-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E6yvaEQxlxCi526wHNuZOUWSQHPczoow6URxnfcalPuqknybOeXBhBAh8VhR2yhZ BEXEYMuJLxoUmistVvqQYw== 0001045969-98-000596.txt : 19980813 0001045969-98-000596.hdr.sgml : 19980813 ACCESSION NUMBER: 0001045969-98-000596 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASV INC /MN/ CENTRAL INDEX KEY: 0000926763 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 411459569 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25620 FILM NUMBER: 98683140 BUSINESS ADDRESS: STREET 1: P O BOX 5160 CITY: GRAND RAPIDS STATE: MN ZIP: 55744-5160 BUSINESS PHONE: 2183273434 MAIL ADDRESS: STREET 1: PO BOX 5160 CITY: GRAND RAPIDS STATE: MN ZIP: 55744-5160 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1998 Commission file number: 0-25620 A.S.V., INC. (Exact name of registrant as specified in its charter) MINNESOTA 41-1459569 ------------------------------ ---------------------------------- State or other jurisdiction of I.R.S. Employer Identification No. incorporation of organization 840 LILY LANE P.O. BOX 5160 GRAND RAPIDS, MN 55744 (218) 327-3434 ---------------------- -------------- Address of principal executive offices Registrant's telephone number Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] As of August 4, 1998, 7,607,229 shares of registrant's $.01 par value Common Stock were outstanding. Page 1 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS A.S.V., INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS JUNE 30, DECEMBER 31, 1998 1997 ----------- ----------- ASSETS (Unaudited) CURRENT ASSETS Cash and cash equivalents............................ $ 1,482,728 $ 316,599 Short-term investments............................... 490,577 1,255,160 Accounts receivable, net ............................ 2,767,282 1,989,906 Inventories.......................................... 13,750,987 11,674,027 Prepaid expenses and other........................... 416,607 342,896 ---------- ----------- Total current assets............................ 18,908,181 15,578,588 PROPERTY AND EQUIPMENT, net............................ 4,433,428 3,636,091 ----------- ----------- Total Assets.................................... $23,341,609 $19,214,679 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term liabilities............. $ 218,114 $ -- Accounts payable..................................... 2,760,370 1,474,701 Accrued liabilities Compensation....................................... 194,497 180,349 Interest........................................... 95,422 81,250 Warranties......................................... 400,000 200,000 Other.............................................. 108,904 98,998 Income taxes payable................................. 217,924 201,674 ----------- ----------- Total current liabilities....................... 3,995,231 2,236,972 ----------- ----------- LONG-TERM LIABILITIES, less current portion............ 7,447,597 7,020,608 ----------- ----------- COMMITMENTS AND CONTINGENCIES.......................... -- -- SHAREHOLDERS' EQUITY Capital stock, $.01 par value: Preferred stock, 11,250,000 shares authorized; no shares outstanding ........................... -- -- Common stock, 33,750,000 shares authorized; 7,540,832 shares issued and outstanding in 1998; 7,518,310 shares issued and outstanding in 1997.. 75,408 75,183 Additional paid-in capital........................... 6,742,911 6,520,371 Retained earnings.................................... 5,080,462 3,361,545 ----------- ----------- 11,898,781 9,957,099 ----------- ----------- Total Liabilities and Shareholders' Equity $23,341,609 $19,214,679 =========== =========== See notes to consolidated financial statements. 2 A.S.V., INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------------- ---------------------------- 1998 1997 1998 1997 ------------ ------------ ------------ ------------- Net sales ........................... $ 10,484,279 $ 5,407,815 $ 19,513,117 $ 10,059,000 Cost of goods sold .................. 7,923,015 4,115,440 14,694,010 7,697,483 ------------ ------------ ------------ ------------ Gross profit ................. 2,561,264 1,292,375 4,819,107 2,361,517 Operating expenses: Selling, general and administrative 942,703 531,348 1,750,898 1,019,405 Research and development .......... 105,088 62,717 203,537 107,655 ------------ ------------ ------------ ------------ Operating income ............. 1,513,473 698,310 2,864,672 1,234,457 Other income (expense) Interest expense .................. (126,579) (92,988) (255,525) (185,940) Other, net ........................ 105,185 145,571 139,770 210,918 ------------ ------------ ------------ ------------ Income before income taxes ...... 1,492,079 750,893 2,748,917 1,259,435 Provision for income taxes .......... 565,000 286,000 1,030,000 479,000 ------------ ------------ ------------ ------------ NET INCOME ..................... $ 927,079 $ 464,893 $ 1,718,917 $ 780,435 ============ ============ ============ ============ Net income per common share Basic ............................. $ .12 $ .06 $ .23 $ .11 ============ ============ ============ ============ Diluted * ......................... $ .11 $ .06 $ .20 $ .10 ============ ============ ============ ============ Weighted average number of common shares outstanding Basic ............................. 7,538,225 7,247,650 7,533,479 7,243,624 ============ ============ ============ ============ Diluted * ......................... 9,031,745 8,764,900 8,975,213 8,782,100 ============ ============ ============ ============
* Includes add back of after-tax effect of interest expense for convertible debentures. See notes to consolidated financial statements. 3 A.S.V., INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1998 AND 1997
1998 1997 ---------- ---------- Cash flows from operating activities: Net income ........................................................ $1,718,917 $ 780,435 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation .................................................. 150,000 78,000 Interest accrued on capital lease obligation .................. 23,028 23,028 Deferred income taxes ......................................... (100,000) (48,000) Effect of warrant earned ...................................... 75,600 75,600 Changes in assets and liabilities: Accounts receivable ........................................ (777,376) 118,972 Inventories ................................................ (2,076,960) (2,320,144) Prepaid expenses and other ................................. 26,289 (16,742) Accounts payable ........................................... 1,285,669 1,050,678 Accrued expenses ........................................... 238,226 (77,759) Income taxes payable ....................................... 16,250 (145,500) ---------- ---------- Net cash provided by (used in) operating activities ................. 579,643 (481,432) ---------- ---------- Cash flows from investing activities: Purchase of property and equipment ................................ (299,543) (728,646) Purchase of short-term investments ................................ -- (1,497,087) Redemption of short-term investments .............................. 764,583 -- ---------- ---------- Net cash provided by (used in) investing activities ................. 465,040 (2,225,733) ---------- ---------- Cash flows from financing activities: Principal payments on long-term liabilities ....................... (25,719) (3,158) Exercise of stock options ......................................... 57,165 57,209 Tax benefit related to exercise of stock options .................. 90,000 241,000 ---------- ---------- Net cash provided by financing activities ........................... 121,446 295,051 ---------- ---------- Net increase (decrease) in cash and cash equivalents ................ 1,166,129 (2,412,114) Cash and cash equivalents at beginning of period .................... 316,599 3,042,494 ---------- ---------- Cash and cash equivalents at end of period .......................... $1,482,728 $ 630,380 ========== ========== Supplemental disclosure of cash flow information: Cash paid for interest ............................................ $ 241,353 $ 160,447 Cash paid for income taxes ........................................ 1,023,750 431,500 Supplemental disclosure of non-cash investing and financing activity: Assets acquired by incurring long-term liabilities ................ $ 647,794 $ --
See notes to consolidated financial statements. 4 A.S.V., INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1998 (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INTERIM FINANCIAL INFORMATION The accompanying unaudited, consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation have been included. Results for the interim periods are not necessarily indicative of the results for an entire year. NOTE 2. LINE OF CREDIT During the second quarter of 1998, the Company amended its line of credit agreement with its primary bank. The amended line of credit provides for borrowings up to $5,000,000 at an interest rate of prime minus1/2% (8% at June 30, 1998). All other major terms and conditions remain the same. NOTE 3. STOCK SPLIT On May 15, 1998, the Company completed a three-for-two stock split. All share and per share information has been restated to reflect this stock split. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth certain Statement of Earnings data as a percentage of net sales:
Three Months Ended June 30, Six Months Ended June 30, 1998 1997 1998 1997 ---- ---- ---- ---- Net sales.......................................... 100.0% 100.0% 100.0% 100.0% Cost of goods sold................................. 75.6 76.1 75.3 76.5 Gross profit....................................... 24.4 23.9 24.7 23.5 Selling, general and administrative................ 9.0 9.8 9.0 10.1 Operating income................................... 14.4 12.9 14.7 12.3 Interest expense................................... (1.2) (1.7) (1.3) (1.8) Net income......................................... 8.8 8.6 8.8 7.8
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997. NET SALES. Net sales increased 94%, or approximately $5,076,000, to approximately $10,484,000 for the three months ended June 30, 1998 compared with the same period in 1997. The increase was due primarily to sales of the Company's Posi-Track vehicle and related accessories increasing 104% over 1997. The growth in Posi-Track sales was due to increased demand for the Company's HD series Posi-Track which was introduced in fourth quarter 1997 and accounted for nearly all unit volume in second quarter 1998. The HD series Posi-Track features a maintenance-free suspension which minimizes operator maintenance on the vehicle, as well as offering a more powerful engine and greater lifting capabilities than the Company's original model MD-70 Posi-Track. The Company will offer this same maintenance-free suspension under the MD-70 chassis as a new series of Posi-Tracks, the MD series. Sales of the new MD series are expected to start in third quarter 1998. Sales of parts, used equipment and other items increased 35% for the three month period ended June 30, 1998 compared with the same period in 1997. This increase was primarily due to parts sales increasing as the number of vehicles in the field continues to increase. In connection with the expansion of its manufacturing facility and increase in the models in its product lines, the Company is anticipating continued growth in its net sales in excess of 50% for the next twelve months. GROSS PROFIT. Gross profit for the three months ended June 30, 1998 increased to approximately $2,561,000, or 24.4% of net sales, compared with $1,292,000, or 23.9% of net sales, in 1997. The increased gross profit was attributable to increased sales volume in 1998. The increased gross profit percentage was attributable to greater efficiencies in the production process from the Company's increased production levels and additional margin obtained from the sale of higher priced products. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses decreased from 9.8% of net sales in second quarter 1997, to 9.0% of net sales in second quarter 1998. The increased dollar volume was due to increased advertising costs including costs to promote the Company's HD series Posi-Track as well as increased compensation costs as sales and administrative personnel have been added to support expanded sales and customer service roles. The decreased percentage of selling, general and administrative expenses was due to the Company closely managing its costs. RESEARCH AND DEVELOPMENT. Research and development expenses increased from approximately $63,000 in second quarter 1997 to approximately $105,000 in 1998. The increase was due mainly to the development of the Company's new model Posi-Track, the MD series, continuing improvements to the Company's existing models and exploration of future product alternatives. 6 In order to maintain its competitive advantage over other manufacturers of similar products, the Company believes it will increase the level of spending on research and development activities. It is expected the main thrust of these activities will be directed towards extensions of the Company's current product lines and improvements of existing products. INTEREST EXPENSE. Interest expense increased from approximately $93,000 for the second quarter of 1997 to approximately $127,000 for the second quarter of 1998. The increase was due to the additional debt related to the completion of the Company's facility expansion and the additional debt incurred in January 1998 for the acquisition of land and buildings for storage and to house research and development activities. NET INCOME. Net income for the second quarter of 1998 was approximately $927,000, compared with approximately $465,000 for the second quarter of 1997. The increase in 1998 resulted primarily from additional gross profit on increased sales, offset in part by increased operating costs and interest expense. FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997. NET SALES. Net sales for the six months ended June 30, 1998 increased 94%, or approximately $9,454,000, to $19,513,000. The increase was due primarily to the increased sales of the Company's Posi-Track vehicle, particularly the HD series Posi-Track, which was introduced in fourth quarter 1997. Posi-Track related sales increased 106% due to the increased demand, sales of two new Posi-Track models in 1998 and new dealers added in the past twelve months. Sales of parts, used equipment and other items increased approximately 37% due primarily to an increase in the sale of parts as a greater number of machines are in service in 1998. GROSS PROFIT. Gross profit increased for the six months ended June 30, 1998 to approximately $4,819,000, or 24.7% of net sales, from $2,362,000, or 23.5% of net sales, for the six months ended June 30, 1997. The increased gross profit was due to increased sales while the increased gross profit percentage was due to the increased efficiencies obtained from the Company's increased production volume and additional margin obtained from the sale of higher priced products. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses decreased from 10.1% of net sales for the six months ended June 30, 1997 to 9.0% of net sales for the six months ended June 30, 1998. The increased dollar amount of approximately $731,000 was due to increased sales and marketing costs and increased costs for administrative personnel hired to support increased sales volumes. The decreased percentage of selling, general and administrative expenses was due to the Company closely managing its costs. RESEARCH AND DEVELOPMENT. Research and development expenses increased from approximately $108,000 in 1997 to approximately $204,000 in 1998. The increase was due mainly to the development of the Company's new model Posi-Track, the MD series, in 1998, continuing improvements to the Company's existing models and exploration of additional models. INTEREST EXPENSE. Interest expense increased from approximately $186,000 for the six months ended June 30, 1997 to approximately $256,000 for the same period in 1998. The increase was due to the additional debt related to the completion of the Company's facility expansion and the additional debt incurred in January 1998 for the acquisition of land and buildings for storage and to house research and development activities. NET INCOME. Net income for the six months ended June 30, 1998 increased to approximately $1,719,000 from approximately $780,000 for 1997. The increase is due to increased sales and gross profit, offset in part by increased operating expenses and interest expense. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1998, the Company had working capital of approximately $14,913,000 compared with working capital of approximately $11,033,000 at June 30, 1997, an increase of approximately $3,880,000. The major components of this increase are as follows: Inventories increased approximately $6,270,000 due to the introduction of two new Posi-Track models in 1997 and one new Posi-Track model in 1998 along with increased sales; Accounts receivable increased approximately $1,625,000 due to increased sales; Cash and short-term investments decreased approximately $2,424,000 as the Company built inventory levels and equipped its expanded manufacturing facility; Current liabilities increased approximately $1,742,000 due to the overall increase in the Company's volume and profitability. 7 The Company's working capital position at June 30, 1998 increased approximately $1,571,000 when compared with December 31, 1997. Major components of this increase are as follows. Inventories increased approximately $2,077,000 and accounts payable increased approximately $1,286,000 due to the increase in the Company's production levels and additional parts required to manufacture new models. Accounts receivables increased approximately $777,000 due to increased sales volume. Cash and short-term investments increased approximately $402,000 due to increased profitability. In addition, the current portion of long-term liabilities increased approximately $218,000 due to the additional debt incurred for the Company's facility expansion and the acquisition of land and buildings for storage and to house the Company's research and development activities. During the second quarter of 1998, the Company amended its line of credit agreement with its primary bank. The amended line of credit provides for borrowings up to $5,000,000 at an interest rate of prime minus 1/2% (8% at June 30, 1998). All other major terms and conditions remain the same. The Company believes its existing cash and investments, together with cash expected to be provided by operations and available, unused credit lines, will satisfy the Company's projected working capital needs and other cash requirements at least through the end of June 1999. The Company has increased its number of employees by approximately 50% in the last 12 months. In order to meet its anticipated sales levels for the next twelve months, the Company expects it will increase its number of employees by approximately 20% over the next twelve months. It is anticipated that nearly all the additional employees will be in the production area. The Company believes the local work force is sufficient to hire the additional employees. In order to maintain its competitive advantage over other manufacturers of similar products, the Company believes it will increase the level of spending on research and development activities. It is expected the main thrust of these activities will be directed towards extensions of the Company's current product lines and improvements of existing products. IMPACT OF THE YEAR 2000 ISSUE. The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Some of the Company's computer programs that have date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process critical business transactions including recording of sales, manufacture of products, inventory management and distribution, preparation of invoices and collection of accounts receivables and many other normal business activities. The Company has begun to identify all relevant software that may affect the Company's operations through surveys and examinations. Based on risk assessments that have been completed for the majority of the Company's operations, the Company must upgrade some of its existing software to ensure that the computer systems will properly utilize dates beyond December 31, 1999. The Company expects to convert its business operations to new Year 2000 compatible software by the end of 1998. The cost of these conversions is not expected to have a material impact on the Company. However, there can be no guarantee the software of other companies on which the Company's systems rely will be timely converted, or that a failure to convert by another company, or a conversion that is incompatible with the Company's systems, would not have a material adverse effect on the Company. The statements set forth above under "Liquidity and Capital Resources" and elsewhere in this Form 10-Q which are not historical facts are forward-looking statements and involve risks and uncertainties, many of which are outside the Company's control and, accordingly, actual results may differ materially. Factors that might cause such a difference include, but are not limited to, lack of market acceptance of new or existing products, inability to attract new dealers for the Company's products, unexpected delays in obtaining raw materials, unexpected delays in the manufacturing process, unexpected additional expenses or operating losses or the activities of competitors. Any forward-looking statements provided from time-to-time by the Company represent only management's then-best current estimate of future results or trends. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None 8 ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of shareholders of A.S.V., Inc. was held on June 19, 1998. Matters submitted at the meeting for vote by the shareholders were as follows: (a) Election of Directors. The following directors were elected at the Annual Meeting, each with the following votes: For Against --- ------- Philip C. Smaby 7,160,723 114,285 Gary D. Lemke 7,160,769 114,239 Edgar E. Hetteen 7,163,145 111,862 Jerome T. Miner 7,160,146 114,861 Karlin S. Symons 7,162,693 112,314 Leland T. Lynch 7,163,143 111,864 James H. Dahl 7,160,145 114,862 R. E. "Teddy" Turner, IV 7,158,519 116,488 (b) Amendment of the 1996 Incentive and Stock Option Plan to increase the number of shares of Common Stock authorized for issuance thereunder. Shareholders approved the amendment to the 1996 Incentive and Stock Option Plan with a vote of 4,642,809 votes for, 231,733 votes against, 100,795 shares abstaining and 2,299,669 broker non-votes. (c) Adoption of the 1998 Non-Employee Director Stock Option Plan Shareholders adopted the 1998 Non-Employee Director Stock Option Plan with a vote of 4,642,561 votes for, 296,272 votes against, 54,504 shares abstaining and 2,299,669 broker non-votes. (d) Ratification of Appointment of Independent Public Accountants. Shareholders ratified the appointment of Grant Thornton LLP as the Company's independent public accountants for the fiscal year ending December 31, 1998, with a vote of 7,249,582 votes for, 1,348 votes against and 24,076 shares abstaining. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS Exhibit Number Description ------ ----------- 3.1 Second Restated Articles of Incorporation of the Company (a) 9 3.1a Amendment to Second Restated Articles of Incorporation of the Company filed January 6, 1997 (e) 3.1b Amendment to Second Restated Articles of Incorporation of the Company filed May 4, 1998 3.2 Bylaws of the Company (a) 4.1 Specimen form of the Company's Common Stock Certificate (a) 4.2* 1987 Stock Option Plan (a) 4.3* 1994 Long-Term Incentive and Stock Option Plan (a) 4.4 Form of Warrant issued to Summit Investment Corporation (b) 4.5 Form of Debenture issued October 1996 (d) 4.6 Warrant issued to Leo Partners, Inc. on December 1, 1996 (e) 4.7* 1996 Incentive and Stock Option Plan (f) 4.8* 1996 Incentive and Stock Option Plan, as amended (g) 4.9* 1998 Non-Employee Director Stock Option Plan (g) 10.1 Development Agreement dated July 14, 1994 among the Iron Range Resources and Rehabilitation Board ("IRRRB"), the Grand Rapids Economic Development Agency ("EDA") and the Company (b) 10.2 Lease and Option Agreement dated July 14, 1994 between the EDA and the Company (b) 10.3 Option Agreement dated July 14, 1994 between the EDA and the Company (b) 10.4 Grant Contract dated July 1, 1994 between the Company and the IRRRB (b) 10.5 Letter Credit Agreement dated June 15, 1994 between the Security State Bank of Hibbing and the Company (a) 10.6 Supplemental Lease Agreement dated April 18, 1997 between the EDA and the Company (f) 10.7 Supplemental Development Agreement dated April 18, 1997 between the EDA and the Company (f) 10.8 Line of Credit dated May 22, 1997 between Norwest Bank Minnesota North, N.A. and the Company (f) 10.9* Employment Agreement dated October 17, 1994 between the Company and Thomas R. Karges (c) 10.10 Consulting Agreement between the Company and Leo Partners, Inc. dated December 1, 1996 (e) 10.11 Extension of Lease Agreement dated May 13, 1998 between the EDA and the Company 10.12 First Amendment to Credit Agreement dated June 30, 1998 between Norwest Bank Minnesota North, N.A. and the Company 11 Statement re: Computation of Per Share Earnings 22 List of Subsidiaries (a) 27 Financial Data Schedule for the six months ended June 30, 1998 10 (a) Incorporated by reference to the Company's Registration Statement on Form SB-2 (File No. 33-61284C) filed July 7, 1994. (b) Incorporated by reference to the Company's Post-Effective Amendment No. 1 to Registration Statement on Form SB-2 (File No. 33-61284C) filed August 3, 1994. (c) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1994 (File No. 33-61284C) filed November 11, 1994. (d) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1996 (File No. 0-25620) filed electronically November 13, 1996. (e) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the year ended December 31, 1996 (File No. 0-25620) filed electronically March 28, 1997. (f) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1997 (File No. 0-25620) filed electronically August 13, 1997. (g) Incorporated by reference to the Company's Definitive Proxy Statement for the year ended December 31, 1997 (File No. 0-25620) filed electronically April 28, 1998. * Indicates management contract or compensation plan or arrangement. (B) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1998. - -------------------------------------------------------------------------------- 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. A.S.V., INC. Dated: August 13, 1998 By /s/ Gary Lemke ---------------------------- Gary Lemke President Dated: August 13, 1998 By /s/ Thomas R. Karges ---------------------------- Thomas R. Karges Chief Financial Officer (principal financial and accounting officer) 11 EXHIBIT INDEX
EXHIBIT METHOD OF FILING ------- ---------------- 3.1b Amendment to Second Restated Articles of Incorporation ....... Filed herewith electronically 10.11 Extension of Lease Agreement.................................. Filed herewith electronically 10.12 First Amendment to Credit Agreement .......................... Filed herewith electronically 11 Statement re: Computation of Per Share Earnings............... Filed herewith electronically 27 Financial Data Schedule....................................... Filed herewith electronically
12 EX-3.1B 2 AMEND TO 2ND RESTATED ARTICLES OF INCORPORATION AMENDMENT TO SECOND RESTATED ARTICLES OF INCORPORATION OF A.S.V., INC. 1. The name of the corporation is A.S.V., Inc., a Minnesota corporation. 2. The following amendment to the Second Restated Articles of Incorporation of A.S.V., Inc. was adopted by the Board of Directors of A.S.V., Inc. at a duly called meeting held April 14, 1998, pursuant to Section 302A.402, Subdivision 3 of the Minnesota Business Corporation Act. RESOLVED, that Article 3, Section 1 of the Restated Articles of Incorporation is hereby amended in its entirety to read as follows: "1. Authorized Shares. The total number of shares of capital stock which the corporation is authorized to issue shall be 45,000,000 shares, consisting of 33,750,000 shares of common stock, par value $.01 per share ("Common Stock"), and 11,250,000 shares of preferred stock, par value $.01 per share ("Preferred Stock")." 3. The amendment will not adversely affect the rights or preferences of the holders of outstanding shares of any class or series and will not result in the percentage of authorized shares that remain unissued after such amendment exceeding the percentage of authorized shares that were unissued before such amendment. 4. The document attached hereto as Exhibit A sets forth resolutions duly adopted by the members of the Board of Directors of A.S.V., Inc. at a duly called meeting held April 14, 1998, which resolutions state the manner in which the Company's share division will be effected. 5. The amendment has been adopted pursuant to Chapter 302A of the Minnesota Business Corporation Act. IN WITNESS WHEREOF, the undersigned, the Secretary of A.S.V., Inc. being duly authorized on behalf of A.S.V., Inc., has executed this document on this 4th day of May, 1998. /s/ Edgar Hetteen ------------------------- Edgar Hetteen, Secretary EX-10.11 3 EXTENSION OF LEASE AGREEMENT Exhibit 10.11 EXTENSION OF LEASE THIS EXTENSION OF LEASE AGREEMENT, made as of May 13, 1998, by and between the GRAND RAPIDS ECONOMIC DEVELOPMENT AUTHORITY, a public body politic and corporate and a political subdivision under the laws of the State of Minnesota, hereinafter referred to as "Landlord", and ASV, INC., a Minnesota corporation, hereinafter referred to as "Tenant". RECITALS A. Landlord and Tenant have made and entered into a certain Lease and Option Agreement, dated July 14, 1994, (the "Lease"), whereby Landlord demised and leased to Tenant, and Tenant rented and hired from Landlord, the land (the "Land"), situated in the City of Grand Rapids, County of Itasca and State of Minnesota, described in Exhibit "A" and made a part hereof, together with certain buildings, structures and improvements, fixtures, equipment and other items now located or to be constructed or located on the Land. B. Landlord has made and entered into the following documents ("IRRRB Documents"): i. Note, dated August 14, 1994, payable to the Office of the Commissioner of Iron Range Resources and Rehabilitation, in the principal sum of $1,000,000.00; ii. Mortgage, dated August 14, 1994, to the Office of the Commissioner of Iron Range Resources and Rehabilitation, to secure an indebtedness of $1,000,000.00; iii. Financial Assistance Agreement, State Contract No. 43000-80530, dated July 15, 1994, with the State of Minnesota, as amended. -1- C. Landlord and Tenant have made and entered into a certain Supplemental Lease, dated April 18, 1997, (the "Supplemental Lease"), whereby Landlord demised and leased to Tenant, and Tenant rented and hired from Landlord, the additional land (the "Additional Land"), situated in the City of Grand Rapids, County of Itasca and State of Minnesota, described in Exhibit "B" and made a part hereof, together with all buildings, structures and improvements (the "Phase II Development") now located or to be constructed on the Land and all easements and appurtenances to the Additional Land owned by Landlord now or hereafter located on the Land or used or procured for use in connection with the Phase II Development. D. Landlord and Tenant have made and entered into a certain Memorandum of Supplemental Lease, dated April 18, 1997. AGREEMENT In consideration of the foregoing and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the others to extend the term of the Lease, as supplemented and amended, to January 1, 2018, with monthly rent to continue in the amount then payable under the Lease and the Supplemental Lease. Provided, that the lease shall not be so extended unless and until tenant shall have performed all of its obligations necessary to satisfy all requirements of the IRRRB Documents. All other terms, conditions provisions and covenants of the Lease and Supplemental Lease shall continue in full force and effect. The parties have executed this Extension of Lease as of the date first above written. LANDLORD: TENANT: GRAND RAPIDS ECONOMIC ASV, INC. DEVELOPMENT AUTHORITY BY: /s/ Thomas W. Saxhaug BY: /s/ Gary Lemke -------------------------- ------------------------ GARY LEMKE Its President Its President AND: /s/ Edward M. Zabinski --------------------------- Its Vice President -2- STATE OF MINNESOTA ) ) ss. COUNTY OF ITASCA ) The foregoing instrument was acknowledged before me this 13 day of May, 1998, by Tom Saxhaug the President of the Grand Rapids Economic Development Authority, a public body politic and corporate and a political subdivision under the laws of the State of Minnesota, on behalf of the body. /s/ Karen Alto ---------------------------- Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ITASCA ) The foregoing instrument was acknowledged before me this 13 day of May, 1998, by Edward Zabinski the Vice President of the Grand Rapids Economic Development Authority, a public body politic and corporate and a political subdivision under the laws of the State of Minnesota, on behalf of the body. /s/ Karen Alto --------------------------- Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ITASCA ) The foregoing instrument was acknowledged before me this 9 day of June, 1998, by Gary Lemke, the President, of ASV, Inc. a corporation under the laws of the State of Minnesota, on behalf of the corporation. /s/ Donna J. Hansen ----------------------------- Notary Public -3- Exhibit "A" LEGAL DESCRIPTION Lots three (3), Four (4) and Five (5), Block Three (3), INDUSTRIAL PARK TWO, according to the plat thereof on file and of record in the Office of the County Recorder in and for Itasca County, Minnesota. -4- Exhibit "B" Additional Land The West three hundred eighty and no hundredths (380.00) feet of the North five hundred seventy-four and thirty-nine hundredths (574.39) feet of Government Lot Five (5), Section Twenty-seven (27), Township Fifty-five (55) North, Range Twenty-five (25) West of the Fourth Principal Meridian, Itasca County, Minnesota. -5- EX-10.12 4 FIRST AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.12 NORWEST BANK MINNESOTA NORTH, NATIONAL ASSOCIATION FIRST AMENDMENT TO CREDIT AGREEMENT - -------------------------------------------------------------------------------- THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "First Amendment") is dated as of the 30th day of June, 1998, and is by and between A.S.V., Inc. (the "Borrower") and Norwest Bank Minnesota North, National Association, a national banking association (the "Bank"). REFERENCE IS HEREBY MADE to that certain Credit Agreement dated May 22, 1997 (the "Agreement") whereby Bank agreed to provide a Two Million and 00/100 Dollars ($2,000,000.00) line of credit to be used for working capital with a Line Expiration Date of June 1, 1998. WHEREAS, the Borrower has requested the Bank to extend the maturity date of its credit line and increase said credit line to $5,000,000.00; and, WHEREAS, the Bank is willing to grant the Borrower's requests, subject to the provisions of this Amendment; NOW, THEREFORE, the Bank and the Borrower agree as follows: 1. All references in the Agreement to the Two Million Dollars ($2,000,000.00) are hereby amended to FIVE MILLION DOLLARS ($5,000,000.00). 2. All references in the Agreement to the Line Expiration Date of June 1, 1998 are hereby amended to ON THE EARLIER OF DEMAND OR JUNE 1, 1999. 3. The Commitment Fee shall be paid quarterly beginning SEPTEMBER 30, 1998. 4. Page 4, Covenants, 1. Financial Information and Reporting, the sections labeled INTERIM FINANCIAL STATEMENTS, BORROWING BASE CERTIFICATE, ACCOUNTS RECEIVABLE AGING, ACCOUNTS PAYABLE AGING, and INVENTORY LIST of the Agreement are hereby amended by adding the following after the sentence "Provide the Bank within 20 days of each month end,":ONLY IF THE BORROWER HAS AN OUTSTANDING BALANCE ON THE LINE OF CREDIT, 5. Page 6, Tangible Net Worth, of the Agreement is amended in its entirety as follows: MAINTAIN A MINIMUM TANGIBLE NET WORTH OF AT LEAST $9,000,000.00 AS OF THE END OF EACH FISCAL YEAR. THE BORROWER hereby represents and warrants to the Bank as follows: A. The Agreement constitutes a valid, legal and binding obligation owed by the Borrower to the Bank, subject to no counterclaim, defense, offset, abatements or recoupment. B. As of the date of the Amendment, (i) all of the representations and warranties contained in the Agreement are true and (ii) there exists no Event of Default and no event which, with the giving of notice or the passage of time, or both, could become an Event of Default. C. The execution, delivery and performance of this Amendment by the Borrower are within its corporate powers, have been duly authorized, and are not in contravention of law or the terms of the Borrower's Articles of Incorporation or by-laws, or of any undertaking to which the Borrower is a party or by which it is bound. D. Except as modified by the Amendment, the Agreement remains unchanged and in full force and effect. IN WITNESS WHEREOF, the Borrower and the Bank have executed this Amendment as of the date first written above. A.S.V., Inc. NORWEST BANK MINNESOTA NORTH, NATIONAL ASSOCIATION By: /s/ Thomas R. Karges By: /s/ Gerald K. Johnson --------------------------------- ---------------------------- Its CFO Its Vice President EX-11 5 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS A.S.V., INC. AND SUBSIDIARY EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Six Months Ended BASIC 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Earnings Net income $ 927,079 $ 464,893 $1,718,917 $ 780,435 ========== ========== ========== ========== Shares Weighted average number of common shares outstanding 7,538,225 7,247,650 7,533,479 7,243,624 ========== ========== ========== ========== Basic earnings per common share $ .12 $ .06 $ .23 $ .11 ========== ========== ========== ========== DILUTED Earnings Net income $ 927,079 $ 464,893 $1,718,917 $ 780,435 Add after-tax interest expense applicable to 6.5% convertible debentures 50,781 50,375 101,562 100,750 ---------- ---------- ---------- ---------- Net income applicable to common stock $ 977,860 $ 515,268 $1,820,479 $ 881,185 ========== ========== ========== ========== Shares Weighted average number of common shares outstanding 7,538,225 7,247,650 7,533,479 7,243,624 Assuming exercise of options and warrants reduced by the number of shares which could have been purchased with the proceeds from the exercise of such options and warrants 811,702 835,432 759,916 856,658 Assuming conversion of 6.5% convertible debentures 681,818 681,818 681,818 681,818 ---------- ---------- ---------- ---------- Weighted average number of common and common equivalent shares outstanding 9,031,745 8,764,900 8,975,213 8,782,100 ========== ========== ========== ========== Diluted earnings per common share $ .11 $ .06 $ .20 $ .10 ========== ========== ========== ==========
EX-27 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF EARNINGS FOUND PAGES 2 AND 3 OF THE COMPANY'S FORM 10-Q FOR THE YEAR TO DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 1,482,728 490,577 2,807,282 40,000 13,750,987 18,908,181 5,311,795 878,367 23,341,609 3,995,231 7,447,597 0 0 75,408 11,823,373 23,341,609 19,513,117 19,513,117 14,694,010 14,694,010 1,954,435 10,000 255,525 2,748,917 1,030,000 1,718,917 0 0 0 1,718,917 .23 .20 Includes addback of after-tax interest expense for convertible debentures.
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