As filed with the Securities and Exchange Commission on July 24, 2001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule TO-T/A
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
(Amendment No. 1)
SMC CORPORATION
(Name of Subject Company (Issuer))
MONACO COACH CORPORATION
SALMON ACQUISITION, INC.,
a wholly owned subsidiary of Monaco Coach Corporation
(Names of Filing Persons (Offerors))
COMMON STOCK
(Title of Class of Securities)
784460107
(CUSIP Number of Class of Securities)
Richard E. Bond, Esq.
Monaco Coach Corporation
91320 Industrial Way
Coburg, Oregon 97408
Telephone: (541) 686-8011
(Name, address, and telephone numbers of persons authorized
to receive notices and communications on behalf of filing persons)
with a copy to:
Henry P. Massey, Jr., Esq.
Michael J. Kennedy, Esq.
Eric John Finseth, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone: (650) 493-9300
CALCULATION OF FILING FEE
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Transaction valuation*
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Amount of filing fee**
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| $21,258,716 | $0 | |
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| Amount Previously Paid: | $4,252 | Filing Party: | Monaco Coach Corporation | |||
| Form or Registration No.: |
Schedule TO-T
(5-49775) |
Date Filed: | July 5, 2001 |
Check the appropriate boxes below to designate any transactions to which the statement relates:
Check the following box if the filing is a final amendment reporting the results of the tender offer: / /
This Schedule TO-T/A (Amendment No. 1) amends the Tender Offer Statement on Schedule TO-T filed with the Commission on July 5, 2001 by Salmon Acquisition, Inc., an Oregon corporation (the "Purchaser") and a wholly owned subsidiary of Monaco Coach Corporation, a Delaware corporation ("Parent"), relating to Purchaser's offer to purchase all the outstanding shares of Common Stock (the "Shares") of SMC Corporation, an Oregon corporation (the "Company"), at a purchase price of $3.70 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 5, 2001 (the "Offer to Purchase"), and in the related Letter of Transmittal, copies of which were filed with such Schedule TO-T on July 5, 2001 as Exhibits (a)(1)(A) and (a)(1)(B), respectively. This Schedule TO-T/A is being filed on behalf of Purchaser and Parent.
ITEM 2. Subject Company Information.
The final sentence of the final paragraph of Section 8 ("Certain Information Concerning the Company") of the Offer to Purchase on page 18 thereof is hereby amended to read in its entirety as follows:
"Although Parent and Purchaser do not have any knowledge that any such information is untrue, neither Purchaser nor Parent has verified the accuracy or completeness of such information or verified that there has been no failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information."
ITEM 4. Terms of the Transaction.
The words "September 3, 2001" in the first paragraph of Section 3 ("Withdrawal Rights") of the Offer to Purchase on page 12 thereof are hereby changed to the words "September 2, 2001".
The first clause (through the first colon to appear) of the first sentence of the subsection entitled "Termination of the Merger Agreement" under the subsection entitled "The Merger Agreement" under Section 12 ("Purpose of the Offer; the Merger Agreement; Plans for the Company") of the Offer to Purchase on page 23 thereof is hereby amended to read in its entirety as follows:
"The Merger Agreement may be terminated, and the Offer and the Merger may be abandoned, in the case of the Offer at any time prior to expiration of the Offer and in the case of the Merger at any time prior to the Effective Time of the Merger:"
The first paragraph (through the first colon to appear) of Section 13 ("Certain Conditions of the Offer") of the Offer to Purchase on page 33 thereof is hereby amended to read in its entirety as follows:
"The Merger Agreement provides that, notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and (subject to any such rules or regulations) may delay the acceptance for payment of any tendered Shares and (except as provided in the Merger Agreement) amend or terminate the Offer as to any Shares not then paid for if (i) the Minimum Condition has not been satisfied, (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer, or (iii) at any time after the date of the Merger Agreement and prior to expiration of the Offer (whether or not any Shares have theretofore been accepted for payment or paid for pursuant to the Offer), any of the following conditions exists:"
1
The second to last paragraph of Section 13 ("Certain Conditions of the Offer") of the Offer to Purchase on page 35 thereof is hereby amended to read in its entirety as follows:
"The foregoing conditions are for the sole benefit of Parent and Purchaser and may be asserted by Parent or Purchaser regardless of the circumstances giving rise to any such condition and may be waived by Parent or Purchaser, in whole or in part, at any time and from time to time prior to expiration of the Offer, in the sole discretion of Parent. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right, the waiver of such right with respect to any particular facts or circumstances shall not be deemed a waiver with respect to any other facts or circumstances, and each right shall be deemed an ongoing right which may be asserted at any time and from time to time prior to expiration of the Offer."
ITEM 5. Past Contacts, Transactions, Negotiations and Agreements.
The first sentence of the final paragraph of Section 11 ("Contacts and Transactions with the Company; Background of the Offer") of the Offer to Purchase on page 21 thereof is hereby amended to read in its entirety as follows:
"During the Offer, Parent intends to have ongoing contacts with the Company and its directors, officers and shareholders."
ITEM 7. Source and Amount of Funds or Other Consideration.
The second sentence of the second paragraph of Section 10 ("Source and Amount of Funds") of the Offer to Purchase on page 19 thereof is hereby amended to read in its entirety as follows:
"Purchaser plans to obtain all funds needed for the Offer and the Merger through capital contributions that will be made by Parent to Purchaser."
ITEM 12. Exhibits.
| (a)(1)(A)* | Offer to Purchase dated July 5, 2001. | |
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(a)(1)(B)* |
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Letter of Transmittal. |
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(a)(1)(C)* |
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Notice of Guaranteed Delivery. |
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(a)(1)(D)* |
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Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees. |
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(a)(1)(E)* |
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Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and Other Nominees. |
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(a)(1)(F)* |
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Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. |
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(a)(1)(G) |
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Press Release issued by Parent on June 25, 2001 (incorporated by reference to Parent's Schedule TO (preliminary communication) filed with the Commission on June 25, 2001, Exhibit 99.(a)(5)). |
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(a)(1)(H)* |
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Summary Newspaper Advertisement published July 5, 2001 in the New York Times. |
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(a)(1)(I) |
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Transcript of Parent's telephonic conference call with investors on June 26, 2001. |
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(a)(1)(J) |
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Press Release issued by Parent on July 23, 2001. |
2
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(a)(1)(K) |
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Press Release issued by Parent on July 24, 2001. |
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(b)(1) |
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Credit Agreement dated January 12, 2001 by and between Parent and U.S. Bank N.A. (incorporated by reference to Parent's Quarterly Report on Form 10-Q filed with the Commission on May 15, 2001, Exhibit 10.1). |
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(b)(2) |
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Waiver Letter received July 5, 2001 from U.S. Bank N.A. |
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(d)(1) |
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Agreement and Plan of Merger dated as of June 23, 2001, among Parent, Purchaser and the Company (incorporated by reference to Parent's Schedule 13D filed with the Commission on July 3, 2001, Exhibit 99.(2)(b)). |
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(d)(2) |
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Shareholder's Agreement dated as of June 23, 2001, among Parent, Purchaser and Mathew M. Perlot (incorporated by reference to Parent's Schedule 13D filed with the Commission on July 3, 2001, Exhibit 99.(3)(a)). |
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(d)(3) |
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Shareholder's Agreement dated as of June 23, 2001, among Parent, Purchaser and Curtis W. Lawler (incorporated by reference to Parent's Schedule 13D filed with the Commission on July 3, 2001, Exhibit 99.(3)(b)). |
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(d)(4)* |
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Letter Agreement dated as of June 22, 2001, among Parent, the Company and Mathew M. Perlot. |
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(d)(5)* |
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Letter Agreement dated as of June 22, 2001, among Parent, the Company and Curtis W. Lawler. |
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(d)(6)* |
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Confidentiality Agreement dated March 21, 2001 between Parent, the Company and McDonald Investments Inc. |
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(g) |
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Not applicable. |
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(h) |
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Not applicable. |
3
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| SALMON ACQUISITION, INC. | ||||
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By: |
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/s/ JOHN W. NEPUTE Name: John W. Nepute Title: President |
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MONACO COACH CORPORATION |
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By: |
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/s/ JOHN W. NEPUTE Name: John W. Nepute Title: President |
Dated: July 24, 2001
4
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Exhibit No.
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Document
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|---|---|---|
| (a)(1)(A)* | Offer to Purchase dated July 5, 2001. | |
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(a)(1)(B)* |
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Letter of Transmittal. |
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(a)(1)(C)* |
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Notice of Guaranteed Delivery. |
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(a)(1)(D)* |
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Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees. |
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(a)(1)(E)* |
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Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and Other Nominees. |
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(a)(1)(F)* |
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Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. |
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(a)(1)(G) |
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Press Release issued by Parent on June 25, 2001 (incorporated by reference to Parent's Schedule TO (preliminary communication) filed with the Commission on June 25, 2001, Exhibit 99.(a)(5)). |
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(a)(1)(H)* |
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Summary Newspaper Advertisement published July 5, 2001 in the New York Times. |
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(a)(1)(I) |
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Transcript of Parent's telephonic conference call with investors on June 26, 2001. |
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(a)(1)(J) |
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Press Release issued by Parent on July 23, 2001. |
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(a)(1)(K) |
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Press Release issued by Parent on July 24, 2001. |
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(b)(1) |
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Credit Agreement dated January 12, 2001 by and between Parent and U.S. Bank N.A. (incorporated by reference to Parent's Quarterly Report on Form 10-Q filed with the Commission on May 15, 2001, Exhibit 10.1). |
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(b)(2) |
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Waiver Letter received July 5, 2001 from U.S. Bank N.A. |
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(d)(1) |
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Agreement and Plan of Merger dated as of June 23, 2001, among Parent, Purchaser and the Company (incorporated by reference to Parent's Schedule 13D filed with the Commission on July 3, 2001, Exhibit 99.(2)(b)). |
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(d)(2) |
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Shareholder's Agreement dated as of June 23, 2001, among Parent, Purchaser and Mathew M. Perlot (incorporated by reference to Parent's Schedule 13D filed with the Commission on July 3, 2001, Exhibit 99.(3)(a)). |
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(d)(3) |
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Shareholder's Agreement dated as of June 23, 2001, among Parent, Purchaser and Curtis W. Lawler (incorporated by reference to Parent's Schedule 13D filed with the Commission on July 3, 2001, Exhibit 99.(3)(b)). |
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(d)(4)* |
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Letter Agreement dated as of June 22, 2001, among Parent, the Company and Mathew M. Perlot. |
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(d)(5)* |
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Letter Agreement dated as of June 22, 2001, among Parent, the Company and Curtis W. Lawler. |
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(d)(6)* |
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Confidentiality Agreement dated March 21, 2001 between Parent, the Company and McDonald Investments Inc. |
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(g) |
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Not applicable. |
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(h) |
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Not applicable. |
Exhibit (a)(1)(I)
MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
LEGEND APPEARING ON WEBSITE:
The discussion contained in this conference call is neither an offer to purchase nor a solicitation of an offer to sell shares of SMC Corporation.
On July 5, 2001, Monaco Coach Corporation filed a Tender Offer Statement and SMC Corporation filed a Solicitation/Recommendation Statement with respect to an offer by Salmon Acquisition, Inc., a wholly owned subsidiary of Monaco Coach Corporation, to purchase all of the outstanding common stock of SMC Corporation. The Tender Offer Statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the Solicitation/Recommendation Statement contain important information, and investors and security holders are strongly advised to read both such statements carefully before any decision is made with respect to the offer. The offer to purchase, the related letter of transmittal and certain other documents, as well as the Solicitation/Recommendation Statement, are available to all shareholders of SMC Corporation, at no expense to them. The Tender Offer Statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the Solicitation/Recommendation Statement are also available at no charge at the SEC's website at www.sec.gov.
MONACO COACH CORPORATION
MODERATOR: KAY TOOLSON
JUNE 26, 2001
2:30 P.M. CT
Operator: Welcome to the Monaco Coach Corporation Conference Call. Today's
call is being recorded. Before I turn over the call, I would
like to make the safe harbor announcement. Statements in this
conference call concerning completion of the tender offer and
merger, Monaco's Coach Corporation intend to maintain the
existing SMC grants and intend to maintain or consolidate
various SMC operations, long-term shareholder value and the
opportunity to ((inaudible)) and the dealer ((inaudible)) can
maximize return on facility's investments are forward-looking
statements based on current information and expectations, and
involve a number of risks and uncertainties.
Actual results and events may differ materially from those
projected in such statements, due to the various factors. For
more information concerning these and other possible risks,
please refer to the Company's Form 10K, Forms 10Q, and other
filings with the SEC. These filings can, like otherwise, be
accessed on the SEC's Web site at www.sec.go. I will now turn
the call over to Mr. Kay Toolson, Chairman and CEO. Please go
ahead, sir.
Kay Toolson: Thank you, Veronica. And thank you all for joining us on this
call today for this exciting news for our company and the
expansion of our business with the SMC acquisition.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 2
Joining me today on this call is John Nepute, President of our
company; Marty Daley, our Chief Financial Officer; and Mike
Duncan, our Investor Relations Manager. Presenting today, John
will walk through pretty much the acquisition and what it means
to our company. Marty Daley will give a short financial
expectation of the acquisition. Then we'll do a wrap-up and have
a chance for questions and answers.
And with that I'll turn it over to John Nepute.
John Nepute: Thank you, Kay. I'm pleased to report our agreement with SMC
Corp to acquire all of the outstanding shares of SMC through a
cash tender offer at a price of 3.70 per share. The boards of
both companies have approved the transactions. And the two
principal stockholders to SMC, Matt Perlot and Curt Lawler, who
have 70% of the outstanding shares, have agreed to tender their
shares.
It's our expectation that this tender process will take 30 days
to complete, after which Monaco will elect our own Board members
to SMC Corp. And the transaction will be complete at that time.
Anticipated total transaction value, exclusive of expenses, is
approximately 36 million, which includes the refinancing of 15
million of indebtedness currently being borrowed through SMC's
existing credit facility.
SMC Corp. had revenues of 190 million in 2000 and 45 million in
the first quarter of 2001. SMC's retail share of the Class A
Motor Home market through April of 2001 was 3.9%, which when
combined with Monaco's 16.7% market share for the same period,
gives the combined company retail Class A market share of 20.6%,
vaulting Monaco into the number-one position in the Class A
market.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 3
For those of you on the call unfamiliar with the SMC's product
line, they offer a range of diesel products under the Safari and
Beaver brand names, which means that this transaction reinforces
our commitment to the diesel market and further strengthens our
already dominant market position in this increasingly important
sector of the Class A market.
A few years ago, diesels accounted for only 30% of the overall
Class A market. But more recently, that has grown to where,
through the first quarter of 2001, diesels now account for 45%
of the Class A market. And Monaco, after the merger is complete,
will have 36% share of that growing market.
From a marketing and product standpoint, it will be our
intention to solidify SMC's position in the diesel market, with
the intention of then introducing new models at additional price
points, including the possibility of additional gas-powered
models, under each brand name, giving Safari and Beaver owners
the same opportunities that our Monaco and Holiday Rambler
owners have to get into a unit at a lower price and then trade
up through the family of products, using our stepping stone
marketing approach.
Operationally, we expect to gain efficiencies from the
combination. It's our intention to take SMC's existing Safari
Motor Coach production, which is currently being done in their
Harrisburg plant, and move it into our newer production facility
in Coburg. This will give us two production lines in that plant
and will enable us to achieve better efficiencies on both lines.
SMC's Beaver line located in Bend will remain there, taking
advantage of the seasoned and highly-skilled workforce already
in place at that plant. From a production standpoint, we're very
excited about some of the opportunities the merger presents with
regard to subcomponents and sub assembly. SMC currently has
chassis, cabinet, electronic, and fiberglass divisions that give
us the opportunity for efficiency across all Oregon operations,
by utilizing those skill sets to provide component parts for all
of our Oregon lines.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 4
We anticipate many of these opportunities will take months and
longer to accomplish. Based on our experience with Monaco's
successful acquisition of Holiday Rambler in 1996, it will be
our intention to attack the product first, strengthening its
position in the marketplace, while at the same time, working to
increase the distribution of those brands.
Additionally, we expect to find immediate purchasing and
administrative synergies. Our aim is to bring SMC to a breakeven
level in the third quarter, from an operational standpoint, and
then work on restoring their margins going forward to a more
normal level.
And now to give you some guidance of what that might mean from a
financial standpoint I'll turn this over to Marty Daley. Marty.
Marty Daley: Thank you, John. As John mentioned, we are excited about the
opportunities for Monaco and SMC as a combined entity. SMC is
expected to generate net sales of between 30 to 35 million in
the second quarter of 2001, and between 70 to 80 million in the
second half of the year.
As we implement our strategy of integration, we plan on bringing
SMC fairly quickly to breakeven from an operating income
standpoint. Our plan is to then improve on this into the fourth
quarter, with expectations from this side of our business to
contribute between 2 to 2-1/2% operating margin.
Assuming the margin improve as expected into 2002, we plan on
building on the sales levels these products will achieve in
2001, and returning the SMC operations to more normal levels of
operating margins of between 7 and 8% by the end of the year.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 5
I'd also like to mention that we'll be financing the acquisition
through our existing credit facilities, which have been
increased to 75 million. And also, we are working on a deal with
the bank to put our overall credit facility to 100 million.
And with that, I'll turn it back over to Kay.
Kay Toolson: Well, thank you, John. And thank you, Marty. We are very
excited about this merger acquisition opportunity. Yesterday,
John and I and Marty and others had a chance, with our
operational people, to tour all of the SMC plants, as we made
the announcements at each of their plants. The announcement was
greeted with great relief and excitement by their management
people and their employees at each of those facilities.
We identified with our operations people. We just spent a great
deal of due diligence, through this process, a variety of
synergies that will help both our existing business, as John
mentioned, as well as efficiencies we can give to current SMC
products.
We see this as a great opportunity to grow our business. We've
had success at acquisitions, as you know, in the past, with the
Holiday Rambler acquisition in 1996 at the time we acquired
them. They lost 13 million the prior year. We were able
obviously to turn them profitable very quickly. And we were able
to gain a lot of great management people with our company.
We feel that the SMC acquisition gives us many similar
opportunities. They have some great management people in their
middle management ranks and upper management ranks that we feel
can help propel this part of our business forward.
Another thing - a side note - John, Marty and I and all of our
management team that's here in Indiana, starting Thursday we
have our dealer meeting - our new showing of our 2002 products.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 6
We're very excited about this and excited about the showing.
We've already begun selling some of our 2002 products to our
((inaudible)).
All of our 2001 products, with exception, I think, of 5 or 6
units, have been sold wholesale to our dealer body. So we're in
very strong shape from a product standpoint, much better than
what we expected to be at this time. And we expect our business
to continue, while challenged, challenging time to be - to start
improving, as we're seeing that improvement now on a retail
level. And with that, we'll open this up now for any questions
and answers that you may have for us.
Operator: Thank you. The question and answer session will be conducted
electronically. If you'd like to ask a question, press the star
key followed by the digit 1. And we'll proceed in the order that
you signal us and take as many questions as time permits.
Once again, that's star, 1, to ask a question. And we'll take
our first question from Mark Johnson with AG Edwards.
Mark Johnson: Thanks. Hi, guys. How are you doing?
Marty Daley: Good.
Mark Johnson: I've got a couple of questions here. How many Safari units will
you actually be moving into the Coburg plant?
Kay Toolson: We'll be moving all their production into the Coburg facility.
Mark Johnson: Well, I know, but how many units annually is that expected to
be?
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 7
Kay Toolson: Currently, they're running I believe seven units a week. They're
running ((inaudible)). They're running seven units of one brand
and four units of another brand - eleven a week. They're
running...
Mark Johnson: So 500 units...
Kay Toolson: ((inaudible)) current gas units and seven diesel units. So we'll
be moving them to our Coburg plant.
Mark Johnson: So roughly 500 units of annual production.
Kay Toolson: Right.
Mark Johnson: Something along those lines.
Kay Toolson: At the current level.
Mark Johnson: Okay. And how much excess capacity do you guys have out in
Oregon right now?
Kay Toolson: We'll still have significant excess capacity in Oregon. We
have capacity to do in-plant - our new plant there to do 100
units a week. And with that move, we will be doing 50 - I think,
50 units a week. So we'll still have a great deal of capacity in
that plant.
Mark Johnson: Okay, so you still have 50 left.
Kay Toolson: Right.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 8
Mark Johnson: Okay. Kay, what about the dealers? There's - what - 85 or so
that are - that SMC had. Is there a lot of overlap there with
your dealer base? And what do you plan to do with that dealer
base?
Kay Toolson: Currently, they have 70 dealers.
Mark Johnson: Oh, okay.
Kay Toolson: They lost some dealers that have been through a struggling
time here. Of those 70 dealers, about 20 of them overlap with
our dealers. The balance are net new distribution points for us.
We expect that we can grow their dealer body quite a bit by
focusing on their product line. They've got some great products.
The Beaver brand is a very strong brand in the marketplace, one
we're really proud to have.
The Safari brand has been a niche product that they have done
very well with. And we think by continuing down that path and
expanding that product offering of both those brands, we can add
a great deal of distribution by adding additional price points
to their product lines.
Mark Johnson: What do you think a great deal of distribution is? I mean, if
they have 70 now, can you double that in three or four years?
Kay Toolson: We would hope so. That's our plan.
Mark Johnson: Could it be bigger than doubling?
Kay Toolson: Could be - but let's stick with doubling for now.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 9
Mark Johnson: Okay. When I took a look at their 2000 income statement, with
respect to gross margins, when the industry volume was healthier
a couple of years ago, it didn't look like their gross profit
margins were too dissimilar from anybody else. Are you - in your
eyes, are their gross margins adequate? Or do you find things in
there you could clean up and even make stronger?
Kay Toolson: Well, John and Marty and I and all of our team have spent a
lot of time really evaluating their product and evaluating their
balance sheets, obviously, and their P&L. We're just now doing
complete analysis of all of the products as we're going through
this phase through the merger. So we'll certainly have a better
feel at that time.
We know their margins are very good on the Beaver product. And
we're comfortable. There 02's are coming offline there. And
we're comfortable with their bill and feel very good about their
margins there.
The Safari brand - they're just in the middle model change yet.
So there's a variety of issues there that we are going to be
dealing with that - as John said, moving them to our plant in
Coburg. We'll be integrating that fully with our build material,
with our - a lot of our people and helping with that. And we
feel very good. We're going to be able to get their margins to -
in line with where ours are.
Mark Johnson: Okay, and on their G&A expenses, it looks like they've been
running a 17, 18 million a year, which as a percent of sales
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seems to be a little bit higher than everybody else. How much - and maybe you can't answer this. So - but out of that 18 million, how much of that G&A expense line do you expect to be around a year from now? I mean, how much excess is there that really isn't needed once SMC gets to be a part of our company?
MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Marty Daley: Well, I think the way to answer that, Mark, is when we acquired
Holiday, they were running SG&A of about 13%. And I think...
Mark Johnson: These guys are about 10.
Marty Daley: Yeah, I think we chopped Holiday - some of these things take a
little bit of time to actually weave our way into the way we'd
normally market a product and some of the different programs
that we run. And I'm sure that will be the case with this. But I
think we're confident that we can eventually get SG&A into the
6, 7% range that we're more accustomed to. So...
Mark Johnson: Okay. Okay, and how about the other expense category in their
income statement that was - something from that is - can be
easily chopped out as well.
Marty Daley: I - we don't have anticipation that that's going to
continue, ((inaudible)).
Mark Johnson: Okay, so that could come out as well. Okay and one last thing
and I'll let somebody else go. Kay, when you said your 2001 -
now that your products are all gone, which is kind of - you said
better than expected, did you have to do a lot of discounting in
June to get those out the door?
Kay Toolson: Well, we did do some discounting, Mark. And we did just pretty
much what we had anticipated doing. It wasn't greater than we
felt it was going to have to do. It was pretty much in line with
what we did in the first quarter.
And we are starting to move some 02's. And there is no
discounting on the 02's. And we are hoping that's going to
continue to be the case and we expect that to be the case. So
we're just really pleased with our dealer meeting to be going
into it without the yard of inventory we had and the number of
unsold 01's that's going to allow us really to focus on the
02's.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 11
I think our people have done an incredible job of - with product
development, both - in the 12% in the motorized - that our
products are really dialed in. And we're feeling better than I
think we've ever felt about it.
Mark Johnson: Okay, so it's clearly a lot better than it was last year at this
time.
Kay Toolson: Clearly a lot better than it was last year at this time, yeah.
Mark Johnson: Okay. Thank you very much.
Kay Toolson: Thank you.
Marty Daley: Thanks, Mark.
Operator: Moving on to Barry Vogel with Barry Vogel & Associates.
Barry Vogel: Congratulations, gentlemen.
Kay Toolson: Thanks, Barry.
Marty Daley: Thank you, Barry.
Barry Vogel: I have a couple of questions. On the savings, I know that you
talked about different types of savings in acquisitions. And, of
course, you've done a great job in realizing that at the Holiday
Rambler acquisition. Can you give us an idea - when two
companies fit together, what kind of gross margin savings you
can gain, which of course would include better utilization of
your Coburg facilities and, of course, vendor savings. That's
the first question.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 12
Marty Daley: In terms of gross margins, I think our initial goal is just to
get SMC's gross margins sort of back in line with the rest of
the industry. And as you know, our gross margins have been
impacted as we've talked about in past calls, in terms of the
discounting we've had to have done.
So we're working on two ends of that. One - SMC's got some
issues in terms of material usage and labor and those kinds of
things that we think bringing some of their production into our
plants will help them with. And obviously, as Kay just talked
about, a strengthening RV market will help the Monaco side in
terms of the new '02 products holding the line on discounting on
- not discounting on those products.
Barry Vogel: But if we had to pick a number to make it easy...
Marty Daley: I wouldn't want to pick a number right at the moment.
Barry Vogel: Okay. I have a question off of Marty. Are you - is there going
to be good will associated with this acquisition?
Marty Daley: Yes, there will be.
Barry Vogel: Can you tell us how much it will be approximately?
Marty Daley: Our initial due diligence that we've done so far puts us
somewhere between 16 and 18 million of good will.
Barry Vogel: And what kind of write-down period are you going to use?
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 13
Marty Daley: According to the new FASB that's come out, our guidance on that
is that we would not be actually amortizing that due to the good
will.
Barry Vogel: Excuse me. Can you repeat that?
Marty Daley: Based on the new guidance from FASB, we're not going to be
actually amortizing the good will out on that.
Barry Vogel: So there won't be any...
Marty Daley: There's going to be deals consummated after the end of June.
Then there will be no amortization of that. And then effective
the first of 2002, we evaluate all good will the Company would
have. And at that point, probably we'll not be amortizing any
good will.
Barry Vogel: Are you going to have a tax ((inaudible)) carry forward that
you're going to be able to use?
Marty Daley: Yes, we will.
Barry Vogel: Can you give me - give me some idea of - roughly of what it
might be?
Marty Daley: It seems like that's going to be around 4 to $5 million.
Barry Vogel: Okay, now I have a question on the properties that these guys
have. Do they - if you look at the three different locations,
first starting with Harrisburg, do they own this property
outright? Or is it leased?
Kay Toolson: They own the Harrisburg property. They own the Hines property.
The only ((inaudible)) that they're leasing right now is the
Bend facilities.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 14
Barry Vogel: Okay, now, if in fact the Hines property is - manufacturing
plant is shut down...
Kay Toolson: Well, they actually have a fairly large what they call composite
technology fiberglass operation there that we plan to continue
and, in fact, expand upon.
Barry Vogel: All right. But there is a plant there that's no longer
manufacturing motor homes. Is that correct?
Kay Toolson: Yes, that's part of the - basically the fiberglass building or
the fiberglass operations are part of the manufacturing
building. So I think our intent would be to expand our
fiberglass into that.
Barry Vogel: So you won't sell any property out of Hines.
Kay Toolson: I am not anticipating doing that, no.
Barry Vogel: Okay, no sale of property there. And then how about Harrisburg?
They own that. And you're going to take the manufacturing and
move it to Coburg. If they own that plant, can you sell that?
John Nepute: More than likely we're going to find another use for that, as
well. It's a nice facility. We have not completed the analysis
of that. But we're thinking we may consolidate some of our
service ((inaudible)) into that plant.
Barry Vogel: Okay. And now I have a question for Kay. Now that you've made
another acquisition, it's sort of the first shot in terms of
consolidation in the industry. And I congratulate you with being
the first.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 15
Looking out ahead, does this generally preclude you over, let's
say, the next 12 months, as you digest it, from making
additional acquisitions like an SMC? In other words, smaller
companies - I'm not talking about larger companies. I'm talking
about smaller companies.
Kay Toolson: We've looked, as you know, Barry, as you've been on most of
our conference calls and we've talked several times - we've
looked at a variety of acquisitions in our industry. Some of
them we've talked to. I think everybody's talked to everybody
else. I think that's pretty much a given at this time.
Some companies have been in far worse shape than have made sense
for us to take a look at. This one was just - happened to be an
excellent bid. And we felt very good about it. And it's going to
be easy for us to assimilate because of its locations.
It does not preclude us from doing other deals. However, there
is nothing imminent right now. That's not meaning that that
won't change. We feel that we have a very strong management team
that's going to be very capable of assimilating this into our
business in a very quick manner.
Barry Vogel: Okay, and I've got two other small questions. You mentioned gas.
If you look at the units that have sold retail by - I'm sorry -
SMC, I was under the impression it might be mostly all diesel.
I'm not sure.
Kay Toolson: It was mostly diesel. Last year they sold 152 gas units.
Barry Vogel: And the balance was diesel.
Kay Toolson: Yeah.
Barry Vogel: ((inaudible)) there?
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 16
Kay Toolson: Yes.
Barry Vogel: Okay, and one last question - what is the interest rate we're
looking at for the new credit facility?
Marty Daley: We're going to be on a floating libor-plus type arrangement on
that. And of course, we have yet to come to terms with the bank
on that. But it's going to be favorable.
Barry Vogel: So it'll be - do you think 7% would be maximum?
Marty Daley: Yeah, I think we'll be able to lock in around there.
Barry Vogel: Okay, thank you very much and congratulations.
Marty Daley: Thank you.
Operator: Moving on to Jeff Kurowski with RV Business.
Jeff Kurowski: Gentlemen, how's it going?
Kay Toolson: Good.
Jeff Kurowski: I wanted to ask - is the magnum chassis assembly operation in
Harrisburg the asset that you wanted the most?
Kay Toolson: Well, certainly it's one of several things that are good about
SMC. And we plan on continuing the magnum chassis.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 17
John Nepute: I don't think that was the driving force in what we wanted
most. Obviously, it's our Roadmaster chassis - we're very
comfortable with it. We do plan on continuing to use that
chassis with the torch elastic suspension on the Safari product.
The Beaver product is currently built on an air bag type
chassis, as magnum fits very easily with our Roadmaster chassis.
How we integrate that whole process hasn't been determined yet.
But there were a variety of things. Obviously there's a lot of
brand equity in the Beaver name. It's a great brand name. It's
got a great following. It's got - it's been a very prestigious
name in the industry for a long time. And we feel very good
about adding that to our product offering.
The Safari, as you know, as I said earlier, has been a really
exciting niche product. I think over the last couple years, have
gotten it - SMC's gotten it out of the niche where it needs to
be in. And Matt has refocused actually himself on the niche it
needs to be in. We're going to be working with Matt over the
next 30 days on - as he's winding down and we're starting to
wind into it - facilitating that. And so really what we got, as
much as anything, was the brand equity I think in the Beaver and
the Safari brand, more than chassis. So...
Jeff Kurowski: So obviously, the chassis operation in Oregon will not become
another Roadmaster plant. You'll continue to follow the design
and use the technology of the magnum chassis.
John Nepute: Yeah, I think we'll combine the best of what we both have and
end up with an even better chassis than what we've got now in
all facets of our business. So we're excited about that
combination.
We're just getting our people from both their chassis plant and
our chassis plant starting to visit each other. You know, this
still just now ((inaudible)) yesterday. So far it's just been us
top guys
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 18
getting the loop on this. And we're not the ones that know the
best how to integrate it. It's our management people now will
start the work on that.
Jeff Kurowski: Given the geographical distance, though, would that make
sense to assemble Roadmaster and magnum chassis in Oregon and
magnum and Roadmaster chassis in Indiana?
John Nepute: It very well may. At this point, we are not planning to build
any - initially any product probably this year in our Indiana
facility. But we will next year - start building some Safari and
Beaver brand products in this facility. So the way the chassis
are assembled, that could easily be assembled at our Roadmaster
plant here in Indiana for the Indiana operations. And they can
certainly be assembled either in Harrisburg or Coburg for those
operations there.
Jeff Kurowski: Let me ask you about the (Harney) Coach brand. I believe in
response to an earlier question you said that the portion of the
one facility where (Harney) Coach units were assembled will
become a fiberglass supply operations. So does that mean you
have no plans to resuscitate the (Harney) Coach brand?
Kay Toolson: That doesn't mean that absolutely we won't resuscitate that
brand. But SMC had made a decision to discontinue that brand, as
you know. We're evaluating it. But right now, our plans are to
expand the (Harney) operation.
Composite technology is part of it, which is - in addition to
fiberglass, is countertops, shower stalls, and a variety of
other things that we think make a lot of sense. We visited that
facility yesterday, got a great workforce there. And they really
want to work and really want their jobs. It's an area that has
incredibly high unemployment. And there aren't a lot of
opportunities there. So we're committed to keeping that
opportunity there for the people in ((inaudible)) Hines area and
expanding it.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 19
Jeff Kurowski: Do you feel the (Harney) brand as it existed in the past would
be redundant with some of your other - either Monaco or Holiday
Rambler brand?
Kay Toolson: We feel like it was redundant with the Safari brands to begin
with. And so - yeah, probably so.
Jeff Kurowski: Okay. All right. Very good. Thank you so much.
Operator: And as a reminder, it's starn, 1, to ask a question. And we'll
take our next question from Rick Fradin with William Blair.
Rick Fradin: Thanks and congratulations on what looks like a great deal. Can
you talk about what a target gross margin might look like for
the Safari business generally and assuming a normal industry
environment and reasonable economies of scale and production?
Marty Daley: A target - well, I guess I'm not sure that our target for Safari
or Beaver would be any different than it is for the overall
Monaco-Holiday Rambler.
Rick Fradin: Is that right?
Marty Daley: Yeah.
Rick Fradin: Okay, I guess I would think that these were the high-end side of
the business.
Kay Toolson: John and Marty, of course, at your investors conference tomorrow
in Chicago, so they're - you can't get ahead of them.
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MONACO COACH CORPORATION
Moderator: Kay Toolson
06-26-01/2:30 p.m. CT
Confirmation # 623536
Page 20
Rick Fradin: Okay - maybe getting back to something similar to what somebody
asked earlier. As you look at SMC 9-1/2 or 10% SG&A ratio, can
you give us a sense or do you have the data yet on how much of
that is just sort of corporate expenditures, as opposed to
selling expense tied directly to the coaches?
Kay Toolson: Marty's taking a look. I'm not sure he - we just actually flew
in and sat down about instantaneously here.
John Nepute: We almost didn't get here in time for this call.
Kay Toolson: But...
Marty Daley: Yeah, about 35% I'd say on that.
Rick Fradin: About 35%. Okay, thanks a lot. See you guys tomorrow.
Kay Toolson: Thanks, Rick.
Marty Daley: Thanks, Rick.
Operator: And at this time, there's no further questions. I'll turn it
back over to Mr. Toolson for any further comments.
Kay Toolson: Well, thank you very much, Veronica. And thank you all for
participating in this call. We are obviously very excited about
this acquisition. We think it's another step in continuing to
grow our business going forward. And we certainly have full
intentions of doing that. Thank you again for your investment in
our company and your interest. END
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Exhibit (a)(1)(J)
MONDAY JULY 23, 6:30 AM EASTERN TIME
PRESS RELEASE
SOURCE: MONACO COACH CORPORATION
MONACO COACH CORPORATION INVITES YOU TO JOIN ITS SECOND QUARTER CONFERENCE CALL ON THE WEB TUESDAY JULY 24, 2001
COBURG, Ore., July 23 /PRNewswire/ -- In conjunction with its second quarter earnings release, Monaco Coach Corporation (NYSE: MNC - news) invites you to listen to its conference call broadcast live over the Internet at 9 A.M. Pacific Time on Tuesday July 24, 2001.
(Photo: http://www.newscom.com/cgi-bin/prnh/19991018/MONACO)
What: Monaco Coach Corporation Second Quarter Earnings Release
Conference Call
When: Tuesday July 24, 2001 at 9:00 A.M. Pacific Time
Where: http://www.monaco-online.com
How: Live over the Internet -- Simply log on to the web at the
address above
Contact: Mike Duncan, Investor Relations, 541-686-8011, or email
mduncan@monacohr.com
|
Headquartered in Coburg, Oregon, with additional manufacturing facilities in Indiana, Monaco Coach Corporation is one of the nation's leading manufacturers of recreational vehicles. The company offers customers luxury recreational vehicle models under the Monaco, Holiday Rambler, Royale Coach and McKenzie brand names.
If you are unable to participate during the live webcast, the call will be archived on the web site. To access the replay, click on http://www.monaco-online.com.
Minimum Requirements to listen to broadcast: The RealPlayer software, downloadable free from www.real.com/products/player/index.html, and at least a 14.4Kbps connection to the Internet. If you experience problems listening to the broadcast, send an email to webmaster@vdat.com.
SOURCE: MONACO COACH CORPORATION
FOR RELEASE JULY 24, 6:00 AM EST
FOR MORE INFORMATION CONTACT: Mike Duncan, Investor Relations,
Monaco Coach Corporation, (541) 686-8011
MONACO COACH CORPORATION REPORTS SECOND QUARTER 2001 RESULTS
COBURG, Oregon, July 24, 2001 -- Monaco Coach Corporation (NYSE:MNC) today reported revenue and earnings for its second quarter ended June 30, 2001. Second quarter earnings per share were 28 cents on revenue of $223.4 million. Net income for the second quarter was $5.5 million. Second quarter operating income was $9.2 million. Second quarter unit sales of Monaco Coach Corporation products totaled 2,395 units. Second quarter motorhome sales totaled 1,540 units and second quarter towable recreational vehicles totaled 855 units.
For the six months ended June 30, 2001, earnings per share were 55 cents on revenue of $434.7 million. Net income for the six months ended June 30, 2001 was $10.7 million and operating income for the same period was $18.2 million. Six months unit sales of Monaco Coach Corporation products totaled 4,691 units. Six-month motorhome sales totaled 2,972 units and towable recreational vehicles totaled 1,719 units.
According to Monaco Coach Corporation Vice President and Chief Financial Officer Marty Daley, "We successfully moved our remaining 2001 inventory during the second quarter. Our efforts to reduce this inventory resulted in further margin pressure; however, it has improved our working capital position. We've reduced our finished goods inventories by approximately $18 million from the first of the year and our cash borrowings are down approximately $6 million from the end of the first quarter."
Monaco Coach Corporation President John Nepute commented, "We continue to experience solid retail demand for our products despite the overall market being down from this time last year. In May, for example, demand for our class A motorhomes resulted in 17.7% market share, and our diesel market share increased to 28.7%."
Nepute continued, "The reception of our 2002 models at our recent dealer meeting in South Bend, Indiana was very encouraging. In addition to the enthusiastic response to our new products, the dealers in attendance were optimistic about market conditions. Low dealer inventories, coupled with reduced finance rates, places our dealers in an excellent position to stock 2002 models. We are confident that the price discounting we've experienced over the past several quarters may subside as a result."
"We are nearing finalization of our acquisition of SMC Corporation," stated Kay L. Toolson, Monaco Coach Corporation Chairman and Chief Executive Officer. "We are currently evaluating opportunities to increase efficiency and exploring areas that will benefit our new organization. Both SMC and Monaco Coach Corporation teams are working closely together to plan for a smooth transition and we are encouraged by the enthusiasm of the entire group of employees. Their excitement will be a tremendous asset
as we move forward with the new organization following the aquisition. We look forward to capitalizing on the great potential of the Safari and Beaver brands."
Headquartered in Coburg, Oregon, with additional manufacturing facilities in Indiana, Monaco Coach Corporation is one of the nation's leading manufacturers of recreational vehicles. The company offers customers luxury recreational vehicle models under the Monaco, Holiday Rambler, McKenzie and Royale Coach brand names.
TABLES TO FOLLOW
The statements in this report regarding demand for the Company's products, the reception of the Company's products by its retail dealers, retail dealers' inventory level and desire to stock additional inventory, expectations concerning further price discounting, the finalization of the acquisition of SMC Corporation and resulting efficiency gains and brand potential are forward-looking statements. A number of factors could cause actual results to differ materially from these statements, including but not limited to slower than anticipated sales of new and existing products, a general slowdown in the economy, new product introductions by competitors, inefficiencies resulting from challenges associated with the acquisition of SMC Corporation or other factors. Please refer to the Company's SEC reports, including but not limited to the annual report on Form 10-Q for the period ended June 30, 2001, Form 10-K for 2000, and the 2000 Annual Report to Shareholders for additional factors.
STATEMENT REGARDING TENDER OFFER
As previously announced, Monaco Coach Corporation and SMC Corporation have entered into a merger agreement under which a wholly owned subsidiary of Monaco Coach Corporation, Salmon Acquisition Inc., commenced an all-cash tender offer on July 5, 2001 for all of SMC Corporation's outstanding common stock at a price of $3.70 per share. The tender offer is conditioned upon, among other things, there being tendered and not withdrawn prior to the expiration date of the tender offer at least 51% of the outstanding shares of common stock.
The tender offer and withdrawal rights are scheduled to expire at 12:00
midnight, New York City time, on Wednesday, August 1, 2001, unless the tender
offer is extended. The tender offer may be extended on the terms and conditions
stated in the offer to purchase sent to shareholders in connection with the
tender offer. Any extension of the tender offer will be followed as promptly as
practicable by a public announcement, which will be issued no later than 9:00
a.m. New York City time on the next business day after the previously scheduled
expiration date. Further information and a copy of the offer to purchase may be
obtained from the information agent for the offer: Innisfree M&A Incorporated,
501 Madison Avenue, 20th Floor, New York, NY 10022; (212) 750-5833 (banks and
brokers); (888) 750-5834 (all others). Salomon Smith Barney ((800) 220-7501) is
the Dealer Manager for the tender offer.
Important Disclaimer
This press release is neither an offer to purchase nor a solicitation of an offer to sell shares of SMC Corporation. Monaco Coach Corporation has filed a Tender Offer Statement and SMC Corporation has filed a Solicitation/Recommendation Statement with respect to the tender offer. The Tender Offer Statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the Solicitation/Recommendation Statement, in each case as amended from time to time, contain important information, and investors and security holders are strongly advised to read both such statements and all subsequent amendments thereto carefully before any decision is made with respect to the offer. The offer to purchase, the related letter of transmittal and certain other documents, as well as the Solicitation/Recommendation Statement, and any amendments thereto, are available to all shareholders of SMC Corporation, at no expense to them. The Tender Offer Statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the Solicitation/Recommendation Statement and any amendments thereto are also available at no charge at the SEC's website at www.sec.gov.
***
Exhibit (b)(2)
[U.S. BANK LETTERHEAD]
Marty Daley, CFO
Monaco Coach Corporation
91320 Industrial Way
Coburg, Oregon 97408
Dear Mr. Daley,
I am pleased to advise you that U.S. Bank, National Association ("Bank") hereby waives the requirements of Section 9.9 of the Agreement with respect to the acquisition by Parent of SMC Corporation.
Sincerely,
/s/ CRAIG A. WANICHEK Craig A. Wanichek Vice President |