "Item 12 --
Security Ownership of Certain Beneficial Owners and Management."
No dividends have been paid on the Company's common equity. There are
certain limitations on the payment of dividends in the Company's borrowing
arrangements.
9
Item 6 -- SELECTED FINANCIAL DATA
Through November 26, 1996, the Company operated as wholly owned
subsidiaries of the Predecessor's Parent. On November 27, 1996, the Company was
acquired by Holdings. Accordingly, the selected financial data shown below is
not necessarily comparable as a result of these ownership changes and the
resulting adjustments required for purchase business combinations under
generally accepted accounting principles.
The information contained in this table should be read in conjunction with
"Item 7 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's consolidated financial statements
included under "Item 8--Financial Statements and Supplementary Data."
Wholly Owned Subsidiaries of the
Predecessor's Parent The Company
---------------------------------------------- ----------------------------
Eleven Months One Month
Years Ended Ended Ended Year Ended
December 31, November 26, December 31, December 31,
------------------------
1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ----
Operating Data:
Net Sales $395.6 $472.7 $528.8 $404.6 | $46.8 $489.3
Gross Profit (1) 22.3 42.9 44.2 45.6 | 4.9 58.2
Engineering, selling and |
administration expenses (1) (2) 50.9 50.2 37.6 32.3 | 3.0 37.1
Income (loss) from operations (3) (28.6) (14.0) 3.1 13.3 | 1.9 21.0
Income (loss) before |
extraordinary items and |
cumulative effect of change |
in accounting (2) (3) (44.9) (25.3) (17.4) (2.1) | .5 7.9
Balance sheet data (at end |
of period): |
Working capital (4) 50.8 41.4 46.4 51.4 | 45.0 55.8
Net property, plant and |
equipment 75.3 60.7 58.2 51.2 | 51.0 47.8
Total assets 208.0 194.7 192.7 192.7 | 301.3 313.3
Long-term obligations (5) 120.0 125.9 143.0 151.3 | 133.6 133.9
|
- ------------
(1) Certain reclassifications of prior years have been made to conform with
the current year presentation.
(2) Includes corporate charges allocated by the Predecessor's Parent of; (a)
$4.4 million, $8.5 million and $7.0 million in the years ended December
31, 1993, 1994 and 1995, respectively; and (b) $5.7 million in the eleven
month period ended November 26, 1996.
(3) Includes severance and exit charges of $6.7 million and $3.5 million in
the years ended December 31, 1994 and 1995, respectively.
(4) Calculated as net trade receivables plus net inventories less trade
payables.
(5) The amounts of long-term obligations as of December 31, 1993, 1994 and
1995, and November 26, 1996, include Due to Parent of $40.2 million,
$68.5 million, $87.6 million and $96.4 million, respectively; such
amounts also include the long-term portion of capital lease obligations.
At December 31, 1996 and 1997 the amount of long-term obligations
includes the Notes and the long-term portion of capital lease
obligations.
10
Item 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
CLARK experienced operating losses of $28.6 million and $14.0 million for
the years ended December 31, 1993 and 1994, respectively. These losses were
largely due to high operating expenses and cash constraints. Since 1993, CLARK
has undertaken a series of initiatives aimed at reducing fixed costs, developing
a largely variable cost structure and maximizing the Company's ability to
respond to market changes. These initiatives involved (i) elimination of
redundant manufacturing and distribution facilities, (ii) head-count reductions
involving termination of over 600 employees, representing approximately 40% of
the Company's workforce, (iii) elimination of non-core, unprofitable product
lines and (iv) greater reliance on outsourcing. In addition to cost
rationalization, the Company has redesigned a significant portion of its product
portfolio. The Company's new and redesigned products have earned higher gross
margins due to their lower production costs. As a result of these initiatives,
CLARK'S operating earnings have steadily improved since 1993.
The Company manufactures products in the U.S. and Germany and sells
products in more than 80 countries worldwide. A portion of the Company's raw
materials are acquired from foreign suppliers and denominated in foreign
currencies. Consequently, the Company's operating results are subject to
fluctuations in foreign currency exchange rates, as well as, the translation of
its foreign operations into U.S. dollars. The risks associated with operating in
foreign countries could adversely affect the Company's future operating results.
In addition, currency fluctuations could improve the competitive position of the
Company's foreign competitors if the value of the U.S. dollar rises in relation
to the local currencies of such competitors. The Company has not historically
hedged its foreign currency risk.
Sales of products manufactured and sold by the Company have historically
been subject to cyclical variation based, among other things, on general
economic conditions. Management believes that the Company has improved its
ability to sustain profitability in changing market conditions. There can be no
assurance, however, as to the magnitude or timing of any decline or recovery, or
that any future decline will not have a material adverse effect on the Company's
business.
Results of Operations
Wholly Owned Subsidiaries of the Predecessor's Parent The Company
----------------------------------------------------- ----------------------------------------
Year Ended Eleven Months Ended One Month Ended Year Ended
December 31, 1995 November 26, 1996 December 31, 1996 December 31, 1997
($) (%) ($) (%) ($) (%) ($) (%)
(dollars in millions)
Net Sales $528.8 100.0% $404.6 100.0% | $46.8 100.0% $489.3 100.0%
Gross Profit (1) 44.2 8.4% 45.6 11.3% | 4.9 10.5% 58.2 11.9%
|
Engineering, Selling 37.6 7.1% 32.3 8.0% | 3.0 6.4% 37.1 7.6%
and Administrative |
Expenses (1) (2) |
Income from Operations(2)(3) 3.1 0.6% 13.3 3.3% | 1.9 4.0% 21.0 4.3%
- ----------
(1) Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
(2) Includes corporate charges allocated by the Predecessor's Parent of, $7.0
million and $5.7 million in the years ending 1995 and the eleven months
ended November 26, 1996, respectively.
(3) Includes severance and exit charges of $6.7 million and $3.5 million in
the years ended December 31, 1994 and 1995, respectively.
Fiscal Year Ended December 31, 1997 compared to the month ended December 31,
- --------------------------------------------------------------------------------
1996, and the eleven months ended November 26, 1996
- ---------------------------------------------------
The acquisition of the Company on November 26, 1996, resulted in a
significant change in the Company's capital structure and a revaluation of the
Company's assets and liabilities in accordance with the provisions of purchase
accounting required by generally accepted accounting principles. Accordingly,
the results of operations for the year ended December 31, 1997, are not
comparable to the results of operations for the month ended December 31, 1996,
and the eleven-month period ended November 26, 1996, or the year ended December
31, 1995.
11
Net Sales
- ---------
Net sales were $489.3 million in 1997, an increase of $37.9 million or
8.4% from $451.4 million in the twelve month period ended December 31, 1996.
Truck sales increased $38.1 million and parts sales were relatively consistent.
The increase in truck sales was primarily due to improved market conditions in
1997 and the acquisition of Blue Giant USA Corporation and Blue Giant Canada
Limited which increased sales by $4.8 million or 1.2%. CLARK derived 73.5% and
25.7% its net sales from its North American operations and CLARK Europe
respectively, compared to 68.6% and 31.4%, respectively in 1996. A change in the
German Deutsche mark ("DM") annual average currency translation rate from 1.505
DM to one U.S. dollar for 1996 to 1.734 DM to one U.S. dollar for 1997 had a
negative impact on reported sales (and income) in U.S. dollars from the
Company's European operations.
Gross Profit
- ------------
Gross profit increased $7.7 million, or 15.2%, to $58.2 million in 1997
from $50.5 million in 1996. As a percentage of net sales, gross profit was 11.9%
and 11.2% for 1997 and 1996 respectively. Increased sales accounted for
approximately $4.6 million of the increased gross profit and lower costs due to
the Company's cost reduction efforts in the area of materials, labor, and
overhead accounted for the balance of the improvement.
Engineering, Selling and Administrative Expenses
- ------------------------------------------------
Engineering, selling and administrative expenses increased by $1.8
million to $37.1 million for the twelve months period ended December, 1997 from
$35.3 million for the twelve month period ended December 31, 1996. Certain
administrative functions performed by the Predecessor's Parent were replaced,
but at a lower cost than was charged by the parent in 1996. The Company
increased its engineering and selling expenses $4.4 million. This increase was
to support new product and sales initiatives in 1997 and beyond. Engineering,
selling and administrative expenses expressed as a percentage of sales were 7.6%
and 7.8% respectively in 1997 and 1996.
Income from Operations
- ----------------------
Income from operations increased $5.8 million to $21.0 million for the
twelve-month period ended December 31, 1997 from $15.2 million in the
twelve-month period in 1996. This increase was due to the reasons noted above.
Income from operations expressed as a percentage of net sales was 4.3% and 3.4%
for the twelve months ended December 31, 1997 and December 31, 1996
respectively.
Eleven Months Ended November 26, 1996 Compared to Year Ended December 31, 1995
- ------------------------------------------------------------------------------
Net Sales
- ---------
Net sales were $404.6 million for the eleven months ended November 26,
1996 compared to $528.8 million for the twelve-month period in 1995, a decrease
of $124.2 million or 23.5%. This decrease was primarily due to reduced demand by
CLARK's customers, which management believes was related to lower industry
activity beginning in the last quarter of 1995. Net truck sales decreased $112.6
million, or 26.0%, primarily due to a softening in the demand for lift trucks in
North America and Europe, while parts sales declined 12.1%. CLARK derived 68.8%
and 31.2% of its net sales from its North American operations and CLARK Europe,
respectively, in the eleven months ended November 26, 1996, and 69.3% and 30.7%
respectively, in the twelve months ended December 31, 1995.
Gross Profit
- ------------
Gross profit increased $1.4 million, or 3.2%, to $45.6 million for the
eleven months ended November 26, 1996, compared to $44.2 million for the twelve
month period in 1995, despite the 23.5% decline in net sales. As a percentage of
net sales, gross profit was 11.3% and 8.4% for the eleven months ended November
26, 1996 and the twelve month period of 1995, respectively. Cost reduction
efforts and production improvements accounted for most of this increase. Factory
overhead expenses were reduced by $13.9 million. Of this amount, $10.1 million
was
12
attributable to lower salaries, wages and benefits. Other significant areas of
cost decreases included lower product liability costs, lower freight costs and
lower material costs from improved outsourcing. These improvements were
partially offset by lower absorption of fixed costs due to lower production
levels and by lower margins for aftermarket parts due to a change in product
mix.
Engineering, Selling and Administrative Expenses
- ------------------------------------------------
For the eleven months ended November 26, 1996, engineering, selling and
administrative expenses decreased $5.3 million to $32.3 million from $37.6
million for the twelve month period in 1995 primarily due to the rationalization
of staff levels, facilities and support costs in response to lower industry
activity. Engineering, selling and administrative expenses as a percentage of
net sales were 8.0% and 7.1% in the eleven months ended November 26, 1996 and
twelve months ended December 31, 1995, respectively.
Income from Operations
- ----------------------
Income from operations increased $10.2 million to $13.3 million for the
eleven months ended November 26, 1996, compared to $3.1 million for the twelve
months ended December 31, 1995. In addition, CLARK had $3.5 million of severance
and exit charges related to workforce rationalization in Europe and the
termination of certain leases, in 1995, which did not recur in 1996. The
Predecessor's Parent allocated corporate charges to CLARK of $5.7 million and
$7.0 million in the 1996 and 1995 periods. Income from operations, expressed as
a percentage, of net sales were 3.3% and 0.6% for the eleven months ended
November 26, 1996 and the twelve months ended December 31, 1995, respectively.
Backlog
The Company's backlog of orders at December 31, 1997 and December 31,
1996 were $114.8 million and $80.4 million, respectively. Substantially all of
the Company's backlog orders are expected to be filled within one year, although
there can be no assurance that all such orders will be filled within that time
period. The cancellation or delay of certain orders could have a material
adverse effect on the Company.
Capital Resources, Liquidity and Financial Condition
The Company's business is capital intensive and requires funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities as well as
financing of accounts receivables from customers and dealers. The Company will
continue to have significant debt service requirements. On December 31, 1997,
the Company had $6.6 million of cash, cash equivalents and cash securing letters
of credit, $130.0 million of long-term debt and $6.6 million of capital leases
obligations. The Company's overall financial condition did not change
significantly at December 31, 1997 from December 31, 1996. However, working
capital (defined as receivables and inventories less payables) increased $10.8
million primarily as a result of more rapid payment of accounts payable by
taking advantage of vendor discounts for prompt payment, and the acquisitions of
HLT and Blue Giant. This increase was partially offset by declines in the value
of the DM which reduced the working capital of the Company's European operations
when converted to U.S. dollars. The fluctuation in the German currency also
resulted in a substantial increase in the currency translation amount included
within stockholder's equity.
Cash provided by operating activities for 1997 was $11.1 million, and
the Company's cash levels were down $10.2 million from December 31, 1996 levels.
The Company had $6.3 million of capital expenditures including tooling, new
products and systems modernization expenditures, for the twelve months ending
December 31, 1997 compared to $3.5 million of capital expenditures for the
twelve months ending December 31, 1996. The Company purchased substantially all
the assets of HLT on February 28, 1997, in exchange for a $4.9 million
short-term note, which matured and was paid in the second quarter of 1997. In
addition to paying the note issued to acquire HLT, the Company closed its
acquisition of the Blue Giant in two separate purchase business combinations
using existing cash of $9.7 million (see note 4 to the consolidated financial
statements ). The Company also made the interest payments of $13.5 million on
its 10 3/4 % Senior Notes. The Company's ability to incur additional
indebtedness is somewhat restricted by the covenants set forth in the Company's
borrowing arrangements.
14
In connection with the Acquisition, the Company entered into a $30.0
million revolving credit facility (the "Revolving Credit Facility"), which is
secured by the accounts receivable and inventory of the Company's domestic
operations, excluding HLT and Blue Giant. The Revolving Credit Facility has an
aggregate undrawn availability of $29.2 million at December 31, 1997, subject to
the borrowing conditions contained therein. Management believes that it has
adequate available borrowing capacity under the Revolving Credit Facility to
cover its foreseeable working capital requirements for fiscal 1998 and that cash
flow from operations and its borrowing arrangements will be adequate to meet
other liquidity and capital needs in 1998.
As of December 31, 1997, the Company was not in violation of any
covenants or restrictions in the Revolving Credit Facility or the indenture
governing the Notes.
Contingencies, Commitments and Uncertainties
From time to time product liability claims are asserted against the
Company for various injuries alleged to have resulted from defects in the
manufacture and/or design of its products. In addition, the Company is involved
in various other legal proceedings, which have arisen in the normal course of
its operations. See "Item 3-Legal Proceedings."
The Company is contingently liable as a guarantor for certain of its
dealers' and customers' financing arrangements with financial institutions. The
guarantees under these financing arrangements aggregated approximately $137,000
at December 31, 1997, which is consistent with prior years. Historically, the
Company and the Predecessor have incurred only minimal losses relating to these
arrangements.
CLARK is contingently liable for a portion of the related value of
machines sold to and leased by a third party to users for terms generally
ranging from three to five years. CLARK repurchases certain machines leased
under this program and then sells or leases such machines to other users. At
December 31, 1997, the maximum contingent liability under this program was
approximately $6.3 million. CLARK has historically recorded profits on the sale
of repurchased machines.
Year 2000
The Company is aware of the issues associated with the programming code
in existing computer systems as the millennium approaches. The "year 2000"
problem is pervasive and complex as virtually every computer operation will be
affected in some way by the rollover of the two digit year value to 00. The
issue is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not recognize such
information could generate erroneous data or cause a system to fail.
The Company is utilizing both internal and external resources with
respect to its year 2000 issues. The Company is also in the process of
installing new software to provide improved operational and financial
functionality. This new software is year 2000 compliant. The installation is
expected to be completed in 1998 and is expected to cost approximately $6.0
million.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". In February 1998, the FASB issued SFAS No.
132, "Employers' Disclosures about Pensions and other Postretirement Benefits".
These statements require certain modifications and additional information
relating to financial statement disclosure of the components of comprehensive
income, operating segment information and pensions and other post retirement
benefits. These statements only impact the disclosure in financial statements;
therefore, management does not expect that the adoption of these new standards
in 1998 will have a significant impact on the Company's financial condition or
results of operations.
For additional information on contingencies and uncertainties, see Note
11 to the Company's consolidated financial statements included under "Item
8--Financial Statements and Supplementary Data."
15
Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company, along with the
Report of Independents Accountants, is included on pages F-1 through F-25 of
this Form 10-K.
Supplementary data called for by this item is not presented, as it is
not applicable to the registrant.
Item 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or executive officers of the
Company. Directors serve for a term of one year or until their successors are
elected and qualified; officers serve at the discretion of the Board of
Directors.
Name Age Position
---- --- --------
Dr. Martin M. Dorio 52 President, Chief Executive Officer and Director
Dr. J. Frithjof Timm 55 Managing Director and President, CLARK Europe
Joseph F. Lingg 52 Vice President, Finance and Human Resources
and Treasurer
Kevin M. Reardon 53 Vice President, Sales and Marketing, North
America
Michael J. Grossman 47 Vice President, General Counsel and Secretary
Robert J. O'Brien 48 Vice President, Manufacturing, North America
Thomas J. Snyder 52 Director
Dietcher 53 Director
Klingelnberg
Michael A. Delaney 43 Director
James A. Urry 43 Director
Dr. Martin M. Dorio, President, Chief Executive Officer and Director.
Dr. Dorio joined the Company in June 1995 as President and Chief Executive
Officer. From 1990 until he joined the Company, Dr. Dorio served in various
positions with Case Corporation, a manufacturer of tractors and construction
equipment, including Vice President, Corporate Planning and Development. Dr.
Dorio has over 20 years of experience in manufacturing and has served in key
management positions of FMC Corp. and General Electric Co.
Dr. J. Frithjof Timm, Managing Director and President, CLARK Europe.
Dr. Timm joined the Company in May 1995 as Managing Director and President of
CLARK Europe. From 1992 to 1995, he was President of Komatsu Europe and, prior
to that, he was Managing Director of Sales of the Hydraulic Mobile Crane
Division of Krupp A.G.
Joseph F. Lingg, Vice President, Finance, Human Resources and
Treasurer. Mr. Lingg joined the Company in January 1996 as Vice President,
Finance and Treasurer. In 1995, Mr. Lingg served as Vice President and Chief
Financial Officer of RBC Company of America, a manufacturer of bearings, and for
more than five years prior thereto he served as Vice President and Chief
Financial Officer of Mosler Inc., a manufacturer and servicer of security
products.
Kevin M. Reardon, Vice President, Sales and Marketing, North America.
Mr. Reardon joined the Company in 1984 and has been Vice President of Sales and
Marketing, North America since 1995. Previously, Mr. Reardon served as Director
of Marketing and National Sales Manager for the Company.
Michael J. Grossman, Vice President, General Counsel and Secretary. Mr.
Grossman joined the Company in 1985 as Assistant General Counsel. Since 1991, he
has served as Vice President, General Counsel and Assistant Secretary of the
Company.
15
Robert J. O'Brien, Vice President, Manufacturing, North America. Mr.
O'Brien joined the Company in March of 1995, as Director of Manufacturing. From
1980 until he joined the Company, he served in various key operations positions
with Allied Signal Aerospace. Mr. O'Brien has over 20 years of experience in
manufacturing operations in the Aerospace industry.
Thomas J. Snyder, Director. Mr. Snyder has been President, Chief
Operating Officer and a director of Delco Remy International, Inc. since 1994.
From 1962 to 1994, Mr. Snyder held several executive positions with the Delco
Remy Division of General Motors, most recently as Product Manager, Heavy Duty
Systems. He is also a director of St. John's Health Systems.
Dietcher Klingelnberg, Director. Mr. Klingelnberg served as Chief
Executive Officer of International Knife & Saw, Inc. until March 1996. In
addition, he served as Chairman of the Board and Chief Executive Officer of IKS
Corporation from 1979 until November 1996. Mr. Klingelnberg is currently
Managing Director of Klingelnberg Beteillgungs-GmbH and is a director of Honsel
AG, IKS Corporation, the Alfred H. Schuette Company, and Eickhoff, Bochum, and
Oerlikon Geartec AG, Zuerich.
Michael A. Delaney, Director. Mr. Delaney has been a Managing Director
of CVC since 1989. From 1986 through 1989, he was Vice President of Citicorp
Mergers and Acquisitions. Mr. Delaney is a director of Aetna Industries, Inc.,
AmeriSource Health Corporation, MSX International, CORT Business Services
Corporation, Delco Remy International, Inc., Enterprise Media Inc., GVC
Holdings, IKS Corporation, JAC Holdings, Palomar Technologies, Inc., SC
Processing, Inc., and Triumph Holdings, Inc.
James A. Urry, Director. Mr. Urry has been with Citibank, N.A. since
1981, serving as a Vice President since 1986. He has been a Vice President of
CVC since 1989. He is a director of AmeriSource Health Corporation, CORT
Business Services Corporation, Hancor Holding Corporation, IKS Corporation,
Airxcel, Inc., Polamar Technologies, Inc. and York International Corporation.
Director Compensation and Arrangements
The directors of the Company do not receive compensation for their
services as directors. Members of the Board of Directors are elected pursuant to
certain voting agreements among Holdings and its stockholders. See "Item 12 --
Security Ownership of Certain Beneficial Owners and Management--The
Stockholders' Agreement."
Item 11 -- EXECUTIVE COMPENSATION
The compensation of executive officers of the Company will be
determined by the Board of Directors of the Company. The Company adopted a
401(k) retirement plan in 1997. See "--401(k) Plan".
The following table sets forth certain information concerning the
compensation received by the Chief Executive Officer and the four most highly
compensated officers of the Company for services rendered in 1997.
16
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards
------------------- ------
Other Restricted Stock
Annual Stock Options All Other
Salary Bonus Compensation Awards (# Shares) Compensation(1)
------ ----- ------------ ------ ---------- ---------------
Dr. Martin M. Dorio................. $293,750 188,745 -- -- -- $ 11,490
President and Chief Executive
Officer
Dr. J. Frithjof Timm................ 193,195 17,388 -- -- -- 31,719
President, CLARK Europe (2)
Joseph F Lingg...................... 124,375 48,367 -- -- -- 6,905
Vice President of Finance and
Human Resources
Kevin M. Reardon.................... 118,067 33,132 -- -- -- 4,148
Vice President of Sales and
Marketing
Michael J. Grossman 125,000 49,335 -- -- -- 5,639
Vice President and General Counsel
- -----------------
(1) Includes Company 401(k) contributions and group term life insurance
premiums, respectively, as follow: Dr. Dorio, $8,501 and $2,989; Mr.
Reardon, $1,171 and $2,977; Mr. Grossman, $3,868 and $1,772; and Mr. Lingg,
$3,866 and $3,039. Includes $31,719 for pension and disability for Dr. Timm.
(2) Dr. Timm's salary, bonus, and other compensation are calculated from
Deutsche Marks using a conversion rate of 1.734 DM/$.
Employment Agreements
In 1996, Holdings entered a three-year employment contract with Dr.
Martin M. Dorio pursuant to which Dr. Dorio is employed as the President and
Chief Executive Officer of Holdings and the Company. The agreement provides for
an annual base salary of $225,000, which is subject to annual merit increases,
and an annual performance bonus. The Company has agreed that, in the event that
holdings is unable to pay Dr. Dorio any amounts due to him with respect to
annual bonuses, the Company will pay such amounts. Since November 1996, the
Company has paid Dr. Dorio's compensation. In addition, the agreement provides
for the receipt by Dr. Dorio of standard company benefits. The agreement is
terminable by Holdings with or without cause. In the event, the agreement is
terminated without cause or as a result of the total disability of Dr. Dorio,
Dr. Dorio will be entitled to continue to receive his base salary and certain
other benefits for specified periods. Following any termination of Dr. Dorio's
employment, he will be subject to a non-competition covenant for up to two
years.
401(k) Plan
In 1997, the Company adopted a qualified 401(k)-retirement plan.
Subject to certain statutory limitations, eligible employees are able to
contribute a percentage of their compensation to the plan on a pre-tax basis
("elective deferrals"). For 1997, the maximum amount of elective deferrals that
could be made by any employee was $9,500. Employees are fully vested in their
elective deferrals at all times. Generally, employees may not receive a
distribution of their account balances prior to their death, disability,
termination of employment or retirement, and their account balances cannot be
assigned or alienated.
Compensation Committee Interlocks and Insider Participation
Although the Company has no compensation committee, each of Messrs.
Snyder, Klingelnberg, Delaney and Urry participated in deliberations of the
Board of Directors concerning executive compensation.
17
Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the outstanding capital stock of the Company is currently owned
by Holdings. The following table sets forth certain information with respect to
the beneficial ownership of the Holdings Preferred Stock and Holdings Common
Stock by (i) each person or entity who owns five percent or more thereof, (ii)
each director of the Company who is a stockholder, (iii) the Chief Executive
Officer of the Company and the other executive officers named in the "Summary
Compensation Table" above who are stockholders, and (iv) the directors and
officers of the Company as a group. Unless otherwise specified, all shares are
directly held.
Number and Percent of Shares
Holdings
Preferred Holdings Class A Holdings Class B
Stock Stock(1) Stock(2)
----- -------- --------
Name of Beneficial Owner Number Percent Number Percent Number Percent
------------------------ ------ ------- ------ ------- ------ -------
Citicorp Venture Capital Ltd. 12,205.4 71.89% 102,671.40 37.5% 549,394.14 75.6%%
399 Park Avenue
New York, New York 10043
Dr. Martin M. Dorio 404.8 2.4% 55,180.7 20.2% -- --
172 Trade Street
Lexington, Kentucky 40511
Dr. J. Frithjof Timm 130.1 0.8% 19,879.5 7.3% -- --
172 Trade Street
Lexington, Kentucky 40511
Kevin M. Reardon 37.1 0.2% 5,391.6 2.0% -- --
Michael J. Grossman 68.4 0.4% 6,566.3 2.4% -- --
Joseph F. Lingg 40.5 0.2% 5,518.1 2.0% -- --
Thomas J. Snyder -- -- 5,000.0 1.8% -- --
Dietcher Klingelnberg -- -- 42.0 0.02% 8,943.5 1.2%
Michael A. Delaney 101.5 0.6% 855.0 0.3% 4,536.3 0.6%
James A. Urry 101.5 0.6% 855.0 0.3% 4,536.3 0.6%
All directors and executive
officers as a group
(10 persons) 734.9 4.3% 106,396.6 38.9% 18,016.1 1.2%
- ----------
(1) Does not include shares of Holdings Class A Stock issueable upon conversion
of Holdings Class B Stock. See "--Holdings Common Stock." Assuming the
conversion of all of a holder's shares of Holdings Class B Stock into
Holdings Class A Stock, but no such conversion by any other holder of
Holdings Class B Stock, the number of shares and the percentage of total
Holdings Class A Stock held by the converting holder would be as follows:
for CVC, 652,065.5 and 79.2%; for Dietcher Klingelnberg, 8,985.5 and 3.2%;
for Michael A. Delaney, 5,391.3 and 1.9%; for James A. Urry, 5,391.3 and
1.9%; and for all directors and executive officers as a group, 124,412.7 and
42.7%.
(2) Does not include shares of Holdings Class B Stock issuable upon conversion
of Holdings Class A Stock. See "--Holdings Common Stock." Assuming the
conversion of all of a holder's shares of Holdings Class A Stock into
Holdings Class B Stock, but no such conversion by any other holder of
Holdings Class A Stock, the number of shares and the percentage of total
Holdings Class B Stock held by the converting holder would be as follows:
for CVC, 652,065.54 and 78.6%; for Dr. Martin M. Dorio, 55,180.7 and 7.1%;
for Dr. J. Frithjof Timm, 19,879.5 and 2.7%; for Kevin M. Reardon, 5,391.6
and 0.7%; for Michael J. Grossman, 6,566.3 and 0.9%; for Joseph F. Lingg,
5,518.1 and 0.7%; for Thomas J. Snyder, 5,000 and 0.7%; for Dietcher
Klingelnberg, 8,985.5 and 1.2%; for Michael A. Delaney, 5,391.3 and 0.7%;
and for James A. Urry, 5,391.3 and 0.7%; and for all directors and executive
officers as a group, 124,412.7 and 14.9%.
Holdings Common Stock
The Certificate of Incorporation of Holdings provides that Holdings may
issue 2,500,000 shares of Holdings Common Stock, divided into two classes
consisting of 1,250,000 shares of Holdings Class A Stock and 1,250,000 of
Holdings Class B Stock. The holders of Holdings Class A Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders. Except as required by law, the holders of Holdings Class B Stock
have no voting rights. Under the Certificate of Incorporation of Holdings, a
holder of either class of Holdings Common Stock may convert any or all of his
shares into an equal number of shares of the other class of Holdings Common
Stock; provided that in the case of a conversion from Holdings Class B Stock,
which is nonvoting, into Holdings Class A Stock, which is voting, the holder of
shares to be converted would be permitted under applicable law to hold the total
number of shares of Holdings Class A stock which would be held after giving
effect to the conversion.
18
The Stockholders' Agreement
Pursuant to the Securities Purchase and Holders Agreement entered into
among the stockholders of Holdings (the "Stockholders' Agreement"), the Board of
Directors of Holdings and the Company shall be composed at all times of five
directors as follows: the President of the Company, Dr. Martin M. Dorio (so long
as he continues to serve as President); two individuals designated by CVC; and
two additional directors who shall not be employees of CVC but who shall be
designated by CVC, subject to the right of holders of the majority of the
outstanding shares of Holdings Class A Stock to veto the election of either of
such additional directors.
The Stockholders' Agreement contains certain provisions which, with
certain exceptions, restrict the ability of the stockholders from transferring
any Holdings Common Stock, Holdings Preferred Stock or Holdings Debentures
except pursuant to the terms of the Stockholders' Agreement. So long as Holdings
has not consummated a public offering of Holdings Common Stock resulting in
aggregate net proceeds of $30.0 million or more, if holders of at least 50% of
the Holdings Common Stock then outstanding approve the sale of the Company, each
stockholder has agreed to consent to such sale and, if such sale includes the
sale of stock, each stockholder has agreed to sell all of such stockholder's
Holdings Common Stock on the terms and conditions approved by holders of a
majority of the Holdings Common Stock then outstanding. In the event Holdings
proposes to issue and sell (other than in a public offering pursuant to a
registration statement) any shares of Holdings Common Stock and/or Holdings
Preferred Stock or any securities containing options or rights to acquire any
shares of Holdings Common Stock and/or Holdings Preferred Stock or any
securities convertible into Holdings Common Stock and/or Holdings Preferred
Stock to CVC or its corporate affiliates, Holdings must first offer to each of
the other shareholders a pro rata portion of such shares. Such preemptive rights
are not applicable in certain circumstances including the issuance of shares of
Holdings Common Stock and/or Holdings Preferred Stock upon the conversion of
shares of one class of Holdings Common Stock and/or Holdings Preferred Stock
into shares of the other class or upon an initial public offering.
The Stockholders' Agreement also provides for certain additional
restrictions on transfer of shares by Management Investors, including the right
of Holdings to repurchase shares upon termination of such stockholder's
employment prior to 2002, at a formula price, and in certain circumstances the
grant of a right of first refusal in favor of Holdings in the event a Management
Investor elects to transfer shares of Holdings Common Stock.
Registration Rights Agreement
In connection with their entry into the Stockholders' Agreement,
Holdings, CVC, Dr. Martin M. Dorio, Thomas J. Snyder and the other stockholders
of Holdings entered into a Registration Rights Agreement (the "Holdings
Registration Rights Agreement"). Pursuant to the Holdings Registration Rights
Agreement, upon the written request of CVC, Holdings has agreed to (subject to
certain exceptions) prepare and file a registration statement with the
Securities and Exchange Commission concerning the distribution of all or part of
the shares held by CVC and use its best efforts to cause such registration
statement to become effective. If at any time Holdings files a registration
statement for the Holdings Common Stock pursuant to a request by CVC or
otherwise (other than a registration statement on Form S-8, Form S-4 or any
similar form, a registration statement filed in connection with a share exchange
or an offering solely to Holdings' employees or existing stockholders, or a
registration statement registering a unit offering), Holdings will use its best
efforts to allow the other parties to the Holdings Registration Rights Agreement
to have their shares of Holdings Common Stock (or a portion of their shares
under certain circumstances) included in such offering of Holdings Common Stock
if the registration form proposed to be used may be used to register such
shares. Registration expenses of the selling stockholders (other than
underwriting fees, brokerage fees and transfer taxes applicable to the shares
sold by such stockholders or the fees and expenses of any accountants or other
representatives retained by a selling stockholder) are to be paid by Holdings.
19
Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Service Agreement
In connection with the Acquisition, the Company entered into a service
agreement (the "Service Agreement") with the Predecessor's Parent pursuant to
which the Company shares space in the Southaven Facility with another division
of the Predecessor's Parent. In addition, pursuant to such agreement the Company
hired approximately 27 employees who are responsible for aftermarket customer
support and administration. The Company pays an aggregate annual fee under such
Service Agreement of approximately $5.9 million (the "Base Fee"), payable in
monthly installments. In addition to the Base Fee, certain provisions of the
Service Agreement may require each of the Predecessor's Parent and CLARK to
share the responsibility for additional costs and savings resulting from, among
other things, changes or increases in the provision of services or the
implementation of certain cost savings. The term of the agreement is for three
years. Management believes that the terms of the Service Agreement are no less
favorable to the Company than those that could have been obtained from
non-affiliated parties at the time the agreement was entered into.
Tax Sharing Agreement
Holdings and the Company will be included in the consolidated United
States federal income tax return of Holdings. Holdings and the Company entered
into a tax sharing agreement (the "Tax Sharing Agreement") whereby the Company
will pay Holdings (or Holdings will pay the Company) its pro rata share of the
total tax liability, as set out in the Tax Sharing Agreement. In the event the
Company is included in a joint, combined, consolidated or unitary state or local
income or franchise tax return with Holdings, the Company shall make payments to
Holdings, and Holdings shall make payments to the Company, in a manner
consistent with that described above for federal tax purposes.
License Agreement
In connection with the Acquisition, Holdings acquired certain patents
and patent applications related to the Company's business from the Predecessor's
Parent. Pursuant to a License Agreement dated as of November 27, 1996, Holdings
granted to the Company a perpetual, world-wide, exclusive royalty-free,
fully-paid-up license to practice methods, and to make, use, import, offer for
sale or sell any products, covered by such patents and patent applications.
Other
At the time of the Acquisition, it was contemplated that certain shares
of capital stock of Holdings would be issued to the members of management. In
furtherance of that intent, effective as of as of January 31, 1997, Holdings
repurchased certain outstanding shares of Holdings Preferred Stock and Holdings
Class B Stock having an aggregate value of approximately $1.1 million from CVC
and, simultaneously therewith, issued and sold shares of Holdings Preferred
Stock and Holdings Common Stock having an equivalent value to Dr. Martin M.
Dorio, and other members of management. In connection therewith, the Company
loaned Dr. Dorio $200,000 toward the purchase price of the securities acquired
by him. Such loan is evidenced by a demand promissory note that does not bear
interest. In addition, effective as of February 20, 1997, Holdings repurchased
certain outstanding shares of Holdings Class A Stock, Holdings Class B Stock and
12% Junior Subordinated Notes (the "Junior Subordinated Notes") of Holdings
having an aggregate value of $250,000 from CVC and simultaneously therewith,
issued and sold shares of Holdings Class A Stock, Holdings Class B Stock and the
Junior Subordinated Notes having an equivalent value to Dietcher Klingelnberg.
20
PART IV
Item 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) List of Financial Statements.
Financial Data Schedule
The following Consolidated Financial Statements of the Company and the
Report of Independent Accountants set forth on pages F-1 through F-25,
respectively, are incorporated by reference into this item 14 of Form 10-K by
item 8 hereof:
See Index to Consolidated Financial Statements on page F-1.
(a)(2) Financial Statement Schedules.
No financial statement schedules have been filed herewith since they
are either not required, are not applicable, or the required information is
shown in the consolidated financial statements or related notes.
(a)(3) Exhibits.
Exhibit Description
No.
- ---
3.1 Certificate of Incorporation, as amended, of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on Form
S-4, Registration No. 333-18957)
3.2 By-laws of the Company (incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
4.1 Indenture dated as of November 27, 1996 between the Company and United
States Trust Company of New York, as Trustee (incorporated by reference
to Exhibit 4.1 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
4.2 Registration Rights Agreement dated as of November 27, 1996 among the
Company, Jefferies & Company, Inc. and Bear, Stearns & Co. Inc.
(incorporated by reference to Exhibit 4.2 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
4.3 Form of 10 3/4% Senior Notes due 2006 (included in Exhibit 4.1)
(incorporated by reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.1 Purchase Agreement dated November 22, 1996 among the Company, Jefferies &
Company, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to
Exhibit 10.1 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.2 Loan and Security Agreement dated November 27, 1996 by and between
Congress Financial Corporation and the Company (incorporated by reference
to Exhibit 10.2 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.3 Stock and Asset Purchase and Sale Agreement, dated as of November 9, 1996
among the Terex Corporation, and certain of its subsidiaries and the
Company (incorporated by reference to Exhibit 10.3 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.4 Service Agreement dated as of November 27, 1996 between the Terex
Corporation and the Company (incorporated by reference to Exhibit 10.4 to
the Company's Registration Statement on Form S-4, Registration No.
333-18957)
10.5 Indemnity as to Letters of Credit, Performance Bonds, Appeal Bonds,
Guaranties, etc. dated November 27, 1996 by the Company in favor of the
Terex Corporation, for itself and as successor to CMH Acquisition Corp.,
CMH Acquisition International Corp., CLARK Material Handling Company and
CLARK Material Handling International, Inc. (incorporated by reference to
Exhibit 10.5 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.6 Employment Agreement dated as of November 27, 1996 between Holdings and
Dr. Martin M. Dorio (incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
21
10.7 Tax Sharing Agreement made as of November 27, 1996 between Holdings and
the Company (incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.8 Stock Purchase Agreement, dated as of May 27, 1992, by and between CLARK
Equipment Company and the Terex Corporation (incorporated by reference to
Exhibit 10.8 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.9 First Amendment to the Stock Purchase Agreement, dated as of July 31,
1992, by and between CLARK Equipment Company and Terex Corporation
(incorporated by reference to Exhibit 10.9 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.10 Trademark Assignment Agreement, dated as of July 31, 1992, by and between
CLARK Equipment Company and CLARK Material Handling Company (incorporated
by reference to Exhibit 10.10 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.11 Second Amended and Restated General Operating Agreement, dated November
29, 1990, by and between CLARK Material Handling Company and Chase
Manhattan Leasing Company, Inc. (incorporated by reference to Exhibit
10.11 to the Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.12 Second Amendment to the Second Amended and Restated General Operating
Agreement, dated April 15, 1994, by and among CLARK Material Handling
Company, Drexel dated August 1, 1994, by and between CLARK Material
Handling Company and CLARK Credit Corporation (incorporated by reference
to Exhibit 10.13 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.14 Assignment of Second Amended and Restated General Operating Agreement,
dated March 22, 1995, by and between CLARK Material Handling Company,
CLARK Credit Corporation, f/k/a Chase Manhattan Leasing Company, and
Associates Commercial Corporation (incorporated by reference to Exhibit
10.14 to the Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.15 Master Software License and Service Agreement, dated May 17, 1996,
between CLARK Material Handling Company and SDRC Operations (incorporated
by reference to Exhibit 10.15 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.16 Letter Agreement, dated October 26, 1995, between CLARK Material Handling
Company, Manufacturers Distribution Services, Inc. and Maine Rubber
International (incorporated by reference to Exhibit 10.16 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
10.17 MCI Services Agreement, effective as of July 1, 1995, between MCI
Telecommunications Corporation and CLARK Material Handling Company
(incorporated by reference to Exhibit 10.17 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.18 Agreement for Systems Operations Services, dated as of March 2, 1992,
between CLARK Material Handling Company and Integrated Systems Solutions
Corporation, as amended by Amendments #1 through #5 (incorporated by
reference to Exhibit 10.18 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.19 Supply Agreement, dated December 14, 1994, between CLARK Material
Handling Company and Funk Manufacturing Company (incorporated by
reference to Exhibit 10.19 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.20 Supply Agreement, dated July 1, 1995, between CLARK Material Handling
Company and Funk Manufacturing Company (incorporated by reference to
Exhibit 10.20 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.21 Agreement, dated June 1, 1983, between CLARK Equipment Company and
Mitsubishi Corporation, Mitsubishi Heavy Industries, Ltd. and Mitsubishi
Motors Corporation, as amended (incorporated by reference to Exhibit
10.24 to the Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.22 Master Contract for Purchase and Sale, dated July 17, 1995, between CLARK
Material Handling Company and Custom Tool and Manufacturing Company
(incorporated by reference to Exhibit 10.25 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.23 Supply Agreement, dated December 20, 1991, between CLARK Material
Handling Company and Dixson, Inc. (incorporated by reference to Exhibit
10.26 to the Company's Registration Statement on Form S-4, Registration
No. 333-18957)
22
10.24 Lease Agreement, dated as of April 15, 1987, between Vergil D. Kelly and
Kenny Angelucci and CLARK Equipment Company with respect to 172 Trade
Street, Lexington, Kentucky, as amended by Amendment #1 to Lease dated
April 15, 1987 (incorporated by reference to Exhibit 10.27 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
10.25 Standard Form Dealer Sales Agreements, between CLARK Material Handling
Company and domestic dealer entities (incorporated by reference to
Exhibit 10.28 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.26 Agreement, dated as of September 12, 1995, by and between CLARK Material
Handling Company and Nissan Forklift Corporation, North America
(incorporated by reference to Exhibit 10.29 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.27 License Agreement, dated as of November 27, 1996, between Holdings and
the Company (incorporated by reference to Exhibit 10.30 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.28 Asset Purchase Agreement, dated as of November 6, 1997, between Clark
Material Handling of Canada Ltd. and Blue Giant Limited.
10.29 Asset Purchase Agreement, dated as of October 31, 1997, between Blue
Giant Corporation and Blue Giant USA Corporation.
21.1 Subsidiaries of the Company
27 Financial Data Schedule
(b) Reports on Form 8-K.
On October 31, 1997, the Company filed a Form 8-K to report its
acquisition of Blue Giant USA Corporation and Blue Giant Canada Limited in two
separate purchase business combinations effective November 1, 1997.
23
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
CLARK Material Handling Company
BY: /s/ Dr. Martin M. Dorio
Dr. Martin M. Dorio
President and CEO
March 31, 1998
Pursuant to the requirements of the securities exchange act of 1934, as
amended this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on March 31, 1998.
/s/ Martin M. Dorio President, Chief Executive Officer and Director
- ---------------------------- (Principal Executive Officer)
Martin M. Dorio
/s/ Joseph F. Lingg Vice President, Finance, Human Resources and Treasurer
- ---------------------------- (Principal Financial and Accounting Officer)
Joseph F. Lingg
/s/ James A. Urry Director
- ----------------------------
James A. Urry
/s/ Thomas J. Snyder Director
- ----------------------------
Thomas J. Snyder
/s/ Michael A. Delaney Director
- ----------------------------
Michael A. Delaney
/s/ Dietcher Klingelnberg Director
- ----------------------------
Dietcher Klingelnberg
24
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH
HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE
ACT.
The registrant has not sent the following to security holders: (i) any
annual report to security holders covering the registrant's last fiscal year; or
(ii) any proxy statement, form of proxy or other proxy soliciting material with
respect to any annual or other meeting of security holders.
25
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Consolidated financial statements as of December 31, 1997 and December 31, 1996
and for the year ended December 31,1997, the one month period ended December 31,
1996, the eleven month period ended November 26, 1996 and the year ended
December 31, 1995.
Page
Report of independent accountants F-2
Consolidated balance sheet F-3
Consolidated statement of operations F-4
Consolidated statement of stockholder's equity F-5
Consolidated statement of cash flows F-6
Notes to consolidated financial statements F-7
Schedules for which provision is made in the applicable regulations of the
Securities and Exchange Commission are not required under the related
instructions or the information is included in the notes to the consolidated
financial statements, or are not applicable, and therefore have been omitted.
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholder of CLARK Material
Handling Company
In our opinion, the consolidated balance sheet and the related consolidated
statements of operations, of stockholder's equity and of cash flows present
fairly, in all material respects, the consolidated financial position of CLARK
Material Handling Company and its predecessor businesses at December 31, 1997
and December 31, 1996 and the results of their operations and cash flows for the
year ended December 31, 1997, the one month period ended December 31, 1996, the
eleven month period ended November 26, 1996 and the year ended December 31,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of management; our responsibility is
to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audits 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Cincinnati, Ohio
February 24, 1998
F-2
CLARK Material Handling Company
Consolidated Balance Sheet (in thousands, except share amounts)
- --------------------------------------------------------------------------------
December 31, December 31,
1996 1997
---- ----
Current assets
Cash and cash equivalents $ 16,554 $ 6,334
Cash securing letters of credit 1,092 320
Trade receivables (less allowance of $2,215 at
December 31, 1996 and $1,906 at December 31, 1997) 38,154 47,018
Net inventories 60,441 70,784
Other current assets 6,255 7,281
---------- -----------
Total current assets 122,496 131,737
Long term assets
Property, plant and equipment-net 51,014 47,836
Goodwill, net of accumulated amortization of
$231 at December 31, 1996 and $3,081 at
December 31, 1997 109,311 114,887
Other assets 18,486 18,794
---------- -----------
Total assets $ 301,307 $ 313,254
========== ===========
Current liabilities
Notes payable $ 3,246 $ 3,184
Current portion of capital lease obligations 2,407 2,732
Trade accounts payable 53,562 62,002
Accrued compensation and benefits 5,319 5,730
Accrued warranties and product liability 23,383 20,774
Other current liabilities 9,489 10,728
---------- -----------
Total current liabilities 97,406 105,150
Non-current liabilities
Senior notes payable 130,000 130,000
Capital lease obligations, less current portion 3,600 3,864
Accrued warranties and product liability 30,826 38,497
Other non-current liabilities 14,402 12,002
---------- -----------
Total liabilities 276,234 289,513
---------- -----------
Commitments and contingencies (Note 11) - -
Stockholder's equity
Common stock, par value $1 per share, 1,000
shares authorized, issued and outstanding 1 1
Paid-in-capital 24,999 24,999
Retained earnings 535 8,406
Cumulative translation adjustment (462) (9,665)
---------- -----------
Total stockholder's equity 25,073 23,741
---------- -----------
Total liabilities and stockholder's equity $ 301,307 $ 313,254
========== ===========
The accompanying notes are an integral part of these financial statements.
F-3
CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Operations (in thousands)
- --------------------------------------------------------------------------------
Predecessor The Company
----------- -----------
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December3l, November26, December3l, December3l,
1995 1996 1996 1997
Net sales $ 528,759 $ 404,629 | $ 46,763 $ 489,294
Cost of goods sold 484,569 359,061 | 41,905 431,127
--------- --------- | --------- ---------
Gross profit 44,190 45,568 | 4,858 58,167
|
Engineering, selling and administrative expenses 30,649 26,613 | 2,923 37,133
|
Parent company management fees 6,996 5,672 | - -
|
Severance and exit charges 3,478 - | - -
--------- --------- | --------- ---------
Income from operations 3,067 13,283 | 1,935 21,034
|
Other income (expense): |
Interest expense (790) (370) | (1,393) (15,086)
Allocated interest expense from parent |
company (16,145) (14,656) | - -
Interest income 602 220 | 25 809
Amortization interest expense from parent |
company (530) (349) | - -
Property impairment charge (2,500) - | - -
Other income (expense) - net (975) (223) | (32) 1,598
--------- --------- | --------- ---------
Income (loss) before income taxes and |
extraordinary items (17,271) (2,095) | 535 8,355
|
Provision (benefit) for income taxes (148) - | - 484
--------- --------- | --------- ---------
Income (loss) before extraordinary items (17,419) (2,095) | 535 7,871
|
Extraordinary loss on retirement of allocated |
debt (1,347) - | - -
--------- --------- | --------- ---------
Net income (loss) $ (18,766) $ (2,095) | 535 $ 7,871
========== ========= ========= =========
The accompanying notes are an integral part of these financial statements.
F-4
CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Stockholder's Equity (in thousands)
- --------------------------------------------------------------------------------
Foreign
Retained currency
Common Paid-in earnings translation
stock capital (deficit) adoustments
----- ------- --------- -----------
PREDECESSOR
Balance at December 31, 1994 $ (76,107) $ (3,915)
Net loss for the year ended December 31, 1995 (18,766)
Translation adjustment - 2,066
--------- ----------
Balance at December 31, 1995 (94,873) (1,849)
Net loss for the eleven months ended
November 26, 1996 (2,095)
Translation adjustment - (2,546)
--------- ----------
Balance at November 26, 1996 $ (96,968) $ (4,395)
========= ==========
THE COMPANY
Issuance of common stocks $ 1 $ 24,999
Net income for the month ended
December 31, 1996 - - 535 -
Translation adjustment - - - (462)
-------- --------- --------- ----------
Balance at December 31, 1996 1 24,999 535 (462)
Net income for the year ended
December 31, 1997 - - 7,871
Translation adjustment - - - $ (9,203)
-------- --------- --------- ----------
Balance at December 31, 1997 $ 1 $ 24,999 $ 8,406 $ (9,665)
======== ========= ======== ==========
The accompanying notes are an integral part of these financial statements.
F-5
CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Cash Flows (in thousands)
- --------------------------------------------------------------------------------
Predecessor The Company
------------------------------ ------------------------------
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 3l, November 26, December 3l, December 3l,
1995 1996 1996 1997
---- ---- ---- ----
Operating activities: |
Net income (loss) $ (18,766) $ (2,095) | $ 535 $ 7,871
Adjustments to reconcile net income (loss) |
to cash provided by operating activities: |
Depreciation 11,534 9,312 | 778 1,900
Amortization 1,310 1,099 | 322 3,350
Extraordinary loss on retirement of allocated debt 1,347 - | - -
Loss on sale of property, plant and equipment 183 31 | 70 24
Property impairment charge 2,500 - |
Changes in operating assets and liabilities excluding |
business combinations: |
Restricted cash (516) (220) | (136) 638
Trade receivables (240) (2,406) | 2,800 (8,732)
Net inventories (2,685) (2,696) | 9,801 (7,015)
Trade accounts payable (2,084) 61 | (11,265) 7,866
Accrued compensation and benefits (73) 409 | (609) (156)
Accrued warranties and product liability 1,126 (2,248) | 237 3,581
Due to parent company 19,187 8,720 | - -
Other assets and liabilities, net (5,645) (5,876) | 223 (5,211)
--------- --------- | ---------- ---------
Net cash provided by operating activities 7,178 4,091 | 2,756 11,109
--------- --------- | ---------- ---------
Investing activities: |
Business combinations - - | - (14,646)
Capital expenditures (5,290) (3,208) | (317) (6,340)
Proceeds from sale of assets 534 139 | - -
--------- --------- | ---------- ---------
Net cash used in investing activities (4,756) (3,069) | (317) (20,986)
--------- --------- | ---------- ---------
Financing activities: |
Issuance of current notes payable - - | - 1,182
Repayment of current notes payable - - | - (1,020)
Repayment of allocated debt (51,754) - | - -
Proceeds from allocated debt 51,220 105 | - -
Other,net (1,607) 1,376 | 293 147
--------- --------- | ---------- ---------
Net cash provided by (used in) financing activities (2,141) 1,481 | 293 309
--------- --------- | ---------- ---------
Effect of exchange rate changes on cash and |
cash equivalents (976) (1,262) | (306) (652)
--------- --------- | ---------- ---------
|
Net increase (decrease) in cash and cash equivalents (695) 1,241 | 2,426 (10,220)
Cash and cash equivalents at beginning of period 1,514 819 | 14,128 16,554
---------- --------- | ---------- ---------
Cash and cash equivalents at end of period $ 819 $ 2,060 | $ 16,554 $ 6,334
========== ========= | ========== =========
|
Supplemental disclosures |
Cash paid for interest 793 $ 337 | $ 86 $ 14,465
Income taxes paid 17 | $ - $ -
The accompanying notes are an integral part of these financial statements.
F-6
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 1 - REPORTING ENTITY AND BASIS OF PRESENTATION
CLARK Material Handling Company (the "Company") is a wholly-owned subsidiary of
CMH Holdings Corporation ("Holdings"). Prior to November 27, 1996, Holdings had
no previous business operations and was formed for the purpose of acquiring the
Company and its subsidiaries from Terex Corporation ("Terex" or the "Parent
Company") in a purchase business combination. That acquisition was consummated
on November 27, 1996. See Note 3 for information regarding the acquisition.
Prior to the acquisition, the Company's predecessor businesses ("Predecessor")
operated as wholly-owned subsidiaries of the Parent Company. Reference to the
Company relates to the period subsequent to November 26, 1996, while reference
to the Predecessor relates to operations on or prior to November 26, 1996. The
Parent Company acquired the Predecessor in 1992 in a purchase business
combination and Parent Company's basis, including its acquisition debt and
goodwill associated with the 1992 acquisition, was "pushed down" to the
Predecessor's financial statements.
The Predecessor's financial statements include allocations of Parent Company
acquisition debt and related interest expense. Management fees, which include
corporate overhead costs (including legal, treasury and other shared services),
have been allocated to the Predecessor based generally on the percentage of
Predecessor revenues to the Parent Company's consolidated revenues. Interest has
been charged on the management fee allocated and the due to Parent Company
balance at a rate of 13% compounded monthly.
The Company and the Predecessor operate in one industry segment, that being the
design, manufacture, marketing and worldwide distribution and support of
internal combustion and electric lift trucks, electric walkies and related
components and replacement parts. Geographic segment information is shown in
Note 13.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. The Company's financial statements include the
accounts of the Company and its subsidiaries, including CLARK Material Handling
GmbH, CLARK Forklift Korea, CLARK Material Handling of Brazil, HLT, Inc. ("HLT")
and Blue Giant Canada Limited and Blue Giant USA Corporation ("Blue Giant"). HLT
and Blue Giant were acquired in 1997-see Note 4. The Predecessor's financial
statements include the U.S, German, Brazilian and Korean material handling
operations of the Parent Company prior to their acquisition on November 27,
1996, on a combined basis. All material intercompany balances, transactions and
profits have been eliminated.
Cash and cash equivalents. Cash equivalents consist of highly liquid investments
with original maturities of three months or less. The carrying amount of cash
and cash equivalents approximates their fair value.
F-7
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Cash securing letters of credit. The Company has certain cash and cash
equivalents that are not fully available for use in operations. Certain
international operations collateralize letters of credit and performance bonds
with cash deposits.
Inventories. Inventories are stated at the lower of cost or market value. The
Company determines cost on the first-in, first-out ("FIFO") method for all
inventories. The Predecessor determined cost using the last-in, first-out
("LIFO") method for U.S. inventories and by the FIFO method for inventories of
international operations.
Goodwill. Goodwill represents the difference between the total purchase price
and the fair value of assets and liabilities (tangible and intangible) acquired
at the date of acquisition. Goodwill related to the Company is being amortized
on the straight-line method over forty years. The Company reviews the carrying
value of goodwill for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Measurement of any
impairment would include a comparison of discounted estimated future operating
cash flows anticipated to be generated during the remaining amortization period
of the goodwill to the net carrying value of goodwill.
Debt issuance costs. Debt issuance costs of the Company have been capitalized
and are being amortized on the straight-line method over the term of the related
debt. Debt issuance costs are included in other assets and totaled $6,625 and
$5,599 at December 31, 1997 and 1996, respectively. Amortization of these costs
totaled $625 and $47 for the year ended December 31, 1997 and for the one month
ended December 31, 1996, respectively.
Property, plant and equipment. Property, plant and equipment are stated at cost.
Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred.
Depreciation is determined for financial reporting purposes using the
straight-line method over the estimated useful asset lives, generally 20 to 35
years for buildings, eight to twelve years for machinery and equipment and two
to eight years for other assets.
Revenue recognition. Revenue and costs are generally recorded when products are
shipped and invoiced to customers. Certain new units may be invoiced prior to
the time customers take physical possession. Revenue is recognized in such cases
only when the customer has a fixed commitment to purchase the units, the units
have been completed, tested and made available to the customer for pickup or
delivery, and the customer has requested that the units be held for pickup or
delivery at a time specified by the customer in the sales documents. In such
cases, the units are invoiced under the customary billing terms, title to the
units and risks of ownership pass to the customer upon invoicing, the units are
segregated from inventories and identified as belonging to the customer and
there are no further obligations under the order.
F-8
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Accrued warranties and product liability. Accruals for potential warranty and
product liability claims are recorded based on past claims experience. Warranty
costs are accrued at the time revenue is recognized. Self-insurance accruals are
provided for estimated product liability experience on known claims and for
claims anticipated to have been incurred which have not yet been reported.
Product liability accruals are presented on a gross settlement basis.
Foreign currency translation. Assets and liabilities of international operations
are translated at year-end exchange rates. Income and expenses are translated at
average exchange rates prevailing during the year. Foreign operations utilize
the local currency as the functional currency; translation adjustments are
accumulated in the cumulative translation adjustment account in equity. Gains or
losses resulting from foreign currency transactions are included in other income
(expense) and totaled $1,536, ($149), ($1,055) and ($1,232) for the year ended
December 31, 1997, the one month ended December 31, 1996, the eleven months
ended November 26, 1996 and for the year ended December 31, 1995, respectively.
Income taxes. Income taxes are provided using the asset and liability method
required by Statement of Financial Accounting Standards ("SFAS") No. 109.
Pursuant to a tax sharing agreement with Holdings, the Company is included in
the consolidated federal return of Holdings. The tax sharing arrangement does
not differ materially from that which would occur on a separate entity basis.
The Predecessor provided for income taxes on a separate entity basis.
Use of estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Reclassifications. Certain reclassifications of prior year amounts have been
made to conform with the current year presentation.
F-9
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 3 - ACQUISITION
On November 27, 1996, Holdings acquired the Company and the Company's
subsidiaries in a business combination accounted for as a purchase. The
aggregate purchase price for the acquisition was $139,500, which was subject to
certain immaterial post-closing adjustments, and was financed through a $25,000
equity investment by Holdings in the common stock of the Company and the
issuance of $130,000 in Senior Notes due 2006 by the Company. The purchase price
was allocated to the estimated fair values of the Company's tangible and
intangible net assets with the remainder allocated to goodwill. The excess of
purchase price over the net assets acquired of $116,942 is being amortized on a
straight-line basis over forty years.
The operating results of the Company are included in the consolidated results of
operations since November 27, 1996. The following unaudited pro forma summary
presents the consolidated results of operations as though Holdings completed the
acquisition on January 1 of each period presented.
Year ended December 31,
-----------------------
1995 1996
---- ----
Net sales $ 528,759 $ 451,392
========== =========
Income from operations $ 5,894 $ 16,976
========== =========
Net income (loss) $ (12,452) $ 1,881
========== =========
NOTE 4 - BUSINESS COMBINATIONS
Blue Giant
On November 7, 1997, the Company closed its acquisitions of substantially all of
the assets and certain liabilities of Blue Giant USA Corporation ("BGU") and
Blue Giant Canada Limited ("BGC") (collectively, "Blue Giant") in two separate
purchase business combinations effective November 1, 1997. Although separate
legal entities, BGU and BGC were under the common control of substantially the
same stockholder group. The purchase price for the acquisitions comprised $9,365
in cash (of which $200 was paid to a shareholder of Blue Giant under a
noncompete agreement), an obligation payable over three years totaling $1,105
under a noncompete agreement with a shareholder of the Blue Giant and related
expenses of $333. The purchase price was allocated to the estimated fair value
of the tangible and intangible net assets acquired, with the residual being
allocated to goodwill. The goodwill of $1,026 is being amortized on a
straight-line basis over forty years.
F-10
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The operating results of Blue Giant are included in the consolidated results of
operations since November 1, 1997. The following unaudited pro forma summary
presents the consolidated results of operations as though the acquisition of the
Company described in Note 3 had been completed and the Company had completed the
acquisition of Blue Giant on January 1 of each period presented.
Year Ended December 31,
-----------------------
1996 1997
---- ----
Net sales $ 477,254 $ 509,187
========== =========
Income from operations $ 17,293 $ 21,583
========== =========
Net income $ 1,415 $ 8,320
========== =========
HLT, Inc.
On February 28, 1997, the Company purchased substantially all of the assets of
HLT, Inc., a supplier of upright material handling equipment, for $4,948. Assets
acquired included inventory, equipment and tooling. The purchase was financed
through a short-term note which matured in the second quarter of 1997. The
Company is leasing the former company's facility and is continuing production of
the equipment, primarily for its own use. The acquisition was not significant
and pro forma data is not presented.
NOTE 5 - INVENTORIES
Inventories consist of the following:
December 31, December 31,
1996 1997
---- ----
Finished equipment $ 12,797 $ 12,000
Replacement parts 24,107 28,302
Work-in-progress 1,402 5,356
Raw material and supplies 22,135 25,126
--------- ----------
Net inventories $ 60,441 $ 70,784
========= ==========
F-11
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
December 31, December 31,
1996 1997
---- ----
Property $ 7,364 $ 7,005
Plant 15,556 14,574
Equipment 28,779 33,854
---------- -----------
51,699 55,433
Less: Accumulated depreciation (685) (7,597)
---------- -----------
Net property, plant and equipment $ 51,014 $ 47,836
========== ===========
NOTE 7 - BORROWINGS, LINES OF CREDIT AND INDEBTEDNESS
Long-term debt is summarized as follows:
December 31, December 31,
1996 1997
---- ----
10.75% Senior Notes due 2006 $ 130,000 $ 130.000
Capital lease obligations (Note 8) 6,007 6,596
--------- ----------
Total long-term debt 136,007 136,596
Less: current portion 2,407 2,732
--------- ----------
Long-term debt, less current
portion $ 133,600 $ 133,864
========= ==========
Senior Notes due 2006
The Senior Notes due 2006 ("Senior Notes") were issued in connection with the
acquisition of the Company and are due on November 15, 2006. The Senior Notes
are not redeemable at the Company's option prior to November 15, 2001.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon, if any, to the
applicable date of redemption, if redeemed during the 12 month period beginning
on November 15 of the years indicated below:
Year Percentage
---- ----------
2001 105.375%
2002 102.688%
2003 and thereafter 100.000%
F-12
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The Senior Notes also contain provision for early redemption upon the occurrence
of certain significant corporate events, including an offering of equity
securities or a change in control of the Company.
Revolving Line of Credit
The Company has entered into a $30,000 revolving credit facility (the
"Facility") with Congress Financial Corporation (the "Bank"). Borrowings under
the Facility are available for working capital and general corporate purposes,
including letters of credit. The Facility is secured by first priority liens on
all accounts receivable and inventory of the Company's domestic operations,
excluding HLT and Blue Giant.
The Facility expires in November 1999, unless extended. The interest rate per
annum applicable to the Facility is the prime rate, as announced periodically,
plus 0.50% or, at the Company's option, the adjusted Eurodollar rate plus 2.50%.
The Facility permits the Company to prepay loans and to permanently reduce
revolving credit commitments or letters of credit, in whole or in part, at any
time in certain minimum amounts. The Company is required to pay certain fees in
connection with the Facility, including a commitment fee of 0.25% on the undrawn
portion of the revolving credit commitment.
The Facility contains customary representations and warranties, and events of
default and certain other covenants. Borrowings on the Facility are classified
in the consolidated balance sheet as notes payable and were $799 and $0 at
December 31, 1997 and 1996, respectively. The average interest rate on
borrowings during 1997 was 9%.
Fair Value Disclosures
The fair value of the Company's Senior Notes at December 31, 1997 is
approximately $137,800 based on quoted market prices. The fair value of the
Senior Notes approximated carrying value at December 31, 1996. The Company
believes that the carrying value of its other borrowings approximates fair
market value based on discounted future cash flows using rates currently
available for debt with similar terms and remaining maturities.
NOTE 8 - LEASE COMMITMENTS
The Company leases certain facilities, machinery and equipment, and vehicles
with varying terms under operating leases. In most leasing arrangements, the
Company pays the property taxes, insurance, maintenance and expenses related to
the leased property.
Most of the Company's operating leases provide the Company with the option to
renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases based upon the fair
rental values at the date of expiration of the initial lease. Total rental
expense under operating leases was as follows:
F-13
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Year ended December 31, 1997 $ 2,807
=========
One month ended December 31, 1996 $ 191
=========
Eleven months ended November 26, 1996 $ 1,886
=========
Year ended December 31, 1995 $ 2,557
=========
The Company also routinely enters into sale-leaseback arrangements for certain
equipment, which is similarly sold to third-party customers under sales-type
lease agreements. The Company maintains a net investment in these leases,
represented by the present value of payments receivable under the leases. The
Company's net investment in sales-type leases was $7,901 and $7,517 at December
31, 1997 and 1996, respectively, and is included in other current and
non-current assets on the consolidated balance sheet.
In connection with the original sale-leaseback arrangements underlying the
customer lease program, the Company has an outstanding rental installment
obligation which is recorded based on the present value of minimum payments due
under the leases of $6,596 of which $2,732 is current at December 31, 1997.
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1997 are as
follows:
Capital Operating
Leases Leases
------ ------
1998 $ 2,446 $ 3,139
1999 2,001 2,439
2000 1,556 2,023
2001 1,038 1,454
2002 371 1,314
Thereafter - 29
-------- --------
Total minimum obligations 7,412 $ 10,398
========
Less amount representing interest 816
--------
Present value of net minimum obligations 6,596
Less current portion 2,732
--------
Long-term obligations $ 3,864
========
F-14
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 9 - INCOME TAXES
The components of income (loss) before income taxes and extraordinary items are
as follows:
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
United States $ (16,405) $ 2,541 | $ 165 $ 4,080
Foreign (866) (4,636) | 370 4,275
---------------- ---------------- | ---------------- ----------------
Income (loss) before income taxes |
and extraordinary items $ (17,271) $ (2,095) | $ 535 $ 8,355
================ ================ | ================ ================
As a result of the Predecessor's operating losses for book and tax purposes,
provision (benefit) for income taxes for the year ended December 31, 1995 and
the eleven months ended November 26, 1996 were minimal, relating primarily to
state or foreign jurisdictions where taxable income occurred but net operating
loss ("NOL") carryforwards were limited.
Provisions for income taxes during the year ended December 31, 1997 and the one
month ended December 31, 1996 relate to state and local income taxes. The
Company did not provide for federal income taxes during the year ended December
31, 1997 and the one month period ended December 31, 1996 as the result of
incurring a taxable loss in the United States and utilizing NOL carryforwards to
offset taxable income in foreign jurisdictions.
The provision for income taxes is different from the amount which would be
provided by applying the statutory federal income tax rate to income (loss)
before income taxes and extraordinary items. The reasons for the difference are
summarized below:
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
Expected income tax at U.S. Federal
rates $ (6,045) $ (712) | $ 182 $ 2,841
NOL with no current benefit 5,651 1,575 | - -
Foreign NOL carryforward benefit - - | (166) (1,987)
Benefit of domestic NOL - (863) | (56) (1,387)
Foreign tax differential on income/ |
losses of foreign subsidiaries 303 - | 40 533
State and local taxes - - | - 484
Other 239 - | - -
---------------- ---------------- | ---------------- ----------------
|
Total provision for income taxes $ 148 $ - | $ - $ 484
================ ================ | ================ ===============
F-15
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The tax effects of the basis differences and NOL carryforwards as of December
31, 1997 and December 31, 1996 are summarized below:
December 31, December 31,
1996 1997
---- ----
Property, plant and equipment $ (81) $ (1,846)
Goodwill - (942)
---------- ----------
Total deferred tax liabilities (81) (2,788)
---------- ----------
Warranties and product liability 19,602 21,478
Net inventories 2,586 975
Receivables 536 414
Other 2,330 1,620
Benefit of net operating loss carryforwards 19,506 19,293
---------- ----------
Total deferred tax assets 44,560 43,780
---------- ----------
Deferred tax valuation allowance (44,479) (40,992)
---------- ----------
Net deferred taxes $ - $ -
========== ==========
Basis differences between the amounts assigned to net assets for financial
reporting purposes and the amounts assigned for tax purposes resulted in a net
deferred tax asset of $40,992. In light of the Company's and Predecessor's
operating history, management provided a valuation allowance in the same amount.
At December 31, 1997, the Company had U.S. federal NOL carryforwards of $3,049
which begin to expire in 2011.
In addition, the Company's foreign subsidiaries have approximately $43,036 of
loss carryforwards, $18,407 in corporate losses for Germany, $20,763 in
municipal losses for Germany and $3,866 in other countries, which are available
to offset future foreign taxable income. The loss carryforwards in Germany are
available without expiration. The loss carryforwards in other countries expire
in the years 1998 through 2001.
F-16
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 10 - RETIREMENT PLANS
Pension Plans
Certain of the Company's German employees are covered by noncontributory defined
benefit pension plans. The Company also maintains separate pension benefit plans
for German executive employees and for other staff. The executive pension plans
are based on final pay and service, and, in some cases, are dependent on social
security pensions while the other staff plans are based on fixed amounts applied
to the number of years of service rendered. The plans are unfunded.
The components of pension expense relating to defined benefit plans for each of
the reporting periods covered by these financial statements are as follows:
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
Current service cost $ 57 $ 38 | $ 2 $ 37
Interest cost 886 840 | 52 837
Net amortization and deferrals (927) 107 | 7 -
---------------- ---------------- | ---------------- ----------------
$ 16 $ 985 | $ 61 $ 874
================ ================ | ================ ================
The following table summarizes the funded status of the Company's defined
benefit pension plans to the amounts recognized in the financial statements:
December 31, December 31,
1996 1997
---- ----
Projected benefit obligations $ 12,379 $ 11,073
--------- ---------
Accrued pension cost $ 12,379 $ 11,073
========= =========
The accumulated benefit obligations do not differ materially from the projected
benefit obligations.
F-17
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
A discount rate of 7.5% was used in 1997 and 1996 to determine the projected
benefit obligations.
Savings Plans
The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. Generally,
the Company matches contributions up to a maximum of 3% of compensation. In
connection with the required match, the Company's contribution to the plan was
$512, $30, $237 and $283 for the year ended December 31, 1997, for the one month
ended December 31, 1996, for the eleven months ended November 26, 1996 and for
the year ended December 31, 1995, respectively.
Other Postemployment Benefits
The Company does not have any benefit programs which provide retiree health or
life insurance benefits.
NOTE 11 - LITIGATION, COMMITMENTS AND CONTINGENCIES
In the normal course of business, lawsuits have been filed alleging damages for
accidents relating to use of the Company's products. As part of the acquisition
of the Predecessor, the Company assumed both the outstanding and future product
liability exposures related to such operations. As of December 31, 1997, there
were 76 lawsuits outstanding alleging damages for injuries or deaths arising
from accidents involving forklift products. Most of the foregoing suits are in
various stages of pretrial completion, and certain plaintiffs are seeking
punitive as well as compensatory damages. The Company is self-insured, up to
certain limits, for these product liability exposures, as well as for certain
exposures related to general, workers' compensation and automobile liability.
Insurance coverage is obtained for catastrophic losses as well as those risks
required to be insured by law or contract. The Company has recorded and
maintains an estimated liability, based in part upon actuarial determinations,
in the amount of management's estimate of the Company's aggregate exposure for
such self-insured risks.
The Company is involved in various other legal proceedings which have arisen in
the normal course of business. The Company has recorded provisions for estimated
losses in circumstances where a loss is probable and the amount or range of
possible amounts of the loss is estimable.
The Company is contingently liable as a guarantor for certain of its dealers'
financing arrangements with a financial institution. In certain circumstances of
dealer default, the Company is obligated to: a) repurchase new equipment
financed under dealer floor plan obligations and b) purchase dealers' long-term
rental equipment contracts with customers for which financing has been provided
by the financial institution to the dealer. The guarantees
F-18
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
under these financing arrangements aggregated approximately $25,000 and
$110,000, respectively, at December 31, 1997. When a dealer default does occur,
a newly selected dealer generally assumes the assets of the prior dealer and any
related financial obligations. Historically, the Company and the Predecessor
have incurred only minimal losses relating to these arrangements.
The Company is contingently liable for a portion of the residual value of
machines sold by the Company to an independent company which subsequently leases
those machines to third parties for terms generally ranging from three to five
years. Historically, the Company and the Predecessor have made a profit on the
subsequent resale of repurchased machines. At December 31, 1997, the maximum
contingent liability was approximately $6,273. At December 31, 1997 and December
31, 1996, there were $1,887 and $1,188, respectively, of repurchased machines
included in inventory.
The Company is contingently liable on guarantees given by the Predecessor to
financial institutions relating to loans and other dealer and customer
obligations arising in the ordinary conduct of its business. Such guarantees
approximated $2,272 at December 31, 1997. Estimated losses, if any, on such
guarantees are accrued as a component of the allowance for doubtful accounts.
Historically, the Company and the Predecessor have not incurred material losses
on these guarantees.
The Company's outstanding letters of credit totaled $1,084 at December 31, 1997.
The letters of credit generally serve as collateral for certain liabilities
included in the balance sheet. Certain of the letters of credit serve as
collateral guaranteeing the Company's performance under contracts.
The Company is a wholly-owned subsidiary of Holdings. Other than its investment
in the Company, Holdings has no other substantive business activities or
operations. Holdings has financed its investment in the Company through the
issuance of $7,000 of Junior Subordinated Debentures, bearing interest at 12%
per annum and maturing 2007, $17,000 of preferred stock with an annual
cumulative dividend of 12% and $1,000 of common stock. Although the Company has
not guaranteed Holdings' debt or preferred stock dividend obligations, or
otherwise assumed such obligations, Holdings will look to the Company's assets
and cash flows to meet its interest, debt and dividend obligations when and if
they are paid.
F-19
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
NOTE 12 - RELATED PARTY TRANSACTIONS
The following table summarizes related party transactions conducted with the
Parent Company:
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
Distribution and parts warehousing |
expenses $ 7,088 $ 6,100 | $ 490 $ 5,580
Management fee allocation 6,996 5,672 | - -
Interest expense 16,145 14,656 | - -
Interest income 480 150 | - -
NOTE 13 - GEOGRAPHIC SEGMENT INFORMATION
Eleven One
Year Months Month Year
Ended Ended Ended Ended
December 31, November 26, December 31, December 31,
1995 1996 1996 1997
---- ---- ---- ----
Sales
North America $ 385,611 $ 286,992 $ 31,480 $ 388,185
Europe 162,396 126,045 15,787 134,437
All other 116 85 231 3,829
Eliminations (19,364) (8,493) (735) (37,157)
---------------- ---------------- ---------------- ----------------
Total $ 528,759 $ 404,629 $ 46,763 $ 489,294
================ ================ ================ ================
Income (loss) from operations
North America $ (523) $ 10,307 $ 1,389 $ 17,164
Europe 3,973 3,664 571 4,741
All other (379) (688) (25) (768)
Eliminations (4) - - (103)
---------------- ---------------- ---------------- ----------------
Total $ 3,067 $ 13,283 $ 1,935 $ 21,034
================ ================ ================ ================
Indentifiable assets
North America $ 95,107 $ 98,553 $ 265,472 $ 305,184
Europe 101,054 96,595 89,861 79,249
All other 9,650 10,353 10,161 6,839
Eliminations (13,102) (12,794) (64,187) (78,018)
---------------- ---------------- ---------------- ----------------
Total $ 192,709 $ 192,707 $ 301,307 $ 313,254
================ ================ ================ ================
Sales between geographic areas are generally priced to recover costs plus a
reasonable markup for profit. Operating income equals net sales less direct and
allocated operating expenses, excluding interest and other nonoperating items.
F-20
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
The Company is not dependent upon any single customer.
NOTE 14 - SEVERANCE ACTIONS
The Predecessor announced personnel reductions totaling approximately 134
employees in the North American operations during 1995 as a continuation of the
Predecessor's programs to increase manufacturing efficiency, reduce costs and
improve liquidity. The Predecessor recorded a combined charge of $3,478 in 1995
for severance costs associated with these actions and additional costs
associated with the closing of certain administrative and warehouse facilities.
Also during 1995, the Predecessor recorded a charge of $2,500 to recognize the
impairment in value of certain properties held for sale in Korea.
NOTE 15 - FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES
The Company conducts a portion of its business through subsidiaries. The Senior
Notes referred to in Note 7 are unconditionally guaranteed, jointly and
severally, by certain subsidiaries (the "Subsidiary Guarantors") which presently
constitute HLT and BGU operations. Certain of the Company's subsidiaries do not
guarantee the Senior Notes (the "Non-Guarantor Subsidiaries"), presently the
Company's foreign subsidiaries.
Presented below is condensed financial information for the Company, the
Subsidiary Guarantors and the Non-Guarantor Subsidiaries at December 31, 1997.
The equity method has been used by the Company with respect to investments in
subsidiaries. Separate financial statements for Subsidiary Guarantors are not
presented based on management's determination that they do not provide
additional information that is material to investors.
F-21
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Consolidating Balance Sheet
December 31, 1997
CLARK Material
Handling Company Non-
(Parent Company Subsidiary Guarantor
Only) Guarantors Subsidiaries Eliminations Consolidated
----------------- ----------- ------------ ------------ ------------
Current assets
Cash and cash equivalents $ 70 $ 1 $ 6,263 $ - $ 6,334
Cash securing letters of credit - - 320 - 320
Trade receivables 24,224 3,081 19,713 - 47,018
Affiliate accounts receivable 4,900 11,982 189 (17,071) -
Net inventories 47,331 5,106 18,347 - 70,784
Other current assets 1,614 552 5,115 - 7,281
-------------- ---------- ----------- ----------- -----------
Total current assets 78,139 20,722 49,947 (17,071) 131,737
Long term assets
Property, plant and equipment-net 18,275 1,639 27,922 - 47,836
Goodwill 113,861 1,026 - - 114,887
Investment in affiliates 60,844 - - (60,844) -
Other assets 9,638 1,178 7,978 - 18,794
-------------- ---------- ------------ ----------- -----------
Total assets $ 280,757 $ 24,565 $ 85,847 $ (77,915) $ 313,254
============== ========== ============ =========== ===========
Current liabilities
Notes payable $ 1,261 $ - $ 1,923 $ - $ 3,184
Current portion of capital lease obligations - - 2,732 - 2,732
Trade accounts payable 44,437 3,664 13,901 - 62,002
Affiliate accounts payable 12,043 1,680 2,707 (16,430) -
Accrued compensation and benefits 3,051 503 2,176 - 5,730
Accrued warranties and product liability 19,345 196 1,233 - 20,774
Other current liabilities 4,424 303 6,001 - 10,728
-------------- ---------- ------------ ----------- -----------
Total current liabilities 84,561 6,346 30,673 (16,430) 105,150
Non-current liabilities
Senior notes payable 130,000 - - - 130,000
Capital lease obligations, less current portion - - 3,864 - 3,864
Accrued warranties and product liability 38,497 - - - 38,497
Other non-current liabilities 730 7,168 4,745 (641) 12,002
-------------- ----------- ------------ ----------- -----------
Total liabilities 253,788 13,514 39,282 (17,071) 289,513
-------------- ----------- ------------ ----------- -----------
Commitments and contingencies - - - - -
Stockholder's equity
Common stock 1 - - - 1
Paid-in-capital 24,999 - - - 24,999
Retained earnings 1,969 1,741 4,696 - 8,406
Subsidiary investment - 9,310 51,534 (60,844) -
Cumulative translation adjustment - - (9,665) - (9,665)
-------------- ---------- ------------- ----------- -----------
Total stockholder's equity 26,969 11,051 46,565 (60,844) 23,741
-------------- ---------- ------------- ----------- -----------
Total liabilities and stockholder's equity $ 280,757 $ 24,565 $ 85,847 $ (77,915) $ 313,254
============== ========== ============= =========== ===========
F-22
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Consolidating Statement of Operations
Year Ended December 31, 1997
CLARK Material
Handling Company Non-
Parent Company Subsidiary Guarantor
Only) Guarantors Subsidiaries Eliminations Consolidated
-------------- ------------ ------------- ------------- ------------
Net sales $ 358,103 $ 27,849 $ 140,499 $ (37,157) $ 489,294
Cost of goods sold 316,068 24,579 127,535 (37,055) 431,127
------------ ------------ ------------- ------------- ------------
Gross profit 42,035 3,270 12,964 (102) 58,167
Engineering, selling and administrative expenses 26,918 1,399 8,816 - 37,133
------------ ------------ ------------- ------------- ------------
Income from operations 15,117 1,871 4,148 (102) 21,034
Other income (expense):
Interest income 699 8 102 - 809
Interest expense (14,480) (48) (558) - (15,086)
Other income - net 907 6 685 - 1,598
------------ ------------ ------------- ------------- ------------
Income before income taxes 2,243 1,837 4,377 (102) 8,355
Equity in earnings of subsidiaries 5,952 - - (5,952) -
Provision for income taxes 324 105 55 - 484
------------ ------------ ------------- ------------- ------------
Net income $ 7,871 $ 1,732 $ 4,322 $ (6,054) $ 7,871
============ ============ ============= ============= ============
F-23
CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
- --------------------------------------------------------------------------------
Consolidating Statement of Cash Flows
Year Ended December 31, 1997
CLARK Material
Handling Company Non-
(Parent Company Subsidiary Guarantor
Only) Guarantors Subsidiaries Consolidated
--------------- ---------- ------------ ------------
Net cash provided by operating activities $ 3,347 $ 326 $ 7,436 $ 11,109
------------- --------- ---------- ---------
Investing activities:
Business combinations (14,646) - - (14,646)
Capital expenditures (4,532) (325) (1,483) (6,340)
------------- --------- ---------- ---------
Net cash used in investing activities (19,178) (325) (1,483) (20,986)
------------- --------- ---------- ---------
Financing activities:
Issuance of current notes payable 822 - 360 1,182
Repayment of current notes payable - - (1,020) (1,020)
Other, net - - 147 147
------------- --------- ---------- ---------
Net cash provided by (used in) financing activities 822 - (513) 309
------------- --------- ---------- ---------
Effect of exchange rate changes on cash and
cash equivalents - - (652) (652)
------------- --------- ---------- ---------
Net increase (decrease) in cash and cash equivalents (15,009) 1 4,788 (10,220)
Cash and cash equivalents at beginning of period 15,079 - 1,475 16,554
------------- --------- ---------- ---------
Cash and cash equivalents at end of period $ 70 $ 1 $ 6,263 $ 6,334
============= ========= ========== =========
F-24
NOTE 16 - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Balance
at Balance
beginning (1) (2) at end
of period Provision Other Deductions of period
--------- --------- ----- ---------- ---------
Allowance for Doubtful Accounts
The Company
- -----------
Year ended December 31, 1997 $ 2,215 $ 27 $ (123) $ (213) $ 1,906
One month ended December 31, 1996 2,063 164 (12) - 2,215
The Predecessor
- ---------------
Eleven months ended November 26, 1996 2,867 59 (48) (740) 2,138
Year ended December 31, 1995 3,600 - 71 (804) 2,867
(1) Effect of exchange rate
(2) Utilization of established reserves,
net of recoveries
EXHIBIT INDEX
Exhibit Description
No.
3.1 Certificate of Incorporation, as amended, of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on Form
S-4, Registration No. 333-18957)
3.2 By-laws of the Company (incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
4.1 Indenture dated as of November 27, 1996 between the Company and United
States Trust Company of New York, as Trustee (incorporated by reference
to Exhibit 4.1 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
4.2 Registration Rights Agreement dated as of November 27, 1996 among the
Company, Jefferies & Company, Inc. and Bear, Stearns & Co. Inc.
(incorporated by reference to Exhibit 4.2 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
4.3 Form of 103/4% Senior Notes due 2006 (included in Exhibit 4.1)
(incorporated by reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.1 Purchase Agreement dated November 22, 1996 among the Company, Jefferies &
Company, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to
Exhibit 10.1 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.2 Loan and Security Agreement dated November 27, 1996 by and between
Congress Financial Corporation and the Company (incorporated by reference
to Exhibit 10.2 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.3 Stock and Asset Purchase and Sale Agreement, dated as of November 9, 1996
among Terex Corporation, and certain of its subsidiaries and the Company
(incorporated by reference to Exhibit 10.3 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.4 Service Agreement dated as of November 27, 1996 between Terex Corporation
and the Company (incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
10.5 Indemnity as to Letters of Credit, Performance Bonds, Appeal Bonds,
Guaranties, etc. dated November 27, 1996 by the Company in favor of Terex
Corporation, for itself and as successor to CMH Acquisition Corp., CMH
Acquisition International Corp., CLARK Material Handling Company and
CLARK Material Handling International, Inc. (incorporated by reference to
Exhibit 10.5 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.6 Employment Agreement dated as of November 27, 1996 between Holdings and
Dr. Martin M. Dorio (incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
10.7 Tax Sharing Agreement made as of November 27, 1996 between Holdings and
the Company (incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.8 Stock Purchase Agreement, dated as of May 27, 1992, by and between CLARK
Equipment Company and Terex Corporation (incorporated by reference to
Exhibit 10.8 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.9 First Amendment to the Stock Purchase Agreement, dated as of July 31,
1992, by and between CLARK Equipment Company and Terex Corporation
(incorporated by reference to Exhibit 10.9 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.10 Trademark Assignment Agreement, dated as of July 31, 1992, by and between
CLARK Equipment Company and CLARK Material Handling Company (incorporated
by reference to Exhibit 10.10 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.11 Second Amended and Restated General Operating Agreement, dated November
29, 1990, by and between CLARK Material Handling Company and Chase
Manhattan Leasing Company, Inc. (incorporated by reference to Exhibit
10.11 to the Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.12 Second Amendment to the Second Amended and Restated General Operating
Agreement, dated April 15, 1994, by and among CLARK Material Handling
Company, Drexel
Industries, Inc. and CLARK Credit Corporation (incorporated by reference
to Exhibit 10.12 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.13 Third Amendment to the Second Amended and Restated General Operating
Agreement, dated August 1, 1994, by and between CLARK Material Handling
Company and CLARK Credit Corporation (incorporated by reference to
Exhibit 10.13 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.14 Assignment of Second Amended and Restated General Operating Agreement,
dated March 22, 1995, by and between CLARK Material Handling Company,
CLARK Credit Corporation, f/k/a Chase Manhattan Leasing Company, and
Associates Commercial Corporation (incorporated by reference to Exhibit
10.14 to the Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.15 Master Software License and Service Agreement, dated May 17, 1996,
between CLARK Material Handling Company and SDRC Operations (incorporated
by reference to Exhibit 10.15 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.16 Letter Agreement, dated October 26, 1995, between CLARK Material Handling
Company, Manufacturers Distribution Services, Inc. and Maine Rubber
International (incorporated by reference to Exhibit 10.16 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
10.17 MCI Services Agreement, effective as of July 1, 1995, between MCI
Telecommunications Corporation and CLARK Material Handling Company
(incorporated by reference to Exhibit 10.17 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.18 Agreement for Systems Operations Services, dated as of March 2, 1992,
between CLARK Material Handling Company and Integrated Systems Solutions
Corporation, as amended by Amendments #1 through #5 (incorporated by
reference to Exhibit 10.18 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.19 Supply Agreement, dated December 14, 1994, between CLARK Material
Handling Company and Funk Manufacturing Company (incorporated by
reference to Exhibit 10.19 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.20 Supply Agreement, dated July 1, 1995, between CLARK Material Handling
Company and Funk Manufacturing Company (incorporated by reference to
Exhibit 10.20 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.21 Agreement, dated June 1, 1983, between CLARK Equipment Company and
Mitsubishi Corporation, Mitsubishi Heavy Industries, Ltd. and Mitsubishi
Motors Corporation, as amended (incorporated by reference to Exhibit
10.24 to the Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.22 Master Contract for Purchase and Sale, dated July 17, 1995, between CLARK
Material Handling Company and Custom Tool and Manufacturing Company
(incorporated by reference to Exhibit 10.25 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.23 Supply Agreement, dated December 20, 1991, between CLARK Material
Handling Company and Dixson, Inc. (incorporated by reference to Exhibit
10.26 to the Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.24 Lease Agreement, dated as of April 15, 1987, between Vergil D. Kelly and
Kenny Angelucci and CLARK Equipment Company with respect to 172 Trade
Street, Lexington, Kentucky, as amended by Amendment #1 to Lease dated
April 15, 1987 (incorporated by reference to Exhibit 10.27 to the
Company's Registration Statement on Form S-4, Registration No. 333-18957)
10.25 Standard Form Dealer Sales Agreements, between CLARK Material Handling
Company and domestic dealer entities (incorporated by reference to
Exhibit 10.28 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.26 Agreement, dated as of September 12, 1995, by and between CLARK Material
Handling Company and Nissan Forklift Corporation, North America
(incorporated by reference to Exhibit 10.29 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.27 License Agreement, dated as of November 27, 1996, between Holdings and
the Company (incorporated by reference to Exhibit 10.30 to the Company's
Registration Statement on Form S-4, Registration No. 333-18957)
10.28 Asset Purchase Agreement, dated as of November 6, 1997, between Clark
Material Handling of Canada Ltd. and Blue Giant Limited.
10.29 Asset Purchase Agreement, dated as of October 31, 1997, between Blue
Giant Corporation and Blue Giant USA Corporation.
21.1 Subsidiaries of the Company
27 Financial Data Schedule