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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-27506
COHR INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<TABLE>
<S> <C>
DELAWARE 95-4559155
------------------------------- ----------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION)
21540 PLUMMER STREET 91311
---------------------- ----------
CHATSWORTH, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 773-2647
------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO _
---
As of February 3, 1997, there were outstanding 6,353,500 shares of the
Registrant's Common Stock, par value $0.01.
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COHR INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<C> <S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements...................................................... 1
Consolidated Balance Sheets as of December 31, 1996 and March 31, 1996.... 1
Consolidated Statements of Income for the three months ended December 31,
1996, and December 31, 1995 and the nine months ended December 31, 1996
and December 31, 1995..................................................... 2
Consolidated Statements of Cash Flows for the nine months ended December
31, 1996, and December 31, 1995........................................... 3
Notes to Financial Statements............................................. 4
Item 2 Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................ 5
General................................................................... 5
Results of Operations..................................................... 5
PART II OTHER INFORMATION
Item 1 Legal Proceedings......................................................... 8
Item 6 Exhibits and Reports on Form 8-K.......................................... 8
</TABLE>
i
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PART I
ITEM 1. FINANCIAL STATEMENTS
COHR INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1996
------------ ---------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash............................................................... $ 37,758 $19,314
Accounts receivable -- Trade, net of allowance for doubtful
accounts of $1,119 (December 31, 1996) and $835 (March 31,
1996)........................................................... 22,793 12,644
Other........................................................... 1,169 1,233
Inventory.......................................................... 5,801 3,486
Prepaid expenses and other......................................... 603 620
Deferred income tax asset.......................................... 904 806
-------- --------
Total current assets....................................... 69,028 38,103
Equipment & Improvements, net........................................ 5,699 3,718
Intangible assets, net of accumulated amortization of $529 (December
31, 1996) and $280 (March 31, 1996)................................ 5,771 2,530
Other assets......................................................... 111 121
-------- --------
TOTAL................................................................ $ 80,609 $44,472
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade.......................................... $ 1,482 $ 2,092
Accrued expenses................................................... 4,294 3,372
Accrued liabilities -- COHR MasterPlan............................. 1,565 4,498
Deferred Revenue................................................... 5,045 4,586
Income tax liability............................................... 287 --
Current portion of long-term debt.................................. 1,082 85
-------- --------
Total current liabilities.................................. 13,755 14,633
Deferred income tax liability........................................ 399 448
Long-term debt....................................................... 1,362 276
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value; 2,000,000 shares authorized; no
shares issued and outstanding
Common Stock, $.01 par value; 20,000,000 shares authorized;
6,353,500 (December 31, 1996) and 4,562,000 (March 31, 1996)
shares issued and outstanding................................... 887 869
Additional paid in capital......................................... 54,772 22,104
Retained earnings.................................................. 9,434 6,142
-------- --------
Total stockholders' equity................................. 65,093 29,115
-------- --------
TOTAL................................................................ $ 80,609 $44,472
======== ========
</TABLE>
1
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COHR INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues.......................................... $23,451 $16,667 $65,121 $47,501
Direct operating expenses......................... 16,952 12,186 46,944 34,497
------- ------- ------- -------
Gross margin...................................... 6,499 4,481 18,177 13,004
Selling, general and administrative expenses...... 4,532 3,666 13,157 10,617
------- ------- ------- -------
Operating income.................................. 1,967 815 5,020 2,387
Interest income................................... 209 31 524 110
Interest expense.................................. (14) (30) (23) (64)
------- ------- ------- -------
Income before income taxes........................ 2,162 816 5,521 2,433
Provision for income taxes........................ 865 338 2,229 984
------- ------- ------- -------
Net Income........................................ $ 1,297 $ 478 $ 3,292 $ 1,449
======= ======= ======= =======
Net Income Per Share.............................. $ 0.23 $ 0.23 $ 0.64 $ 0.69
------- ------- ------- -------
Weighted Average Number of Common Stock and Common
Stock Equivalents Outstanding................... 5,545 2,112 5,148 2,112
======= ======= ======= =======
</TABLE>
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COHR INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
--------------------
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income............................................................ $ 3,292 $ 1,449
-------- -------
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization...................................... 779 642
Provision for losses on accounts receivable........................ 216 130
Deferred income tax asset -- current portion....................... -- (145)
Deferred rent...................................................... -- (306)
Deferred income taxes payable, net................................. (82) 83
Change in assets and liabilities, net of effect of acquisition of
certain assets:
Accounts receivable:
Trade......................................................... (9,053) (1,900)
Other......................................................... 79 (332)
Inventory........................................................ (1,687) (693)
Prepaid expense and other........................................ 25 (201)
Other assets..................................................... 17 (120)
Accounts payable -- trade........................................ (1,249) (354)
Accrued expenses................................................. 742 1,562
Accrued liabilities -- COHR MasterPlan........................... (2,933) 1,016
Deferred revenue................................................. 185 (2,414)
Income taxes payable............................................. 241 (3)
-------- -------
Total Adjustments............................................. (12,720) (3,035)
-------- -------
Net cash used in operating activities......................... (9,428) (1,586)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................................. (1,613) (691)
Payment for acquisition of certain assets............................. (4,046) (1,387)
-------- -------
Net cash used in investing activities.............................. (5,659) (2,078)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends to parent company................................ -- (247)
Issuance of long-term debt............................................ 906 --
Payments and maturities on long-term debt............................. (61) (21)
Issuance of stock..................................................... 32,214 --
Exercise of stock options............................................. 472 --
-------- -------
Net cash provided by (used in) financing activities........... 33,531 (268)
-------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS............................... 18,444 (3,932)
CASH AND CASH EQUIVALENTS, beginning of period.......................... 19,314 4,453
-------- -------
CASH AND CASH EQUIVALENTS, end of period................................ $ 37,758 $ 521
======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes....................................................... $ 1,942 $ 1,048
======== =======
Interest........................................................... $ 23 $ 3
======== =======
DETAILS OF BUSINESSES OR ASSETS ACQUIRED AT FAIR VALUE ARE AS FOLLOWS:
Current assets........................................................ $ 2,068 $ 409
Equipment............................................................. 905 235
Goodwill and other intangibles........................................ 3,490 893
-------- -------
6,463 1,537
-------- -------
Liabilities assumed................................................... 2,417 --
Debt issued for acquisitions.......................................... -- 150
-------- -------
Net cash paid for acquisitions................................ $ 4,046 $ 1,387
======== =======
</TABLE>
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COHR INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS AND THE THREE MONTHS ENDED
DECEMBER 31, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying consolidated financial
statements include all adjustments (which consist only of normal recurring
adjustments) necessary for a fair presentation of the financial position of COHR
Inc. ("COHR") and subsidiaries (collectively, the "Company"), and the results of
its operations and its cash flows for the interim periods presented. Although
COHR believes that the disclosures in these consolidated financial statements
are adequate to make the information presented not misleading, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. Results of operations for the interim periods are not
necessarily indicative of results to be expected for any other interim period or
for the full year.
The consolidated financial statements for the three month and nine month
periods ended December 31, 1996 and December 31, 1995 are unaudited and should
be read in conjunction with the consolidated financial statements and notes
thereto included in COHR's Annual Report on Form 10-K, for the year ended March
31, 1996.
Consolidation of Subsidiaries -- The Company's financial statements include
the activity of all of its wholly owned subsidiaries over which the Company has
direct or indirect unilateral and perpetual control. All intercompany
transactions have been eliminated in consolidation.
Net Income Per Common Share -- Net income per common share is computed
based on the weighted average number of shares outstanding, giving retroactive
effect to all stock splits, including a 20,000-for-1 Common Stock dividend
effective November 1, 1995.
2. COMMITMENTS AND CONTINGENCIES
In November 1996, the $2,000,000 revolving line of credit agreement was
increased to $5,000,000. This line expires on June 30, 1997. No amounts have
been borrowed against the line of credit during the nine months ended December
31, 1996.
3. SUBSEQUENT EVENTS
Subsequent to December 31, 1996, the Company acquired the businesses of
three companies similar to that of COHR Inc. The acquisition included the
purchase of certain assets including accounts receivable, inventory, equipment,
and other assets, for a purchase price of $6,701,569, of which $5,842,298 was
paid in cash, with a short term note issued for the remainder.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company is a leading national outsourcing service organization
providing equipment servicing, group purchasing and other services to hospitals,
integrated health systems and alternate site providers. The Company operates 29
regional service and sales sites to support its equipment services operations
and nine regional sales and customer service sites to support its group
purchasing activities.
RESULTS OF OPERATIONS
NINE MONTHS ENDED DECEMBER 31, 1996 VERSUS NINE MONTHS ENDED DECEMBER 31,
1995
Revenues -- The Company's revenues for the nine months ended December 31,
1996 totaled $65.1 million, an increase of $17.6 million or 37.1% over revenues
of $47.5 million for the nine months ended December 31, 1995. Of the $17.6
million increase in revenues, $14.2 million resulted from growth in COHR
MasterPlan. The $14.2 million was primarily from increases in revenues from
growth generated internally. The Company acquired or opened 12 new service and
sales sites in the nine months ended December 31, 1996.
Direct Operating Expenses -- The Company's direct expenses for the nine
months ended December 31, 1996 totaled $46.9 million which represented an
increase of $12.4 million or 36.1% over the nine months ended December 31, 1995
total of $34.5 million. Direct operating expenses as a percentage of revenues
for the nine months ended December 31, 1996 decreased to 72.1% from 72.6% for
the nine months ended December 31, 1995. This decrease was a result of certain
economies of scale being achieved over the prior period.
Gross Margin. The Company's gross margin for the nine months ended December
31, 1996 totaled $18.2 million, an increase of $5.2 million or 39.8% over the
nine months ended December 31, 1995 total of $13.0 million. Gross margin as a
percentage of revenues increased to 27.9% for the nine months ended December 31,
1996 from 27.4% for the nine months ended December 31, 1995.
Selling, General and Administrative Expenses. The Company's selling,
general and administrative expenses for the nine months ended December 31, 1996
totaled $13.2 million, an increase of $2.6 million or 23.9% over the nine months
ended December 31, 1995 total of $10.6 million. As a percentage of revenues,
selling, general and administrative expenses decreased during the nine months
ended December 31, 1996 to 20.2% from 22.4% during the nine months ended
December 31, 1995. The absolute increase in expenses reflected the increase in
costs necessary to support the Company's expanded operations. The decrease in
selling, general and administrative expenses as a percentage of revenues
reflected the growth in revenues without a corresponding increase in
administrative costs, as well as other cost savings achieved through economies
of scale.
Operating Income. The Company's operating income for the nine months ended
December 31, 1996 totaled $5.0 million, an increase of $2.6 million or 110.3%
over the nine months ended December 31 ,1995 total of $2.4 million. Operating
income as a percentage of revenues for the nine months ended December 31, 1996
increased to 7.7% as compared to 5.0% for the nine months ended December 31,
1995.
Provision for Income Taxes. The Company's provision for income taxes for
the nine months ended December 31, 1996 totaled $2.2 million, an increase of
$1.2 million or 126.5% over the nine months ended December 31, 1995 total of
$984,000, due to the increase in pre-tax income for the period. The Company's
effective tax rate for the nine months ended December 31, 1996 and the nine
months ended December 31, 1995 was 40.4%.
Net Income. The Company's net income for the nine months ended December 31,
1996 totaled $3.3 million, an increase of $1.8 million or 127.2% over the nine
months ended December 31, 1995 total of $1.5 million. As a percentage of
revenues, net income increased to 5.1% in the nine months ended December 31,
1996 from 3.1% in the nine months ended December 31, 1995.
5
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THREE MONTHS ENDED DECEMBER 31, 1996 VERSUS THREE MONTHS ENDED DECEMBER 31,
1995
Revenues -- The Company's revenues for the three months ended December 31,
1996 totaled $23.5 million, an increase of $6.8 million or 40.7% over revenues
of $16.7 million for the three months ended December 31, 1995. Of the $6.8
million increase in revenues, $6.0 million resulted from growth in COHR
MasterPlan. The $6.0 million was primarily from increases in revenues from
growth generated internally. The Company acquired or opened one new service and
sales site in the three months to December 31, 1996.
Direct Operating Expenses -- The Company's direct expenses for the three
months ended December 31, 1996 totaled $17.0 million which represented an
increase of $4.8 million or 39.1% over the three months ended December 31, 1995
total of $12.2 million. Direct operating expenses as a percentage of revenues
for the three months ended December 31, 1996 decreased to 72.3% from 73.1% for
the three months ended December 31, 1995. This decrease was a result of certain
economies of scale being achieved over the prior period.
Gross Margin. The Company's gross margin for the three months ended
December 31, 1996 totaled $6.5 million, an increase of $2.0 million or 45.0%
over the three months ended December 31, 1995 total of $4.5 million. Gross
margin as a percentage of revenues increased to 27.7% for the three months ended
December 31, 1996 from 26.9% for the three months ended December 31, 1995.
Selling, General and Administrative Expenses. The Company's selling,
general and administrative expenses for the three months ended December 31, 1996
totaled $4.5 million, an increase of $0.8 million or 23.6% over the three months
ended December 31, 1995 total of $3.7 million. As a percentage of revenues,
selling, general and administrative expenses decreased during the three months
ended December 31, 1996 to 19.3% from 22.0% during the three months ended
December 31, 1995. The absolute increase in expenses reflected the increase in
costs necessary to support the Company's expanded operations. The decrease in
selling, general and administrative expenses as a percentage of revenues
reflected the growth of revenues without a corresponding increase in
administrative costs, as well as other cost savings achieved through economies
of scale.
Operating Income. The Company's operating income for the three months ended
December 31, 1996 totaled $2.0 million, an increase of $1.2 million or 141.3%
over the three months ended December 31 ,1995 total of $0.8 million. Operating
income as a percentage of revenues for the three months ended December 31, 1996
increased to 8.4% as compared to 4.9% for the three months ended December 31,
1995.
Provision for Income Taxes. The Company's provision for income taxes for
the three months ended December 31, 1996 totaled $865,000, an increase of
$527,000 or 155.9% over the three months ended December 31, 1995 total of
$338,000, due to the increase in pre-tax income for the period. The Company's
effective tax rate for the three months ended December 31, 1996 was 40.0% as
compared to 41.4% for the three months ended December 31, 1995.
Net Income. The Company's net income for the three months ended December
31, 1996 totaled $1.3 million, an increase of $0.8 million or 171.3% over the
three months ended December 31, 1995 total of $0.5 million. As a percentage of
revenues, net income increased to 5.5% in the three months ended December 31,
1996 from 2.9% in the three months ended December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $55.3 million and $23.5 million as of
December 31, 1996 and March 31, 1996 respectively. The Company had cash and cash
equivalents of $37.8 million and $19.3 million for the same respective periods.
Net cash used in operating activities was $9.4 million and $1.6 million for
the nine months ended December 31, 1996 and 1995, respectively. The fluctuations
in cash used in operations is due primarily to changes in accounts receivable,
inventories, accounts payable, accrued liabilities and deferred revenue.
Net cash used in investing activities was $5.7 million and $2.1 million for
the nine months ended December 31, 1996 and 1995 respectively. The principal
uses of this cash were for the purchase of businesses,
6
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customer lists and related assets. Capital expenditures during these periods
amounted to $1.6 million and $0.7 million respectively.
Cash flows provided by (used in) financing activities were due to issuance
of additional stock, exercise of stock options and issuance of long-term debt.
INFLATION
The Company believes that its operations have not been materially adversely
affected by inflation. The Company expects that salary and wage increases for
its skilled staff will continue to be higher than average wage increases, as is
common in the Company's industry.
7
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved from time to time in various legal proceedings
incidental to its business. In the opinion of the Company's management, no such
pending litigation is likely to have a material adverse effect on the Company's
business.
ITEM 6. EXHIBITS & REPORTS ON FORM 8-K
(a) Exhibits included or incorporated herein:
See Index to Exhibits
(b) Reports on Form 8-K
Not applicable
8
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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.
COHR INC.
--------------------------------------
(Registrant)
Date: February 13, 1997 /S/ PAUL CHOPRA
--------------------------------------
Paul Chopra
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: February 13, 1997 /S/ UMESH MALHOTRA
--------------------------------------
Umesh Malhotra
Chief Financial Officer and Treasurer
(Principal Financial Officer)
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COHR INC.
INDEX TO EXHIBITS
ITEM (6)
(a) Exhibits
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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<S> <C> <C>
1.1* Form of Underwriting Agreement...................................
3.1* Certificate of Incorporation of Registrant.......................
3.2* By-laws of Registrant............................................
4.1* Form of Warrant to be issued to the Representatives of the
Underwriters.....................................................
4.2* Form of Registration Rights Agreement between Registrant,
Healthcare Association of Southern California ("HASC") and
Hospital Council Coordinated Programs, Inc.......................
4.3* Specimen Stock Certificate.......................................
10.1* Form of Indemnity Agreement entered into between Registrant and
each of its executive officers and directors.....................
10.2* Employment Agreement between Registrant and Paul Chopra,
effective January 1, 1996........................................
10.3* Executive Long-Term Incentive Plan of Registrant.................
10.4* Form of 1995 Stock Option Plan of Registrant and Form of
Nonstatutory Option Grant Under the Plan.........................
10.5*** Revolving Credit Agreement between Registrant and 1st Business
Bank, dated June 11, 1996, together with Promissory Note, General
Security Agreement and Continuing Guarantee......................
10.8* Consulting Agreement between Registrant and Stephen W. Gamble dba
Gamble's Victory Marine, dated August 1, 1994....................
10.9* Administrative Services Agreement between Registrant and
Healthcare Association of Southern California, dated January 1,
1996.............................................................
10.10** Office Lease between TCEP II properties and Registrant dated May
8, 1996..........................................................
10.11 Amendment dated November 14, 1996 to Revolving Credit Agreement
between Registrant and 1st Business Bank dated June 11, 1996, and
Promissory Note dated November 20, 1996..........................
11 Computation of Per Share Earnings................................
21.1*** Subsidiaries of Registrant.......................................
27 Financial Data Schedule..........................................
</TABLE>
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* Previously filed as exhibits to Registrant's Registration Statement on Form
S-1, Registration No. 33-80635.
** Previously filed as exhibit to Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996, Commission File No. 0-27506.
*** Previously filed as exhibit to Registrant's Registration Statement on Form
S-1, Registration No. 333-14979.
10
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Exhibit 10.11
[LOGO] [1ST BUSINESS BANK LETTERHEAD]
November 14, 1996
Paul Chopra
Chief Executive Officer
COHR, Inc.
21540 Plummer Street
Chatsworth, CA 91311
Dear Paul:
You have requested, and the Bank has agreed, to increase our Revolving Line of
Credit to COHR, Inc. from the existing $2,000,000 to $5,000,000. This letter
will serve to amend that certain Revolving Credit Agreement dated July 11, 1996
by and between COHR, Inc. ("Borrower") and 1st Business Bank ("Bank"), as
follows:
Section 1.1 Revolving Line of Credit. is deleted in its entirety and
replaced with the following:
"1.1 REVOLVING LINE OF CREDIT. From the date the Borrower has satisfied all
conditions precedent as set forth in Section 2 hereof, to and until June 30,
1997, Bank agrees to make advances to Borrower from time to time up to a
maximum amount of FIVE MILLION DOLLARS ($5,000,000). Borrower may borrow and
repay and reborrow all or part of the Line of Credit for its short term working
capital requirements of Borrower's business. The indebtedness of Borrower to
Bank pursuant to the Line of Credit shall be evidenced by the Revolving Note on
the form used by Bank for such purposes. Bank shall enter each amount borrowed
and repaid on the back of the Revolving Note, and such entries shall be PRIMA
FACIE evidence of the amount of the Line of Credit outstanding, but the failure
of the Bank to make any such notations shall not release Borrower from the
obligation to repay amount borrowed hereunder."
All other terms and conditions of the Revolving Credit Agreement shall remain
unchanged and in full force and effect. Please sign below indicating your
agreement and acceptance of this amendment, and return an original signed copy
to my attention at your earliest convenience. Thank you.
<PAGE> 2
Very truly yours,
1ST BUSINESS BANK
/s/ JOHN C. BLACK /s/ R.W. KUMMER, JR.
- ---------------------------- ----------------------------
John C. Black Robert W. Kummer, Jr.
Vice President Chairman & C.E.O.
Agreed to and Accepted this 25th day of November, 1996
by COHR, INC.
/s/ PAUL CHOPRA /s/ UMESH MALHOTRA
- ---------------------------- ----------------------------
Paul Chopra Umesh Malhotra
Chief Executive Officer Chief Financial Officer
<PAGE> 3
[LOGO]
PROMISSORY NOTE
================================================================================
BORROWER: COHR, INC. LENDER: 1st Business Bank
21540 PLUMMER STREET Headquarters
CHATSWORTH, CA 91311 601 West Fifth St.
Los Angeles, CA 90071
================================================================================
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL AMOUNT: $5,000,000.00 INITIAL RATE: 8.250% DATE OF NOTE: NOVEMBER 20, 1996
</TABLE>
PROMISE TO PAY. COHR, INC. ("BORROWER") PROMISES TO PAY TO 1st BUSINESS BANK
("LENDER"), ON ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA, THE
PRINCIPAL AMOUNT OF FIVE MILLION & 00/100 DOLLARS ($5,000,000.00) OR SO MUCH AS
MAY BE OUTSTANDING, FROM TIME TO TIME WITH INTEREST THEREON FROM THE DATE OF
THE ADVANCE UNTIL PAID IN FULL.
PAYMENT. BORROWER WILL PAY ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID
INTEREST ON OR BEFORE JUNE 30, 1997. IN ADDITION, BORROWER WILL PAY, MONTHLY,
INTEREST, BEGINNING DECEMBER 31, 1996,AND ON THE LAST DAY OF EACH MONTH AFTER
THAT. Interest on this Note is computed on a 365/360 simple interest basis;
that is, by applying the ratio or the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay
Lender Principal and Interest at Lender's address shown above or at such other
place as Lender may designate in writing. Unless otherwise agreed or required
by applicable law, payments will be applied first to any unpaid collection
costs and any late charges, then to any unpaid interest, and any remaining
amount to principal.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the 1st Business Bank
Reference Rate (the "Reference Rate"). Any change in the interest rate
resulting from a change in the Reference Rate shall be effective on and as of
the date of such change. Lender will tell Borrower the current Reference Rate
upon Borrower's request. Borrower understands that Lender may make loans based
on other rates as well. THE REFERENCE RATE CURRENTLY IS 8.250% PER ANNUM. THE
INTEREST RATE TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE
WILL BE AT A RATE EQUAL TO THE REFERENCE RATE, RESULTING IN AN INITIAL RATE OF
8.250% PER ANNUM. NOTICE: Under no circumstances will the interest rate on
this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Amounts repaid may be reborrowed in accordance
with the terms of this Note.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or misleading
in any material respect either now or at the time made or furnished. (d)
Borrower becomes insolvent, a receiver is appointed for any part of Borrower's
property, Borrower makes an assignment for the benefit of creditors, or any
proceeding is commenced either by Borrower or against Borrower under any
bankruptcy or insolvency laws. (e) Any creditor tries to take any of
Borrower's property on or in which Lender has a lien or security interest.
This includes a garnishment of any of Borrower's accounts with Lender. (f) Any
guarantor dies or any of the other events described in this default section
occurs with respect to any guarantor of this Note. (g) A material adverse
change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the indebtedness is impaired. (h) Lender
in good faith deems itself insecure.
ADDITIONAL DEFAULT PROVISION. BORROWER WILL ALSO BE IN DEFAULT IF ANY OF THE
FOLLOWING HAPPENS: BORROWER'S FAILURE TO SUBMIT FINANCIAL STATEMENTS, TAX
RETURNS AND SUCH OTHER FINANCIAL INFORMATION TO THE HOLDER HEREOF WHEN
REQUESTED; THE OCCURRENCE OF AN EVENT WHICH CAUSES A MATERIAL ADVERSE CHANGE IN
BORROWER'S FINANCIAL CONDITION; THE GOOD FAITH BELIEF BY LENDER THAT THERE
EXISTS, OR THE ACTUAL EXISTENCE OF, ANY DETERIORATION OF BORROWER'S ABILITY TO
MEET BORROWER'S OBLIGATIONS TO LENDER OR TO BORROWER'S OTHER CREDITORS OR IN
THE VALUE OF ANY COLLATERAL SECURING THE OBLIGATIONS OF THE UNDERSIGNED
HEREUNDER; BORROWER CEASES TO EXIST OR ANY GENERAL PARTNER IN BORROWER CEASES
TO EXIST OR IS NO LONGER A GENERAL PARTNER IN BORROWER.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay
upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 5.000
percentage points over the Reference Rate. Lender may hire or pay someone else
to help collect this Note if Borrower does not pay. Borrower also will pay
Lender all costs and expenses of collection. This includes, subject to any
limits under applicable law, Lender's attorneys' fees and Lender's legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Borrower also will pay any court costs, in addition to
all other sums provided by law. THIS NOTE HAS BEEN DELIVERED TO LENDER AND
ACCEPTED BY LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER
AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF LOS
ANGELES COUNTY, THE STATE OF CALIFORNIA. LENDER AND BORROWER HEREBY WAIVE THE
RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY
EITHER LENDER OR BORROWER AGAINST THE OTHER. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
COLLATERAL. This Note is secured by personal property collateral referred to
in a security/pledge agreement dated November 3, 1995. Reference should be
made to such document for events of default which may accelerate payments of
this note.
ADVANCES. Advances under this Note may be requested either orally or in writing
by borrower or by an authorized person. Lender may, but need not; require that
all requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. Borrower agrees to be liable for all sums either: (a)
advanced in accordance with the instructions of an authorized person or (b)
credited to any of Borrower's accounts with Lender. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on
this Note or by Lender's internal records, including daily computer print-outs.
PRIOR NOTE. THIS IS AN INCREASED RENEWAL OF THAT CERTAIN PROMISSORY NOTE NO.
11455 DATED JULY 11, 1996.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive any applicable statute of limitations, presentment, demand for payment,
protest and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan, or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RAGE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
COHR, INC.
By:
-------------------------------------------
AUTHORIZED OFFICER, TITLE
================================================================================
<PAGE> 1
EXHIBIT 11
COHR INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
----------------- -----------------
DECEMBER 31, DECEMBER 31,
----------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET INCOME ATTRIBUTABLE TO COMMON STOCK................. $1,297 $ 478 $3,292 $1,449
PRIMARY EARNINGS PER SHARE:
Weighted average number of common shares
outstanding........................................ 5,162 2,112 4765 2112
Dilutive effect of stock options and warrants after
application of treasury stock method............... 383 -- 383 --
------- ------- ------- -------
Number of shares used to compute primary earnings per
share.............................................. 5,545 2,112 5,148 2,112
Primary earnings per share.............................. $ 0.23 $ 0.23 $ 0.64 $ 0.69
======= ======= ======= =======
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 37,758
<SECURITIES> 0
<RECEIVABLES> 22,793
<ALLOWANCES> 1,119
<INVENTORY> 5,801
<CURRENT-ASSETS> 69,028
<PP&E> 5,699
<DEPRECIATION> 4,038
<TOTAL-ASSETS> 80,609
<CURRENT-LIABILITIES> 13,755
<BONDS> 0
0
0
<COMMON> 887
<OTHER-SE> 64,206
<TOTAL-LIABILITY-AND-EQUITY> 80,609
<SALES> 65,121
<TOTAL-REVENUES> 65,121
<CGS> 46,944
<TOTAL-COSTS> 46,944
<OTHER-EXPENSES> 13,157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> 5,521
<INCOME-TAX> 2,229
<INCOME-CONTINUING> 3,292
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,292
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.64
</TABLE>
