<PAGE> 1
================================================================================
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
================================================================================
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12317
NATIONAL-OILWELL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0475875
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10000 RICHMOND AVENUE
4TH FLOOR
HOUSTON, TEXAS
77042-4200
----------------------------------------------------
(Address of principal executive offices)
(713) 346-7500
----------------------------------------------------
(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 such filing
requirements for the past 90 days.
YES [X] NO [ ]
As of November 10, 2000, 80,285,395 common shares were outstanding, assuming the
exchange on a one-for-one basis of all Exchangeable Shares of Dreco Energy
Services Ltd. into shares of National-Oilwell, Inc. common stock.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONAL-OILWELL, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited) (Restated)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 25,047 $ 48,091
Marketable securities, at fair value (cost of $13,437 -- 14,686
at December 31, 1999)
Receivables, less allowance of $5,697 and $7,246 247,618 200,396
Inventories 386,335 348,024
Deferred income taxes 20,003 10,684
Income taxes receivable 12,932 12,888
Prepaids and other current assets 11,372 7,776
----------- -----------
703,307 642,545
Property, plant and equipment, net 176,099 154,844
Deferred income taxes 14,537 11,726
Goodwill 308,697 177,377
Property held for sale 7,424 7,424
Other assets 4,983 5,488
----------- -----------
$ 1,215,047 $ 999,404
=========== ===========
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 89 $ 300
Accounts payable 159,131 106,219
Customer prepayments 15,971 18,776
Accrued compensation 8,685 4,232
Other accrued liabilities 49,783 61,003
----------- -----------
233,659 190,530
Long-term debt 205,008 196,053
Deferred income taxes 3,039 6,138
Other liabilities 10,516 10,308
----------- -----------
452,222 403,029
Commitments and contingencies
Stockholders' equity:
Common stock - par value $.01; 80,269,759 shares
and 71,736,609 shares issued and outstanding
at September 30, 2000 and December 31, 1999 803 717
Additional paid-in capital 581,139 415,701
Accumulated other comprehensive income (17,927) (11,923)
Retained earnings 198,810 191,880
----------- -----------
762,825 596,375
----------- -----------
$ 1,215,047 $ 999,404
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE> 3
NATIONAL-OILWELL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 286,325 $ 194,870 $ 820,521 $ 617,140
Cost of revenues 222,040 157,071 640,338 500,839
--------- --------- --------- ---------
Gross profit 64,285 37,799 180,183 116,301
Selling, general and administrative 42,046 35,898 132,842 113,906
Special charge -- 321 13,000 1,779
--------- --------- --------- ---------
Operating income 22,239 1,580 34,341 616
Other income (expense):
Interest and financial costs (4,672) (3,970) (14,142) (11,980)
Interest income 973 605 2,394 1,747
Other 667 2,798 (7,802) (3,440)
--------- --------- --------- ---------
Income/(loss) before income taxes 19,207 1,013 14,791 (13,057)
Provision/(benefit) for income taxes 7,299 539 7,863 (3,331)
--------- --------- --------- ---------
Net income/(loss) $ 11,908 $ 474 $ 6,928 $ (9,726)
========= ========= ========= =========
Net income/(loss) per share:
Basic $ 0.15 $ 0.01 $ 0.09 $ (0.14)
========= ========= ========= =========
Diluted $ 0.15 $ 0.01 $ 0.09 $ (0.13)
========= ========= ========= =========
Weighted average shares outstanding:
Basic 80,111 71,681 78,991 71,668
========= ========= ========= =========
Diluted 81,727 72,515 80,436 72,093
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 4
NATIONAL-OILWELL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 6,928 $ (9,726)
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 25,813 20,720
Amortization of negative goodwill -- (4,026)
Provision for losses on receivables 885 1,663
Provision for deferred income taxes (8,176) (1,587)
Gain on sale of assets (2,862) (1,413)
Foreign currency transaction gain (loss) (706) (248)
Special charge 13,000 1,779
Changes in assets and liabilities, net of acquisitions and divestments:
Receivables (18,558) 137,641
Net investment in marketable securities 14,686 3,000
Inventories (21,797) 25,736
Prepaid and other current assets (3,530) (1,730)
Accounts payable 36,559 (66,347)
Other assets/liabilities, net (19,290) (17,288)
--------- ---------
Net cash provided by operating activities 22,952 88,174
--------- ---------
Cash flow from investing activities:
Purchases of property, plant and equipment (16,991) (13,411)
Proceeds from sale of assets 6,590 30,760
Business acquired, net of cash (48,208) (65,000)
--------- ---------
Net cash used by investing activities (58,609) (47,651)
--------- ---------
Cash flow from financing activities:
Payments on line of credit 1,744 (34,995)
Proceeds from stock options exercised 11,434 476
Other 37 (209)
--------- ---------
Net cash provided (used) by financing activities 13,215 (34,728)
--------- ---------
Effect of exchange rate (gain) on cash (602) 137
--------- ---------
Increase/(decrease) in cash and equivalents (23,044) 5,932
Cash and cash equivalents, beginning of period 48,091 49,439
--------- ---------
Cash and cash equivalents, end of period $ 25,047 $ 55,371
========= =========
Supplemental disclosures of cash flow information:
Cash payments during the period for:
Interest $ 14,921 $ 8,033
Income taxes 4,879 12,314
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 5
NATIONAL-OILWELL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
Information concerning common stock and per share data has been restated on an
equivalent share basis and assumes the exchange of all Exchangeable Shares
issued in connection with the 1997 combination with Dreco Energy Services Ltd.
In addition, all periods presented have been restated to reflect the merger with
IRI International Corporation.
The Company employs accounting policies that are in accordance with generally
accepted accounting principles in the United States. Accordingly, Company
management makes estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the periods. Actual results could differ from those
estimates.
The accompanying unaudited consolidated financial statements present information
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and applicable rules of
Regulation S-X. They do not include all information or footnotes required by
generally accepted accounting principles for complete financial statements and
should be read in conjunction with the Company's 1999 Annual Report on Form
10-K.
In the opinion of the Company, the consolidated financial statements include all
adjustments, all of which are of a normal, recurring nature, necessary for a
fair presentation of the results for the interim periods. The results of
operations for the nine months ended September 30, 2000 and 1999 may not be
indicative of results for the full year. No significant accounting changes have
occurred during the nine months ended September 30, 2000.
2. ACQUISITIONS
During February 2000, the Company completed its merger with Hitec ASA, a leading
supplier of highly advanced systems and solutions, including leading-edge
automation and remote control technologies, for the oil and gas industry. The
Company issued approximately 7.9 million shares of common stock valued at $19.50
per share and cash of $4 million for all of the outstanding shares of Hitec.
Goodwill related to the transaction approximated $136 million. Hitec's financial
results are included in National Oilwell's consolidated results effective
February 1, 2000. Pro forma results of operations are not presented since they
are not considered material.
On June 27, 2000, the Company issued 13.5 million shares of common stock for all
of the outstanding shares of IRI. The transaction was a tax-free exchange and
was recorded in accordance with the pooling-of-interests method of accounting.
All prior periods have been restated. In conjunction with the merger, the
Company recorded a special charge of $13.0 million in June 2000, consisting
principally of direct deal costs and employee severance payments. Integration of
the merged companies was begun in the third quarter 2000 and included a
comprehensive review of operations, product lines, staffing and facility needs,
asset valuations and liabilities. This review process is currently ongoing and
any additional charges will be recognized during the fourth quarter 2000 as the
merger is fully implemented. The need for or amount of any additional charges
has not been determined.
4
<PAGE> 6
Effective September 1, 2000, the Company acquired the Wheatley Gaso and Omega
pump product lines from Halliburton Company for approximately $13 million.
Goodwill related to this cash transaction approximated $3 million and is
accounted for under the purchase method of accounting. On September 27, 2000,
National Oilwell acquired the assets and certain liabilities of the Baylor
Company and its subsidiaries in a cash transaction approximating $29 million.
Baylor designs and manufactures braking systems and large synchronous generators
used on drilling rigs. The transaction was accounted for under the purchase
method of accounting with goodwill approximating $5 million.
3. INVENTORIES
Inventories consist of (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Raw materials and supplies $ 61,840 $ 54,958
Work in process 56,874 46,722
Finished goods and purchased products 267,621 246,344
-------- --------
Total $386,335 $348,024
======== ========
</TABLE>
4. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities. The Company
expects to adopt the new Statement effective January 1, 2001. The Statement will
require the Company to recognize all derivatives on the balance sheet at fair
value. The Company has not completed its evaluation but currently does not
anticipate that the adoption of this Statement will have a significant effect on
its results of operations or financial position.
5. COMPREHENSIVE INCOME
The components of comprehensive income are as follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income/(loss) $11,908 $ 474 $ 6,928 $(9,726)
Currency translation adjustments 3,984 (4,898) (7,121) 1,079
Unrealized gains on securities 162 146 732 528
------- ------- ------- -------
Comprehensive income/(loss) $16,054 $(4,278) $ 539 $(8,119)
======= ======= ======= =======
</TABLE>
5
<PAGE> 7
6. BUSINESS SEGMENTS
Segment information (unaudited) follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues from unaffiliated customers
Products and Technology $ 152,972 $ 93,611 $ 441,856 $ 312,975
Distribution Services 133,336 101,263 378,647 304,176
Intersegment revenues
Products and Technology 13,846 5,659 35,157 21,343
Distribution Services 61 490 256 856
Operating income (loss)
Products and Technology 20,297 5,636 49,404 19,446
Distribution Services 3,892 (633) 7,388 (6,215)
--------- --------- --------- ---------
Total profit for reportable segments 24,189 5,003 56,792 13,231
Special charge -- 321 13,000 1,779
Unallocated corporate costs (1,950) (3,102) (9,451) (10,836)
Operating income 22,239 1,580 34,341 616
Net interest expense (3,699) (3,365) (11,748) (10,233)
Other income (expense) 667 2,798 (7,802) (3,440)
--------- --------- --------- ---------
Income/(loss) before income taxes $ 19,207 $ 1,013 $ 14,791 $ (13,057)
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Total assets September 30, September 30,
2000 1999
------------- -------------
<S> <C> <C>
Products and Technology $1,005,554 $ 746,634
Distribution Services 219,480 187,420
</TABLE>
7. SALE OF ASSETS
During June 2000, the Company liquidated a marketable securities portfolio
maintained by IRI prior to the merger for $11.2 million, generating a pre-tax
loss on the sale of $8.5 million ($5.2 million after-tax). Proceeds were used to
pay down debt.
Included in Other Expense for the nine months ended September 30, 1999 are
losses totaling $1.9 million from the sale of assets related to two product
lines. On June 17, 1999, the Company sold its tubular business for approximately
$15 million, generating a pre-tax loss of $0.9 million ($0.5 million after-tax).
Revenues and operating loss recorded in 1999 for the tubular business was $23.6
million and $0.6 million, respectively. On June 24, 1999 the Company sold its
drill bit manufacturing business for approximately $12 million, recording a
pre-tax loss of $1.0 million ($0.6 million after-tax). Revenues and operating
income recorded in 1999 for the drill bit business was $6.1 million and $0.1
million, respectively.
6
<PAGE> 8
8. SPECIAL CHARGE
In conjunction with the merger, the Company recorded a special charge of $13.0
million, approximately half of which was direct transaction costs. The remaining
amount pertains to severance payments related to the integration of
administrative and operational functions. Cash payments related to all direct
transaction costs and most severance payments are complete.
9. SUBSEQUENT EVENT
On October 30, 2000, the Company announced it had entered into a memorandum of
understanding to acquire the stock of Maritime Hydraulics (Canada) Ltd. from
Aker Maritime ASA for Canadian $25 million (approximately U.S. $16 million).
Maritime Hydraulics Canada designs, manufactures and sells coiled tubing units
and truck mounted wireline and nitrogen pumping units. The transaction will be
accounted for in accordance with the purchase method of accounting and is
expected to close in January 2001.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
National Oilwell is a worldwide leader in the design, manufacture and sale of
drilling systems, drilling equipment and downhole products as well as the
distribution of maintenance, repair and operating products to the oil and gas
industry. National Oilwell's revenues are directly related to the level of
worldwide oil and gas drilling and production activities and the profitability
and cash flow of oil and gas companies and drilling contractors , which in turn
are affected by current and anticipated prices of oil and gas. Beginning in late
1997, oil prices declined to less than $15 per barrel due to concerns about
excess production, less demand from Asia due to an economic slowdown and warmer
than average weather in many parts of the United States. The resulting lower
demand for products and services had an increasingly negative effect on both
business segments in 1999. Oil prices have recovered since late July 1999 to a
range of $25-$35 per barrel. The higher prices have already resulted in higher
revenues for National Oilwell and the Company expects its revenues to increase
further if its customers gain confidence in sustained commodity prices at this
level and as their cash flows from operations improve.
RESULTS OF OPERATIONS
Operating results by segment are as follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
Revenues 2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Products and Technology $ 166,818 $ 99,270 $ 477,013 $ 334,318
Distribution Services 133,397 101,753 378,903 305,032
Eliminations (13,890) (6,153) (35,395) (22,210)
--------- --------- --------- ---------
Total $ 286,325 $ 194,870 $ 820,521 $ 617,140
========= ========= ========= =========
Operating Income
Products and Technology $ 20,297 $ 5,636 $ 49,404 $ 19,446
Distribution Services 3,892 (633) 7,388 (6,215)
Corporate (1,950) (3,102) (9,451) (10,836)
--------- --------- --------- ---------
22,239 1,901 47,341 2,395
Special charge -- 321 13,000 1,779
--------- --------- --------- ---------
Total $ 22,239 $ 1,580 $ 34,341 $ 616
========= ========= ========= =========
</TABLE>
Products and Technology
The Products and Technology segment designs and manufactures a wide range of
proprietary products, including drawworks, mud pumps, power swivels, electrical
control systems and downhole motors and tools, as well as complete land drilling
and well servicing rigs and structural components such as cranes, masts,
derricks and substructures for offshore rigs. A substantial installed base of
these products results in a recurring replacement parts and maintenance
business. Sales of new capital equipment fluctuate between periods depending on
the size and timing of order shipments. In addition, the segment provides pump
expendable products for maintenance of National-Oilwell's and other
manufacturers' equipment.
During February 2000, the Company completed its merger with Hitec ASA, a leading
supplier of highly advanced systems and solutions, including leading-edge
automation and remote control technologies, for the oil and gas industry. In
connection therewith, the Company issued approximately 7.9 million shares of
common stock and $4 million in cash. Hitec's financial results are included in
National Oilwell's consolidated results effective February 1, 2000. This
transaction has been
8
<PAGE> 10
accounted for as a purchase for financial reporting purposes with goodwill
related to this transaction approximating $136 million. With the addition of
Hitec, the Company intends to expand its emphasis on technology, especially in
the areas of automation and remotely controlled equipment.
On June 27, 2000, the Company issued 13.5 million shares of common stock for all
of the outstanding shares of IRI. The transaction was a tax-free exchange and
was recorded in accordance with the pooling-of-interests method of accounting.
All prior periods have been restated. In conjunction with the merger, the
Company recorded a special charge of $13.0 million in June 2000, consisting
principally of direct deal costs and employee severance payments. Integration of
the merged companies was begun in the third quarter 2000 and included a
comprehensive review of operations, product lines, staffing and facility needs,
asset valuations and liabilities. This review process is currently ongoing and
any additional charges will be recognized during the fourth quarter 2000 as the
merger is fully implemented. The need for or amount of any additional charges
has not been determined.
Effective September 1, 2000, the Company acquired the Wheatley Gaso and Omega
pump product lines from Halliburton Company for approximately $13 million.
Goodwill related to this cash transaction approximated $3 million and is
accounted for under the purchase method of accounting.
On September 27, 2000, National Oilwell acquired the assets and certain
liabilities of the Baylor Company and its subsidiaries in a cash transaction
approximating $29 million. Baylor designs and manufactures braking systems and
large synchronous generators used on drilling rigs. The transaction was
accounted for under the purchase method of accounting with goodwill
approximating $5 million.
Revenues for the Products and Technology segment increased by $68 million (68%)
in the third quarter of 2000 as compared to the same quarter in 1999 due
primarily to increased sales of capital equipment, drilling replacement and
expendable pump parts, and downhole motors and tools. Revenues associated with
Year 2000 acquisitions accounted for $19 million, or approximately 28% of the
increase. Operating income increased by $15 million in the third quarter of 2000
compared to the same quarter in 1999 due principally to the higher revenue
volume as margin percentage remained virtually the same. Year 2000 acquisitions
accounted for $4 million of the operating income increase.
Products and Technology revenues in the first nine months of 2000 increased $143
million as compared to 1999 due to the overall improved market opportunities, as
reflected in IRI results increasing by $37 million (53%) and the inclusion of
Hitec revenues of $27 million. Operating income increased by $30 million, or
154%, in the first nine months of 2000 as a result of the higher volumes with
Year 2000 acquisitions accounting for $12 million of the increase.
Backlog of the Products and Technology capital products was $180 million at
September 30, 2000 compared to $114 million at December 31, 1999 and $49 million
at September 30, 1999. Backlog increased by $38 million during the current
quarter.
Distribution Services
Distribution Services revenues result primarily from the sale of maintenance,
repair and operating ("MRO") supplies from National Oilwell's network of
distribution service centers and, prior to July 1999, from the sale of well
casing and production tubing. These products are purchased from numerous
manufacturers and vendors, including National Oilwell's Products and Technology
segment. The Company sold its tubular product line in June 1999 for
approximately $15 million, generating a pre-tax loss of $0.9 million ($0.5
million after-tax). Revenues and operating loss recorded in 1999 for the tubular
operations were $23.6 million and $0.6 million, respectively.
9
<PAGE> 11
Distribution Services revenues increased during the third quarter of 2000 over
the comparable 1999 period by $32 million. This 31% increase in MRO products
reflects the enhanced drilling activity driven primarily by higher, more stable
oil and gas prices. North American revenues account for all of this increase
with Canada increasing 20% and the United States higher by 36%. Operating income
in the third quarter of 2000 of $3.9 million was a $4.5 million improvement over
the third quarter of 1999, principally due to the higher revenue volume and
improved margins.
Revenues for the Distribution Services segment increased $74 million in the
first nine months of 2000 when compared to the prior year. Reflecting the
significant increase in oil prices between the periods, Canadian revenues were
higher by 35% while MRO revenues in the United States were 20% greater.
Operating income was $14 million higher in the first nine months of 2000 when
compared to 1999 and is attributable to the higher volume levels and favorable
margin improvements resulting from the sale of the low margin tubular product
line.
Corporate
Corporate costs during the third quarter of 2000 of $2 million represent a
significant reduction from prior quarters due to the elimination of the IRI
corporate operations as a result of the merger. Corporate costs for the first
nine months of 2000 of $9.5 million were slightly lower than the 1999 comparable
time frame.
Interest Expense
Interest expense increased during the three months and nine months ended
September 30, 2000 as compared to the prior year due to higher levels of debt
incurred in connection with completed acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000 the Company had working capital of $470 million, an
increase of $18 million from December 31, 1999. The Wheatley Gaso/Omega and
Baylor Company acquisitions in September 2000 were accountable for a $43 million
increase in working capital at September 30, 2000. Significant increases in
accounts receivable and inventory of $48 million and $38 million were partially
offset by an increase in accounts payable of $53 million. Cash and equivalents
were reduced $23 million and $15 million of marketable securities were
liquidated to repay outstanding debt.
Total capital expenditures were $17 million during the first nine months of 2000
compared to $13 million in the first nine months of 1999. Enhancements to
information and inventory control systems represent a large portion of these
capital expenditures. The Company believes it has sufficient existing
manufacturing capacity to meet currently anticipated demand for its products and
services.
The Company has a five-year unsecured $125 million revolving credit facility
which is available for acquisitions and general corporate purposes. The credit
facility provides for interest at prime or LIBOR plus 0.375%, subject to
adjustment based on the Company's Capitalization Ratio, as defined. The credit
facility contains financial covenants and ratios regarding minimum tangible net
worth, maximum debt to capital and minimum interest coverage. The Company
believes that cash generated from operations and amounts available under the
credit facility will be sufficient to fund operations, working capital needs,
capital expenditure requirements and financing obligations.
The Company intends to pursue acquisition candidates, but the timing, size or
success of any acquisition effort and the related potential capital commitments
cannot be predicted. The Company expects to fund future cash acquisitions
primarily with cash flow from operations and borrowings, including the
unborrowed portion of the credit facility or new debt issuances, but may also
issue
10
<PAGE> 12
additional equity either directly or in connection with acquisitions. There can
be no assurance that additional financing for acquisitions will be available at
terms acceptable to the Company.
SPECIAL CHARGE
In conjunction with the merger, the Company recorded a special charge of $13.0
million, approximately half of which was direct transaction costs. The remaining
amount pertains to severance payments related to the integration of
administrative and operational functions. Cash payments related to all direct
transaction costs and most severance payments are complete.
FORWARD-LOOKING STATEMENTS
This document, other than historical financial information, contains
forward-looking statements that involve risks and uncertainties. Such statements
relate to the Company's revenues, sales of capital equipment, backlog, capacity,
liquidity and capital resources and plans for acquisitions and any related
financings. Readers are referred to documents filed by the Company with the
Securities and Exchange Commission which identify significant risk factors which
could cause actual results to differ from those contained in the forward-looking
statements, including "Risk Factors" at Item 1 of the Annual Report on Form
10-K. Given these uncertainties, current or prospective investors are cautioned
not to place undue reliance on any such forward-looking statements. The Company
disclaims any obligation or intent to update any such factors or forward-looking
statements to reflect future events or developments.
11
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company has not filed any report on Form 8-K during the quarter for which
this report is filed.
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.
Date: November 14, 2000 /s/ Steven W. Krablin
--------------------------------------------------------------------------
Steven W. Krablin
Principal Financial and Accounting Officer
and Duly Authorized Signatory
12
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
