1
As filed with the Securities and Exchange Commission on March 30, 1998 amending
report filed on February 11, 1998.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: January 30, 1998
(Date of earliest event reported)
AASCHE TRANSPORTATION SERVICES, INC.
(Exact name of registrant as specified in the charter)
Delaware 0-24576 36-3964954
(State or other Jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
10214 N. Mt. Vernon Road
Shannon, Illinois 61078
(Address of Principal Executive Offices)
(815) 864-2421
(Registrant's telephone number including area code)
n/a
(Former name or former address, if changed since last report)
2
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Jack Gray Transport Municipal Solid Waste Division Financial Statements* Page
----
Report of Independent Auditors 1
Financial Statements
Balance Sheets 2
Statements of Income 3
Statements of Cash Flow 4
Notes to Financial Statements 5
(b) Pro forma financial information of the Company.
Pro Forma Consolidating Balance Sheet (Unaudited) 10
Notes to Unaudited Pro Forma Consolidating Balance Sheet 11
Pro Forma Consolidating Statements of Operations (Unaudited) 12
Notes to Unaudited Pro Forma Consolidating Statements of Operations 13
* Information required to be included under Item 2 with respect to Jack Gray
Transport Municipal Solid Waste Division was previously filed on an initial
report on Form 8-K dated February 11, 1998.
(c) Exhibits
10.1 Credit Agreement dated as of January 30, 1998, by and among
Specialty Transportation Services, Inc., the Lenders parties
thereto from time to time, and Mellon Bank, N.A.
10.2 Subordinated Note and Equity Purchase Agreement, dated January
30, 1998, between Specialty Transportation Services, Inc. and
American Capital Strategies, Ltd.
10.3 Term Loan Agreement dated January 30, 1998 between Aasche
Transportation Services, Inc. and Aim Financial Corporation
10.4 Promissory Note dated as of January 16, 1998 by Aasche
Transportation Services, Inc. payable to Larry L. Asche in the
amount of $500,000
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10.5 Promissory Note dated as of January 16, 1998 by Aasche
Transportation Services, Inc. payable to Diane L. Asche in the
amount of $500,000
10.6 Promissory Note dated as of January 26, 1998 by Aasche
Transportation Services, Inc. payable to Diane L. Asche in the
amount of $25,000
10.7 Promissory Note dated as of January 20, 1998 by Aasche
Transportation Services, Inc. payable to Kevin M. Clark in the
amount of $500,000
10.8 Promissory Note dated as of January 26, 1998 by Aasche
Transportation Services, Inc. payable to Richard S. Baugh in the
amount of $250,000
10.9 Promissory Note dated as of January 26, 1998 by Aasche
Transportation Services, Inc. payable to Gary I. Goldberg in the
amount of $250,000
10.10 Warrant dated as of January 16, 1998, from Aasche Transportation
Services, Inc. to Larry L. Asche
10.11 Warrant dated as of January 16, 1998, from Aasche Transportation
Services, Inc. to Diane L. Asche
10.12 Warrant dated as of January 26, 1998, from Aasche Transportation
Services, Inc. to Diane L. Asche
10.13 Warrant dated as of January 20, 1998, from Aasche Transportation
Services, Inc. to Kevin M. Clark
10.14 Warrant dated as of January 26, 1998, from Aasche Transportation
Services, Inc. to Richard S. Baugh
10.15 Warrant dated as of January 26, 1998, from Aasche Transportation
Services, Inc. to Gary I. Goldberg
10.16 Employment Agreement dated as of January 2, 1998 between
Specialty Transportation Services, Inc. and Gary I. Goldberg
(c) Consent of Ernst & Young LLP
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SIGNATURE
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 hereunto duly authorized.
Aasche Transportation Services, Inc.
(Registrant)
By: /s/ Leon M. Monachos
--------------------------------
Leon M. Monachos
Chief Financial Officer
Date: March 27, 1998
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Jack Gray Transport Municipal Solid Waste Division
Financial Statements
Nine months ended September 30, 1997 and
years ended December 31, 1996 and 1995
CONTENTS
Report of Independent Auditors..............................................1
Financial Statements
Balance Sheets..............................................................2
Statements of Income........................................................3
Statements of Cash Flows....................................................4
Notes to Financial Statements...............................................5
6
Report of Independent Auditors
The Board of Directors
Jack Gray Transport, Inc.
We have audited the accompanying balance sheets of Jack Gray Transport Municipal
Solid Waste Division (the Division), a division of Jack Gray Transport, Inc., as
of September 30, 1997 and December 31, 1996, and the related statements of
income and cash flows for the nine-month period ended September 30, 1997, and
the years ended December 31, 1996 and 1995. These financial statements are the
responsibility of the Division's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jack Gray Transport Municipal
Solid Waste Division, a division of Jack Gray Transport, Inc., at September 30,
1997 and December 31, 1996, and the results of its operations and its cash flows
for the nine-month period ended September 30, 1997 and the years ended December
31, 1996 and 1995 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
January 6, 1998
1
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Jack Gray Transport Municipal Solid Waste Division
(A Division of Jack Gray Transport, Inc.)
Balance Sheets
SEPTEMBER 30 DECEMBER 31
1997 1996
-----------------------------
ASSETS
Current assets:
Cash $ 24,488 $ 25,500
Accounts receivable 6,157,002 5,670,718
Receivables from employees 159,110 152,895
Supply inventory 364,549 352,442
Prepaid expenses 436,653 343,396
Other current assets 4,845 8,891
---------------------------
Total current assets 7,146,647 6,553,842
Property and equipment:
Land 470,064 470,064
Buildings and improvements 951,408 951,408
Motor carrier equipment 27,832,842 26,976,408
Other equipment, furniture, and fixtures 4,103,092 3,808,274
---------------------------
33,357,406 32,206,154
Less: Accumulated depreciation and amortization 12,398,072 10,460,585
---------------------------
Net property and equipment 20,959,334 21,745,569
Other assets 2,927,987 3,121,970
---------------------------
$31,033,968 $31,421,381
===========================
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable - Trade $ 518,892 $ 581,202
Accounts payable - Brokers 210,895 147,327
Accrued liabilities 965,850 1,073,000
---------------------------
Total current liabilities 1,695,637 1,801,529
Division equity 29,338,331 29,619,852
---------------------------
$31,033,968 $31,421,381
===========================
See accompanying notes.
2
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Jack Gray Transport Municipal Solid Waste Division
(A Division of Jack Gray Transport, Inc.)
Statements of Income
NINE MONTHS
ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
1997 1996 1995
---------------------------------------------
Net revenues $25,565,147 $30,615,962 $31,455,092
Operating expenses:
Transportation 12,243,474 14,370,722 14,825,388
Terminal 1,161,592 1,548,046 1,333,966
Maintenance 3,059,517 3,899,291 3,257,634
Taxes and licenses 1,984,895 2,578,330 2,757,567
Insurance and safety 1,154,998 1,373,757 1,323,515
Allocated general and administrative 1,168,793 1,418,645 1,307,357
Depreciation and amortization 2,203,738 2,688,638 2,542,831
---------------------------------------------
Total operating expenses 22,977,007 27,877,429 27,348,258
---------------------------------------------
Operating income 2,588,140 2,738,533 4,106,834
Other income - Net 63,691 29,643 162,974
Allocated interest expense 656,068 849,521 642,189
============================================
Net income $ 1,995,763 $ 1,918,655 $ 3,627,619
============================================
See accompanying notes.
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Jack Gray Transport Municipal Solid Waste Division
(A Division of Jack Gray Transport, Inc.)
Statements of Cash Flows
NINE MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
1997 1996 1995
------------------------------------------------
OPERATING ACTIVITIES
Net income $ 1,995,763 $ 1,918,655 $ 3,627,619
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,203,738 2,688,638 2,542,831
Gain on sale of property and
equipment
(4,730) (94,649) (147,309)
Changes in operating assets and
liabilities:
Accounts receivable (486,284) (1,055,468) (679,396)
Receivables from employees (6,215) (40,113) (2,782)
Supply inventory (12,107) (49,162) 71,381
Prepaid expenses (93,257) 144,957 168,908
Other current assets 4,046 16,722 4,583
Other assets 193,983 (103,570) (272,344)
Accounts payable - Trade (62,310) 346,919 (31,811)
Accounts payable - Brokers 63,568 44,564 (40,659)
Accrued liabilities (107,150) 37,177 (35,583)
----------------------------------------------
Net cash provided by operating activities 3,689,045 3,854,670 5,205,438
INVESTING ACTIVITIES
Purchases of property and equipment (1,488,836) (2,956,673) (3,318,914)
Proceeds from sale of property and equipment
52,420 247,468 261,018
----------------------------------------------
Net cash used in investing activities (1,436,416) (2,709,205) (3,057,896)
FINANCING ACTIVITIES
Distributions to Parent, net (2,253,641) (1,144,465) (2,151,042)
----------------------------------------------
Net cash used in financing activities (2,253,641) (1,144,465) (2,151,042)
----------------------------------------------
Net increase (decrease) in cash (1,012) 1,000 (3,500)
Cash at beginning of year 25,500 24,500 28,000
----------------------------------------------
Cash at end of year $ 24,488 $ 25,500 $ 24,500
==============================================
NONCASH INVESTING AND FINANCING
ACTIVITIES
Transfers of equipment from (to)
Parent, net
$ (23,643) $ 283,784 $ (384,914)
==============================================
See accompanying notes
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Jack Gray Transport Municipal Solid Waste Division
Notes to Financial Statements
September 30, 1997
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Jack Gray Transport Municipal Solid Waste Division (the Division) is a division
of Jack Gray Transport, Inc. (Jack Gray or Parent). The Division transports
primarily municipal and solid waste at various locations throughout the United
States under contracts ranging from five to twenty years.
The accompanying financial statements present the assets, liabilities, and
results of operations for the Division as if the Division had existed as an
entity separate from Jack Gray. Costs related to support activities performed by
Jack Gray are allocated to the Division (see Note 7). These financial statements
are not necessarily indicative of the financial position and results of
operations which would have occurred had the Division been an independent
company.
The assets, liabilities, income, and expenses reflected in the Division's
financial statements are only part of those of a larger entity and are not
subject to the constraints of law and customs applicable to legal entities.
Consequently, they may be available to satisfy claims unrelated to and not
reflected in the financial statements of the nonlegal entity.
2. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
CASH MANAGEMENT
Jack Gray provides a centralized cash management function; accordingly, cash
disbursements and receipts are settled through division equity.
TIRES
Tires attached to new motor carrier equipment are being depreciated over the
estimated useful lives of the related equipment. Replacement tires are
inventoried and charged to expense as used.
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Jack Gray Transport Municipal Solid Waste Division
Notes to Financial Statements (continued)
2. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided on the
straight-line basis over the estimated useful lives of the respective assets:
buildings and improvements - five to fifteen years, motor carrier equipment -
four to twenty years, and other equipment, furniture, and fixtures - three to
ten years.
Replacement of the Company's tractors occurs principally through trade-in. The
excess of the trade-in value over the net book value of the traded equipment is
deferred and reflected as a reduction in the cost of the new equipment.
ACCOUNTING ESTIMATES
Accounting estimates are an integral part of financial statements prepared in
conformity with generally accepted accounting principles. Judgments made by
management affect the amounts and related disclosures of assets, liabilities,
revenues, and expenses reported on the financial statements. Actual results
could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments include trade accounts receivable, accounts
payable, and accrued liabilities. The fair values of all financial instruments
were not materially different from their carrying values.
3. OTHER ASSETS
Other assets consist of the following:
SEPTEMBER 30 DECEMBER 31
1997 1996
---------------------------
Contract start-up costs, net $ 366,120 $ 388,535
Retainage under long-term contract 2,561,867 2,733,435
---------------------------
$ 2,927,987 $ 3,121,970
===========================
Start-up costs incurred to obtain a waste hauling contract, which began January
2, 1990, are being amortized over the 20-year contract term.
6
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Jack Gray Transport Municipal Solid Waste Division
Notes to Financial Statements (continued)
4. ACCRUED LIABILITIES
Accrued liabilities consist of the following:
SEPTEMBER 30 DECEMBER 31
1997 1996
--------------------------
Salaries, wages, and benefits $ 270,300 $ 396,610
Accrued vacation 287,550 355,847
Accrued insurance 52,490 224,437
Accrued fuel taxes 98,431 77,067
Accrued disposal fees 230,643 --
Other 26,436 19,039
-------------------------
$ 965,850 $1,073,000
=========================
5. DIVISION EQUITY
Division equity reflects the net assets of the Division and consists of the
following:
SEPTEMBER 30 DECEMBER 31
1997 1996
-------------------------------
Beginning balance $ 29,619,852 $ 28,561,878
Net income 1,995,763 1,918,655
Net asset transfers to/from Parent (23,643) 283,784
Net cash distributions to Parent (2,253,641) (1,144,465)
-------------------------------
Ending balance $ 29,338,331 $ 29,619,852
===============================
6. INCOME TAXES
The stockholder of Jack Gray has elected to be taxed as an S Corporation under
the provisions of the Internal Revenue Code. Accordingly, Jack Gray is not
subject to federal or state income taxes as the income of Jack Gray is included
in the taxable income of its stockholder. As a result, no provision for income
taxes has been made in the accompanying financial statements of the Division.
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Jack Gray Transport Municipal Solid Waste Division
Notes to Financial Statements (continued)
7. ALLOCATED COSTS
Jack Gray provided certain general and administrative support services to the
Division, including general management, tax, financial audit and reporting,
benefits administration, insurance, information management, legal, accounts
payable and receivable, and credit functions. Jack Gray has historically charged
the Division for these services through an allocation based on a percent of net
revenues. The allocated general and administrative support costs of $1,168,793,
$1,418,645, and $1,307,357 for the nine months ended September 30, 1997, and the
years ended December 31, 1996 and 1995, respectively, are reflected as allocated
general and administrative expense in the accompanying financial statements.
There is no debt or associated interest directly attributable to the Division.
Interest expense related to the Parent's debt is allocated to the Division based
on a percent of net revenues. Jack Gray allocated 41%, 38%, and 36% of the
Parent's interest expense to the Division for the nine months ended September
30, 1997, and the years ended
December 31, 1996 and 1995, respectively.
8. EMPLOYEE BENEFIT PLANS
Substantially all of the Division's nonunion employees are covered by a
discretionary, noncontributory, profit-sharing plan sponsored by Jack Gray. The
Division is charged for its share of Jack Gray's contribution to the plan. The
Division was charged approximately $56,000 and $72,500 for the years ended
December 31, 1996 and 1995. Effective January 1, 1997, Jack Gray terminated this
plan.
Jack Gray also sponsors a qualified 401(k) plan in which the Division
participates. The plan is available to substantially all nonunion employees and
provides a 25% match of an employee's contribution up to 4% of the employee's
salary. The Division's contribution was approximately $53,100, $20,300, and
$18,600 for the nine-month period ended September 30, 1997, and the years ended
December 31, 1996 and 1995, respectively.
The Division participates in several union-sponsored pension plans.
Contributions to such plans amounted to $74,600, $96,200, and $73,400 for the
nine months ended September 30, 1997, and the years ended December 31, 1996 and
1995, respectively.
8
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Jack Gray Transport Municipal Solid Waste Division
Notes to Financial Statements (continued)
9. MAJOR CUSTOMERS
During the nine months ended September 30, 1997, and the years ended December
31, 1996 and 1995, the same three customers accounted for approximately 92%,
95%, and 97% of net revenues, respectively. At September 30, 1997, and December
31, 1996 and 1995, these same three customers accounted for approximately 84%,
92%, and 99% of accounts receivable, respectively.
10. SALE OF DIVISION
In September 1997, Jack Gray entered into an agreement to sell substantially all
assets of this Division, excluding accounts receivable, for proceeds of
approximately $30 million.
9
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AASCHE TRANSPORTATION SERVICES, INC.
PRO FORMA CONSOLIDATING BALANCE SHEET (UNAUDITED)
The following unaudited pro forma consolidating balance sheet is based on
certain amounts derived from the audited balance sheet of Jack Gray Transport
Municipal Solid Waste Division ("MSW Division") as of September 30, 1997 and the
unaudited consolidated balance sheet of Aasche Transportation Services, Inc.
("Aasche"), as of September 30, 1997, and assumes that the acquisition of the
net assets of MSW Division occurred on September 30, 1997. The assumptions
underlying the pro forma adjustments are described in the accompanying notes,
which should be read in conjunction with this balance sheet. The pro forma
balance sheet is not necessarily indicative of the purchase transaction which
would have occurred had the acquisition taken place on September 30, 1997.
AASCHE TRANSPORTATION SERVICES, INC.
PRO FORMA CONSOLIDATING BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1997
(IN THOUSANDS)
Adjustments
MSW Increase Pro
Division Aasche (Decrease) Forma
-------- -------- ---------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 24 $ 42 $ 228(1)(2)(3)(4)(5) $ 294
Trade receivables, net 6,157 5,572 (6,157)(5) 5,572
Prepaid expenses and other current assets 966 3,386 (545)(5) 3,807
-------- -------- -------- --------
Total current assets 7,147 9,000 (6,474) 9,673
Property and equipment, net 20,959 21,723 3,352 46,034
Excess of cost over net assets acquired, net --------
Debt issuance costs -- 7,411 4,236(5) 11,647
Deferred income taxes -- -- 1,800(4) 1,800
Other assets -- 3,022 -- 3,022
2,928 378 (428)(5) 2,878
-------- -------- -------- --------
TOTAL ASSETS $ 31,034 $ 41,534 $ 2,486 $ 75,054
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 730 $ 962 $ (730)(5) $ 962
Accrued liabilities 966 2,398 55 (5) 3,419
Guaranteed obligation of Employee Stock Ownership Plan -- 203 -- 203
Line of credit -- 4,217 -- 4,217
Current maturities of long-term debt with unrelated parties -- 2,888 1,286(1) 4,174
Current maturities of long-term debt with related party -- 995 -- 995
Current maturities of capital lease obligations with unrelated parties -- 2,417 -- 2,417
Current maturities of capital lease obligations with related parties -- 1,149 -- 1,149
-------- -------- -------- --------
Total current liabilities 1,696 15,229 611 17,536
Long-term debt with unrelated parties, less current maturities -- 4,265 16,714(1) 20,979
Long-term debt with related party, less current maturities -- 1,675 -- 1,675
Capital lease obligations with unrelated parties, less current maturities -- 3,920 -- 3,920
Subordinated debt with unrelated parties -- -- 11,250(2) 11,250
Subordinated debt with related parties -- -- 2,125(2) 2,125
Deferred income taxes -- 3,677 -- 3,677
Minority Interest -- -- 500(3) 500
-------- -------- -------- --------
Total liabilities 1,696 28,766 31,200 61,662
Stockholders' equity:
Common stock -- -- -- --
Additional paid-in capital -- 16,594 624(4) 17,218
Guarantee of Employee Stock Ownership Plan obligation -- (203) -- (203)
Accumulated deficit -- (3,623) -- (3,623)
Division equity 29,338 -- (29,338)(5) --
-------- -------- -------- --------
Total stockholders' equity 29,338 12,768 (28,714) 13,392
-------- -------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,034 $ 41,534 $ 2,486 $ 75,054
======== ======== ======== ========
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AASCHE TRANSPORTATION SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATING BALANCE SHEET
The unaudited pro forma consolidating balance sheet gives effect to the
acquisition of the net assets of MSW Division, as if the acquisition occurred
on September 30, 1997. The actual effects of purchase accounting as of the
effective acquistion date, January 30, 1998 differ substantially from the pro
forma amounts because of changes in financial position and earnings of MSW
Division since September 30, 1997.
Pro Forma Adjustments (in thousands):
(1) To record the borrowing of $18,000 under a senior credit term loan.
(2) To record the borrowing of $13,375 under subordinated loans.
(3) To record the issuance of $500 of MSW Division common stock.
(4) To record debt issuance costs of $1,800, of which $1,176 was paid in
cash and $624 relates to the value attributed to detachable warrants
issued to certain subordinated debt investors.
(5) To record consideration given to Jack Gray for the purchase of the net
assets of MSW Division.
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AASCHE TRANSPORTATION SERVICES, INC.
PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
The following unaudited pro forma consolidating statements of
operation are based on certain amounts derived from the audited statements of
income of Jack Gray Transport Municipal Solid Waste Division ("MSW Division")
for the nine months ended September 30, 1997 and the year ended December 31,
1996 and the unaudited consolidated statement of operations of Aasche
Transportation Services, Inc. ("Aasche"), for the nine months ended September
30, 1997 and the audited consolidated statement of operations for the year
ended December 31, 1996, and assumes, in each case, that the acquisition of the
net assets of MSW Division occurred on January 1, 1996. The assumptions
underlying the pro forma adjustments are described in the accompanying notes,
which should be read in conjunction with these statements. The pro forma
statements are not necessarily indicative of the results of operations which
would have occurred had the acquisition taken place on January 1, 1996 or of
future results of the consolidated operations of MSW Division and Aasche.
AASCHE TRANSPORTATION SERVICES, INC.
PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share and share data)
For the Nine Months Ended September 30, 1997
Adjustments
MSW Increase
Division Aasche (Decrease) Pro Forma
------------ ------ ------------ ----------
Net revenues $ 25,565 $ 49,769 - $ 75,334
Operating Expenses 22,977 47,508 $ (203)(1) 70,282
--------- --------- ----------- ---------
Operating income 2,588 2,261 203 5,052
Other income (expense):
Interest expense (656) (1,731) (1,721) (2) (4,108)
Accretion of warrants - - (989) (3) (989)
Amortization of debt discount - - (164) (5) (164)
Minority Interest - - (52) (4) (52)
Other 64 41 - 105
--------- --------- ----------- ---------
Income (loss) before income tax
(provision) benefit 1,996 571 (2,723) (156)
Income tax (provision) benefit - (371) 291 (6) (80)
--------- --------- ----------- ---------
Net income (loss) $ 1,996 $ 200 $ (2,432) (236)
========= ========= =========== =========
Basic and diluted net income (loss)
per common share $ 0.05 $ (0.06)
========= =========
Weighted average common shares outstanding 4,259,558 4,184,237
========= =========
For the Year Ended December 31, 1996
Adjustments
MSW Increase
Division Aasche (Decrease) Pro Forma
------------ ------ ------------ ----------
Net revenues $ 30,616 $ 77,365 - $ 107,981
Operating Expenses 27,877 77,978 (165) (1) 105,690
--------- --------- ----------- ---------
Operating income (loss) 2,739 (613) 165 2,291
Other income (expense)
Interest expense (850) (3,464) (2,728) (2) (7,042)
Accretion of warrants - - (857) (3) (857)
Amortization of debt discount - - (306) (5) (306)
Minority Interest - - (69) (4) (69)
Other 30 136 - 166
--------- --------- ----------- ---------
Income (loss) before income tax
(provision) benefit 1,919 (3,941) (3,795) (5,817)
Income tax (provision) benefit - 1,321 750 (6) 2,071
--------- --------- ----------- ---------
Net income (loss) $ 1,919 $ (2,620) $ (3,045) (3,746)
========= ========= =========== =========
Basic and dilluted net income (loss)
per common share $ (0.67) $ (0.95)
========= =========
Weighted average common shares outstanding 3,928,596 3,928,596
========= =========
18
AASCHE TRANSPORTATION SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS
The unaudited pro forma consolidating statements of operations give
effect to the acquisition of the new assets of MSW Division as if the
acquisition on January 1, 1996. The actual effects of purchase accounting as of
the effective acquisition date, January 30, 1998 differ substantially from the
pro forma amounts because of changes in financial position and earnings of MSW
Division since January 1, 1996.
Pro Forma Adjustments (in thousands):
(1) To record (a) amortization of purchased goodwill of $106 for the nine
months ended September 30, 1997 and $141 for the year ended December 31,
1996 (b) amortization of debt issuance costs of $189 for the nine months
ended September 30, 1997 and $298 for the year ended December 31, 1996
(c) management fee of $28 for the nine months ended September 30, 1997 and
$38 for the year ended December 31, 1996 (d) reduction in general and
administration expense of $555 for the nine months ended September 30, 1997
and $684 for the year ended December 31, 1996 and (e) additional
depreciation related to step-up of property and equipment of $218 for the
nine months ended September 30, 1997 and $340 for the year ended December
31, 1996.
(2) To record (a) interest expense on the $18,000 senior term loan (at 8.69%)
of $1,027 for the nine months ended September 30, 1997 and $1,550 for the
year ended December 31, 1996 and (b) interest expense on the $13,375
subordinated loans (ranging from 8.25% to 15%) of $1,161 for the nine
months ended September 30, 1997 and $1,730 for the year ended December 31,
1996.
(3) To record accretion expense related to warrants to purchase the common
stock of MSW Division of $989 for the nine months ended September 30, 1997
and $857 for the year ended December 31, 1996.
(4) To record minority interest expense related to $500 common stock investment
in MSW Division of $52 for the nine months ended September 30, 1997 and
$306 for the year ended December 31, 1996.
(5) To record amortization of debt discount related to detachable warrants
issued to subordinated debt investors of $164 for the nine months ended
September 30, 1997 and $306 for the year ended December 31, 1996.
(6) To record (a) income tax benefit on the pro forma adjustments and (b) pro
forma income tax provision on MSW Division operations, both recorded at an
assumed 40% tax rate.