EXHIBIT 99.1
ANSA LOGISTICS LIMITED
REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2001
REGISTERED NO: 3715126
ANSA LOGISTICS LIMITED
Pages
Independent auditors' report 1
Profit and loss account 2
Balance sheet 3
Cash flow statement 4 - 5
Notes to the financial statements 6 - 24
ANSA LOGISTICS LIMITED 1
REPORT OF INDEPENDENT ACCOUNTANTS TO THE MEMBERS OF ANSA LOGISTICS LIMITED
To the Board of Directors and shareholder of Ansa Logistics Limited
We have audited the accompanying balance sheet of Ansa Logistics Limited as of
31 December 2001 and 2000, and the related profit and loss account and statement
of cash flows for the years ended 31 December 2001 and 2000, and for the 10
months ended 31 December 1999, all expressed in pounds sterling and prepared on
the basis set forth in Note 1 to the financial statements. As described in Note
29, these financial statements are the responsibility of the company's
directors. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits both in accordance with Auditing Standards issued by the
Auditing Practices Board and with auditing standards generally accepted in the
United States of America. 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 the company at 31 December 2001
and 2000, and the results of its operations and its cash flows for the year
ended 31 December 2001, 2000 and the 10 months ended 31 December 1999, all
expressed in pounds sterling and in conformity with accounting principles
generally accepted in the United Kingdom.
Accounting principles generally accepted in the United Kingdom differ in certain
significant respects from accounting principles generally accepted in the United
States of America. The application of the latter would have affected the
determination of net income and shareholders' equity to the extent summarised in
Note 28 to the financial statements.
/s/ PRICEWATERHOUSECOOPERS
- --------------------------
PRICEWATERHOUSECOOPERS
Chartered Accountants
Bristol
27 June 2002
ANSA LOGISTICS LIMITED 2
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2001
Notes YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
TURNOVER - CONTINUING OPERATIONS 2 67,943 69,722 53,669
Cost of sales (51,111) (49,604) (38,163)
-------- -------- --------
GROSS PROFIT - CONTINUING OPERATIONS 16,832 20,118 15,506
Administrative expenses (11,926) (14,827) (11,945)
-------- -------- --------
OPERATING PROFIT - CONTINUING OPERATIONS 4,906 5,291 3,561
Interest payable and similar charges 5 (61) (96) (107)
Interest receivable and similar income 6 221 102 73
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 7 5,066 5,297 3,527
Tax on profit on ordinary activities 8 (1,662) (2,010) (1,442)
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 3,404 3,287 2,085
Dividends 9 (7,000) -- --
-------- -------- --------
(LOSS)/RETAINED PROFIT FOR THE FINANCIAL YEAR 19 (3,596) 3,287 2,085
======== ======== ========
The company has no recognised gains and losses other than the profit above and
therefore no separate statement of total recognised gains and losses has been
presented.
There is no difference between the profit on ordinary activities before taxation
and the retained profit for the financial period, and their historical cost
equivalents.
ANSA LOGISTICS LIMITED 3
BALANCE SHEET
AT 31 DECEMBER 2001
Notes 31 DECEMBER 31 December
2001 2000
(POUND)'000 (pound)'000
TANGIBLE FIXED ASSETS 10 2,881 2,831
-------- --------
CURRENT ASSETS
Stocks 12 230 229
Debtors 13 17,135 21,779
Cash at bank and in hand 2,279 602
-------- --------
19,644 22,610
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR 14 (20,584) (19,348)
-------- --------
NET CURRENT (LIABILITIES)/ASSETS (940) 3,262
-------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,941 6,093
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN
ONE YEAR 15 -- (600)
PROVISIONS FOR LIABILITIES AND CHARGES 16 (165) (121)
-------- --------
NET ASSETS 1,776 5,372
======== ========
CAPITAL AND RESERVES
Called up share capital ((pound)2) (2000:(pound)1) 18 -- --
Profit and loss account 19 1,776 5,372
-------- --------
EQUITY SHAREHOLDERS' FUNDS 20 1,776 5,372
======== ========
The financial statements on pages 6 to 24 were approved by the board of
directors on 27 June 2002 and were signed on its behalf by:
J MERRY
Director
ANSA LOGISTICS LIMITED 4
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2001
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
NET CASH INFLOW FROM CONTINUING OPERATING
ACTIVITIES
(reconciliation to operating profit on page 5) 11,400 6,881 1,984
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest received 221 102 73
Interest paid (61) (96) (107)
-------- -------- --------
160 6 (34)
TAXATION
Taxation paid (2,320) (1,873) (364)
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (595) (146) (5,901)
Sale of tangible fixed assets 32 49 --
-------- -------- --------
(563) (97) (5,901)
EQUITY DIVIDENDS PAID (7,000) -- --
-------- -------- --------
CASH FLOW BEFORE FINANCING 1,677 4,917 (4,315)
FINANCING
Issue of ordinary shares (1999:(pound)1) -- -- --
-------- -------- --------
INCREASE/(DECREASE) IN CASH IN THE PERIOD 1,677 4,917 (4,315)
======== ======== ========
ANSA LOGISTICS LIMITED 5
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
YEAR ENDED YEAR ENDED 10 months
31 DECEMBER 31 DECEMBER ended
2001 2000 31 December
1999
(POUND)'000 (POUND)'000 (pound)'000
CONTINUING OPERATING ACTIVITIES
Operating profit 4,906 5,291 3,561
Depreciation on tangible fixed assets 537 1,746 1,421
Profit on disposal of fixed assets (24) -- --
(Increase)/decrease/(increase) in stocks (1) 168 (397)
(Increase)/decrease in debtors 4,644 (8,566) (13,213)
Increase in creditors 1,294 8,549 10,184
Increase/ (decrease)/increase in provisions for 44 (307) 428
liabilities and charges
-------- -------- --------
NET CASH INFLOW FROM CONTINUING OPERATING
ACTIVITIES 11,400 6,881 1,984
======== ======== ========
ANSA LOGISTICS LIMITED 6
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2001
1 ACCOUNTING POLICIES
These financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards. A summary of
the more important accounting policies, which have been consistently applied are
set out below.
NEW ACCOUNTING STANDARDS
The financial statements comply, to the extent detailed below, with the new
Financial Reporting Standards issued by the UK Accounting Standards Board.
FRS 17 - RETIREMENT BENEFITS
This standard replaces these of actuarial values for assets in a pension scheme
in favour of a market based approach. In order to cope with volatility inherent
in this measurement basis, the standard requires that the profit and loss
account shows the relatively stable ongoing service cost, interest cost and
expected rate of return on assets. Fluctuations in market values are reflected
in the statement of total gains and losses. In accordance with the transitional
arrangements contained within FRS 17, disclosures in respect of the closing
balance sheet only (without comparatives for the prior period) have been made.
FRS 18 - ACCOUNTING POLICIES
The company complies with this standard, which deals with the selection,
application and disclosure of accounting policies in the financial statements.
The adoption of this standard has not resulted in the change of any accounting
policy.
TURNOVER
Turnover, which excludes value added tax and trade discounts, represents the
value of services supplied. Turnover is recognised when services have been
completed.
TANGIBLE FIXED ASSETS
Land and buildings are stated at cost. Other tangible fixed assets are stated at
their purchase price, together with any incidental expenses of acquisition.
Depreciation is calculated so as to write off the cost of tangible fixed assets,
less their estimated residual values, on a straight-line basis over the expected
useful economic lives of the assets concerned. The principal lives used for this
purpose are:
Motor vehicles 4 - 8 years
Plant and machinery 5 years
Leasehold land and buildings shorter of lease term and useful economic life
Computer equipment 3 years
ANSA LOGISTICS LIMITED 7
INVESTMENTS
Investments are stated at the lower of cost and net realisable value.
STOCKS AND WORK IN PROGRESS
Stocks and work in progress are stated at the lower of cost and net realisable
value. In general, cost is determined on a first in first out basis. Net
realisable value is the price at which stocks can be sold in the normal course
of business. Provision is made where necessary for obsolete, slow moving and
defective stocks.
DEFERRED TAXATION
Provision is made for deferred taxation, using the liability method, on all
material timing differences to the extent that it is probable that a liability
or asset will crystallise.
PENSION ARRANGEMENTS
The company operates a defined benefit scheme. The fund is valued every three
years by a professionally qualified actuary, the rates of contribution being
determined by the actuary. The cost of providing benefits under this scheme is
charged to the profit and loss account so as to spread the cost of retirement
benefits over the period during which the employer derives benefits from the
employee's services.
The company provides no other post retirement benefits to its employees.
OPERATING LEASES
Costs in respect of operating leases are charged on a straight-line basis over
the lease term.
2 TURNOVER
The whole of the turnover arises in the United Kingdom and relates to the
transport of motor vehicles. Turnover consists of the amount of goods and
services supplied during the year, net of value added tax.
3 DIRECTORS' EMOLUMENTS
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
Aggregate emoluments 0 30 80
--
======== ======== ========
ANSA LOGISTICS LIMITED 8
3 DIRECTORS' EMOLUMENTS (CONTINUED)
The directors are employed by AutoLogic Holdings plc and Axis International Inc
(see note 27), and are remunerated by those companies in respect of their
services for the respective groups. Their emoluments are dealt with in the
accounts of AutoLogic Holdings plc and Axis International Inc.
4 EMPLOYEE INFORMATION
The average monthly number of persons (including executive directors) employed
during the period was:
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
NUMBER Number Number
Drivers 225 250 265
Hourly paid 217 266 298
Staff 92 94 100
----- ----- -----
534 610 663
===== ===== =====
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
STAFF COSTS
Wages and salaries 22,940 25,986 19,296
Social security costs 2,087 2,441 1,823
Other pension costs (see note 17) 1,900 2,108 1,403
-------- -------- --------
26,927 30,535 22,522
======== ======== ========
5 INTEREST PAYABLE AND SIMILAR CHARGES
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
Interest payable on bank loans and overdrafts 13 65 83
Interest payable on loan from related undertakings 27 -- 3
Other interest 21 31 21
----- ----- -----
61 96 107
===== ===== =====
ANSA LOGISTICS LIMITED 9
6 INTEREST RECEIVABLE AND SIMILAR INCOME
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
Interest on loans to related undertakings -- 102 62
Interest on bank deposits 221 -- 11
------ ------ -----
221 102 73
====== ====== =====
7 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION IS
STATED AFTER CHARGING:
Depreciation of tangible fixed assets 537 1,746 1,421
Auditors' remuneration - for audit services 16 16 30
- for non-audit services 10 11 31
Hire of plant and machinery under operating leases 2,943 2,043 111
Hire of other assets under operating leases 1,344 1,284 884
======== ======== ========
8 TAX ON PROFIT ON ORDINARY ACTIVITIES
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
UNITED KINGDOM CORPORATION TAX CHARGE AT 30%
(2000: 30%):
Current period 1,662 2,010 1,442
======== ======== ========
ANSA LOGISTICS LIMITED 10
9 DIVIDENDS
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
(POUND)'000 (pound)'000 (pound)'000
Equity - Ordinary
Paid: (pound)3.5m per (pound)1 share 7,000 -- --
======== ======== ========
10 TANGIBLE FIXED ASSETS
Land and Plant & Computer Motor
buildings machinery equipment vehicles Total
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
COST
At 1 January 2001 2,774 425 51 2,713 5,963
Additions -- 101 1 493 595
Disposals -- -- -- (134) (134)
------- ------- ------- ------- -------
AT 31 DECEMBER 2001 2,774 526 52 3,072 6,424
======= ======= ======= ======= =======
ACCUMULATED DEPRECIATION
At 1 January 2001 (790) (138) (19) (2,185) (3,132)
Charge for year (70) (91) (17) (359) (537)
Disposals -- -- -- 126 126
------- ------- ------- ------- -------
AT 31 DECEMBER 2001 (860) (229) (36) (2,418) (3,543)
======= ======= ======= ======= =======
NET BOOK VALUE
AT 31 DECEMBER 2001 1,914 297 16 654 2,881
======= ======= ======= ======= =======
Net book value
At 31 December 2000 1,984 287 32 528 2,831
======= ======= ======= ======= =======
ANSA LOGISTICS LIMITED 11
10 TANGIBLE FIXED ASSETS (CONTINUED)
The net book value of land and buildings comprises
2001 2000
(POUND)'000 (pound)'000
Freehold 425 425
Long Leasehold 1,186 1,203
Short leasehold 303 356
------ ------
1,914 1,984
====== ======
11 INVESTMENTS IN SUBSIDIARIES
Name of company Description of shares held % shareholding Nature of business
- --------------------------------------------------------------------------------------------
Corkdean Limited Ordinary (pound)1 100% Non-trading company
The investment in Corkdean Limited is disclosed as a 100% subsidiary due to the
substance of the agreement in place to acquire all of the shares of that
company, through a series of share purchase options.
The results of Corkdean Limited have not been consolidated within the financial
statements as in the directors' opinion, the results for the year and the net
assets of the company are not material to Ansa Logistics Limited.
12 STOCKS
2001 2000
(POUND)'000 (pound)'000
Parts, protective clothing and consumables 113 88
Fuel and oil 117 141
----- -----
230 229
===== =====
ANSA LOGISTICS LIMITED 12
13 DEBTORS
2001 2000
(POUND)'000 (pound)'000
AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade debtors 119 224
Amounts owed by group undertakings 11,807 15,676
Other debtors 3,376 3,727
Prepayments and accrued income 1,833 2,152
-------- --------
17,135 21,779
======== ========
14 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2001 2000
(POUND)'000 (pound)'000
Trade creditors 2,150 2,108
Amounts owed to group undertakings 8,197 4,917
Other creditors 619 672
Corporation tax 557 1,216
Other taxation and social security payable 1,515 1,375
Accruals and deferred income 7,546 9,060
-------- --------
20,584 19,348
======== ========
15 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2001 2000
(POUND)'000 (pound)'000
Other creditors -- 600
----- -----
-- 600
===== =====
ANSA LOGISTICS LIMITED 13
16 PROVISIONS FOR LIABILITIES AND CHARGES
TRANSPORTER DILAPIDATION
PROVISION PROVISION
(POUND)'000 (POUND)'000
AT 31 DECEMBER 2000 46 75
-------- --------
Transfers (to)/from the profit and loss account (36) 80
-------- --------
AT 31 DECEMBER 2001 10 155
======== ========
The dilapidation provision relates to the estimated costs of restoring assets
held under operating leases to a condition stipulated within the terms of the
lease. The transporter provision relates to the estimated costs of repairing the
vehicles upon return to the hirer.
In the year to 31 December 2000, (pound)202,000 was transferred to the Profit
and Loss account and (pound)105,000 was utilised on the dilapidations provision.
In the 10 months to 31 December 1999, (pound)428,000 was transferred from the
Profit and Loss account to the dilapidations provision.
DEFERRED TAXATION
The potential deferred tax asset, none of which has been recognised in the
financial statements, is as follows:
2001 2000
(POUND)'000 (pound)'000
AMOUNTS Amounts
UNPROVIDED Unprovided
TAX EFFECTS OF TIMING DIFFERENCES BECAUSE OF:
Excess of tax allowances over depreciation 314 397
Other short term timing differences 117 29
======== --------
431 426
======== ========
17 PENSION COMMITMENTS
The company participates in a final salary pension scheme, the assets of which
are held separately from those of the company in an independently administered
fund. This scheme has been in operation since October 1999 and will be subject
to a full actuarial valuation at October 2002. Total contributions payable for
the year-ended 31 December 2001 amounted to (pound)1,900,000 (2000:
(pound)2,108,000). Contributions of (pound)106,000 (2000: (pound)53,000) were
due to the scheme at 31 December 2001.
ANSA LOGISTICS LIMITED 14
17 PENSION COMMITMENTS (CONTINUED)
The valuation has been performed by the actuary, Barnett Waddingham, as at 31
December 2001 to take account of the requirements of FRS 17. Scheme assets are
stated at their market value at 31 December 2001.
The financial assumptions used to calculate scheme liabilities under FRS 17 are:
Valuation method Projected unit
Discount rate 5.8%
Inflation rate 2.6%
Increase to deferred benefits 2.6%
LPI increases to pensions in payment 2.6%
Salary increases 3.6%
The assets in the scheme and the expected rate of return were:
LONG-TERM RATE OF VALUE AT
RETURN EXPECTED AT 31 DECEMBER
31 DECEMBER 2001 2001
(POUND)'000
Equities 7.8% 5,639
Other 4.0% 17
---- -------
Total market value of assets 5,656
Present value of scheme liabilities (7,416)
Deficit in the scheme -------
(1,760)
Related deferred tax assets 528
-------
Net pension liability (1,232)
=======
NET ASSETS
Net assets excluding pension deficit 1,776
Pension deficit (1,232)
-------
Net assets including pension deficit 544
=======
RESERVES
Profit and loss reserve excluding pension deficit 1,776
Pension deficit (1,232)
-------
Profit and loss reserve including pension deficit 544
=======
ANSA LOGISTICS LIMITED 15
18 CALLED-UP SHARE CAPITAL
2001 2000
(POUND) (pound)
AUTHORISED
100 Ordinary shares of (pound)1 each 100 100
-------- --------
100 100
======== ========
ISSUED, ALLOTTED & FULLY PAID UP
2 Ordinary shares of (pound)1 2 1
-------- --------
2 1
======== ========
During the year, one (pound)1 ordinary share was issued for cash consideration
of (pound)1.
19 RESERVES
PROFIT AND
LOSS ACCOUNT
(POUND)'000
At 31 December 2000 5,372
Loss for the year (3,596)
-------
At 31 December 2001 1,776
=======
20 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2001 2000
(POUND)'000 (pound)'000
Opening shareholders' funds 5,372 2,085
Issue of share capital ((pound)1) (2000:(pound)nil) -- --
(Loss) / profit for the year (3,596) 3,287
-------- --------
Closing shareholders' funds 1,776 5,372
======== ========
ANSA LOGISTICS LIMITED 16
21 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
(POUND)'000
Net debt at 1 January 2001 602
Increase in cash in the period 1,677
-------
Net funds at 31 December 2001 2,279
=======
22 ANALYSIS OF NET FUNDS/(DEBT)
At CASH AT
31 December FLOW 31 DECEMBER
2000 2001 2001
(pound)'000 (POUND)'000 (POUND)'000
Cash at bank and in hand 602 1,677 2,279
----- ------ ------
TOTAL 602 1,677 2,279
===== ====== ======
23 CONTINGENT LIABILITIES
The company has given an unlimited multilateral cross company guarantee to its
bankers in respect of Autocar Logistics Limited. Autocar Logistics Limited is
owned by the same shareholders as Ansa Logistics Limited.
The company is a participant in a banking arrangement under which all surplus
cash balances are held as collateral for bank facilities advanced to Autocar
Logistics Limited. In addition the company has issued an unlimited guarantee to
the bank to support these facilities.
ANSA LOGISTICS LIMITED 17
24 FINANCIAL COMMITMENTS
At 31 December 2001 the company has annual commitments under non-cancellable
operating leases expiring as follows:
MOTOR Motor
LAND AND VEHICLES AND Land and Vehicles and
BUILDINGS TRAILERS Buildings Trailers
2001 2001 2000 2000
(POUND)'000 (POUND)'000 (pound)'000 (pound)'000
Expiring within one year -- 83 -- 79
Expiring between two to five years 899 1,404 899 1,400
Expiring after five years 84 1,353 84 737
------- ------- ------- -------
983 2,840 983 2,216
======= ======= ======= =======
25 CAPITAL AND OTHER COMMITMENTS
Capital expenditure that has been contracted for but has not been provided for
in the financial statements is (pound)1.3m.
26 RELATED PARTY TRANSACTIONS
(a) The company contracts with Autocar Logistics Limited, a subsidiary
undertaking of AutoLogic Holdings plc. The company made sales of
(pound)774,003,000 (ex vat) to Autocar Logistics Limited and made
purchases of (pound)1,154,000 (ex vat) during the period. All of these
transactions were at arms length and in the ordinary course of
business. A net amount of (pound)6,036,000 was owing from Autocar
Logistics Limited at the balance sheet date.
(b) The company contracts with AutoLink Limited, a joint venture
undertaking of AutoLogic Holdings plc and STVA. The company made
purchases of (pound)39,000 (ex vat) from Autolink Limited and made
sales of (pound)395,000 (ex vat) during the period. All of these
transactions were at arms length and in the ordinary course of
business. A net amount of (pound)125,000 was owing from Autolink
Limited at the balance sheet date.
(c) The company contracts with Walon Limited, a subsidiary of AutoLogic
Holdings plc. The company made purchases of (pound)2,626,000 (ex vat)
and sales of (pound)308,000 to Walon Limited. All of these transactions
were at arms length and in the ordinary course of business. A net
amount of (pound)1,115,000 was owing to Walon Limited at the balance
sheet date.
(d) The company contracts with Autotrax Limited, a subsidiary of AutoLogic
Holdings plc. The company made purchases of (pound)283,000 (ex vat)
during the period. All of these transactions were at arms length and in
the ordinary course of business. A net amount of (pound)358,000 was
owing to Autotrax Limited at the balance sheet date.
ANSA LOGISTICS LIMITED 18
(e) The company contracts with Axial Logistics Limited. The company made
purchases of (pound)1,304,000 (ex vat) during the period. All of these
transactions were at arms length and in the ordinary course of business.
A net amount of (pound)1,185,000 was owing to Autotrax Limited at the
balance sheet date.
27 ULTIMATE AND IMMEDIATE PARENT COMPANIES
Previous to 1 October 2001, AutoLogic Holdings plc and Allied Holdings Inc. each
held 50% of the share capital of the company. On 1 October 2001, AutoLogic plc
entered into an agreement with Allied Holdings Inc. to acquire its shareholding
in the company. Under UK GAAP the company became a subsidiary of AutoLogic
Holdings plc with effect from 1 October 2001 as control over the company had
effectively passed to AutoLogic Holdings plc from that date.
Under US GAAP, ownership did not pass to AutoLogic Holding plc until 10 December
2001, the date of legal completion, when shareholder approval was obtained by
AutoLogic Holdings plc.
As a result of this transaction, the directors regard AutoLogic Holdings plc as
the ultimate holding company.
ANSA LOGISTICS LIMITED 19
28 SUMMARY OF DIFFERENCES BETWEEN UK GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United Kingdom (UK GAAP), which
differs in certain significant respects from those generally accepted in the
United States (US GAAP). These differences are set out below.
(A) REVENUE RECOGNITION AND DEFERRAL OF START-UP COSTS
Staff Accounting Bulletin No. 101 (SAB 101) Revenue Recognition in
Financial Statements provides the views of the staff of the Securities
and Exchange Commission on recognition of revenue. SAB 101 requires
certain up-front fees to be recognised as revenue over the expected
period of the customer relationship to which they relate. Under SAB 101
deferred costs are also charged to expense proportionally and over the
same period that the associated deferred revenue is recognised as
revenue. The cumulative effect of the change in accounting principle in
adopting SAB 101 has been recorded in 2000. Under UK GAAP, these
up-front fees were recognised as revenue upon receipt in 1999; the
associated costs were recognised as expense in 1999. Pro forma US GAAP
net income for 1999 would not have changed had SAB 101 been applied
then.
(B) PENSIONS
Under UK GAAP, the expected cost of providing retirement benefits are
charged to the profit and loss account over the periods benefiting from
the employees' services. Variations from expected cost are similarly
spread. Under US GAAP, pension costs and liabilities are calculated in
accordance with Statement of Financial Accounting Standards No. 87,
"Employer's Accounting for Pensions " (SFAS 87) which requires the use
of a prescribed actuarial method and a set of measurement principles.
(C) DEFERRED TAXES
Under UK GAAP the company provides for deferred tax in respect of the
tax attributable to timing differences only to the extent that such
timing differences are expected to reverse in the foreseeable future.
US GAAP requires recognition of all deferred tax assets and liabilities
for temporary differences using enacted tax rates in effect at year end
in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). A valuation allowance is
posted to the extent that it is more likely than not that all or part
of the deferred tax assets will not be realised. Deferred tax has also
been calculated in respect of the US GAAP adjustments.
(D) CURRENT ASSETS AND LIABILITIES
Current assets under UK GAAP include amounts that fall due after more
than one year. Under US GAAP, such assets would be reclassified as
non-current assets. Provisions for liabilities and charges under UK
GAAP include amounts due within one year that would be reclassified to
current liabilities under US GAAP. At 31 December 2001 and
ANSA LOGISTICS LIMITED 20
2000 the amounts of assets that would be classified as falling due more
than one year were (pound)Nil and (pound)1,132,000 respectively. At 31
December 2001 and 2000 the amounts of liabilities that would be
classified as falling due more than one year were also (pound)165,000
and (pound)1,253,000 respectively.
(E) PURCHASE ACCOUNTING AND RECOGNITION OF INTANGIBLES
On 10 December 2001, AutoLogic Holdings plc acquired from Allied
Holdings Inc the 50% interest in Ansa Logistics Limited that it did not
already own for total consideration of $20.56 million.
Under UK GAAP, this transaction is not required to be reflected in the
stand-alone accounts of the acquired company.
Under US GAAP, this transaction has been accounted for as a
step-acquisition using the purchase method of accounting in accordance
with provisions of Statement of Financial Accounting Standard No. 141,
"Business Combinations" ("SFAS 141"). The value of assets acquired and
liabilities assumed have been based on a pro rata allocation of the
fair values of the assets acquired and liabilities assumed at the date
of acquisition and the historical financial statement carrying amounts
and are required to be reflected in the company's stand-alone accounts.
Goodwill, representing the excess of cost over the estimated fair
value of net assets acquired, and identifiable intangibles assets,
including customer contracts and customer relationships, were recorded
at (pound)8,276,000 and (pound)9,551,000, respectively. Under US GAAP,
goodwill arising on the acquisition is not being amortised, in
accordance with the provisions of Statement of Financial Accounting
Standard No. 142, "Goodwill and Other Intangible Assets". Identifiable
intangible assets are being amortised over a period of between
approximately two and four years. The results of operations and
financial position pre- and post-acquisition are not comparable in
certain respects due to significant differences between the cost bases
of certain assets resulting from the acquisition.
The effect of the application of US GAAP to net income and shareholders' equity
is set out in the tables below.
ANSA LOGISTICS LIMITED 21
RECONCILIATION OF NET INCOME UNDER UK GAAP TO US GAAP
The reconciliation of net income for the year-ended 31 December 2001 has been
separated into pre and post acquisition periods based on the effective date of
acquisition under US GAAP. The pre-acquisition period is from 1 January 2001 to
10 December 2001 and the post acquisition period is from 11 December 2001 to 31
December 2001.
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
POST- PRE-
ACQUISITION ACQUISITION
(POUND)'000 (POUND)'000 (pound)'000 (pound)'000
Net income under UK GAAP 158 3,246 3,287 2,085
US GAAP adjustments:
Up-front revenue recognition -- 609 647 --
Deferred start-up costs -- (609) (647) --
Pensions - application of SFAS 87 (46) (750) (766) (71)
Deferred taxes - application of SFAS 109 2 39 148 278
Deferred tax on US GAAP adjustments 105 225 230 21
Amortisation (305) -- -- --
------- ------- ------- -------
Income/ (loss) before cumulative effect of changes (86) 2,760 2,899 2,313
Cumulative effect of change in accounting
principle for up-front revenue -- -- (2,426)
Cumulative effect of change in accounting
principle for deferred start-up costs -- -- 2,426
------- ------- ------- -------
Net income/ (loss) under US GAAP (86) 2,760 2,899 2,313
======= ======= ======= =======
ANSA LOGISTICS LIMITED 22
RECONCILIATION OF SHAREHOLDERS' EQUITY UNDER UK GAAP TO US GAAP
31 DECEMBER 31 December
2001 2000
(POUND)'000 (pound)'000
Shareholders' equity under UK GAAP 1,776 5,372
US GAAP adjustments:
Deferred revenue -- (1,779)
Deferred start up costs -- 1,779
Pensions - application of SFAS 87 (1,697) (837)
Deferred taxes (1,817) 677
Goodwill 8,276 --
Intangibles 9,246 --
-------- --------
15,784 5,212
======== ========
CASH FLOW INFORMATION
Under UK GAAP, the company complies with Financial Reporting Standard 1
(revised) "Cash Flow Statements" (FRS 1), the objective and principles of which
are similar to those set out in Statement of Financial Accounting Standards No.
95, "Statement of Cash Flows" (SFAS 95). The principal difference between the
two standards is in respect of classification. Under UK GAAP, cash flows are
presented separately for operating activities, returns on investments and
servicing of finance, taxation, capital expenditure, financial investment,
acquisition and disposals, equity dividends paid, management of liquid resources
and financing. Under US GAAP, only three categories of cash flow activity are
reported operating activities, investing activities and financing activities.
Under UK GAAP cash paid or received for interest and income taxes is presented
separately from operating activities and dividends paid are presented separately
from financing activities. Under US GAAP cash flows from operating activities
are based on net income, which includes interest and income taxes. Under UK
GAAP, cash is defined as cash in hand and deposits repayable on demand. The US
GAAP cash flow statement reports changes in cash and cash equivalents, which
includes short-term highly liquid investments with an original maturity of three
months or less but excludes bank overdrafts.
The cash flow statement for the year-ended 31 December 2001 has been analysed
between pre and post acquisition based on the effective date of acquisition
under US GAAP. The pre-acquisition period is from 1 January 2001 to 10 December
2001 and the post acquisition period from 11 December 2001 to 31 December 2001.
Under US GAAP presentation the following amounts would have been reported:
ANSA LOGISTICS LIMITED 23
US GAAP CASH FLOW STATEMENT
YEAR ENDED Year ended 10 months
31 DECEMBER 31 December ended
2001 2000 31 December
1999
POST- PRE-
ACQUISITION ACQUISITION
(POUND)'000 (POUND)'000 (pound)'000 (pound)'000
Net cash provided by operating activities 428 8,812 5,014 1,586
Net cash used in investment activities (26) (537) (97) (5,901)
Net cash provided by/ (used in) financing activities -- (7,000) (4,370) 4,370
------- ------- ------- -------
Net increase in cash and cash equivalents 402 1,275 547 55
Cash and cash equivalents at beginning of period 1,877 602 55 --
------- ------- ------- -------
Cash and cash equivalents at end of period 2,279 1,877 602 55
======= ======= ======= =======
29 UNITED KINGDOM COMPANY LAW REQUIREMENTS (UNAUDITED)
The directors are required by United Kingdom company law to prepare financial
statements for each financial year that give a true and fair view of the state
of affairs of the company as at the end of the financial year and of the profit
or loss of the company for that period.
The directors confirm that suitable accounting policies have been use and
applied consistently, and reasonable and prudent judgements and estimates have
been made in the preparation of the financial statements for the year ended 31
December 2001. The directors also confirm the applicable accounting standards
have been followed.
The directors are responsible for keeping proper accounting records, for
safeguarding the assets of the company and of the group and hence for taking
responsible steps for the prevention and detection of fraud and other
irregularities.
30 RECENT US GAAP ACCOUNTING PRONOUNCEMENTS
SFAS 141 and SFAS 142
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS 141
which supersedes APB Opinion No. 16, "Business Combinations." SFAS 141 requires
that purchase method of accounting be used for business combinations initiated
after 30 June 2001, and eliminates the pooling-of-interests method. In addition,
SFAS 141 establishes specific criteria for the recognition of intangible assets
separately from goodwill and requires unallocated negative goodwill to be
written off immediately as an extraordinary gain. The provisions of this
statement apply to all business combinations initiated after 30 June 2001, and
applies to all business combinations accounted for using the purchase method for
which the date of acquisition is 1 July 2001, or later.
ANSA LOGISTICS LIMITED 24
30 RECENT US GAAP ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In June 2001, the FASB also issued SFAS 142, which is effective for fiscal years
beginning after 15 December 2001. Certain provisions are also applicable to
acquisitions initiated subsequent to 30 June 2001. SFAS 142 supersedes APB
Opinion No. 17, "Intangible Assets," and requires, among other things, the
discontinuance of amortisation related to goodwill and indefinite lived
intangible assets. These assets will then be subject to an impairment test at
least annually. In addition, the standard includes provisions upon adoption for
the reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles, and
reclassification of certain intangibles out of previously reported goodwill.
We have applied SFAS 141 and 142 to the goodwill and intangible assets acquired
in the acquisition on 10 December 2001. We will be required to measure goodwill
for impairment as part of the transition provisions of SFAS 142. Goodwill will
be subject to an annual impairment test and will not be amortized under SFAS
142. Any impairment resulting from these transition tests will be recorded and
recognized as the cumulative effect of a change in accounting principle. The
Company has not yet determined what effect these impairment tests will have on
the Company's earnings and financial position.
SFAS 143
In August 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations," which is effective for fiscal years beginning after 15 June 2002.
SFAS 143 requires, among other things, that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred
if a reasonable estimate of fair value can be made. The associated asset
retirement costs are then capitalized as part of the carrying amount of the
long-lived asset. We will adopt SFAS 143 no later than 1 January 2003. The
Company has not yet determined what effect this standard will have on the
Company's earnings and financial position.
SFAS 144
In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long Lived Assets," which is effective for fiscal years beginning
after 15 December 2001. SFAS 144 supersedes SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
and addresses financial accounting and reporting for the impairment or disposal
of long-lived assets. We are required to adopt SFAS 144 from 1 January 2002.
This accounting pronouncement is not expected to have a significant impact on
our financial position or results of operations.
SFAS 145
In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements No. 4,
44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS
145 rescinds and amends certain previous standards related primarily to debt and
leases. The provisions of SFAS 145 related to the rescission of SFAS 4 are
effective for financial statements issued for fiscal years beginning after May
15, 2002 and will become effective for the Company on 1 January 2003. The
provisions of SFAS 145 related to the rescission of SFAS 13 are effective for
transactions occurring after May 15, 2002. All other provisions of SFAS 145 are
effective for financial statements issued on or after May 15, 2002. This
accounting pronouncement is not expected to have a significant impact on our
financial position or results of operations.