UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(MARK)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
PERIOD ENDED JUNE 30, 1998.
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 000-24019
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United Road Services, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 94-3278455
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8 Automation Lane
Albany, New York 12205
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518) 446-0140
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
filing requirements for the past 90 days.
Yes X NO
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As of August 10, 1998, the registrant had 14,251,515 shares of
common stock issued and outstanding.
UNITED ROAD SERVICES, INC.
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Form 10-Q For The Quarterly Period Ended June 30, 1998
Index Page
Part I. - Financial Information
Item 1 Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations
For the Three Months and Six Months Ended
June 30, 1998 4
Condensed Consolidated Statement of Cash Flows for
the Six Months Ended June 30, 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. - Other Information
Item 2 Changes in Securities and Use of Proceeds 14
Item 5 Other Information 15
Item 6 Exhibits and Reports on Form 8-K 16
Signatures 17
UNITED ROAD SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30, December 31,
1998 1997
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ASSETS (Unaudited)
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Current assets:
Cash and cash equivalents $40,931 $50
Trade receivables, net 4,871 -
Other receivables 1,267 -
Prepaid expenses and deposits 1,454 -
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Total current assets 48,523 50
Property and equipment, net 18,648 -
Goodwill, net 65,650 -
Deferred financing costs, net 871 -
Other non-current assets 44 -
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Total assets $133,736 $50
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Current portion of long-term debt and
capitalized leases $1,247 $ -
Notes payable 922 -
Accounts payable 4,582 62
Accrued income taxes 292 -
Other accrued liabilities 2,045 -
Due to related parties 798 92
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Total current liabilities 9,886 154
Long-term debt and capitalized lease obligations
less current portion 1,156 -
Deferred income taxes 811 -
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Total liabilities 11,853 154
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Stockholders' equity (deficit):
Preferred stock; 5,000,000 shares authorized;
no shares issued or outstanding - -
Common stock, $.001 par value; 35,000,000
shares authorized; Issued and outstanding
13,152,381 and 2,604,000 shares at
June 30, 1998 and December 31, 1997,
respectively 13 3
Additional paid-in capital 121,819 67
Retained earnings (deficit) 51 (174)
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Total stockholders' equity (deficit) 121,883 (104)
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Total liabilities and stockholders'equity $133,736 $50
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See accompanying notes to condensed consolidated financial statements.
UNITED ROAD SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months and Three Months Ended June 30, 1998
(Unaudited)
(In thousands, except per share amounts)
Three Months Six Months
------------ ----------
Revenue $8,468 $8,468
Cost of revenue 5,458 5,458
Amortization of goodwill 189 189
Depreciation 337 339
Selling, general and administrative expenses 1,940 2,328
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Income from operations 544 154
Other income (expense):
Interest income 472 477
Interest expense (114) (114)
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Income before income taxes 902 517
Income tax expense 445 292
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Net income $457 $225
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Per share amounts:
Basic earnings $.05 $.04
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Diluted earnings $.05 $.04
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See accompanying notes to condensed consolidated financial statements.
UNITED ROAD SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1998
(Unaudited)
(In thousands)
Cash flows from operating activities:
Net income $225
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 339
Amortization of goodwill 189
Amortization of deferred loan costs 12
Changes in operating assets and liabilities:
Increase in trade receivables (70)
Increase in other receivables (629)
Increase in prepaid expenses and deposits (231)
Increase in other non-current assets (44)
Increase in accounts and notes payable 2,299
Increase in accrued income taxes 292
Increase in other accrued liabilities 752
Increase in amounts payable to related parties 706
Net cash provided by operating activities 3,840
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Cash flows from investing activities:
Acquisition of companies, net of cash acquired (42,510)
Purchase of property and equipment (2,378)
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Net cash used in investing activities 44,888
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Cash flows from financing activities:
Proceeds from issuance of stock, net 90,982
Increase in deferred financing costs (883)
Payments on long-term debt and capital leases (8,170)
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Net cash provided by financing activities 81,929
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Net increase in cash and cash equivalents 40,881
Cash and cash equivalents at beginning of period 50
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Cash and cash equivalents at end of period $40,931
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Supplemental disclosure of cash flows information:
Cash paid during the period for interest $61
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Warrant issued to lender as partial loan fee $471
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See accompanying notes to condensed consolidated financial statements.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Consolidated Financial Statements
June 30, 1998
(1)DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) INTERIMFINANCIALSTATEMENTS
The interim financial information included in these consolidated
financial statements is unaudited but reflects all adjustments
(consisting of only normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the
results for the interim periods presented. Results of operations
for the three and six months ended June 30, 1998 are not necessarily
indicative of results to be expected for the year ending December
31, 1998.
(b) DescriptionofBusiness
United Road Services, Inc. (formerly Towing America, Inc.), a
Delaware corporation, was formed in July 1997 to become a leading
national provider of motor vehicle and equipment towing and
transport services. United Road Services, Inc. acquired twelve
businesses (the "Acquisitions") through June 30, 1998, seven of
which closed simultaneously with the consummation of an initial
public offering (the "Offering") of its common stock (the "Common
Stock") on May 6, 1998. United Road Services, Inc. intends to
continue to acquire similar businesses to expand its national
operations.
Most of United Road Services, Inc.'s activities to date have related
to the Offering and the Acquisitions. United Road Services, Inc.
has a limited combined operating history and future success is
dependent upon a number of factors which include, among others, the
ability to integrate operations, reliance on the identification and
integration of satisfactory acquisition candidates, the availability
of acquisition financing, the ability to manage growth and attract
and retain quality management.
(c) IncomeTaxes
From July 25, 1997 (inception) to December 31, 1997, United Road
Services, Inc. elected to file federal and State income tax returns
under S-corporation provisions. As such, earnings or losses flowed
through to the stockholder level. Accordingly, no income tax
expense or benefit has been recorded by United Road Services, Inc.
as of December 31, 1997.
Effective January 1, 1998, United Road Services, Inc. elected to
file federal and State income tax returns under C-corporation
provisions. As a result of United Road Services, Inc. profit for
the six month period ended June 30, 1998, a tax expense has been
recorded at June 30, 1998 at the effective tax rate expected by
United Road Services, Inc. for the year ending December 31, 1998.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Consolidated Financial Statements, Continued
(1) - CONTINUED
(d) UseofEstimates
Management of United Road Services, Inc. has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities
to prepare these unaudited interim consolidated financial statements
in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
(e) PerShareAmounts
Basic earnings per share is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock
or resulted in the issuance of common stock that shared in the
earnings of the entity (such as stock options and warrants).
The following table provides calculations of both basic and diluted
earnings per share:
Three months ended June 30, 1998
Weighted Per
Net average share
Income shares amounts
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Basic $ 457,000 9,372,725 $ .05
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Diluted $ 457,000 9,524,590 $ .05
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Six months ended June 30, 1998
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Weighted Per
Net average share
Income shares amounts
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Basic $ 225,000 6,115,824 $ .04
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Diluted $ 225,000 6,230,733 $ .04
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(f) ImpactofRecentlyIssuedAccountingStandards
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income". SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements.
SFAS No. 130 requires all items that are required to be recognized
under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed in equal
prominence with the other financial statements. United Road
Services, Inc. adopted SFAS No. 130 during the period ended March
31, 1998, however the adoption of SFAS No. 130 did not have any
effect on the reporting and display of the financial position,
results of operations or cash flows of United Road Services, Inc.
There is no difference in the three months and six months ended June
30, 1998 between net income and comprehensive income.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Consolidated Financial Statements, Continued
(1) - CONTINUED
In June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information". SFAS No. 131
established standards for the way public companies are to report
information about operating segments in annual financial statements
and requires those enterprises to report selected information about
operating segments in interim financial reports issued to
shareholders. SFAS No. 131 focuses on a "management approach"
concept as the basis for identifying reportable segments. The
management approach is based on the way that management organizes
the segments within the enterprise for making operating decisions
and assessing performance. United Road Services, Inc. continues to
evaluate the provisions of SFAS No. 131.
In March 1998, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position (SOP) 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use." SOP 98-1 requires that certain costs related to
the development or purchase of internal-use software be capitalized
and amortized over the estimated useful life of the software. SOP
98-1 also requires that costs related to the preliminary project
stage and post-implementation/operations stage of an internal-use
computer software development project be expensed as incurred.
United Road Services, Inc. adopted SOP 98-1 as of January 1, 1998.
However due to the initial stages of United Road Services, Inc.'s
operations, there was no significant effect on its financial
position or results of operations during the six months ended June
30, 1998.
In March 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-up Activities." SOP 98-5 requires the expensing of certain
costs such as pre-operating expenses and organizational costs
associated with the company's start-up activities. The effect of
adoption is required to be accounted for as a cumulative change in
accounting principle. United Road Services, Inc. adopted SOP 98-5
as of January 1, 1998. However, due to the initial stages of United
Road Services, Inc.'s operations, all start-up costs have been
expensed.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective
for all fiscal quarters of fiscal years beginning after June 15,
1999. Management is currently evaluating the impact of SFAS No. 133
on the United Road Services, Inc. consolidated financial statements.
(2)STOCKHOLDERS' EQUITY
United Road Services, Inc. effected a 100-for-one stock split on
December 18, 1997. In addition United Road Services, Inc. increased its
authorized shares of Common Stock to 1,000,000 shares with a $.001 par
value. Subsequently, and pursuant to an amended and restated
certificate of incorporation of United Road Services, Inc., filed on
February 23, 1998, the authorized number of shares have been increased
to 40,000,000 (35,000,000 common shares and 5,000,000 preferred shares).
Also, on February 23, 1998, United Road Services, Inc. effected a 3.72
for 1 stock split. Common Stock has been retroactively reflected in the
consolidated balance sheets.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Consolidated Financial Statements, Continued
(2) - CONTINUED
On December 18, 1997, United Road Services, Inc. authorized the
issuance of 188,976 shares pursuant to the terms and conditions of a
subscription agreement. At December 31, 1997, United Road Services,
Inc. had obtained subscription agreements to purchase all authorized
shares of Common Stock. These shares were issued and fully paid on
January 1, 1998 for $3.36 per share.
In January 1998, United Road Services, Inc. issued 29,760 shares of
Common Stock to a member of the board of directors for a purchase price
of $3.36 per share. In addition, options to purchase 550,000 shares of
Common Stock were granted as of June 30, 1998 to several employees of
United Road Services, Inc. and outside consultants. Such stock options
were issued at an average exercise price of $12.47 per share and vest
over a three-year period.
On May 6, 1998, United Road Services, Inc. completed its initial public
offering of 6,600,000 shares of Common Stock. On May 6, 1998, the
Underwriters also exercised their overallotment option to purchase an
additional 990,000 shares of Common Stock. The net proceeds to the
Company were $91,800,000.
On May 6, 1998, United Road Services, Inc. issued 2,375,741 shares of
Common Stock in conjunction with the acquisition of the Founding
Companies.
During the period June 12, 1998 through June 30, 1998 the Company
acquired five additional companies using a combination of Common Stock
and cash. The total number of shares issued was 363,904 with a
recorded fair value of $6,071,853.
(3) DUE TO RELATED PARTIES
At December 31, 1997 United Road Services, Inc. was indebted to two of
its primary stockholders under unsecured notes, bearing interest at 8.5%
per annum. The notes and unpaid interest were repaid subsequent to
the Offering. At June 30, 1998 the balance represents amounts owed
to former owners of companies acquired being held to offset potential
contingencies related to the purchases.
UNITED ROAD SERVICES, INC.
Notes to Unaudited Financial Statements, Continued
(4) SUBSEQUENT EVENTS
(a) Since June 30, 1998, United Road Services, Inc. has acquired 17
motor vehicle and equipment towing and transport services
businesses, including Keystone Towing, Inc., for $25.1 million in
cash and 1,099,134 shares of Common Stock, and signed definitive
agreements to acquire three additional businesses for total
consideration of $5.8 million.
(b) In connection with its acquisition program, United Road Services,
Inc. may enter into agreements with the stockholders of acquired
companies to lease buildings in United Road Services, Inc.'s
operations for negotiated amounts and terms.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited
financial statements and notes thereto included in Item 1 of this Quarterly
Report.
Cautionary Statements
- ---------------------
From time to time, in written reports and oral statements, management may
discuss their expectations regarding United Road Services, Inc.'s future
performance. These "forward-looking statements" are based on currently
available competitive, financial and economic data and management's
operating plans and involve risks and uncertainties that could render actual
results materially different from management's expectations. Such risks and
uncertainties include, without limitation, general economic conditions,
changes in applicable regulations, including but not limited to, various
federal, state and local laws and regulations regarding equipment, driver
certification, training and recordkeeping and workplace safety, the loss of
significant customers and contracts, risks related to the Company's
acquisition strategy and its ability to integrate acquired companies,
changes in the level of demand for towing and transport services, price
changes in response to competitive factors, seasonal variations and the
timing of expenditures for new equipment and the disposition of used
equipment. Investors must recognize that events could turn out to be
significantly different from what management expects.
Overview
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United Road Services, Inc. ("United Road" or the "Company") was formed in
July 1997 to become a leading national provider of motor vehicle and
equipment towing and transport services. Simultaneously with its initial
public offering of Common Stock (the "Offering") in May 1998, United Road
acquired (the "Founding Company Acquisitions") seven motor vehicle and
equipment towing and transport services businesses (the "Founding
Companies") and is now one of the largest providers of these services
in the United States. The Founding Companies have been in business for
periods ranging from ten to 48 years and operate an aggregate of 15
facilities located in six states. In June 1998, United Road acquired five
additional motor vehicle and equipment towing and transport services
businesses (the "June Acquisitions"). Since June 30, 1998, United Road has
acquired 17 motor vehicle and equipment towing and transport services
businesses, including Keystone Towing, Inc., and entered into definitive
agreements to acquire three additional businesses (the "Subsequent
Acquisitions" and together with the Founding Company Acquisitions and the
June Acquisitions, the "Acquisitions").
United Road offers a broad range of towing and transport services, including
towing, impounding and storing motor vehicles, conducting lien sales and
auctions of abandoned vehicles and transporting new and used vehicles and
heavy construction equipment. United Road derives revenue from towing and
transport services based on distance, time or fixed charges and from related
impounding and storage fees. In the event that impounded vehicles are not
la ted impounding and storage fees. In the event that impounded vehicles
are not claimed by their owners within prescribed time periods, United Road
is paid from the proceeds of lien sales or auctions. United Road's customers
include commercial entities, such as automobile leasing companies, insurance
companies, automobile auction companies, automobile dealers, repair shops
and fleet operators; law enforcement agencies such as police, sheriff and
highway patrol departments; and individual motorists.
Results of Operations - Three Months Ended June 30, 1998
- --------------------------------------------------------
Revenue was $8.5 million for the three months ended June 30, 1998. Cost of
revenue was $6.0 million, or 70.7% of revenue, for the three months ended
June 30, 1998, consisting primarily of $3.6 million in labor and
subcontractor costs, resulting in a gross profit of $2.5 million or 29.3% of
revenue.
Selling, general and administrative expenses were $1.9 million or 22.9% of
revenue for the three months ended June 30, 1998 consisting primarily of
$1.0 million in salary and wages, resulting in income from operations of
$544,000 or 6.4% of revenue. Other income (expense) was $358,000 or 4.3% of
revenue for the three months ended June 30, 1998 consisting primarily of
$472,000 of interest income.
Results of Operations - Six Months Ended June 30, 1998
- ------------------------------------------------------
Revenue was $8.5 million for the six months ended June 30, 1998. Cost of
revenue was $6.0 million or 70.7% of revenue for the six months ended June
30, 1998, consisting primarily of $3.6 million in labor and subcontractor
costs, resulting in a gross profit of $2.5 million or 29.3% of revenue.
Selling, general and administrative expenses was $2.3 million or 27.5% of
revenue for the six months ended June 30, 1998, consisting primarily of $1.0
million in salary and wages, resulting in income from operations of
$154,000 or 1.8% of revenue. Other income (expense) was $363,000 or 4.3% of
revenue for the six months ended June 30, 1998, consisting primarily of
$477,000 of interest income.
Liquidity and Capital Resources
- -------------------------------
At June 30, 1998, working capital was $38.6 million. Through June 30, 1998,
United Road incurred certain costs associated with the Offering,
the Acquisitions and costs related to obtaining a commitment for a
revolving Credit Facility of $50 million. United Road met its cash needs
during the second quarter of 1998 primarily through capital provided by the
Offering.
United Road completed the Offering of 6,600,000 shares of Common Stock
(7,590,000 shares upon exercise of the underwriters' over-allotment option)
in May 1998. A portion of the net proceeds available to United Road from
the Offering (which proceeds equalled $78.3 million or $91.8 million upon
exercise of the underwriters' over-allotment option) were used to pay the
cash portion of the purchase price of the Founding Company Acquisitions
and the June Acquisitions, as described in notes 1(b) and 4 of the
quarterly financial information included herein, expenses incurred in
connection with the Acquisitions, and repayment of certain indebtedness
assumed as part of the Acquisitions.
United Road has a $50 million revolving credit facility with a group of
financial institutions, for which Bank of America is acting as agent (the
"Credit Facility"). The Credit Facility terminates in June 2001, at which
time all outstanding indebtedness will be due. Borrowings under the Credit
Facility accrue interest, at United Road's option, at either (a) the Base
Rate (which is equal to the greater of (i) the Federal Funds Rate plus
0.5% and (ii) Bank of America's reference rate), or (b) the Eurodollar Rate
(which is equal to Bank of America's reserve adjusted eurodollar rate plus
a margin ranging from 1.5% to 2.5% per annum). The obligations of United
Road under the Credit Facility are guaranteed by each of its subsidiaries.
The obligations of United Road and its subsidiaries under the Credit
Facility and related guarantees are secured by substantially all of the
assets of United Road, the assets of the subsidiaries and the stock of the
subsidiaries. The Credit Facility requires United Road to comply with
various loan covenants including (i) maintenance of certain financial ratio
nal indebtedness, and (iii) restrictions on liens, guarantees, advances
and dividends. The Credit Facility is subject to customary drawing
conditions. United Road has not yet borrowed any amounts under the Credit
Facility. To the extent United Road draws down the Credit Facility to
finance capital expenditures, the Company's interest expense for future
periods will increase. In connection with the Credit Facility, the
Company issued to Bank of America National Trust and Savings Association
a warrant to purchase 117,789 shares of Common Stock at an exercise
price of $13.00 per share. The warrant expires on June 16, 2003.
United Road's near-term principal sources of cash are (i) net proceeds from
the Offering, (ii) borrowings under the Credit Facility and (iii) results
from operations. These sources of cash will be used for future
acquisitions, capital expenditures, refinancing of outstanding debt and for
general corporate purposes, and should enable United Road to fund its day-
to-day working capital requirements in the near term.
United Road is in the process of implementing systems that will enable it to
centralize its accounting and financial reporting activities at its
headquarters in Albany, New York. In addition, management intends to
develop a national dispatch system for its transport operations.
Management estimates that it will make expenditures of approximately $3.2
million in 1998 in order to install an integrated information system. The
vendors of the information software have informed management that the system
will be year 2000 compliant. Although United Road expects that it will be
required to upgrade and expand this system in the future, management cannot
quantify such expenditures at this time.
The Founding Companies spent an aggregate of $2.4 million on purchases of
property and equipment, which includes towing and transport vehicles, during
the three months ended March 31, 1998. United Road spent $2.4 million on
purchases of property and equipment (including amounts spent in connection
with installation of the integrated information system) for the six months
ended June 30, 1998. United Road expects to make capital expenditures of an
additional $3.0 million during the remainder of 1998. Sources of liquidity
to meet these demands are expected to be generated from earnings and related
cash flow.
United Road intends to pursue additional acquisition opportunities and
expects to fund future acquisitions through the issuance of additional
Common Stock, borrowings under the Credit Facility, and cash flow from
operations. There can be no assurance that any such financing will be
available on terms satisfactory to United Road or at all.
General Economic Conditions and Inflation
- -----------------------------------------
United Road's future operating results may be adversely affected by (i)
changes in general economic conditions, including various federal, state and
local laws and regulations regarding equipment, driver certification,
training and recordkeeping and workplace safety, (ii) the loss of
significant customers or contracts, (iii) success in integrating acquired
companies and future acquisitions, (iv) price changes in response to
competitive factors, (v) seasonal variations, and (vi) the timing of
expenditures for new equipment and the disposition of used equipment.
Although United Road cannot accurately anticipate the effect of inflation on
its operations, management believes that inflation has not had, and is not
likely in the foreseeable future to have, a material impact on its results
of operations.
Part II. OTHER INFORMATION
-----------------
Item 2 Changes in Securities and Use of Proceeds
Recent Sales of Unregistered Securities
---------------------------------------
On May 6, 1998, the Company issued an aggregate of 2,375,741 shares of
Common Stock to private investors, all of whom were accredited investors, in
connection with the Company's acquisitions of Northland Auto Transporters,
Inc., Northland Fleet Leasing, Inc., Falcon Towing and Auto Delivery, Inc.,
Smith Christensen Enterprises, Inc., Caron Auto Works, Inc., Caron Auto
Brokers, Inc., Absolute Towing and Transporting, Inc., ASC Transportation
Services, and Silver State Tow & Recovery, Inc.
On June 12, 1998, the Company issued an aggregate of 212,023 shares of
Common Stock to private investors, all of whom were accredited investors, in
connection with the Company's acquisition of 5L Corporation and ADP
Transport, Inc.
On June 22, 1998, the Company issued an aggregate of 93,902 shares of
Common Stock to private investors, all of whom were accredited, in
connection with the Company's acquisition of D&M Auto Towing, Inc.
On June 29, 1998, the Company issued an aggregate of 35,956 shares of
Common Stock to private investors, all of whom were accredited, in
connection with the Company's acquisition of Rouse's Body Shop, Inc.
On June 30, 1998, the Company issued an aggregate of 22,023 shares of
Common Stock to private investors, all of whom were accredited, in
connection with the Company's acquisition of Northshore Towing, Inc.,
Northshore Recycling Inc. and Evanston Reliable Maintenance, Inc.
On June 16, 1998, the Company issued a warrant to purchase 117,789
shares of Common Stock at $13.00 per share to Bank of America National Trust
and Savings Association, an accredited investor, in connection with the
Credit Facility. The warrant expires on June 16, 2003.
The sales of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act or Regulation D promulgated thereunder as transactions by an
issuer not involving a public offering. The recipients of securities in
each such transaction represented their intention to acquire the securities
for investment only and not with a view to or for sale in connection with
any distribution thereof and appropriate legends were attached to the share
certificates issued in such transactions.
Certain Information Concerning the Company's Initial Public Offering
- --------------------------------------------------------------------
Set forth below is certain information concerning the Company's initial
public offering ("the "Offering").
1. During the period from April 30, 1998 (the effective date of the
Registration Statement) through June 30, 1998, the total expenses paid by
the Company related to the Offering (determined on a cash basis) were $8.0
million. Such expenses consisted of the following:
a. $6.9 million paid to the underwriters in respect of the
underwriting discount and commission; and
b. $1.1 million of other expenses.
2. None of the payments described in paragraph 1 above represented a
direct or indirect payment to (i) directors, officers or general partners of
the Company or to their associates, (ii) persons owning 10% or more of any
class of equity securities of the Company or (iii) affiliates of the
Company.
3. After deducting the payments described in paragraph 1 above, the
amount of Offering proceeds that remained was $90.7 million. The Company
used $48.7 million of such proceeds as follows:
a. $27.8 million to pay the cash portion of the purchase price
of the seven acquisitions consummated simultaneously with the
Offering (the "Founding Company Acquisitions"), $12.3 million
of which was paid directly or indirectly to persons who are
now directors or officers of the Company;
b. $7.2 million to repay certain indebtedness assumed as part of
the Founding Company Acquisitions.
c. $12.1 million to pay the cash portion of the purchase price
of five acquisitions consummated in June 1998 (the "June
Acquisitions") none of which was paid directly or indirectly
to persons who are now directors or officers of the Company;
d. $1.0 million to repay certain indebtedness assumed as part of
the June Acquisitions; and
e. $612,000 to pay expenses related to the Founding Company
Acquisitions and the June Acquisitions.
As of June 30, 1998, the balance of such proceeds was invested in temporary
investments consisting of short-term securities.
Item 5. Other Information
Effective June 3, 1998, Ross Berner and Mark McKinney resigned as
directors and officers of the Company. Effective June 16, 1998, Richard A.
Molyneux was appointed to the Board of Directors to fill one of the
vacancies caused by such resignations and Robert Joseph Adams, Jr. was
appointed Chief Acquisition Officer of the Company.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Number Description of Documents
- ------- ------------------------
10.1 Credit Agreement dated as of May 8, 1998 among the Company,
various financial institutions and Bank of America National Trust
and Savings Association, as Agent (incorporated by reference to
Exhibit 10.10 to the Company's Registration Statement on Form S-1
(Reg. No. 333-56603)).
10.2 First Amendment to Credit Agreement dated June 26, 1998 among the
Company, various financial institutions and Bank of America
National Trust and Savings Association, as Agent.
10.3 Second Amendment to Credit Agreement dated July 15, 1998 among the
Company, various financial institutions and Bank of America
National Trust and Savings Association, as Agent.
10.4 Amended and Restated Employment Agreement dated as of May 1, 1998
between the Company and Donald J. Marr (incorporated by reference
to Exhibit 10.11 to the Company's Registration Statement on Form
S-1 (Reg. No. 333-56603)).
10.5 Resignation letter from Mark McKinney in favor of the Company
(incorporated by reference to Exhibit 10.4 to the Company's
Registration Statement on Form S-1 (Reg. No. 333-56603)).
10.6 Resignation letter from Ross Berner in favor of the Company
(incorporated by reference to Exhibit 10.5 to the Company's
Registration Statement on Form S-1 (Reg. No. 333-56603)).
10.7 Employment Agreement dated as of June 1, 1998 between the Company
and Robert Joseph Adams, Jr.
11.1 Statement re computation of per share earnings
27.1 Financial data schedule
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.
UNITED ROAD SERVICES, INC.
Registrant
Date August 10, 1998 /s/ Edward T. Sheehan
--------------------- ---------------------------
Edward T. Sheehan
Chairman and Chief Executive
Officer
Date August 10, 1998 /s/ Donald J. Marr
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Donald J. Marr
Chief Financial Officer