<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period Commission File number 0 - 27698
ended June 30, 1999
CHIREX INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3296309
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
300 Atlantic Street
Suite 402
Stamford, Connecticut 06901
(Address of principle executive office) (Zip Code)
(203) 351-2300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
Yes X No
----------- ------------
Number of shares outstanding of the issuer's classes of common stock as of July
27, 1999
Class Number of Shares Outstanding
- -------------------------------------- ----------------------------
Common Stock, par value $.01 per share 14,854,892
1
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CHIREX INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31,
1998 and June 30, 1999 3
Consolidated Statements of Operations for
the three and six months ended June 30,
1998 and 1999 4
Consolidated Statements of Comprehensive
Operations for the three and six months
ended June 30, 1998 and 1999 4
Consolidated Statements of Cash Flows for
the six months ended June 30, 1998 and 1999 5
Notes to Consolidated Interim Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security
Holders. 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
This Quarterly Report on Form 10-Q contains "forward-looking statements,"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, as amended. These forward-looking
statements are subject to a number of risks and uncertainties, many of which are
beyond the Company's control. Forward-looking statements are typcially
identified by the words "believe," "expect," "anticipate," "intent," estimate,"
"plan" and similar expressions.
Actual results could differ materially from those contemplated by these
forward-looking statements as a result of factors ("Cautionary Statements") such
as product development and market acceptance risks, product manufacturing risks,
the impact of competitive products and pricing, the results of current and
future licensing and other collaborative relationships, the results of financing
efforts, developments regarding intellectual property rights and litigation,
risks of product non-approval or delays or post-approval reviews by the U.S.
Food and Drug Administration or foreign regulatory authorities and those
described under "Risk Factors" on page 26 of our Annual Report on Form 10-K for
the year ended December 31, 1998.
In light of these risks and uncertainties, there can be no assurance that
the results and events contemplated by the forward- looking information
contained in this Quarterly Report will in fact transpire. Readers are cautioned
not to place undue reliance on these forward-looking statements. ChiRex does not
undertake any obligation to update or revise any forward-looking statements. All
subsequent written or oral forward-looking statements attributable to ChiRex or
persons acting on behalf of ChiRex are expressly qualified in their entirety by
the Cautionary Statements.
2
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PART I - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CHIREX INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND JUNE 30, 1999
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 128 $ 319
Trade and other receivables 16,285 17,610
Inventories 32,295 28,343
Other current assets 4,012 5,967
------------- -------------
Total current assets 52,720 52,239
Property, plant and equipment, net 154,070 154,151
Intangible assets, net 26,398 30,975
Other non-current assets 5,350 2,425
============= =============
Total assets $238,538 $239,790
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 15,123 $ 10,399
Accrued expenses 17,122 13,415
Current portion of long-term debt 14,756 14,220
Income taxes payable 389 153
------------- -------------
Total current liabilities 47,390 38,187
Long-term debt 76,544 29,492
Deferred income taxes 10,640 13,654
Capital lease obligation - 1,582
Deferred income 6,751 7,282
------------- -------------
Total liabilities 141,325 90,197
------------- -------------
Commitments and Contingencies - -
Stockholders' equity:
Preferred stock ($0.01 par value, 4,000,000 authorized
none issued and outstanding in 1998 and 1999) - -
Common stock ($0.01 par value, 30,000,000 shares authorized,
11,881,377 and 14,805,876 shares issued and outstanding on
December 31, 1998 and June 30, 1999, respectively) 119 148
Additional paid-in capital 102,354 153,954
Retained deficit (9,243) (3,645)
Cumulative translation adjustment 3,983 (864)
------------- -------------
Total stockholders' equity 97,213 149,593
============= =============
Total liabilities and stockholders' equity $238,538 $239,790
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
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ChiRex Inc.
Consolidated Statements of Operations and
Consolidated Statements of Comprehensive Operations
(unaudited)
(in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three-Months Ended Six-Months Ended
June 30, June 30,
------------------------------ -----------------------------
1998 1999 1998 1999
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 28,359 $ 36,478 $ 51,960 $ 70,558
License fees and royalty income 195 146 252 246
-------- -------- -------- --------
Total revenues 28,554 36,624 52,212 70,804
Cost of goods sold (21,456) (23,872) (40,758) (46,671)
-------- -------- -------- --------
Gross margin 7,098 12,752 11,454 24,133
Selling, general and administrative 3,152 3,737 6,277 7,062
Research and development 1,085 1,642 2,286 2,964
Non-recurring charges and other expenses 221 1,733 221 1,733
-------- -------- -------- --------
Operating profit 2,640 5,640 2,670 12,374
Interest expense, net (1,425) (1,272) (2,829) (3,293)
Amortization of goodwill (291) (334) (582) (625)
-------- -------- -------- --------
Income (loss) before income taxes 924 4,034 (741) 8,456
(Provision) for income taxes (315) (1,343) 254 (2,858)
======== ======== ======== ========
Net income (loss) $ 609 $ 2,691 $ (487) $ 5,598
======== ======== ======== ========
Weighted average common shares outstanding:
Basic 11,809 14,795 11,803 13,451
======== ======== ======== ========
Diluted 12,415 15,737 11,803 14,263
======== ======== ======== ========
Net income (loss) per common share:
Basic $ 0.05 $ 0.18 $ (0.04) $ 0.42
======== ======== ======== ========
Diluted $ 0.05 $ 0.17 $ (0.04) $ 0.39
======== ======== ======== ========
</TABLE>
Consolidated Statements of Comprehensive Operations
<TABLE>
<CAPTION>
Three-Months Ended Six-Months Ended
June 30, June 30,
----------------------------------- ---------------------------
1998 1999 1998 1999
-------- -------- ------------ ----------
<S> <C> <C> <C> <C>
Net income (loss) $ 609 $ 2,691 $ (487) $ 5,598
Change in cumulative translation adjustment (845) (2,308) (50) (4,847)
-------- -------- --------- -------
Comprehensive net income (loss) $ (236) $ 383 $ (537) $ 751
======== ======== ========= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
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CHIREX INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1999
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six-Months Ended
June 30,
---------------------------
1998 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (487) $ 5,598
Adjustments to reconcile net income (loss) to cash provided
by operating activities:
Depreciation & amortization 6,246 7,716
Deferred tax provision (benefit) 868 4,032
Non-recurring charges and other expenses 221 1,733
Changes in assets and liabilities:
Receivables 4,911 (2,188)
Inventories (6,350) 2,456
Other assets 1,036 (327)
Accounts payable and accrued expenses 5,690 (8,566)
Income taxes payable (1,200) (1,499)
Deferred income 1,374 847
------------ ------------
Net cash provided from operating activities 12,309 9,802
------------ ------------
Cash flows from investing activities:
Capital expenditures (15,477) (13,253)
Acquisition of business - (5,871)
------------ ------------
Net cash used in investing activities (15,477) (19,124)
------------ ------------
Cash flows from financing activities:
Payments on revolving credit and term loan facilities, net (25) (44,157)
Proceeds from sale and leaseback - 2,082
Proceeds from exercise of stock options 222 500
Issuance of common stock, net - 51,129
------------ ------------
Net cash provided from financing activities 197 9,554
------------ ------------
Effect of exchange rate changes on cash (15) (41)
------------ ------------
Net increase (decrease) in cash (2,986) 191
Cash at beginning of period 5,347 128
------------ ------------
Cash at end of period $ 2,361 $ 319
============ ============
Noncash Activities:
Fair value of assets of acquired business $ - $ 7,161
Liabilities assumed of acquired business - (1,290)
============ ============
Cash paid for acquired business $ - $ 5,871
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
CHIREX INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Nature of Operations and Principles of Consolidation
Nature of Operations
Introduction
ChiRex Inc. (the "Company" or "ChiRex") is an integrated outsourcing
company that provides an extensive range of services to pharmaceutical and life
science companies. The Company's services span a broad range of outsourcing
services from the early stages of drug development and from post-discovery to
full-scale manufacture of active ingredients. Specifically the Company provides
contract process research and development and pharmaceutical fine chemical
manufacturing services and access to an extensive portfolio of proprietary
technologies. The Company's contract manufacturing services, developed over the
past thirty years, include process research and development, hazard evaluation,
analytical methods development, clinical quantity production and pilot-scale and
commercial-scale manufacturing at its world-class, current Good Manufacturing
Practices ("cGMP") facilities in Boston, Massachusetts, Malvern, Pennsylvania,
Dudley, England and Annan, Scotland. In addition the Company utilizes its
proprietary technologies to solve problems for its customers and reduce drug
development time.
Principles of Consolidation
The interim financial statements, in the opinion of management, reflect all
adjustments (including normal recurring adjustments) necessary for a fair
presentation of the results for the interim periods ended June 30, 1999 and
1998. The results of operations for the interim period are not necessarily
indicative of the results of operations expected for the fiscal year.
2. Net Income (Loss) per Common Share
Basic income (loss) per common share for the second quarter ended June 30,
1999 and 1998 were computed by dividing the net income (loss) by the weighted
average shares outstanding during the period in accordance with Statement of
Financial Accounting Standards No. 128, Earnings per Share. In the three and
six months ended June 30, 1999 and the three months ended June 30, 1998, the
impact of assumed exercise of stock options is included in diluted shares
outstanding. Using the Treasury Stock method, the Company calculates the
potential dilution from stock options at the average market stock price during
the period based on the assumption that all stock options are exercised and
simultaneously the proceeds of exercise are used to acquire the Company's stock.
Since the effect of assumed exercise of stock options of 524,965 shares for the
six months ended June 30, 1998 were anti-dilutive, basic and diluted loss per
share for the first six months of 1998 are the same.
3. Stock Offering
On March 24, 1999, the Company issued 2,500,000 shares of the Company's
common stock to the public at $19.00 per share and received $44.3 million in
proceeds net of underwriters discount and expenses. In connection with the sale,
the Company granted the underwriters a 30 day option to purchase up to 375,000
additional shares of the Company's common stock on the same terms to cover over
allotments. On March 30, 1999, the underwriters exercised their option and the
Company issued 375,000 shares of its common stock and received proceeds of $6.8
million, net of underwriters discount. The total net proceeds of $51.1 million
were utilized to pay down existing revolving credit borrowings outstanding of
$28.4 million ((Pounds)17.4 million) on March 26, 1999, and to repay $21.5
million ((Pounds)13.3 million) of term-loan borrowings.
6
<PAGE>
4. Shelf Registration
On June 3, 1999, the Company filed with the Securities and Exchange
Commission to register for the sale of debt securities, preferred stock, common
stock and warrants, (representing rights to purchase debt securities, preferred
stock, common stock and warrants) with an initial offering price not to exceed
$104.6 million bringing the total securities available for register to $150.0
million at June 30, 1999. Costs associated with this filing have been deferred
and included in other assets.
5. Non-Recurring Charges
In April and June 1999, the Company announced the outsourcing of the
Company's inventory warehouse operation at its Dudley, England facility and the
outsourcing of its management information systems departments at its Dudley,
England and Annan, Scotland facilities. As a result, the Company recorded a $0.7
million pre-tax charge in the second quarter for severance and pension benefits.
In addition, as a result of the Company paying down revolving-credit and
term-loan borrowings from the stock offering proceeds and amending its
Facilities Agreement to shorten the expiry of the agreement to January 1, 2001
and modify certain other provisions to more favorable terms, the Company
recorded a pre-tax non-recurring charge of $1.0 million in the second quarter of
1999 to write off certain deferred financing costs.
6. Purchase of Cauldron Process Chemistry
On May 17, 1999, the Company purchased the Cauldron Process Chemistry
business in Malvern, Pennsylvania. The Company paid approximately $5.8 million
in cash plus a $1.0 million cash payment due September 1, 1999 and an additional
payment due in February 2000 based on the results of the business during 1999.
The acquisition was accounted for as a purchase. Accordingly, the assets and
liabilities acquired are included in the consolidated balance sheet as of June
30, 1999 and the results of operations and cash flows from the date of
acquisition. The Company recorded goodwill of approximately $5.0 million
associated with the acquisition which may increase depending on the final
contingent consideration paid in February 2000 and is amortizing it on a
straight-line basis over 15 years.
7. Long-Term Debt
In May 1999, the Company amended its senior secured term-loan and
revolving-credit facilities, (the "Facilities Agreement"). The amendment to the
Facilities Agreement included a reduction of the interest rate to LIBOR plus 1.0
percent (6.12 % at June 30, 1999) declining to LIBOR plus 0.75 percent after
September 30, 1999 should certain financial covenants be met, and the shortening
of the term to January 1, 2001.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the historical consolidated financial statements and the notes thereto included
elsewhere herein.
Introduction
ChiRex Inc. (the "Company" or "ChiRex") is an integrated outsourcing
company that provides an extensive range of services to pharmaceutical and life
science companies. The Company's services span a broad range of outsourcing
services from the early stages of drug development and from post-discovery to
full-scale manufacture of active ingredients. Specifically the Company provides
contract process research and development and pharmaceutical fine chemical
manufacturing services and access to an extensive portfolio of proprietary
technologies. The Company's contract manufacturing services, developed over the
past thirty years include process research and development, hazard evaluation,
analytical methods development, clinical quantity production and pilot-scale and
commercial-scale manufacturing at its world-class, current Good Manufacturing
Practices ("cGMP") facilities in Boston, Massachusetts, Malvern, Pennsylvania,
Dudley, England and Annan, Scotland. In addition the Company utilizes its
proprietary technologies to solve problems for its customers and reduce drug
development time.
Substantially all of the Company's revenues and expenses are denominated in
Great Britain pounds sterling, and to prepare the Company's financial statements
such amounts are translated into U.S. dollars at average exchange rates in
accordance with generally accepted accounting principles.
Results of Operations
Three-month period ended June 30, 1998 and 1999
Total revenues in the second quarter increased $8.1 million, or 28.3% to
$36.6 million in the second quarter of 1999, from $28.6 million in the
comparable period in 1998. Revenues from manufacturing services increased to
$29.1 million or 14.1%, from $25.5 million in the comparable period in 1998 as
new products came on stream, while revenues from technology development
activities increased to $7.5 million or 141.9% from $3.1 million in the
comparable period in 1998 due to an increase in the number of development
projects and the acquisition of the Cauldron Process Chemistry business. Total
revenues denominated in Great Britain pounds sterling translated at a constant
currency rate increased $9.1 million or 31.5%, to $37.6 million in the second
quarter of 1999.
Cost of goods sold increased $2.5 million, or 11.3% to $23.9 million in the
second quarter of 1999, from $21.5 million in 1998. This increase is due
primarily to the higher volume of new product sales. Gross margin percentage
increased to 34.8% in the second quarter of 1999 from 24.9% in 1998 primarily
due to the effect of operating leverage from higher revenues, cost reduction at
the Dudley and Annan manufacturing facilities, a greater mix of development
revenues and better product pricing.
Research and development expenses increased $0.6 million, or 51.3% to $1.6
million in the second quarter of 1999. This increase was due mainly to the cost
of additional research chemists at the newly opened technology center in Boston,
Massachusetts and pilot plant costs to support the new product pipeline.
Selling, general and administrative expenses increased $0.6 million or
18.6%, to $3.7 million in the second quarter of 1999 from $3.2 million last
year. This increase is due primarily to expenses associated with the formation
of the technology center in Boston, Massachusetts, and the acquisition of the
Cauldron Process Chemistry business partly offset by lower expenses resulting
from the restructuring initiated in July last year.
Non-recurring charges and other expenses increased $1.5 million from $0.2
million in the second quarter of 1999 primarily as a result of severance and
pension costs associated with the Company's outsourcing of the inventory
warehouse operation at its Dudley, England facility and the outsourcing of its
management information systems departments at its Dudley, England and Annan,
Scotland facilities.
8
<PAGE>
In addition, the Company wrote off certain deferred financing costs associated
with the pay down and amendment of its Facilities Agreement. In June 1999, the
Company announced a voluntary redundancy and early retirement plan at its Dudley
and Annan facilities. As a result, the Company expects to record a non-recurring
charge in the third quarter.
Amortization of goodwill increased slightly in the second quarter as a
result of the acquisition of the Cauldron Process Chemistry business in May
1999. The Company expects amortization will increase in the third and fourth
quarters of 1999 as a result of the acquisition.
Interest expense was $1.3 million in the second quarter of 1999 compared to
$1.4 million in the second quarter of 1998. This was due to lower borrowing
rates and lower borrowing levels as proceeds from the stock offering in March
1999 were utilized to pay down borrowings.
Income tax expense was $1.3 million in the second quarter of 1999, an
effective tax rate of 33.3%, compared to an effective tax rate of 34.1% in the
comparable period in 1998.
As a result of the factors described above, the Company reported a net
income of $2.7 million in the second quarter of 1999 compared to a net income of
$0.6 million for the comparable prior-year period.
Six-month period ended June 30, 1998 and 1999
Total revenues increased $18.6 million, or 35.6% to $70.8 million in the
six months ended June 30, 1999, from $52.2 million in the comparable period in
1998. Revenues from commercial scale business increased to $30.1 million or
38.7%, from $21.7 million in the comparable period in 1998 as new products came
on stream, while revenues from technology activities increased to $11.6 million
or 96.6% from $5.9 million in the comparable period in 1998 due to an increase
in the number of projects and the acquisition of the Cauldron Process Chemistry
business. Total revenues denominated in Great Britain pounds sterling translated
at a constant currency rate increased $19.9 million or 38.1%, to $72.1 million
in the six months ended June 30, 1999.
Cost of goods sold increased $5.9 million, or 14.5% to $46.7 million in the
six months ended June 30, 1999 from $40.8 million in the comparable period in
1998. This increase is due primarily to the higher volume of new product sales.
Gross margin percentage in the six months ended June 30, 1999 increased to 34.1%
from 21.9% in 1998 primarily due to the effect of operating leverage from higher
revenues, cost reduction at the Dudley and Annan manufacturing facilities, a
greater mix of development revenues and better product pricing.
Research and development expenses increased $0.7 million, or 29.7% to $3.0
million in the six months ended June 30, 1999. This increase was due mainly to
the cost of additional research chemists at the newly opened technology center
in Boston, Massachusetts and pilot plant costs to support the new product
pipeline.
Selling, general and administrative expenses increased $0.8 million or
12.5%, to $7.1 million in the six months ended June 30, 1999 from $6.3 million
during the comparable period in 1998. This increase is due primarily to expenses
associated with the formation of the technology center in Boston, Massachusetts,
and the acquisition of the Cauldron Process Chemistry business, partly offset by
lower expenses resulting from the restructuring initiated in July last year.
Non-recurring charges and other expenses increased $1.5 million from $0.2
million in the six months ended June 30, 1999 primarily as a result of costs
associated with the Company's outsourcing of the inventory warehouse operation
at its Dudley, England facility and the outsourcing of its management
information systems departments at its Dudley, England and Annan, Scotland
facilities. In addition, the Company wrote off certain deferred financing costs
associated with the pay down and amendment of its Facilities Agreement. In June
1999, the Company announced a voluntary redundancy and early retirement plan at
its Dudley and Annan facilities. As a result, the Company expects to record a
non-recurring charge in the third quarter.
9
<PAGE>
Amortization of goodwill increased slightly in the first half as a result
of the amortization of goodwill associated with the asset acquisition of the
Cauldron Process Chemistry business in the first half of 1999. The Company
expects that amortization will increase in the third and fourth quarters of 1999
as a result of the acquisition.
Interest expense was $3.3 million in the six months ended June 30, 1999
compared to $2.8 million in the comparable period of 1998. This increase was
due primarily to an increase in amortization of deferred financing costs
resulting from the shortening of the term of the Facilities Agreement, partly
offset by lower borrowing rates and lower borrowing levels.
Income tax expense was $2.9 million in the six months ended June 30, 1999,
an effective tax rate of 33.8%, compared to a tax benefit of $0.3 million in the
comparable period of 1998, an effective tax rate of 34.3%.
As a result of the factors described above, the Company reported a net
income of $5.6 million in the second quarter of 1999 compared to a net loss of
$0.5 million for the comparable prior-year period.
Liquidity and Capital Resources
Historically, the Company's primary sources of funding have been cash flow
from operations, sales of its common stock and borrowings under its revolving-
credit and term-loan facilities. In March 1999, the Company consummated the
sale of 2,875,000 shares of its common stock issued to the public. This
resulted in net proceeds to the Company of approximately $51.1 million. The
Company used the proceeds from the stock offering to repay borrowings
outstanding under the revolving-credit and term-loan facilities.
Cash provided from operating activities was $9.7 million in the six months
ended June 30, 1999 or $2.9 million less than the comparable period in 1998 as
increased profitability and a reduction in inventory were more than offset by
cash utilized to reduce trade and contractor creditors, accrued expenses, and an
increase in accounts receivable.
Net cash used in investing activities in the first six months of 1999 was
$19.0 million including $5.8 million for the acquisition of the Cauldron Process
Chemistry business in May 1999, compared to $15.5 million in the same period of
1998. Capital spending of $13.3 million in 1999 consists of expenditures to
complete the modification of the Annan facility to a multi-product
pharmaceutical fine chemical manufacturing facility, plant maintenance at both
the Annan and Dudley sites, and spending at the Boston facility associated with
its start up.
Net cash provided from financing activities for the first six months of
1999 of $9.6 million is primarily the result of net proceeds from the stock
offering of $51.1 million and $2.1 million received in a sale-leaseback
transaction, partly offset by the repayment of borrowings outstanding under the
Company's revolving-credit and term-loan facilities of $44.2 million.
The Company expects to satisfy its cash requirements, including the
requirements of its subsidiaries, through internally generated cash and
borrowings. As of June 30, 1999 the Company had approximately $33.2 million
((Pounds)21.0 million) of availability under its revolving-credit facility.
Year 2000 Disclosure
The Company has dedicated internal resources to identify and resolve "Year
2000" compliance issues with respect to computer systems and applications
utilized by the Company. The Company has also engaged external resources,
including hiring an independent consulting firm, and will purchase necessary
computer software upgrades to become year 2000 compliant. The Company will
develop comprehensive testing procedures once necessary software and equipment
have been installed to validate year 2000 compliance. The Company is
implementing a year 2000 compliant management information system at its Annan
facility in connection with its business plans for this location. The Company's
plan is to implement these systems at the Company's other locations, including
the Dudley facility, in 1999. The Company expects to spend approximately $7.1
million on systems and equipment, which are year 2000 compliant and will expense
these costs in accordance with current accounting guidance.
10
<PAGE>
The Company believes that the systems at two of the three production
facilities at Annan are year 2000 compliant. At present, the Company is not
utilizing the third production facility at Annan. In the event that the Company
commences operations at this third facility, it expects to spend approximately
$1.0 million upgrading the facility's computer systems and applications and will
expense these costs in accordance with current accounting guidance.
No assurance can be given that the year 2000 compliance issues will be
resolved without any future disruption or that the Company will not incur
significant additional expense in resolving the issue. In addition, the failure
of certain of the Company's significant suppliers and customers to address the
year 2000 compliance issues could have a material adverse effect on the Company.
Contingency plans have been addressed for all major computer systems and
applications, and they include manual capability of certain business areas if
necessary, and the controlled shutdown and start-up of the manufacturing plant
for a minimum period of days during the date change. The approach, methodology,
plans, and contingencies for internal processes have been reviewed by our
independent computer consultant and are subject to further development and
testing. With regards to external factors such as supply of raw materials,
access to funds and potential utility disruption, the Company's contingency
plans are at a preliminary stage and require further development.
Foreign Currency
The Company currently expects that sales of its products outside the United
States will continue to be a substantial percentage of its net sales. The
Company believes it has a natural cash currency hedge because its operating
expenses and revenues tend to be denominated in matched currencies. Also, the
Company has partly offset foreign currency-denominated assets with foreign
currency denominated liabilities.
Financial results of the Company could be adversely or beneficially
affected by fluctuations in foreign exchange rates. Fluctuations in the value of
foreign currencies will affect the U. S. dollar value of the Company's net
investment in its foreign subsidiaries, with related effects included in a
separate component of stockholders' equity titled Cumulative Translation
Adjustments. In the first six months of 1999, the cumulative translation
adjustment declined $4.8 million due to the reduction in the Great Britain
pounds sterling exchange rate to (Pounds)1.58 to $1.00 at June 30, 1999.
Operating results of foreign subsidiaries are translated into U. S. dollars at
average monthly exchange rates and balance sheet amounts are translated at
period-end exchange rates. In addition, the U. S. dollar value of transactions
based in foreign currency also fluctuates with exchange rates. The Company
expects that the largest foreign currency exposure will result from activity in
Great Britain pounds sterling and Euros.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
-NONE-
ITEM 2. Changes in Securities and Use of Proceeds
-----------------------------------------
See Note 3 of Notes to Consolidated Interim Financial Statements
ITEM 3. Defaults Upon Senior Securities
-------------------------------
-NONE-
ITEM 4. Submission of Matters to a vote of Security Holders.
----------------------------------------------------
On April 21, 1999, the Company held its Annual Meeting of
Stockholders at the Ritz Carlton Hotel, Amelia Island, Florida. The
matters voted on are described below:
1. The election of Director Eric N. Jacobsen, Ph. D.
For all Nominees Against all Nominees Withheld
---------------- -------------------- --------
10,314,491 0 256,882
The terms of office of Directors Michael A. Griffith, W. Dieter
Zander, Dirk Detert, Ph.D. continued after the Annual Meeting.
2. Ratification of Arthur Andersen LLP as independent auditors of
the Company for fiscal 1999.
For all Nominees Against all Nominees Abstain
---------------- -------------------- -------
10,548,078 14,764 8,531
3. The approval of the Amended and Restated 1999 Directors Stock
Option Plan
For all Nominees Against all Nominees Abstain Broker Non-Vote
---------------- -------------------- ------- ---------------
8,912,035 1,483,362 161,968 14,008
ITEM 5. Other Information
-----------------
-NONE-
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
-Amendment No. 4 dated May 14, 1999, to the Facilities
Agreement.
12
<PAGE>
SIGNATURE
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.
CHIREX INC.
Date: July 29, 1999 By: /s/ Jon E. Tropsa
---------------------------------
Jon E. Tropsa
Vice President, Finance
13
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
27 Financial Data Schedule.
99 -Amendment No. 4 dated May 14, 1999, to the Facilities
Agreement.
14
<PAGE>
Exhibit 99
CONFORMED COPY
FOURTH AMENDMENT DATED 14 MAY 1999
TO
FACILITIES AGREEMENT DATED 30 OCTOBER 1997
THIS FOURTH AMENDMENT (this "Amendment") is dated 14 May 1999 and entered into
by and among:
(1) CHIREX (HOLDINGS) LIMITED, a limited company organised under the laws of
England with registered number 3080257 with its registered office at
Dudley, Cramlington, Northumberland NE23 7QG (the "Borrower")
(2) BANKERS TRUST INTERNATIONAL PLC and MIDLAND BANK PLC, as Joint Arrangers
("Joint Arrangers")
(3) BANKERS TRUST COMPANY, as Agent ("Agent")
(4) BANKERS TRUST COMPANY, as Security Agent ("Security Agent")
(5) the Lenders referred to in the Facilities Agreement, as defined below (the
"Lenders"); and
(6) for purposes of Section 5 hereof, CHIREX INC., a corporation organised
under the laws of the State of Delaware with its principal office at 300
Atlantic Street, Suite 402, Stamford, CT 06901, U.S.A., CHIREX (DUDLEY)
LIMITED, a limited company organised under the laws of England with
registered number 857670 with its registered office at Dudley, Cramlington,
Northumberland NE23 7QG, CHIREX (ANNAN) LIMITED, a limited company
organised under the laws of England with registered number 3417229 with its
registered office at Dudley, Cramlington, Northumberland NE23 7QG, CHIREX
TECHNOLOGY CENTER INC, a corporation organised under the laws of the State
of Delaware with its principal office at 300 Atlantic Street, Suite 402,
Stamford CT06901, U.S.A., CHIREX AMERICA INC, a corporation organised
under the laws of the State of Delaware with its principal office at 300
Atlantic Street, Suite 402, Stamford, CT06901, U.S.A., each as Guarantors
("Guarantors").
RECITALS
WHEREAS, the parties listed above, among others, are parties to that certain GBP
62,000,000 Facilities Agreement dated 30th October 1997 as amended by the First
Amendment dated 30th July, 1998 and by the Second Amendment dated 16 November
1998 and by the Third Amendment dated 19 February 1999 (as such facilities
Agreement may be amended, novated or supplemented from time to time, the
"Facilities Agreement"). Capitalised terms used in this Amendment without
definition shall have the same meanings herein as set forth in the Facilities
Agreement;
WHEREAS, the Borrower has prepaid all of the Advances currently outstanding
under the Tranche B Multicurrency Revolving Facility and intends to reschedule
repayment of the Advances under the Tranche A Term Facility.
WHEREAS, the Borrower has requested that the Lenders amend certain provisions of
the Facilities Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants contained herein and the receipt of (Pound)1, the
adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
1 ACKNOWLEDGEMENT OF PAYMENT
The Agent acknowledges receipt of the sum of (Pounds)4,444,444.44 paid on
31 March 1999 which has been applied against the Amortisation due on 31
December 1998 as deferred by clause 6.1.4 of the Second Amendment
Agreement.
2 AMENDMENT/AGREEMENT
2.1 Clause 1.1. of the Facilities Agreement is hereby amended by:
2.1.1 deleting in its entirety the existing definition of "Margin"
including the provisos added by the First Amendment Agreement and
the Second Amendment Agreement and substituting the following
therefor with effect from the Fourth Amendment Effective Date:
"Margin" means 1.00% for the period commencing on the Fourth
Amendment Effective Date and ending on 30 September 1999 and
thereafter 0.75% upon ChiRex Inc. (on a consolidated basis)
achieving a level of Total Debt/EBITDA Ratio equal to or less
than 1.5:1 (and only for such time as such level continues to be
achieved), tested as at the last day of the immediately preceding
Accounting Quarter and calculated as provided in Clause 13.4
provided that:
(i) there shall be no decrease in the Margin if there has
occurred an Event of Default or a Potential Event of
Default which is continuing and the Margin shall remain at
or increase to 1.00% until such time as such Event of
Default or Potential Event of Default is no longer
continuing, whereupon the Margin shall be determined as
aforesaid;
(ii) any reduction or increase in the Margin shall take effect
as from the date of receipt by the Agent of the relevant
accounts in accordance with Clause 13.3.4 (on the basis
that in the case of a reduction or increase taking effect
during an Interest Period the interest payable on the
Interest Payment Date will reflect such reduction or
increase on a time apportioned basis);
(iii) if at any time the Tranche A Facility is classified by the
Auditors as a current or short term liability for the
purposes of the accounting standards applicable to ChiRex
Inc. then the Margin shall be 1.5% from the date of such
classification until the earlier of the Final Repayment
Date or the date upon which such classification ceases.
2.1.2 replacing the reference to 31 December 2002 in the definition of
"Final Repayment Date" with a reference to 1 January 2001.
2.2 clause 6.2.4 of the Facilities Agreement is hereby amended by deleting the
clause in its entirety and substituting the following therefor:
Subject to the terms of this Agreement on 1st January 2001 the
Borrower shall repay all remaining outstanding Tranche B Multicurrency
Revolving Advances.
2.3 Schedule 2 of the Facilities Agreement is hereby amended by deleting the
schedule in its entirety and substituting the following therefor:
Repayment Schedule
Repayment Date Scheduled Repayment of Term Loans
GBP
<PAGE>
31 March 1999 4,444,444.44
the next rollover date which will be
within 10 business days of the Fourth 8,888,888.88
Amendment Effective Date
31 December 1999 4,500,000.00
30 June 2000 4,500,000.00
1 January 2001 17,666,666.68
2.4 Clause 6.1.3 of the Second Amendment Agreement is hereby amended by
replacing the reference to 31 December 1999 as the end date of the
Monitoring Period with a reference to 31 December 2000, and by altering the
obligation to deliver consolidated monthly management accounts from not
later than the 21st day of the following month to not later than the 30th
day of the following month.
2.5 NatWest and the Agent, acting on the instructions of the Majority Lenders
hereby agree that the Payment by the Borrower on 31 March 1999 and the
alteration of the Facilities Agreement is an effective restructuring of the
Facilities on terms acceptable to NatWest and the Agent within the
provisions of Clause 9.3.1 of the Second Amendment Agreement thus it is
hereby confirmed for the avoidance of doubt that the provisions of Clause
9.4 of the Second Amendment Agreement are no longer effective and the
Borrower is under no obligation to make the two payments of Pounds 250,000
which otherwise would become due and payable on 30 September 1999 and 31
December 1999 respectively.
3 REPRESENTATIONS AND WARRANTIES
Each of the Borrower and the Guarantors hereby represents and warrants to
the Agent and the Lenders that:
3.1 as of the date hereof, assuming that the amendments contained herein have
been effected there exists no Event of Default or Potential Event of
Default under the Facilities Agreement, and after giving effect to this
Amendment, there will exist no Event of Default or Potential Event of
Default under the Facilities Agreement;
3.2 all representations and warranties contained in the Facilities Agreement
and the other Finance Documents are true, correct and complete in all
material respects on and as of the date hereof except to the extent such
representations and warranties specifically relate to an earlier date, in
which case they were true, correct and complete in all material respects on
and as of such earlier date;
3.3 as of the date hereof, the Borrower has performed all agreements to be
performed on its part as set forth in the Facilities Agreement;
3.4 it is duly organised and validly existing under the laws of the
jurisdiction of its organisation, and has all necessary power and authority
to execute and deliver this Amendment and to consummate the transactions
contemplated hereby;
3.5 neither the execution and delivery of this Amendment, nor the consummation
of the transactions contemplated hereby, violates (i) any law, regulation,
decree or other legal restriction applicable to it, (ii) its charter,
by-laws or other constitutional documents or (iii) any instrument or
agreement to which it or any of its assets is subject or by which it is
bound;
3.6 there is no legal requirement of any governmental authority (including any
requirement to make any declaration, filing or registration or to obtain
any consent, approval, license or order) which is necessary to be met by it
in connection with its execution, delivery or performance of this
Amendment; and
3.7 this Amendment has been duly authorised, executed and delivered on its
behalf and this Amendment, the Facilities Agreement, as amended by this
Agreement, and the other Finance Documents to which it is a
<PAGE>
party constitute its legal, valid and binding obligation, enforceable
against it in accordance with their terms, except as limited by the
Reservations.
4 COUNTERPARTS; EFFECTIVENESS
4.1 This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
4.2 This Amendment shall become effective on the date (the "Fourth Amendment
Effective Date") when the conditions have been satisfied that (i) each of
the Borrower, the Guarantors, the Agent, the Security Agent and the Lenders
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent, (ii) the Borrower shall have delivered
to the Agent favourable opinions of Cravath, Swaine & Moore, U.S. legal
advisers to the ChiRex Group, and Dibb Lupton Alsop, English legal advisers
to the ChiRex Group, in each case addressed to the Agent and the Lenders,
dated the effective date of this Amendment and in form and substance
satisfactory to the Agent.
4.3 On and after the Fourth Amendment Effective Date, each reference in the
Facilities Agreement to "this Agreement", hereunder","hereof", "herein" or
words of like important referring to the Facilities Agreement, and each
reference in the other Finance Documents to the "Facilities Agreement",
"thereunder","thereof" or words of like import referring to the Facilities
Agreement shall mean and be a reference to the Facilities Agreement as
amended by the First Amendment Agreement, the Second Amendment Agreement
the Third Amendment Agreement and by this Amendment.
4.4 This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Facilities
Agreement, any provision of any other Finance Document or any right, power
or remedy of the Agent or any Lender under the Facilities Agreement shall
remain in full force and effect and is hereby ratified and confirmed.
4.5 Clause headings in this Amendment are included herein for convenience of
reference only and shall not constitute a part of this Amendment for any
other purposes or be given any substantive effect.
5 GOVERNING LAW; JURISDICTION
5.1 This Amendment and the rights and obligations of the parties hereunder
shall be governed by, and shall be construed and enforced in accordance
with the laws of England.
5.2 Each Guarantor and Borrower hereby ratifies and confirms the application of
the provisions of Clause 30 of the Facilities Agreement to this Amendment.
6 ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS
Each of the Guarantors hereby acknowledges that it has read this Amendment
and consents to the terms thereof and further hereby confirms and agrees
that, notwithstanding the effectiveness of this Amendment, the obligations
of such Guarantor under its respective Guarantee shall not be impaired or
affected and such Guarantee is, and shall continue to be, in full force and
effect and is hereby confirmed and ratified in all respects.
7 WAIVER
7.1 Permanent Waiver
Subject to the other terms and conditions set forth herein and in reliance
on the representations and warranties of the Borrower herein contained,
Lenders hereby waive, with effect solely from the Fourth
<PAGE>
Amendment Effective Date and in perpetuity thereafter, any breach of
the Facilities Agreement to the extent, and only to the extent,
resulting from the Borrowers failure to provide the Agent with ten
Business Days Notice of the proposed date and the amount of the sum
paid on 31 March 1999.
7.2 Limitation Of Waiver
Without limiting the generality of the provisions of Clauses 22 or 26
of the Facilities Agreement, the waiver set forth above shall be
limited precisely as written, and nothing in this Clause 7 shall be
deemed to:
7.2.1 constitute a waiver of any other term, provision or condition
of the Facilities Agreement or any other instrument or
agreement referred to therein or otherwise; or
7.2.2 prejudice any right or remedy that the Agent or any Lender may
now have or may have in the future under or in connection with
the Facilities Agreement or any other instrument or agreement
referred to therein.
Except as expressly set forth therein, the terms, provisions
and conditions of the Facilities Agreement and the other
Finance Documents shall remain in full force and effect and in
all other respects are hereby ratified and confirmed.
7.3 Finance Party Expenses; Certain Agency Matters
7.3.1 Without Limitation to Clauses 11 (Fees, Expenses and Stamp
Duties) and 27 (Indemnities) of the Facilities Agreement but
without duplication, the Borrower hereby agrees that it will on
demand pay and reimburse, on the basis of a full indemnity, all
reasonable costs and expenses (including reasonable accounting
and legal expenses, recordation fees and other out-of-pocket
expenses, including for the avoidance of doubt the reasonable
professional fees of Linklaters & Paines, and any VAT or
similar Tax on any of the foregoing) incurred by the Agent, the
Security Agent or NatWest in connection with this Amendment and
any subsequent variation, recordation, amendment, supplement,
restatement, waiver, consent or suspension of rights (or any
proposal for any of the same or negotiations in connection
with the same) relating to any of the Finance Documents (and
documents, matters or things referred to therein) and in
connection with the security to be given by ChiRex Inc in
respect of the "ChiRex" trademark owned by it pursuant to the
Third Amendment.
7.3.2 In addition to but without prejudice to the generality of
Clause 7.3.1 the Borrower hereby agrees that it will within 5
working days of the Fourth Amendment Effective Date;
(a) pay to Ernst & Young the sum of (Pounds) 50,865.96 in
satisfaction of their invoice rendered in respect of their fees
incurred since November 1998 up until the Fourth Amendment
Effective Date; and
(b) pay to Linklaters & Paines the sum of (Pounds) 20,064.16 in
satisfaction of their invoice dated 12 April 1999 which relates
to work carried out by them from December 1998 until 19
February 1999
7.3.3 Each Lender reaffirms the appointment of NatWest to act as its
representative in assisting the Agent and otherwise in
investigating the prospects, financial condition, business,
assets and revenues of the Borrower, its subsidiaries and its
affiliates, and agrees that NatWest shall be entitled in such
capacity to the benefits of Clause 16 (including without
limitation the indemnities therein and exculpatory provisions
thereof) of the Facilities Agreement as if references to the
Agent therein were also to NatWest, mutatis mutandis.
8 FEES
In consideration of the amendments to the Facilities Agreement made
pursuant to Clause 2 above and the waiver agreed by the Lenders
pursuant to Clause 7.1 above the Borrower agrees to pay to the Agent
for the account of each Lender the outstanding amendment fees and
monitoring fees payable under clauses 8.1 and 8.2 of the Second
Amendment Agreement and clause 7.1 of the Third Amendment (totalling
<PAGE>
(Pound)1,116,000 at the date of this Amendment) in full within not more
than 10 Business Days of the Fourth Amendment Effective Date.
8.2 The Borrower also agrees to pay NatWest further monthly monitoring and lead
bank fees of (Pound)5,000:
Such fees shall become due on the first day of each month from 1 July 1999
to 1 December 2000 and shall be paid not later than the end of each such
month.
8.3 Notwithstanding the above, the Borrower hereby confirms that the Fees
Letter from the Agent to the Borrower dated 23 October, 1998 (the "Waiver
Fees Letter"), remains in full force and effect, except that for the
purposes of the Waiver Fees Letter and from the Fourth Amendment Effective
Date, the references to
(i) "Limited Waiver" therein shall also refer to this Amendment and
(ii) the Facility Agreement dated 30 October 1997 as amended by the
First Amendment dated 30 July 1998 and the Second Amendment dated
17 November 1998 and the Third Amendment dated 19 February 1999
shall refer to the Facilities Agreement as further amended by
this Amendment.
9 UNDERTAKINGS
9.1 The Borrower undertakes to pay any sums due or owing or incurred pursuant
to this agreement, including but not limited to those sums becoming due
under Clauses 1, 7.3 and 8 above, on the date for payment.
9.2 Any failure by the Borrower to fulfil its undertakings under this Clause in
full and at or by the times indicated shall constitute an Event of Default.
10 AGENTS APPLICATION OF FEES
If any fees are paid to the Agent or NatWest by the Borrower in accordance
with Clause 8 above, each of the Agent and NatWest agree to pay such sums
as are for the account of each Lender to that Lender within 2 business days
of receipt by the Agent of such fees.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorised as of the date first written above.
<PAGE>
CHIREX (HOLDINGS) LIMITED, in its capacity as the Borrower
By: (s)
Print Name: Jon E Tropsa
Title: Director
CHIREX INC., in its capacity as a Guarantor
By: (s)
Print Name: Jon E Tropsa
Title: Director
CHIREX (DUDLEY) LIMITED, in its capacity as a Guarantor
By: (s)
Print Name Jon E Tropsa
Title: Director
CHIREX (ANNAN) LIMITED, in its capacity as a Guarantor
By: (s)
Print Name Jon E Tropsa
Title: Director
CHIREX AMERICA INC., in its capacity as a Guarantor
By: (s)
Print Name Jon E Tropsa
Title: Director
CHIREX TECHNOLOGY CENTER INC., in its capacity as a Guarantor
By: (s)
Print Name Jon E Tropsa
Title: Director
<PAGE>
BANKERS TRUST INTERNATIONAL PLC. in its capacity as a Joint Arranger
By: (s)
Print Name: Stephen O'Neil
Title: Director
MIDLAND BANK PLC, in its capacity as a Joint Arranger and a Lender
By: (s)
Print Name: Paul Thompson
Title: Senior Manager
BANKERS TRUST COMPANY, in its capacities as a Lender, Agent and Security
By: (s)
Print Name: Stephen O'Neil
Title: Director
THE GOVERNOR AND COMPANY OF
BANK OF IRELAND, in its capacity as a Lender
By: (s)
Print Name: Brendan McLoughlin/David Walsh
Title: Manager/Senior Manager
BANQUE ET CAISSE D'EPARGNE DE L'ETAT, in its capacity as a Lender
By: (s)
Print Name: Jean-Pierre Thein
Title: Consellier de Direction adjoint
By:(s)
Print Name: John Dhur
Title: Sous-Director
<PAGE>
DE NATIONALE INVESTERINGSBANK N.V., in its capacity as a Lender
By:(s)
Print Name: Gerard Burgers/Tim Crossley
Title: Head of Acquisition Finance/Senior Manager
IKB DEUTSCHE INDUSTRIEBANK AG, in its capacity as a Lender
By:(s)
Print Name: Manfred Ziwey
Title: Director
By:(s)
Print Name: Edwin Brecht
Title: Executive Director
By:(s)
Print Name:
Title:
AIB CAPITAL MARKETS PLC, in its capacity as a Lender
By:(s)
Print Name: Barry Pitcher
Title: Director, Special Finance Unit
MITSUBISHI TRUST & BANKING CORPORATION, in its capacity as a Lender
By:(s)
Print Name: Sheila Lambert
Title: Chief Manager - Head of Credit
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE, in its capacity as a
Lender
By: (s)
Print Name: A de Gromard
Title: Senior Manager
By: (s)
Print Name: T D Prestwich
Title: Relationship Manager
NATIONAL WESTMINSTER BANK PLC, in its capacity as a Lender
By: (s)
Print Name: NT Smith
Title: Senior Manager
<TABLE> <S> <C>
<PAGE>
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<NAME> CHIREX INC
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
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<RECEIVABLES> 17,610
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<CURRENT-ASSETS> 5,967
<PP&E> 174,582
<DEPRECIATION> 20,431
<TOTAL-ASSETS> 239,790
<CURRENT-LIABILITIES> 38,187
<BONDS> 29,492
0
0
<COMMON> 148
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<TOTAL-LIABILITY-AND-EQUITY> 239,790
<SALES> 36,478
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<CGS> (23,872)
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<INCOME-PRETAX> 4,034
<INCOME-TAX> (1,343)
<INCOME-CONTINUING> 2,691
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,691
<EPS-BASIC> 0.18
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