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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): June 9, 1998 (January 8, 1997)
TEXAS EQUIPMENT CORPORATION
(Exact name of Registrant as specified in its charter)
Nevada 000-21813 62-1459870
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification Number)
1305 Hobbs Hwy, Seminole, Texas 79360
(Address of principal executive offices)
Registrant's telephone number, including area code: (915) 758-3643
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 8, 1997, Texas Equipment Corporation (the "Company") entered
into and consummated an Agreement to Purchase two John Deere & Company ("Deere")
agricultural dealerships from J&H Equipment Company. The acquisition is the
result of the Company's desire to create a network of Deere agricultural
dealerships in West Texas. In addition, to more efficient operations, the
Company believes that its customers will be better served with a network of
Deere Dealerships in this area.
The terms of the acquisition, which included the buildings, land,
equipment and inventory of the two stores for approximately $2,400,000, was cash
of $945,000, a note for $258,000 and the assumption of indebtedness due Deere of
$1,197,000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements, Pro Forma Financial Statements and
Exhibits.
1. Audited Financial Statements for the two years ended
December 31, 1996 and 1995.
2. Pro Forma Financial Information.
(b) Exhibits.
EX-2 Agreement of Sale
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TEXAS EQUIPMENT CORPORATION AND J & H EQUIPMENT COMPANY
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The accompanying pro forma consolidated financial statements have been prepared
to show the effects of the acquisition of J&H Equipment Company ("J&H") assets
and liabilities assumed ("acquisition") by Texas Equipment Corporation (the
"Company").
The following unaudited consolidated balance sheet presents the combined
financial position of the Company at December 31, 1996, as if the acquisition of
"J&H" had occurred on December 31, 1996, adjusted for the assets acquired and
liabilities assumed pursuant to the terms of the acquisition agreement.
The unaudited pro forma consolidated statement of operations for the year ended
December 31, 1996 reflects the combined results of the Company for its fiscal
year ended December 31, 1996 and J&H for the year December 31, 1996, as if the
acquisition had occurred on January 1, 1996, adjusted to reflect interest on the
acquisition debt, income taxes imputed and depreciation.
The unaudited pro forma consolidated statement of operations does not
necessarily represent actual results that would have been achieved had the
companies been together as of January 1, 1996, nor may it be indicative of
future operations. These unaudited pro forma consolidated financial statements
should be read in conjunction with the Company's and J&H's historical financial
statements and notes thereto.
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TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
TEXAS J&H Pro-Forma
EQUIPMENT EQUIPMENT Adjustments Consolidated
CORP. COMPANY
1996 1996 Dr. Cr. 1996
---- ---- --- --- ----
Current assets
Cash and cash equivalents $ 2,661,058 $ 38,290 (1) $ 38,290
(2) 945,162 $ 1,715,896
Accounts receivable, net 872,815 356,113 (1) 238,879 990,049
Contract in transit 823,516 (1) 823,516 --
Other receivables 204,649 204,649
Inventories 5,380,188 5,192,345 (1) 1,546,831 9,025,702
Prepaid expenses 12,500 12,500
----------- ---------- -----------
Total current assets 9,131,210 6,410,264 11,948,796
----------- ---------- -----------
Property and equipment, net 1,244,442 386,872 (2) 741,129 2,372,443
Finance receivables 731,028 54,782 (1) 54,782 731,028
Receivables from officer 215,810 215,810
Goodwill, net 136,667 136,667
Other assets 153,101 275,418 (1) 275,418 153,101
----------- ---------- -----------
Total assets $11,612,258 $7,127,336 $15,557,845
=========== ========== ===========
Liabilities and Stockholders' equity
Current liabilities
Floor plan payables 2,190,355 4,752,560 (1) 1,005,473 4,937,442
Accounts payable 437,564 32,960 (1) 32,960 437,564
Accrued liabilities 102,271 1,257 (1) 1,257 102,271
Notes payable 300,000 -- (2) 258,500 558,500
Customer deposits 79,500 10,372 (1) 10,372 79,500
Income tax liabilities 810,800 -- 810,800
Current maturities of
long-term debt 396,022 320,715 (1) 320,715 396,022
----------- ---------- -----------
Total current
liabilities 4,316,512 5,117,864 7,322,099
----------- ---------- -----------
Long-term debt, net of
current maturities 1,005,762 175,161 (1) 175,161 (2) 940,000 1,945,762
Deferred tax liabilities 107,200 107,200
Stockholders' equity
Partners' capital 1,834,311 (1) 1,160,968
(2) 673,343 --
Common stock, $001, par
value, authorized
50,000,000 issued and
outstanding 24,547,808
and 24,799,808 24,798 24,798
Paid in capital 2,534,859 2,534,859
Retained earnings 3,623,127 3,623,127
----------- ---------- -----------
Total stockholders'
equity 6,182,784 1,834,811 6,182,784
----------- ---------- -----------
Total liabilities
and stockholders'
equity $11,612,258 $7,127,336 $15,557,845
=========== ========== ===========
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TEXAS EQUIPMENT CORPORATION AND J & H EQUIPMENT COMPANY
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended
December 31, 1996 Pro-Forma Adjustments
Adjusted
TEC J&H Dr. Cr. Pro-Forma
Revenues $ 28,094,196 $ 17,483,100 $ 45,577,296
Cost of sales 24,001,389 15,328,218 39,329,607
------------ ------------ -------------
Gross profit 4,092,807 2,154,882 6,247,689
Selling, general and administrative
expenses 2,871,729 1,783,440 (3) 27,140 4,682,309
------------ ------------ --------------
Income from operations 1,221,078 371,442 1,565,380
Other income (expense)
Interest income 175,465 31,071 206,536
Gain on sale of assets 823 823
Interest expense (127,151) (66,595) (2) 25,800 (219,546)
Other income 38,756 6,156 44,912
------------ ------------ --------------
Income from continuing operation
before taxes 1,308,148 342,897 1,598,105
Income tax expense 425,033 (1) 110,000 535,033
------------ ------------ --------------
Income from continuing operations 883,115 342,897 1,063,072
Discontinued operations
Loss on discontinued
operations (146,764) (146,764)
------------ ------------ --------------
Net income $ 736,351 $ 342,897 $ 916,308
============ ============ ==============
Net income per share
Basic
Continuing operations $ 0.06
Discontinued operations (0.01)
--------------
Total $ 0.05
==============
Diluted
Continuing operations $ 0.05
Discontinued operations (0.01)
--------------
Total $ 0.04
==============
Number of shares used in computation
Basic 19,499,936
--------------
Diluted 19,531,186
==============
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TEXAS EQUIPMENT CORPORATION AND J & H EQUIPMENT COMPANY
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
On January 8, 1997, the Company purchased the assets (building, land, equipment
and inventory) of J&H for $2,400,000. The $2,400,000 was paid with cash, a
$258,000 note to the seller bearing interest at 10% due on demand and the
assumption of indebtedness due to John Deere.
The acquisition has been accounted for under the purchase method of accounting
with the purchase price being allocated to the assets acquired.
(A) The following pro-forma adjustments are included in the accompanying
unaudited pro-forma consolidated balance sheet as of December 31, 1996
which has been prepared to reflect the January 8, 1997 acquisition as
if it had occurred on December 31, 1996:
1.) To eliminate assets not acquired, liabilities not assumed and
partners' capital.
2.) Record cash paid, note assumed, debt incurred, and increase in
property and equipment acquired due to the purchase agreement.
(B) The following pro-forma adjustments are included in the accompanying
unaudited pro-forma consolidated statement of operations for the year
ended December 31, 1996 which has been prepared to reflect the January
8, 1997 acquisition as if it had occurred on January 1, 1996:
1.) Impute federal and state income taxes as if J&H was a C Corp.
verses a partnership. An average tax rate of 38% was utilized net
of the benefit of items 2 & 3 below.
2.) Record interest expense on note payable to seller at 10%.
3.) Record additional depreciation expense on the stepped up basis in
assets acquired.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: June 8, 1998
TEXAS EQUIPMENT CORPORATION
By: /s/ Paul J. Condit
----------------------------------------
Paul J. Condit
President and Chief Executive Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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EX-2 Agreement of Sale