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8.3 Issue IRB Wheels Unlimited Inc CITY OF SALINA REQUEST FOR COMMISSION ACTION DATE 9/22/1980 TIME 4:00 P.M. AGENDA SECTION: NO. 8 Administration ORIGINATING DEPARTMENT: City Clerk APPROVED FOR AGENDA: ITEM NO. 3 D. L. Harrison , W~ BY: BY: Request from Wheels Unlimited, Inc. for the issuance of Industrial Revenue Bonds. Information has been provided, based on the Commission's establ ished pol icy. The required $500 fee has been paid. It has been the City's policy to put the request on the agenda and then convene in Executive Session. COMMISSION ACTION MOTtON BY SECOND BY TO: CLARK, MIZE & LINVILLE, CHARTERED C. L. CLARK ....AMI!:S P. MIZE AU"''''I!:Y O. LINVILLl!!: PET!!:R L. PETERSON ..JOHN W. MIZI!: L..A.MeNAL..I-!!:Y OF' COUNSI!:L. LAW O......'CI!:S 129 SOUTH E1QHTH- BOX 1343 SAl.INA, KANSAS 67401 AREA. CODe:: ~U3 823-<5325 September 18, 1980 Rufus Nye, City Manager City-County Building 300 West Ash Salina, Kansas 67401 Re: Proposed issuance by the City of Salina of $400,000 in Industrial Revenue Bonds to pay the cost of construction of facilities for use by Wheels Unlimited, Inc., in its truck sales and service business Dear Mr. Nye: Wheels Unlimited, Inc. ("the Company") is in critical need of space for use in the sale and distribution of its products and for office use. The Company has experienced remarkable growth during the past six years, and it expects this trend to continue. As a consequence of its need for the space, on behalf of the Company, we respectfully request that the City of Salina adopt a Resolution of Intent to issue $400,000, more or less, in serial Industrial Revenue Bonds, payable over a period of twenty years, in order to provide funds to pay the cost of developing the proposed project. In consideration of the affirmative act of the Commission in so agreeing, the Company agrees: (i) to provide a purchaser for the bonds; (ii) to execute an appropriate lease to fund the timely payment of the bonds in form and substance satisfactory to the Commission and the bond purchaser; (iii) to provide for the availability of a site to be owned by the City; and (iv) to perform such other acts as may be necessary to provide for the completion and use of the facility. It is understood that upon retirement of the bonds the Company is to have an option to purchase the fee simple title to the facility for a nominal sum. We are forwarding copies of this letter to D. L. Harrison and L. O. Bengtson, and we are enclosing five copies for use by the Commissioners. We also attach the City's standard revenue bond application form, together with a copy of the Company's own letter to the Commissioners. Rufus Nye, City Manager Re: Wheels Unlimited, Inc. Industrial Revenue Bonds September 18, 1980 Page Two We hereby respectfully request that this matter be placed on the Commission's agenda for an executive session at its next scheduled meeting on Monday, September 22, 1980. Very truly yours, LINv~D I -r;' B :-/ , uL, ~---- , :-/ I Peter L. Peterson Attorneys for Wheels Unlimited, Inc. WHEELS U"UMITED, 1"(. TRUCK SALES. SERVICE & PARTS (913) 825-2291 or call toll free in Kansas (800) 432-2843 September 15, 1980 The Commissioners of the City of Salina, Kansas Re: Industrial Revenue Bond Issue for Construction of Facilities to be Leased to Wheels Unlimited, Inc. Commissioners: The following is submitted in support of, and constitutes a reques t for the is suance of an amount not to exceed $q.QO, 000 in Industrial Revenue Bonds of the City of Salina, Kansas, in accordance with the authorization of K.S.A. 12-1740 through 12-1749. The proceeds of such bonds will provide for the con- struction of a new multi-purpose facility for lease to Wheels Unlimited, Inc. History of Wheels Unlimited, Inc. Wheels Unlimited, Inc. is one of Salina's leading light, medium and heavy duty truck sales and service facilities. The Company was founded in August of 1974 by Gerald L. Widmer and has been active in Salina since October of 1977. The original dealership which was operated in the State of Illinois was closed in 1979 and all dealership operations are now conducted in Kansas. The Company has grovffi consistently in its 6-year history with increases in sales and growth of employnlent to approximately 30 employees. Sales in Kansas have increased from the 8 new units sold during the last year of the former dealer's operation to more than 138 new units sold during the last fiscal year for fdheels Unlimi ted, Inc. Mr. Widmer is the president of Wheels Unlimited, Inc. which is a wholly-owned subsidiary of JLW Holding Company, Inc. of which Mr. Widmer is the sole shareholder. Corporate offices for Wheels Unlimited, Inc. are located at 1206 North Ninth Street, Salina, Kansas, with its fiscal office being located at Paxton, Illinois. Among the principal customers of Wheels Unlimited, Inc. are Big Wheels, Inc. and Farmland Industries. Wheels Unlimited. Inc. P.O. Sox 996 170 & Ohio Street Salina. KS 67401 The COllunissioners of the City of Salina, Kansas Page 2 Reasons for Expansion Wheels Unlimited, Inc. requires an expansion of facilities at this time in order to more adequately serve Salina, Saline County, and the entire State of Kansas. The increased visibility of the proposed facility which will be located in the southwest quadrant of the intersection of North Ohio Street Road and Interstate 70 will lead to an increase in over-the-road business which in turn should result in increased sales of new and used truck units. A~ the present time, Wheels Unlimited, Inc. serves as an authorized service provider for service work on Big Wheels' high flotation applicators. The service territory handled by \vheels Unlimited includes the states of Texas, Oklahoma, Kansas, and Nebraska. The additional facilities will permit the Company to provide more and better service for the owners of the Big Wheels' units. The proposed facility will be approximately 23,000 square feet. The building and facilities are designed for efficient operation and the surrounding area permits future expansion of the facility. Employment Wheels Unlimited, Inc. has shown steady growth in its 6-year history. As indicated previously, the number of unit sales has drastically increased and sales volume during the past year was in excess of $4,000,000.00. It is anticipated that the new facility will result in increased employment within the next two years. At the present time, wheels Unlimited employs 29 persons and it is anticipated that approximately 16 new service-related employees will be added within the next two years. Since the Company pur- chases supply services, fuel and construction services locally, additional jobs in the Salina area should be created. On a continuing basis, the Company purchases repair parts from dealer supply houses in the Salina area. Security for Bonds Wheels Unlimited, Inc. pledges the assets of this facility and future revenues derived from this facility to the payment of this bond issue. . . The Commissioners of the City of Salina, Kansas Page 3 Use of Proceeds The use of bond proceeds is to complete the construction of a 23,000 square foot facility at the intersection of Interstate 70 and North Ohio Street Road. The new facility will be essentially a one-story metal structure with two stories in the area to be occupied by the parts department. The structure will be visually attractive and will be aesthetically compatable with the area. The total cost to complete the project including associated fees is approximately $400,000.00. Bond Harketing Wheels Unlimited, Inc. has made arrangements for the negotiated sale of the bonds on terms and conditions satisfactory to the Company. These negotiations and arrangements have been made with United Securities, Inc., 610 One Twenty Building, Wichita, Kansas 67202, which will prepare the details of the bond issue and market the bonds. A Letter of Commitment by United Securities, Inc. is found in Exhibit I. Wheels Unlimited, Inc., through its designated underwriter, will pay the cost of the bond issuance and the fees of Gaar & Bell, Wichita, Kansas, bond attorneys, whose legal opinion and official statement will be employed on this issue. Certified Audit A certified audit for the year ending April 30, 1980 is included as Exhibit II. Request for Letter of Intent The use of the Kansas Industrial Revenue Bond law for the purpose herein requested is totally within the concept and intention of the statute. The proposed building expansion of Wheels Unlimited, Inc. will provide economic growth and associated benefits to the City of Salina and its economy. In order that Wheels Unlimited, Inc. may complete its financial arrangements and proceed with its building program, it is requested that the City Commission authorize the Mayor to execute a Letter of Intent to the City of Salina relative to the issuance of approximately $400,000.00 for Industrial Revenue Bonds as herein described. . . , The Commissioners of the City of Salina, Kansas Page 4 Wheels Unlimited, Inc. is aware that a Letter of Intent is only an in~ication of the City's intention to proceed with bond issuance and that final terms and conditions of the lease agreement and bond ordinance are subject to approval of the City of Salina. Your consideration and approval of this financial program will be greatly appreciated. Sincerely, WHEELS UNLIMITED, INC. C\./ . ( I' : If' l ~_: ~H:J- /~=-~'-'-\.- Gerald L. Widmer, President UNITED SECURITIES, INC. INVESTMENT BANKERS 610 ONE 1WEN1Y BUILDING / WICHITA. KANSAS 67202 / 316/265-9421 EXHIBIT I LETTER OF COt1MITMENT September 15, 1980 Mr. Gerald L. Widmer Wheels Unlimited, Inc. 1206 North Ninth Street Salina, Kansas Dear Mr. Widmer: This is a letter of commitment to underYlrite an amount of Industrial Revenue Bonds not to exceed $400,000.00, and to place the bonds per commitment to the First National Bank in Champaign, Illinois. This agreement is contingent upon approval by the city of Salina of all necessary legal documents and the issuance of an unqualified Legal Opinion by Gaar & Bell, Wichita, Kansas. Sincerely, UNITED SECURITIES, INC. &~ Pres iden t deh S1~i CITY OF SALINA, KANSAS APPLICATION FOR ISSUANCE OF INDUSTRIAL REVENUE BONDS I. General Information 1. Applicant Name and Address: Wh.u..ls V,^ ll'YV\ ,'-k..J) ~c.. :r- -to ~\t\,J O~ 1.0 S-t-ree..-t SQ.l.' ~Q. J 1< a. "" .s Q.,J ~ 1 t.f a I 2. Name, address and telephone to proposed bonds: number of person to contact in O.'c.k Se.wc.ll . c/o w~~e.l.5 V.... \; IfY\ ,-led J q \ 3 - l?"2- S'"" - 2."'2.. '1 I regards ~c.. 3. Name and ad~ess of atto~ey for applicant: re. ~ 1-. f"'~.Ae.......so \0-.. p. O. ~OX \3'+3 I t l.-'1 5. c?tk .... .... )C\ /: V\.~ I ~a. V\S4$ - 4. Nature of applicant I s business: -rrv c.k $1:.\ \~...s ~ "" J s;.R.;v v i c..e.. 5. Name and ad~e~~ qf ~derw~i~er for issue: Vr\ \ 1'CA ~c..l.lr loMas... -:.r::"..c..\, C,'f o~ -rw~ <3v "\~i~ \~ ,'c.h: \<:Q . 0..5 ~1) '1- .... 6. Estimated amount of issue $ J.{. 0 0 J 000 , '}.,o 7. Number of years for maturity of bonds II. Use of Bond Proceeds 1. Amount requested for purchase of land $ tJ 0 n..ll... $ 400 00t) J . $ N. i"\.f. No 2 . Amount requested for land im- provements (buildings) 3. Amount requested for machinery and equipment 4. Will the issue refinance an existing project? 5. Is the proposed project an expansion or replacement of another existing facility? Ye.,$ III. Proposed Facilities: 1. Location of proposed facility :r-(O aV\J Oh~o 5~+ SQ.I .. ~ I<Q. '^ sa....s ) - 2. What business is proposed by the applicant? Trvc.k Sq! e.....s o..~d . S/4Jr v \ c...Gt.. 3. List the products or services to be rendered: Nf..,VJ ().V\,J IJ.sAd +('vc:..k vt\\'h ,,'/'\d fo..~+r +-h.~.tor 4. Will the applicant be in competition with any local firms? If so, name the firms: ;f - J ~tt V"" Ie. lC"Jfo '" ",V ( J 4""iW\ 5vlllv~ "'Ole.'t-..J ~C.) 5. What percentage of the facility will be occupied by the applicant? 'OO/c:) IV. Ownership and Management 1. Describe the organizational structure of the firm (proprie- tership, partnership, subsidiary, corporation, etc.): Co (' f" ('"r>. 1'0 "" 2 . List the names of principal partners, owners and/or officers of the applicant firm: 6'e.roJd L. W~d~er I P~S"~+ , O\'C. \( $.(.. ~ I G ~c..rt...~.J - T ~Sv'rl!..or ()cO b W (Are...; &e.A^. ~ ~ 1 M (AV\ A.:j.eJr V. Financial Responsibility 1. How many years has the applicant been L, business? .$ \ ';( ~ t/ol 000 10 6.. .fv ., ^ ~ 5 k-d 2. Amount of equity capital to be furnished by applicant 3. What is the applicant firm 's Dun & Bradstreet rating? 4. List assets applicant will pledge to secure the revenue bonds ~1-\V'e. ( I ~ V'\d c.~J ~c; \ l\~ \mp{'O~--h) 5. List any person or firm who will act as guarantors for bonds VI. Marketing of Bonds 1. Will bonds be sold as a public offering? No 2. Have arrangements for the marketing of the bonds been made? y~s 3. Has the tenant investigated conventional financing? Ye.s VII. Measure of Economic Growth and Benefit 1. What percentage of sales will be sold locally? To b..- {u'YI ~ sh~ J 2. What is the estimated amount of merchandise and services purchased locally per year? to ~ .f,;v~.' sk J 3. How many people will the project employ? 4-5' ' 4. How many new jobs will be created? 10 VIII. In order to facilitate the timely processing of ~~e application, please attach as part of the proposal the following items: 1. Copy of firm's audited financial statements for the past two years. 2. Interim financial statements, to date, for the current fiscal year. IX. Applicant Agrees To 1. Pay any payment L."'l lieu of taxes required by the City. 2.::iU1~d data required by Re - .~ the City. ~~b.,...r 1~/l'1~Q Dat Ti t1 fl- -fl-o f" 1'\ ~ JLW HOLDING CO}~.~Y, INC. Paxton, Illinois CONSOLIDATED FINANCIAL STATEMENTS and ACCOUNT&~TS' REPORT April 30, 1980 TABLE OF CONTENTS Page Number ACCOUNTANTS' REPORT 1 FINANCIAL STAT~ffiNTS Statement 1 - 'Consolidated Balance Sheet 3 2 - Consolidated Statements of Stockholder's Equity 4 3 - Consolidated Statement of Operations 5 l~ - Consolidated Statement of Changes in Financial Position 6 Notes to Financial Statements 7 <&~ /jfiUvh:tJ8R/ <r t1~ ~. t?~ (ff~ ~ t?~ CERTIFIED PUBLIC ACCOUNTANTS . COLORADO . ILLINOIS . INDIANA . KANSAS . MISSOURI . 'OHIO . WISCONSIN Board of Directors JLW Holding Company, Inc. Paxton, Illinois We have examined the consolidated balance sheet of JLW Holding Company, Inc. as of April 30, 1980, and the related consolidated state- ments of, stockholder"s equity, operations, and changes in financial posttion for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circrnnstances. In our op1n1on, the accompanying consolidated financial statements present fairly the financial position of JL\~ Holding Company, Inc. at April 30, 1980, and the results or its operations and the changes in its financial position for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. U~/~~~U. Champaign, Illinois June 5, 1980 - 1 - Members of Amencan Institute of CertIfied Public Accountants JUl HOLDBG COMPANY, INC. CO~SOLIDATED BAL<~~CE SHEET April 30, 1980 Current assets (Note 7) Cash on hand and in banks Accounts receivable: Trade Factory holdbacks and warranty claims Notes receivable Total Less allowance for uncollectible accounts Inventories: Trucks and trailers Parts, accessories and ~a~.! !!!a !:e~ials Prepaid expense Property and eauipment (Note 7) ASSETS Lease and rental units Machinery, shop and accessory equipment Company vehicles Furniture and fixtures Leasehold improvements Total - at cost Less cost charged to operations to date Total assets - 2 - $ 366,001 166,368 7,541 $ 539,910 34,153 $2,371,982 2,712,921 $ 193,281 505,757 5,084,903 98,407 $ 812,728 228,610 743,818 46,100 595,226 $2,426,482 1,171,206 $5,882,348 1,255,276 $7,137,624 I ~ ! j 1 I i , I I I ~ 1 f. i 8 6 4 Jt!''' -\.~ ., LIABI~ITIES AND STOCKHOLDER'S EQUITY Current liabilities Accounts payable Deferred rental income Floor plan notes payable (Note 7) Working capital notes payable (Note 7) Lease notes payable, current maturities (Note 7) Other accrued liabilities Long-term liabilities Lease notes payable, less current maturities included above (Note 7) Netes payable to bank (Xote 7) Total liabilities Commitments and contingencies (Notes 4, 5 and 6) Stockholder's equity (Statement 2) (Note 2) Common stock, no par value, 1000 shares authorized, 100 shares issued and outstanding - at stated value Capital contributed in excess of stated value Retained earnings Total liab~lities and stockholder's equity $ 268,503 61,480 2,269,705 1,100,000 239,694 360,067 $ 333,153 260,000 $ 1,000 130,426 2,113,596 Statement 1 $4,299,449 593,153 $4,892,602 2,245,022 $7.137.624 These financial stateoents should be read only in conne~tion with the accompanying accountants' report and notes to financial statements. - 3 - t:?4fMJ (fl:t/det-kM' 'i?- {)6l'. JLW HOLDING COMPfu~, INC. CONSOLIDATED STATE~ffiNT OF STOCKHOLDER'S EQUITY Year Ended April 30, 1980 Common Stock Balance, ~~y 1, 1979. $1,000 Retained earnings (deficit) of merged corporation in pooling of interests (Note 2) Capital acquired in pooling of interests (Note 2) Net income (Statement 3) Balance, April 30, 1980 (Statement 1) $1.000 Capital Contributed in Excess of Stated Value $ 50,426 80,000 $130.426 Statement 2 Retained Earnings $1,717,491 (4,190) 400,295 $2.113.596 These.financial statements should be rend only in connection with the accompanying accountants' report and notes to financial statements. - 4 - t?~ :t1lUf~k'lMIl/ ~ (e&: .........~ Statement 3 JLH HOLDING COMPANY, INC. CONSOLIDATED STATE}~T OF OPERATIONS Year Ended April 30, 1980 Sales and cost of sales Sales Cost of sales Gross profit on sales Lease income $18,911,323 12,974,361 $ 5,936,962 248,430 $ 6,185,392 Expense Operating, selling, general,. and ~ administrative expense (Note 6) Depreciation and amortization Interest on long-term and short-term debt Net income (Statement 2) $4,887,097 331,410 490,460 5,708,967 $ 476,425 148,661 $ 625,086 224,791 S 400.295 Net income on operations Other income (Note 10) Net income before income taxes Income taxes (Note 8) The.se financial stateI:lents -should be read only in connection ~./'ith the accompanying accountants' report and notes to fin~ncial statements. - 5 - ~~P, ~1/ldeWM' r C?&-. Statement 4 JUl HOLDING Cm1PANY, INC. CONSOLIDATED STATEHENT OF CHAi'IGES IN FINANCIAL POSITION Year Ended April 30, 1980 Funds were provided by Operations: Net income Charges and credits to operations not affecting funds: Depreciation and amortization Gain on sale of equipment Proceeds from sale of equipment Pooling of interests - net $400,295 331,410 (20,960) $710,745 37,811 75,810 $824.366 Total funds provided Funds were applied to Purchase of property and equipment Decrease in long-term debt maturities Increase in working capital Total funds applied $336,280 132,062 356,024 $824.366 CHANGES IN WORKING CAPITAL April 30, 1980 1979 . Increase (Decrease) Current assets Cash on hand and in bank Accounts and notes receivable Inventories Prepaid expense Working capital $ 193,281 $ 102,370 $ 90,911 505,757 699,318 (193,561) 5,084,903 3,840,161 1,244,742 98,407 88,050 10,357 $5,882,348 $4,729,899 $1,152,449 $ 268,503 $ 269,599 $ (1,096 ) 61,430 41,209 20,271 2,269,705 2,419,157 (149,452) 1,100,000 1,100,000 239,694 169,511 70,183 373,700 (373,700) 360,067 229,848 130,219 $4,299,449 $3,503,024 $ 796,425 S1.582.899 S1.226,875 S 356,024 Total current assets Current liabilities Accounts payable Deferred income Floor plan notes payable Working capital notes ?2yable Current maturities or lease notes payable Federal and state income taxes Other accrued liabilities Total current liabilities These financial statements should be read only in connection with the accompanying accountants' report and notes to financial statements. - 6 - . t:?1f~ (f/Wldet4<J# <r- {5&; JLW HOLDING Cm1PAJ.'lY, INC. NOTES TO FINANCIAL STATENENTS April 30, 1980 Note 1 - Summary of significant accounting policies Significant accounting policies followed by the corporation are presen ted belo'ol: A - Principles of consolidation The consolidated financial statements include the assets, liabilities, revenues and expenses of all subsidiaries. All significant intercompany transactions have been eliminated in consolidation. B - Inventories Inventories are carried at the 1110wer of cost or market value. II Cost is determin.ed by the "specific identification" basis of accounting for truck, tire and fertilizer bed inventories and on the "first-in, first-out" basis of accounting for all other inventories. Supplies are expensed as purchased. C - Property and equipment Property and equipment are carried at cost. Expenditures for replacements are capitalized and the replaced items are retired. ~Iaintenance and repairs are charged to operations. Gains and losses from the sale of property are included in operations. Items :of machinery and equipment and furniture and fixtures are being depreciated on the straight-line or declining balance method over lives ranging generally from two to ten years. &~ortization of leasehold improvements is computed on the straight-line method over the lives of the respective leases. The Company uses the same methods of depreciation and amortization in determining taxable income. (continued) -7- <6'~ :J!ilutf~'l~ r {<?~; .,...........~._-- JLW HOLDING COHPANY, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1980 D - Investment credit Investment credit on purchased equipment is accounted for on the "flow-through" method, i. e., as a direct reduction of income t~~es in the year in which assets are placed in service. Note 2 - Business combinations During the fiscal year ending April 30, 1980 the following business combination transactions were effected in order to stream line the administration of the affected business units. 1. Wheels Unlimited'of Kansas, Inc., an unconsolidated sister corporation was merged into ~fheels Unlimited, Inc. effective December 2, 1979. This merger was a statuatory type A merger which essentially resulted in a pooling of interests. Operating results of the combined entity reflect only those income and expense items derived from \.:heels Unlimited, . Inc. before the merger and the combined activity subsequent to the merger date. Therefore, separate results of \{heels Unlimited of Kansas are not required or herein provided. The fiscal years of both organizations were identical and remain unchanged before and after merger. 2. Wheels Leasing, Inc., a wholly mmed subsidiary of r,..'heels Unlimited, Inc. was "spun off" and became a wholly owLled subsidiary of the parent company, JLW Holding Company, Inc. 3. Agricultural Commercial Inc., a wholly o~Lled subsidiary of Big Wheels, Inc. was "spun off" and becat4e a wholly owned subsidiary of the parent company, JLiI Holding Company, Inc. 4. Big \fheels of Kansas, Inc., a consolidated sister company, formed during the current fiscal year to accommodate third party requirements, was merged into I':heels U~limited, Inc. effective April 30, 1980. The business purpose of the formation of this corporation was obviated by franchise terminations accomplished by the merging parties. Therefore, this organization engaged in no operational activities and the entirety of the merger consisted of combining cash and equity exclusively. (continued) t:?lItWl~ (fjlUldetJ<J!V q:- <(-?&-; -8- JU1 HOLDING CmlPANY, INC. NOTES TO FI~ANCIAL STATE1ENTS April 30, 1980 Note 3 - Cnange of business name On May 2, 1979, a Certificate of .~endment to the Certificate of Incorporation of JLW, Inc. was filed with the Delaware Secretary of State changing the name of the corporation to JLW Holding Company, Inc. Note 4 - Leases On August 1, 1974, Big Hheels, Inc. and Wheels Unlimited, Inc. entered into 20 year lease agreements with Gerald L. Widmer for the land and existing building referred to in Note 6. The Companies are responsible for expense of the property including, but not limited to, taxes, insurance, and repairs. If the Companies are not in substantial default of the lease,s upon expiration of the regular terms, they shall have the option or renewing the leases for two consecutive five year periods. Future commitments under these noncancellable leases are as follows: Year Ended April 30 Real Estate Leases 1981 1982 1983 1984 1985 1986-1990 1991-1995 $ 36,000 36,000 36,000 36,000 36,000 180,000 153,000 $513 .000 Subsequent to the year end on ~~y 1, 1980 a triple net lease agreement has been executed by ~~eels Unlimited, Inc. providing for the leasing of real and personal property in Salina, Kansas. Such lease provides for 'rental payments of $1,750 per month for the term of the lease. The specific term and duration of the lease is to be determined subsequent to thi? report. (continued) -9- <0'if<m; JJ;u<<ktkifl.' ~ C?o-; ~"-_"C JLW HOLDING CO~~.~~, INC. NOTES TO FIN.AI~CIAL STATEHENTS April 30, 1980 Note 5 - Profit sharing pl~ The Companies have adopted two profit sharing plans which have been approved by the Internal Revenue Service. Contributions to the plans are calculated from 0 to 15% of eligible plan participants \~ages at the discretion of the Companies' Board of Directors. Contributions to the Big lfueels, Inc. Integrated Profit Sharing Plan and Big ~fuee1s, Inc. Nonintegrated Profit Sharing Plan totaled $3,997 and $15,694, respectively. Note 6 - Related parties Gerald L. Widmer, sole stockholder of JLW Holding Company, Inc., leases the land and building (see Note 4) which constitutes a portion of the operating facility of the Companies. . Mr. Widmer personally owns various patents critical to the production of Big Hheels'$l units. During the current year the Com~anies transferred $116,613 in cash and credits to Big ~~eels International, Inc., a Domestic International Sales Corporation which is not a part of the con~olidated group. Note 7 - Notes payable Floor plan notes payable and working capital notes payable are secured by virtually all assets of the Corporations. Current loan agreements provide for credit lines t~taling $3,600,000. This includes new and used trucks, trailers and agricultural equipment interest bearing floor plan notes of $1,700,000 and \Jorking capital notes, per~anent and overlines, totaling $1,900,000. At April 30, 1980, advances against these agreements were $636,877 and $1,100,000, respectively. These agreements are annually renegotiated in July utilizing the First ~ational Bank in Champaign as the primary lender ,,-ith the Continental Illinois National Bank' and Trust of Chicago and First National Bank and Trust of Salina, Kansas for overlines as required. (continued) -10- ~if~ JfiU<<$tJ~l'{/ 'r ~~ k..o,...,,~~-:o,. '. ~ ~ ~ "----.. ~ JLH HOLDING CaMP ANY, ruC. NOTES TO FINfu~CIAL STATEHENTS April 30, 1980 Toe mortgage pay?-ble on the plant site o~~ed by Gerald L. widmer is payable to the First National Bank in Champaign with overline to the Jefferson Bank and Trust Co. of Peoria, Illinois. It is payable in equal annual installments of $130,000 with interest payable monthly. The next principal payment is due July 1, 1981. Virtually all of the above debts are also secured by the personal guarantee of Mr. Widmer. Lease notes payable are secured by the leased equipment and assignment of the related leases (see Note 9). Notes payable at April 30, 1980 are summarized as follows: Payable to Current Long-term Total Floor ~lan notes payable $ 636,877 $ $ 636,877 Non-interesting bearing floor plan notes payable to General Hotors Company (trucks which are still in the interest free period) 1,632,828 1,632,828 Total floor plan notes payable $2,269,705 $ $2,269,705 Working capital notes payable 1,100,000 1,100,000 :'1ortgage notes payable 260,000 260,000 Lease notes payable 239,694 333,153 572,847 Total notes payable $3.609.399 S593.153 $4.202.552 (continued) -11- . ~~&l~ /f1:udetkHt, ~ n: ~""o.,... JLW HOLDING COMPA1~, INC. NOTES TO FINANCIAL STATE}lENTS April 30, 1980 Note 8 - Income taxes Income taxes are as follows: Federal income taxes Less: Investment tax credit Net benefit of new jobs tax credit carryover $237,051 (25,605) (28,691) Total Add: Investment tax credit recaptured $182,755 3,002 Federal income taxes State income taxes $185,757 39,034 Total S224.791 Note 9 - Segment information Summaries of industry segment and geographic data follows: Big ~fueels, Inc. manufactures Big wneels~units used for ~ fertilization &~d sludge operations. It markets its products worldwide. Agricultural Commercial, Inc. is in the business of leasing Big ~{heels@Dunits and serves the same geographic area as Big ~beels, Inc. The leases, which are for terms of five years or less, are classified as operating leases by FASB 13. Hinimun future lease corr.:nitments receivable under noncancellable leases are as follows: (continued) -12- <(g~M4 J7;Uu/e7~ <;?- t?&: JLW HOLDING CQ}!PAi~Y, INC. NOTES TO FINANCL\L STATfu'1ENTS April 30, 1980 Year Ended April 30 Equipment Leases Receivables Notes Payable 1981 1982 1983 1984 1985 $301,905 243,166 134,361 87,123 40,024 $806.579 $239,694 196,614 119,142 85,129 40,024 $680.603 Wheels Unlimited, Inc. is a franchised dealer for: GHC Truck and Coach, Dorsey Trailers, Cummins, Caterpillar, and Detroit Diesel Allison. Its activities include sales, servic.e and replacement parts supply for the Hidtvest. ~fueels Leasing. Inc. is a )e~~ing company whose leases are classified as sales~type'leases by FASB 13. Minimum future lease commitments receivable under noncancellable leases are as follows: Equipment Leases Year Ended April 30 Receivables Notes Payable 1981 $ 22,892 $ 21,203 1982 6,173 6,939 1983 1984 1985 $ 29.065 $ 28.142 Significant segment financial information is summarized as follot./s: (continued) -13- . t?~ (ff:u<<kt~. ~ {?tJ: IdentiCiable assets Current assets Cash on hand and in bank Accounts and notes receivable Inventories: Trucks and trailers Part:>, accessories and raw materials Prepaid expense Prepaid taxes Total current assets Property and equipment - at cost Less cost charged to operations to date Totnl pL.opl.lr ty and equipment Total aBBetll I ~ Identifiable liabilities Current liabilities Accounts payable Deferred rental income Floor plan notes payable Working capital notes payable l.euBe lIotes pUYllb1e - current: maturitiea Other accrued liabilities Total current liabilities Long-term liabilities Stockholder I s equity Total liabilities and stockholder's equity Cupital expenditures Sales nnd cost of sales Sales and lease income Cost of sales ~ .~ l~ ~ ~ ~ ~ ~ ~ Cross profit Expcl~ Operating, selling, general and administrative expense Depreciation and amortization Interl.lst on long-term and short-term debt Total expense Net income on operations Other income Net income before income taxes Inca_me taxes Nl't income JLW 1I01ding Company, Inc. Unconsolidated $ 7,014 $ $ 7,014 $ $ 7,014 $ $ $ $ 7 ,014 Ll..9.H L - ~ $ $ $ $ $ 528,000 ll~~. 000 Big Wheels, Inc, $ 130,685 308,896 1,706,763 2,293,076 47,629 23 ,175 l4.510.224 $ 1,506,404 $ 747,305 Wheels Unlimited Inc. $ 31,603 189,840 665,219 419,845 5,170 217,558 $1,529,235 107,350 69,106 $ 759,099 $ 38,2~4 ~5,269~~ $1,567,479 . $ 208,561 $ , 1,621,852 1,155,000 295,839 $ 3,281,258 $ $ 260,000 $ $ 1,728,065 $ 59,816 647,853 43,341 751,070 816,409 U..?f1.2,l.U ll...lQJ.A12 $ 1 U , Q5..Q 1-..1.2..J!21 $13,709,211 8,768,7/.5 $9,552,864 8,477 ,040 $ 4,940,472 $1,075,824 $4,174,614 $ 204,769 289,451 $ 4,668,834 $ $ 271,638 $ 108,712 766,391 19,573 143,553 929,517 146,307 .t__180.1lQ ~ 221...aU 81,558 Agricultural Commercial, Inc. $ 19,144 55,000 $ 31,568 111,712 $1,097,425 495,336 $ 602,089 $ 713,801 $ 60 56,785 $ $ $ 239,694 20,853 317,392 333,153 63,256 U1).!HlJ. L-].28_,m $ 241,122 $ 241,122 $ 34,852 150,472 60,792 $ $ 246 ,116 (4,994) 20,356 $ n.li Wheels Leasing Inc. $ 4,835 7,021 2,645 $14,501 $ Adjustments and Eliminations JLW Holding Company, Inc. C\lnsolidated $ $ 193,281 (55,000) 505,757 2,371,982 2,712,921 (332) 52,467 (235,006) . 45:940 1-!1~) $ 5,882 348 $ (284,697) -.-Jl40,5li) $ 2,426,482 1,171,206 $ ~ (14/1,156) $ 1,255,276 ,Sl.4,501 $ (434,494) S 7.UL,tlll $ 4.695 366 $ 5,061 $ $ 9.440 $ $ $ $ (55,000) (332) (~j ,332) .114-1?01 L{43~,~94) (379 ,1(2) .L..--=---. ~ $ 6,421 $(4,349,871) (4 ,271,424) $ 6,421 $ $ 1,240 $ 3,586 $ 4,826 $ $ 1,595 $ (78,447) (90,000) (43,404) (6,922) (140,326) 61,879 (589,965) .L.L222 L~ 28 .ill!.n) $ 268,503 61,480 2 ,26~, 705 1,100,000 239,694 360,067 $ 4,299,449 . $ 593.ill U,245,022 ~LlL.H~ L__U{>,.21l~ $19,159,753 12,974,361 $ 6,185,392 $ 4,887,097 331,410 490,460 $ 5,708,967 $ 476,425 148,661 $ 625.086. 224 , 791 1-__~ 9Q.~.~.~~ '\ : . I> JLW HOLDING COMPANY, INC. NOTES TO FINA.'\CIAL STATEHENTS April 30, 1980 Note 10 - Other income The items included in other income are summarized as follows: Net gain on sale of fixed assets Income from the lime-sludge operation Net cash discounts Batch plant delivery $ 20,960 75,998 42,066 9,637 $148.661 This information should be read only in connection with the accompanying accountants' report. -15- . t?~ Jj:UI&tMIl' ~ ~&; ~-~': ;';'~.' ~6L" '~ 'g~ ~1 ~'t~~ ~f .........,..7 ~:~ ~c_:~~ ~f~ t~l~~ Ei; :;~:.; ...,..:~',~. :'~.. -~;. ......"...... ~:~: ~F~ ~i:'... ~J :i'.~ #..::~ n~1: ::;~~f ::::.:'~:: i ~':;ry';;':~1 rt-~ .~?~ ~2:. ~{ Ir: ~~.'~ !f~~' ~~) ~1(:'; ~if.~~~! ::=.~ :'--,~ X$;~.:~ f~2 "~~~ -~'- :--::::~~ . ~;~.'~d '.~;~'~-~~ JLW HOLDING Cm~ANY, INC. Paxton, Illinois CO~SOLIDATED FINANCIAL STATEMENTS and ACCOUNT~~TSr REPORT April 30, 1979 TABLE OF CONTENTS Page Number ACCOUNT}u~TS' REPORT 1 FINANCIAL STAT~lENTS Statement 1 - Consolidated Balance Sheet 2 - Consolidated Statement of Retained Earnings 3 - Consolidated Statement of Operations 4 - Consolidated Statement of Changes in Financial Position 2 3 4 5 Notes to Financial Statements 6 ~1 crg~ (ff:~ 'r tgD; CERTIFIED PUBLIC ACCOUNTANTS COLORADO IlliNOIS KANSAS MISSOURI OHIO WISCONSIN -~ Board of Directors JLW Holding Company, Inc. Paxton, Illinois We have examined the consolidated balance sheet of JLW Holding Company, Inc. as or April 30, 1979 and the related consolidated statements of retained earnings, operations, and changes in financial position for the year then ended. Our examination was made in accordance with generally accepted audit- ing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompany~ng consolidated financial statements present fairly the financial position of JLW Holding Company, Inc. at April 30, 1979, and the results of its operations and the changes in its financial position for the year then ended, in conformity with generally accepted accounting principles. ~L6~ , c 0_~~ fG~ Champaign, Illinois May 31, 1979 -1- ~embe's of American Institute of Certified Public Accountants I N I J .~ .~ ~ ~ 'f( ~ ~ Current Assets (Note 7) Cash on hand and in banks Accounts receivable: Trada Factory holdbacks and warranty claims Notes receivable (Note 6) Total Less allowance for uncollectible accounts Inventories: Trucks and trailers (Note Parts, nccessories and rm. materials Prepaid expenses Property and equipment (Note 7) Lease and rental units Machinery, shop and accessory equipment Company vehicles Furniture and fixtures Leasehold improvements Total - at cost Less cost charged to operations to date Total assels , I < :~ ~!'. > JL\~ HOLDING Cffill'ANY, INC. CONSOLIDATED lIALANCE SHEET April 30, 1'179 ~. $ 102,370 $ 394,826 230,478 _98,014 $ 723,318 24 ,000 699,318 7) $2,269,750 1,570,411 3,840,161 88,050 ~4,729,899 $ 611,293 213,969 706,997 45,211 589,2/18 $2,166,718 899,461 1,267,257 ~~~~ Current liabilities LIABILITIES AND STOCKHOLDER 'S EQUlTY Accounts payable DeCerred rental income nuor plan note" payable (Note 7) NoLes payable to bank, current maturities (Note 7) Federal and state income. taxes (Note 8) Other accrued liabilities LanA-term liabilities Notes payable to bank, less current maturities included above (Note 7) COllUnitments and contingencies (Notes 4,5 and 6) Stockholder's equity (Note 2) Common sLack, no par value, 1,000 Shill"eS authorized, 100 shares issucd anJ out:;tanding - at stnted value Cnpitnl contributed in excess of stated value Retaified earnings (Statement 2) Total liabilities and stockholder's equity These financial statements should he read only in connection with the accompanying accountants t rCI>ort and notcs to financial s tn tements. $ 269,599 41,209 2,419,157 169,511 373,700 229,848 $ 1,000 50,426 1. 717 ,491 Statement 1 $3,503,024 725,215 1.768.917 $5.997.156 ~.~ . .~~: ~~ Statement 2 JL'IV HOLDING Cm-iF ANY, INC. CONSOLIDATED STATEHENT OF RETAINED EARNINGS Year Ended April 30, 1979 Retained earnings, ~~y 1, 1978 $1,256,186 Addition Net income (Statement 3) 471,305 Total $1,727 ,491 Deduc tion Cash dividends, COI!llllon stock, $10.00 per share 10,000 . Retained earnings, April 30, 1979 (Statement 1) $1. 717 .491 These financial statements should be read only in connection with the accompanying accountants' report and notes to financial statements. -3- <(g~ Jfiutd8U&V '?- '(g~ ~~:..6 -~:' ~""'; ;~ . .~. ... .~' :t.'. ~ Statement 3 t j t , I JUl HOLDING COMPANY, INC. CONSOLIDATED STATEMENT OF OPERATIONS Year Ended April 30, 1979 Sales and cost of sales Unit sales department Service department Parts department Lease income Total Expenses Operating, selling, general and administrative expense (Note 6) Depreciation and amortization Interest on long-term and short-term debt Net income on operations Other income Refund of federal excise tax All other (Note 10) Net income before income taxes Income taxes (Note 8) Net income (Statement 2) Sales $13,284,542 407,205 1,609,08R 279,750 $15.580.585 Cost of Gross Sales Profit $ 8,660,451 $4,624~091 269~092 138,113 1,244,556 364~532 279,750 $10.174.099 $5,406,486 $~ .281,77 5 377 , 261 372~132 ~31,168 $ 375.318' $267,446 202,241 469~687 $ 845,005 171,700 $ 471.305 These financial statements should. be read only in connection with the accompanying accountants' report and notes to financial statements. -4- ., , .<6'~ Jj'_tkHP ~ CZ)&: .,. ~ ~. Statement 4 JLW HOLDING COMPANY, INC. CONSOLIDATED STAT~mNT OF CHANGES IN FINANCIAL POSITION Year Ended April 30, 1979 Funds were provided by Operations: Net income Charges and credits to operations not affecting funds: Depreciation and amortization Gain on sale of equipment Proceeds from the sale of equipment $471,305 Total funds provided 377 , 261 (108,404) $740.162 164,044 $904,206 Funds were applied to Purchase of property and equipment Reduction in long-term maturities of notes payable to bank Payment of cash dividends Increase in working capital Total funds applied $305,034 462,184 10,000 126.988 $904,206 CHANGES IN WORKING CAPITAL April 30, 1978 1979 (Note 2) Increase (Decrease) Current assets Cash on hand and in bank Accounts and notes receivable Inventories Prepaid expenses \-lorking capital $ 102,370 $ 124,308 $(21,938) 699,318 821,629 (122,311) 3,840,161 3,345,204 494,957 88.050 297,361 (209.311) $4,729,899 $4,588,502 $141,397 $ 269,599 $ 181,789 $ 87,810 41,209 50,677 (9,468) 2,419,157 2,281,691 137,466 740,000 (740,000) l69,511 65,389 104,122 373,700 373,700 229,848 169,069 60,779 $3,503,024 $3,488,615 $ 14,409 $1,226.875 $1.099.887 $126.988 Total current assets Current liabilities Accounts payable Deferred income Floor plan notes payable Notes payable to bank - short-term debt Current maturities of long-term debt Federal and state income taxes Other accrued liabilities Total current liabilities These. financial statements should be read only in connection with the accompanying accountants' report and notes to financial statements. -5- <()~v, J!flIH<hJlJ/t-' cr- CC)&: JLW HOLDING COMPANY, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1979 Note 1 - Summary of significant accounting policies JLW Holding Company, Inc. was incorporated as JLW, Inc. (See Note 3) on }~y 1, 1978 in the State of Delaware for the purpose of serving as a holding company for the wholly-owned subsidiaries, Big Wheels, Inc. and Wheels Unlimited, Inc. Significant accounting policies followed by the corporation are presented below: A - Principles of consolidation The consolidated financial statements include the assets, liabilities, revenues and expenses of all subsidiaries. All significant intercompany transactions have been eliminated in consolidation. B - Inventories Inventories are carried at the "lower of cost or market value." Cost is determined by the "specific identification" basis of accounting for truck, tire and fertilizer bed inven- tories and on the "first-in, first-out" basis 'of accounting for all other inventories. Supplies are expensed as purchased. C - Property and equipment Property and equipment are carried at cost. Expenditures for replacements are capitalized and the replaced items are retired. Maintenance and repairs are charged to operations. Gains and losses from the sale of property are included in operations. Items-of machinery and equipment and furniture and fixtures are being depreciated on the straight-line or declining balance method over lives ranging generally from two to ten "years. Amortization of leasehold improvements is computed on the straight-line method over the lives of the respective leases. The Company uses the same methods of depreciation and amortization in determining taxable income. D - Investment credit Investment credit on purchased equipment is accounted for on the "fIOtJ-through" .method, Le., as a direct reduction of income taxes in the year in which assets are placed in service. (continued) -6- <&~I'P, ijlU!de(,J~t' ~ (5'~ JLW HOLDING COMPANY, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1979 Note 2 - Business combination On }~y 1, 1978 all the outstanding capital stock of Big \fheels, Inc. and \fheels Unlimited, Inc. was exchanged under Internal Revenue Code Section 351 by Gerald L. Widmer, sole stockholder for 100 shares of common stock of JLW, Inc. (Note 3). The transfer, which includes Agricultural Commercial Incorporated, a wholly-owned subsidiary of Big \fheels, Inc., and Wheels Leasing, Inc., a wholly-owned sub- sidiary of ~~eels Unlimited, Inc., has been accounted for by the pooling of interest method of accounting. All subsidiary companies had the common year end of April 30 and followed the same basic accounting practices. As a result, there are no transactions included in the combined net income for periods before the combi- nation was consummated, nor was any adjustment of net assets required of the combining companies. Note 3 - Chan~e of business name Subsequent to the fiscal year end on May 2, 1979, a Certificate of Amendment to the Certificate of Incorporation of JLW, Inc. was filed with the Delaware Secretary of State changing the name of the corporation to JLW Holding Company, Inc. Note 4 - Leases On August 1, 1974, the Companies entered into 10 year lease agree- ments with Gerald L. Widmer for the land and existing building referred to in Note 6. The Companies are responsible for expense of the property including, but not limited to, taxes, insurance, and repairs. If the Companies are not in substantial default of the leases upon expiration of the regular terms, they shall have the option of renewing the leases for two consecutive five year periods. Future commitments under these noncancellable leases are as follows: Year Ended April 30 Real Estate Leases 1980 1981 1982 1983 1984 1985-1989 1990-1994 1995 $ 36,000 36,000 36,000 36,000 36,000 180,000 180,000 9,000 5549,000 (continued) -7- C(g~l; J!llUl&tJtJlP g- ~; , -~"- JLW HOLDING C~~ANY, INC. NOTES TO FINANCIAL STATEMENTS April 30, .1979 Note 5 - Profit sharing plans The Companies have adopted two profit sharing plans which have been approved by the Internal Revenue Service. Contributions to the plans are calculated from 0 to 15% of eligible plan participants wages at the discretion of the Companies' Board of Directors. Contributions,to the Big Wheels, Inc. Integrated Profit Sharing Plan and Big Wheels, Inc. Non-integrated Profit Sharing Plan totaled $4,350 and $13,700, respectively. Big Ifheels International, Inc., a Domestic International Sales Corporation, is wholly-owned by the Big IVheels, Inc. Integrated Profit Sharing Plan. Note 6 - Related parties Gerald L. Widmer, sole stockholder of JLW Holding Company, Inc., leases the land and building (see Note 4) which constitutes a portion of the operating facility of the Companies. Mr. Widmer personally o~vns various patents critical to the produc- tion of "Big Wheels" units. Mr. Widmer also has controlling interest of Wheels Unlimited of Kansas, Inc. This creates a "controlled group" situation under the Internal Revenue Code which requires a surtax exemption apportionment. For the fiscal year ended April 30, 1979, the entire surtax exemption was allocated to JLW Holding Company, Inc. In addition, the Companies have entered into "Service Assistance Agreements" with Ifheels Unlimited of Kansas, Inc. The agreements compensate IVheels Unlimited of Kansas, Inc. for maintaining high levels of General Motor's truck and parts inventory, for main- taining a complete inventory of parts for Big Ifheels units, and for extending service to "Big \fheels" units throughout the States of Iow~, Nebraska, Kansas, Oklahoma and Texas. The agreement, which can be terminated at any time on sixty days' wr,itten notice by either party, calls for representatives of the Companies to meet each year prior to April 30 and negotiate the service assistance fee. Should the parties be unable to mutually agree upon the amount of the service assistance fee in any year, the agreement calls for independent arbitration to set the fee. The Companies paid $175,000 to l{hee1s Unlimited of Kansas, Inc. under such service assistnace agreements during the fiscal year ended April 30, 1979. The Companies have notes receivable from Wheels Unlimited of Kansas, Inc. totaling $90,000 as of April 30, 1979. ( continued) -8- t:?~ :Jfluu/etJ{M/ r {)&-. .~. io/ ~ t~ JLW HOLDING COMPANY, INC. NOTES TO FINAI~CIAL STATEHENTS April 30, 1979 Note 6 - Related parties (continued) The Companies are guarantors to the First National Bank and Trust Co., Salina, Kansas, for Wheels Unlimited of Kansas, Inc. As of April 30, 1979, the Companies were guarantors on notes totaling $295,000. During the current year the Companies transferred $121,775 to Big Wheels International, Inc., a Domestic International Sales Corporation. (Note 5) Note 7 - Notes payable Floor plan notes payable and working capital notes payable are secured by virtually all assets of the Corporations. Current loan agreements provide for lines of credit for $1,500,000 for floor plan notes for new GMC trucks and Dorsey trailers and Sl,OOO,OOO for working capital. At April 30, 1979, advances against these agreements were $882,249 and $-0-, respectively. These agreements are annually renegotiated in July utilizing the First National Bank in Champaign as the primary lender and the Continental Illinois National Bank and Trust of Chicago for overlines as required. Ifhite trucks and trade-ins thereon are floor planned to Ifhite Motor Credit Corporation. The mortgage payable on the plant site o\voed by Gerald L. Widmer is payable to the First National Bank in Champaign with over line to the Jefferson Bank and Trust Co. of Peoria, Illinois. It is payable in equal annual installments of $130,000 with interest payable monthly. The next principal payment is due July 1, 1980. ~ Virtually all of the above debts are also secured by the personal guarantee of Mr. Widmer. Lease notes payable are secured by the leased equipment and assi~nment of the related leases (see Note 9) (continued) -9- tg~ J!fi1/lde'lJ&/!/ ~ t)t1'. ,. ,;. { 'j! ~ ~; !. ." ", '" JLW HOLDING COMPANY, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1979 Note 7 - Notes payable (continued) Notes payable at April 30, 1979 are summarized as follows: Payable to Current Long-term Total Floor plan notes payable to \.fuite Motor Credit Corporation $ 375,626 $ $ 375,626 Floor plan notes payable to the First National Bank In Champaign (including a $621,441 overline with Continental Illinois National Bank and Trust of Chicago) 882,249 882,249 Non-interest bearing floor plan , notes payable to Genera1'Motors Company (trucks which are still , in the interest free period) 1,161,282 1,161,282 Total floor plan notes payabla. $2,419,157 $ $2,419,157 First National Bank In Champaign: Mortgage 390,000 390,000 Lease notes payable 169,511 335,215 504 ,726 Total notes payable $2,588,668 $725,215 $3,313,883 Note 8 - Income taxes Income taxes are all due currently and are as follows: Federal income taxes Less: Investment tax credit Net benefit of new jobs tax credit Total Add: Investment tax credit recaptured $362,300 (13,100) (22,500) $326,700 11,800 Federal income taxes State income taxes $338,500 35,200 Total $373.700 (continued) -10- {g~ $/1~Ie'tJt"lt +- ~; ~- { r t ~ ~ .+ " ~' .. ':oJ , ,_. -_.- ."~-_." "_..~_. JLW HOLDING COMPANY, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1979 Note 9 - Segment information Summaries of industry segment and geographic data follows: Big \.Jheels, Inc. manufactures "Big \.Jheels" units used for fertilization and sludge operations. It markets its products throughout the United States and Canada. Agriculture Commercial, Inc. is a wholly-o~vned subsidiary of Big \.Jheels, Inc. The Company is in the business of leasing "Big Hheels" units and serves the same geographic area as Big wneels, Inc. The leases, which are for terms of five years or less, are classified as operating leases by FASB 13. Minimum future lease commitments receivable under noncancellable leases are as follows: Year Ended April 30' 1980 1981 1982 1983 1984 Equipnent Leases Receivables Notes Payable $235,558 235,558 169,968 54,312 7,075 $702.471 $169,511 169,511 121,499 39,123 5,082 $504.726 \.Jheels Unli~ited, Inc. is a franchised truck dealer for GMC Truck and Coach and \.Jhite Motor Company, and a franchised dealer for Dorsey trailers. Its activities include sales, service and replace- ment parts supply for Central Illinois. \.Jheels Leasing, Inc. is a wholly-o~vned subsidiary of \.Jheels Unlimited, Inc. The Company is a leasing company whose leases are classified as sales-type leases by FASB 13. Minimum future lease commitments receivable under non-cancellable leases are as follows: Year Ended April 30 Equipment Leases Receivables Notes Payable 1980 1981 1982 1983 1984 $ 32,829 26,204 9, 928 $ 29,977 23,402 4,360 $ 68,961 $ 57.739 Significant segment financial information is summarized as follows: (continued) -11- t?~ JJiUldetJO/// r ~&: ....'"....,;-..."...~..... "'1 t - H j'..,,~ \~hel.'ls Aj?,ricu1tural \.Jhcels JLW Holding ~ Rig \.Jhee1s, Unlimited Commercial, l.easing Company, Inc. Inc. Inc. Inc. Inc. Eliminations Consolidated Sales and cost of sales Sales $11,545,949 $8,375.663 $266,453 $ 13,297 $(4,620,777) $15,580,585 Cost of sales 7,244,839 7,476,439 (4,547.179) 10,174 .099 Gross profit $ 4,301.110 $ 899.221, $266.453 .Ll.Lill. $ (73,598) $ 5,406,486 Expcn~...:!. Operating. !lclling, gencral and administrative expense $ ).6Q6,305 $ 70I,!>5'> $ 33,739 $ 74 $ (139, 9~8) $ 4.281.775 Depreciation llnd omorci:l;at L0n 189,601, 14,SZO 21.'>.6111 (42,544) 377,261 Interest on long-term and :;hort-term debt L'n n7 -11J.'-'~.!.i~ ') 2-,-(,2 0 _IO,)~ --Q.,!!,-(~) __In, 132 __L.::....=...:- Total expenses $ 4,109.836 $ 798,621 $302,040 $ 10,',53 $ (189,782) $ 5,031,168 Net income on operations $ 191.274 $ 100,(0) $ (35 , 587) $ 2,844 $ 116,184 $ 375.3]8 Other income Refund of federal excise tax $ $ 267.,446 $ $ $ $ 267,446 All other 91,121 ~1.n.~. _-18 ,58.!.. 65,604 202,241 I I-' Total other income $ 91.121 $ 274 ]81 $ 38.581 L__ $ 65,604 $ 1,69,687 N --'-"-- I Net income before income taxes .L 28~L.~9i .LJL~-,_W-i i..1..m ~....1..84!i i ..J!l.1,]JHi i_ 845.il<l5 Identifiable assets Current assets C.:lsh on hand and in bank $ 38 . 336 $ '.2,288 $ 16.669 $ 5,077 $ $ 102,370 Accounts and notes receivable 417 ,1,34 1,1,9.978 100.063 8,014 (276,171) 699,318 Inventories: Trucks and trailers 2.269,750 2,269.750 Parts) accessories and raw materials 1,155,884 414,527 1.570,411 Prepaid expenses _57 ,58!! ~}Q. t./,2 88,050 Total current assets $ 1,669,21.2 $3.207,005 $116 , 7)2 $ 13 , 091 $ (276,171) $ 4,729.899 ~ Property and equipment Lealic and rentill IInits $ $ $864,393 $ $ (253,100) $ 611.293 ~ Machinery. shop and accessory equipment 183.671 30,298 213,969 Company vehicles 650,773 56,22/, 706.997 ~ Furniture and fixtures 33,177 12,034 45,211 ~~ Leasehold improvements _1!!.h876 5,]72 589.2/,8 Total .- at cost $ 1 ,fl.')] , I, 9 7 $!in. 9 fa -$864 ,393 $ $ (253.100) $ 2.166.718 Less cost chaq;ed to operations to datc -----1_(,!).,~I.!!~ (,7,1\51, ]71, '121 _...-ll~"Q.2Jl) 899 1,61 ~ I=~!!,~:'~7!~ ___._:-L. ...._..~ :t-== -~ ~ Total properly aod e<lulpUlcnt L-~!~..J~!l i'~~Q.,-'!l~ 1--D!.!i.t 0 71) $ l.267.25?. ~ 'fatal identifiable assets ~t-1_.5..'>fb!l.~~ Jih~~!~t.9l2. JMj.?"1.~Jl!1 -t,L~1tll i_(4~~A.l) L~.227 L112. ~ Capital <.!xpenditures i _n~39.1i!1 ,t.__l...o..QQ .tni8.2,ll ~ -":'-- i. i 305...0}i ~ 'f ~ (ClIllt (rh,pd) ~ ii. l' l: j:; r . ~ I I j t 1 JLW HOLDING COHPAi.'IT, INC. NOTES TO FINANCI.~ STATErffiNTS April 30, 1979 Note 10 - Other income The items included in other income are summarized as follows: Net gain on sale of fixed assets Income from the lime-sludge operation Net cash discounts Batch plant delivery Hiscellaneous $108,404 40,802 30,533 9,678 12,824 $202.241 ~. ,,; ~ .. This information should be read only in connection with the accompanying accountants' report. -13- ~~ /jp/mktM/l/ q- t)&-. --.'"!Cj .:. ;~~'\; .1.:::--: . :"..., ~ i ; i i 1 i , i ; t ~;:~.: . _ "I;,l~':"""" = ~t o.-)I1'l::J'.," :'!.~ '\l";;-~ ~.." i. C;..:.)I <_ '\:,....-!'i:.,...., ~ r'.~j,: 5~. ~:.;:,..~I ~-~~~~~ I '7 ~~l-r 0 ~ 1..:.:--~" ':.I :-......;..~...i ~\.lAn """'" 'l:! ~~~q~.ot1 ':--:o:;roos ".~:S J.;...-:'~ ~...>t :~t ~lanc:, ':9~~~ '::e:. 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