<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 27, 1998
Panavision Inc.
-------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
<TABLE>
<S> <C> <C>
Delaware 001-12391 13-3593063
- ------------------------------------ ------------------------------------ ------------------------------------
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of corporation) Identification No.)
</TABLE>
<TABLE>
<S> <C>
6219 De Soto Avenue
Woodlands Hills, California 91367
- ---------------------------------------------- ----------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
</TABLE>
Registrant's telephone number, including area code: (818) 316-1000
--------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 5. OTHER EVENTS
On January 27, 1998, as part of a private offering (the 'Private
Offering'), PX Escrow Corp., a Delaware corporation (the 'Issuer'), distributed
in an offering circular pro forma financial information of Panavision Inc., a
Delaware corporation ('Panavision' or the 'Company') to a limited group of
prospective investors in the Private Offering. The pro forma financial
information gives pro forma effect to certain acquisitions by, and
recapitalizations of, the Company, including the transactions (the
'Recapitalization') contemplated by the Agreement of Recapitalization and Merger
(the 'Recapitalization Agreement'), dated as of December 18, 1997, by and among
PX Merger Corporation and PX Holding Corporation, both Delaware corporations,
and the Company.
The Recapitalization Agreement has been previously filed with the
Securities and Exchange Commission as Exhibit 10.1 to the Company's Current
Report on Form 8-K, dated December 18, 1997.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired: None
(b) Pro Forma Financial Information: Unaudited Pro Forma Financial Data of
Panavision Inc.
(c) Exhibits: None.
3
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma condensed consolidated statement of
operations and other data for the nine months ended September 30, 1997 and the
twelve months ended September 30, 1997 (the 'LTM Period') give pro forma effect
to the June 5, 1997 acquisition (the 'FSG Acquisition') of Visual Action
Holdings plc's Film Services Group ('FSG') by the Company and the
Recapitalization (including the assumption by the Company of the obligations of
the Issuer pursuant to the Private Offering (the 'Panavision Assumption')).
The unaudited pro forma condensed consolidated statement of operations and other
data for the year ended December 31, 1996 give pro forma effect to the July 1,
1996 acquisition (the 'Lee Lighting Acquisition') of Lee Lighting Limited by the
Company, the May 1996 recapitalization of the Company (the '1996
Recapitalization') (including the Company's November 1996 initial public
offering (the 'IPO')), the FSG Acquisition and the Recapitalization (including
the Panavision Assumption), in each case, as if such transactions had been
consummated on January 1, 1996. The pro forma condensed consolidated balance
sheet data as of September 30, 1997 gives pro forma effect to the
Recapitalization (including the Panavision Assumption) as if it had been
consummated on September 30, 1997. The pro forma financial data assume that an
aggregate of 88% of all shares of common stock, par value $.01 per share, of the
Company ('Company Common Stock') held by stockholders other than Warburg, Pincus
Capital Company, L.P. ('Warburg') is converted into the right to receive cash.
The pro forma adjustments are based upon available information and certain
assumptions that management of the Company believes are reasonable under
the circumstances. The summary pro forma financial data do not purport
to represent the results of operations or the financial position of
Panavision and its subsidiaries that actually would have occurred had
the foregoing transactions been consummated on the aforesaid dates.
The pro forma condensed consolidated statements of operations and other
data exclude the following non-recurring charges which will be reflected in the
Company's statement of operations in connection with the Recapitalization: (i)
$29.3 million relating to the cash settlement of unexercised stock options; (ii)
$17.5 million relating to the purchase by the Company of shares acquired through
the exercise of certain stock options; (iii) $6.0 million relating to
transaction expenses; (iv) $3.9 million increase in the valuation allowance on
deferred tax assets in connection with the Recapitalization; and (v) an
extraordinary charge of $1.9 million relating to the write-off of deferred
financing costs relating to the repayment of borrowings under the existing
credit agreement.
The Recapitalization is being accounted for as a recapitalization of the
Company and not as an acquisition which would have been required to be accounted
for under the purchase method of accounting.
The FSG Acquisition has been recorded under the purchase method of
accounting, and accordingly, FSG's operating results have been included in the
Company's consolidated financial statements since the acquisition date of June
5, 1997. The purchase price of the FSG Acquisition plus direct
acquisition-related costs have been allocated based on fair values of the
acquired assets and assumed liabilities. This allocation is preliminary and
subject to adjustments until the Company completes its review and evaluation of
the acquired assets and assumed liabilities. The Company has also provided for
lease cancellation costs and severance related to the acquired businesses.
Goodwill of approximately $8.9 million was recognized as part of the transaction
and is being amortized over 30 years. The amounts for FSG included in the
accompanying unaudited pro forma condensed consolidated financial statements for
the period ended September 30, 1997, are based on unaudited management
information compiled for each FSG operation from January 1, 1997 up to the date
of the acquisition, June 4, 1997. The amounts for FSG included in the
accompanying unaudited pro forma condensed consolidated financial statements for
the year ended December 31, 1996 are based on the consolidated financial
statements of FSG. All amounts have been converted into U.S. dollars at the
appropriate exchange rates (after adjustment for minor differences between U.K.
and the U.S. generally accepted accounting principles, as more fully described
in the notes to the FSG financial statements).
4
<PAGE>
PANAVISION INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------------------------------------------------------
HISTORICAL PRO FORMA ADJUSTMENTS
------------------------ ----------------------------------
PANAVISION FSG PANAVISION PANAVISION
ADJUSTED(A) FSG ACQUISITION RECAPITALIZATION PRO FORMA
------------- ------- -------------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $ 134,876 $64,728 $ (5,580)(b) $ -- $194,024
Cost of sales..................................... 66,668 30,765 (5,580)(b) 91,649
(204)(c)
------------- ------- -------------- ---------------- ---------
Gross margin...................................... 68,208 33,963 204 102,375
Operating costs................................... 37,119 29,958 312(d) 1,531(h) 66,527
(2,131)(e) (262)(h)
------------- ------- -------------- ---------------- ---------
Operating income (loss)........................... 31,089 4,005 2,023 (1,269) 35,848
Interest income................................... 331 195 526
Interest expense.................................. (5,437) (878) (3,321)(f) (40,198)(i) (40,198)
9,636(i)
Foreign exchange gain............................. 368 -- 368
Other, net........................................ (1,959) -- (1,959)
------------- ------- -------------- ---------------- ---------
Income (loss) before income taxes................. 24,392 3,322 (1,298) (31,831) (5,415)
Income tax (provision) benefit.................... (4,290) (609) 237(g) 2,085(g) (2,577)
------------- ------- -------------- ---------------- ---------
Net income (loss) before extraordinary item....... $ 20,102 $ 2,713 $ (1,061) $(29,746) $ (7,992)
------------- ------- -------------- ---------------- ---------
------------- ------- -------------- ---------------- ---------
EBITDA(k).......................................................................................................... $ 65,291
EBITDA to cash interest expense.................................................................................... 2.6x
EBITDA to total interest expense................................................................................... 1.6x
Ratio of earnings to fixed charges(j).............................................................................. (j)
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Operations.
5
<PAGE>
PANAVISION INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1997
NINE MONTHS ----------------------------------
ENDED
SEPTEMBER 30, FSG PRO FORMA ADJUSTMENTS
1997 JANUARY 1, 1997 ----------------------------------
PANAVISION TO PANAVISION
HISTORICAL JUNE 4, 1997 FSG ACQUISITION RECAPITALIZATION
------------- ------------------ --------------- ----------------
<S> <C> <C> <C> <C>
Revenue.......................................... $ 124,684 $ 27,802 $(1,819)(b) $ --
Cost of sales.................................... 63,731 16,751 (1,819)(b)
(85)(c)
------------- ------- ------- --------
Gross margin..................................... 60,953 11,051 85 --
Operating costs.................................. 36,198 10,488 130(d) 1,148(h)
(500)(e) (156)(h)
------------- ------- ------- --------
Operating income (loss).......................... 24,755 563 455 (992)
Interest income.................................. 303 --
Interest expense................................. (4,566) (280) (1,471)(f) (31,173)(i)
6,317(i)
Foreign exchange loss............................ (157) --
Other, net....................................... 196 276
------------- ------- ------- --------
Income (loss) before income taxes................ 20,531 559 (1,016) (25,848)
Income tax (provision) benefit................... (6,570) (179) 179(g) 4,555(g)
------------- ------- ------- --------
Net income (loss)................................ $ 13,961 $ 380 $ (837) $(21,293)
------------- ------- ------- --------
------------- ------- ------- --------
EBITDA(k)........................................ $ 44,112
EBITDA to cash interest expense.................. 10.6x
EBITDA to total interest expense................. 9.7x
Ratio of earnings to fixed charges(j)............ 4.4x
<CAPTION>
PANAVISION
PRO FORMA
----------
<S> <C>
Revenue.......................................... $150,667
Cost of sales.................................... 78,578
----------
Gross margin..................................... 72,089
Operating costs.................................. 47,308
----------
Operating income (loss).......................... 24,781
Interest income.................................. 303
Interest expense................................. (31,173)
Foreign exchange loss............................ (157)
Other, net....................................... 472
----------
Income (loss) before income taxes................ (5,774)
Income tax (provision) benefit................... (2,015)
----------
Net income (loss)................................ $ (7,789)
----------
----------
EBITDA(k)........................................ $ 50,051
EBITDA to cash interest expense.................. 2.6x
EBITDA to total interest expense................. 1.6x
Ratio of earnings to fixed charges(j)............ (j)
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS ENDED DECEMBER 31, 1996
ENDED ------------------------------------------------------------
SEPTEMBER 30, PRO FORMA ADJUSTMENTS
1997 ----------------------------------
PANAVISION PANAVISION FSG PANAVISION
PRO FORMA HISTORICAL HISTORICAL FSG ACQUISITION RECAPITALIZATION
------------- ---------- ---------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenue................................. $ 150,667 $ 39,588 $ 18,000 $(1,415)(b) $ --
Cost of sales........................... 78,578 19,394 10,298 (1,415)(b)
(51)(c)
------------- ---------- ---------- --------------- --------
Gross margin............................ 72,089 20,194 7,702 51 --
Operating costs......................... 47,308 10,014 5,776 78(d) 383(h)
(533)(e) (87)(h)
------------- ---------- ---------- --------------- --------
Operating income (loss)................. 24,781 10,180 1,926 506 (296)
Interest income......................... 303 109 33
Interest expense........................ (31,173) (1,955) (213) (837)(f) (10,139)(i)
3,005(i)
Foreign exchange gain (loss)............ (157) 469 --
Other, net.............................. 472 (2,106) 102
------------- ---------- ---------- --------------- --------
Income (loss) before income taxes....... (5,774) 6,697 1,848 (331) (7,430)
Income tax (provision) benefit.......... (2,015) (1,524) (578) 100 1,565(g)
------------- ---------- ---------- --------------- --------
Net loss................................ $ (7,789) $ 5,173 $ 1,270 $ (231) $ (5,865)
------------- ---------- ---------- --------------- --------
------------- ---------- ---------- --------------- --------
EBITDA(k)............................... $ 50,051
EBITDA to cash interest expense......... 2.6x
EBITDA to total interest expense........ 1.6x
Ratio of earnings to fixed charges(j)... (j)
<CAPTION>
TWELVE MONTHS
ENDED
SEPTEMBER 30,
1997
PANAVISION
PRO FORMA
-------------
<S> <C>
Revenue................................. $ 206,840
Cost of sales........................... 106,804
-------------
Gross margin............................ 100,036
Operating costs......................... 62,939
-------------
Operating income (loss)................. 37,097
Interest income......................... 445
Interest expense........................ (41,312)
Foreign exchange gain (loss)............ 312
Other, net.............................. (1,532)
-------------
Income (loss) before income taxes....... (4,990)
Income tax (provision) benefit.......... (2,452)
-------------
Net loss................................ $ (7,442)
-------------
-------------
EBITDA(k)............................... $ 69,192
EBITDA to cash interest expense......... 2.7x
EBITDA to total interest expense........ 1.7x
Ratio of earnings to fixed charges(j)... (j)
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Operations.
6
<PAGE>
PANAVISION INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(a) As more fully described in the Company's financial statements for the year
ended December 31, 1996, the Company effected a recapitalization transaction
(the '1996 Recapitalization') in May 1996, and acquired substantially all of
the assets of Lee Lighting Limited ('Lee Lighting') effective July 1, 1996
(the 'Lee Lighting Acquisition'). The Company completed an initial public
offering ('IPO') of its common stock, resulting in net proceeds of $61.6
million, which were used to repay certain debt.
The Lee Lighting Acquisition was recorded under the purchase method of
accounting, and accordingly, Lee Lighting's operating results have been
included in the Company's financial statements from the effective date of the
acquisition (July 1, 1996).
The Panavision Adjusted column in the unaudited pro forma condensed
consolidated statements of income for the year ended December 31, 1996 set
forth above, reflects the effects of the Lee Lighting Acquisition, the 1996
Recapitalization and the IPO, as if they had occurred at the beginning of the
period presented.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA ADJUSTMENTS
-------------------------- ------------------------------------------------
LEE LIGHTING LEE LIGHTING 1996 PANAVISION
PANAVISION JAN-JUNE(1) ELIMINATIONS ACQUISITION RECAPITALIZATION ADJUSTED
---------- ------------ ------------ ------------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $124,638 $ 10,400 $ (162) $ -- $ -- $134,876
Cost of sales.................. 59,473 7,531 (336) -- -- 66,668
---------- ------------ ------------ ------------ -------- ----------
Gross margin................... 65,165 2,869 174 -- -- 68,208
Operating costs................ 34,998 1,981 140(2) 37,119
---------- ------------ ------------ ------------ -------- ----------
Operating income (loss)........ 30,167 888 174 -- (140) 31,089
Interest income................ 747 9 -- (425)(3) 331
Interest expense............... (8,182) (2,784) 2,784(4) (1,104)(5) (5,437)
3,849(6)
Foreign exchange gain.......... 368 368
Other, net..................... (1,793) 8 (174) (1,959)
---------- ------------ ------------ ------------ -------- ----------
Income (loss) before non-
controlling partners'
interest in Panavision
International, L.P. ('PILP')
and income taxes............. 21,307 (1,879) -- 2,784 2,180 24,392
Non-controlling partners'
interest in PILP............. (4,500) -- 4,500(7) --
---------- ------------ ------------ ------------ -------- ----------
Income before income taxes..... 16,807 (1,879) -- 2,784 6,680 24,392
Income tax provision........... (3,536) (300)(8) (454)(8) (4,290)
---------- ------------ ------------ ------------ -------- ----------
Net income (loss) before
extraordinary item........... $ 13,271 $ (1,879) $ -- $ 2,484 $ 6,226 $ 20,102
---------- ------------ ------------ ------------ -------- ----------
---------- ------------ ------------ ------------ -------- ----------
</TABLE>
- ------------------
(1) Represents Lee Lighting's operating results for the first six months
ended June 30, 1996. Operating results of Lee Lighting have been included
with the Company's historical results under the Panavision historical
column since the effective date of the acquisition (July 1, 1996).
(2) To reflect the amortization of deferred financing costs incurred in
connection with the 1996 Recapitalization.
(3) To reflect lower interest income earned due to the use of cash in the
1996 Recapitalization.
(4) To reflect the elimination of Lee Lighting's historical interest expense
as the underlying borrowing was not assumed by the Company.
(5) To reflect higher interest expense due to additional borrowings required
for the 1996 Recapitalization.
(6) To reflect the elimination of historical interest expense related to the
debt assumed to be repaid using proceeds from the IPO.
(7) To reflect the elimination of non-controlling partners' interest in PILP.
(8) To adjust the pro forma tax provision to reflect the tax effect of the
pro forma adjustments including the recognition of tax benefits which had
previously been allocated to the non-controlling partners in PILP.
(b) To eliminate intercompany revenues between the Company and FSG and the
related cost of sales.
(c) To adjust depreciation expense for the revaluation of assets and to conform
estimated useful lives.
(d) To reflect the amortization of goodwill resulting from the FSG Acquisition.
(e) To eliminate management fees paid to Visual Action Holdings, plc.
(f) To reflect higher interest expense due to additional borrowings required for
the FSG Acquisition.
7
<PAGE>
PANAVISION INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS--(CONTINUED)
(IN THOUSANDS)
(g) To reflect the tax effects of the pro forma adjustments.
(h) To reflect the elimination of historical deferred charges on debt retired
and the amortization of deferred charges on the notes (the 'Notes') and the
credit agreement (the 'New Credit Agreement') assumed in connection with the
Recapitalization.
(i) To reflect interest expense on the Notes, compounded semiannually,
borrowings under the New Credit Agreement and elimination of historical
interest expense:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED NINE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
INTEREST EXPENSE 1996 1997 1996
------------------- ----------------- ------------------
<S> <C> <C> <C>
Notes at 9.75%.................................. $14,981 $12,260 $ 3,834
Revolving Facility at 8.13%..................... 5,024 3,768 1,256
Tranche A Term Facility at 8.13%................ 7,313 5,485 1,828
Tranche B Term Facility at 8.38%................ 12,564 9,423 3,141
Other fees...................................... 316 237 80
---------- ----------------- ----------
40,198 31,173 10,139
Interest expense on retired debt................ 9,636 6,317 3,005
---------- ----------------- ----------
Net interest adjustment....................... $30,562 $24,856 $ 7,134
---------- ----------------- ----------
---------- ----------------- ----------
</TABLE>
A 0.125% change in the interest rate payable on the outstanding balance would
change annual interest expense as follows:
<TABLE>
<S> <C> <C> <C>
Notes........................................... $ 188 $ 141 $ 47
Revolving Facility.............................. 77 58 19
Tranche A Term Facility......................... 113 84 28
Tranche B Term Facility......................... 187 140 47
------ ------ ------
$ 565 $ 423 $141
------ ------ ------
------ ------ ------
</TABLE>
(j) For purposes of calculating the ratio of earnings to fixed charges, earnings
include income (loss) before income taxes plus fixed charges. Fixed charges
consist of interest expense, amortization of debt issuance costs and the
interest portion of rent expense. For the Pro forma year ended December 31,
1996, nine months ended September 30, 1997 and the LTM Period, the
deficiency of earnings to fixed charges was $5,415, $5,774 and $4,990.
(k) EBITDA is calculated by adding back all depreciation and amortization and
net interest expense to income before income taxes.
8
<PAGE>
PANAVISION INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------------------------
ACTUAL RECAPITALIZATION PRO FORMA
-------- ---------------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................. $ 9,885 $ 144,000(a) $ 6,000
296,829(b)
154,377(c)
944(d)
(444,145)(e)
(29,264)(f)
(120,626)(g)
(6,000)(h)
Accounts receivable................................................... 32,016 32,016
Inventories........................................................... 8,241 8,241
Prepaid expenses and other current assets............................. 4,728 4,728
-------- ---------------- ---------
Total current assets.................................................... 54,870 (3,885) 50,985
Property, plant and equipment, net...................................... 200,325 200,325
Deferred tax assets..................................................... 5,364 (3,873)(i) 1,491
Goodwill................................................................ 9,456 9,456
Other................................................................... 6,218 6,000(a) 15,325
5,000(b)
(1,893)(g)
-------- ---------------- ---------
$276,233 $ 1,349 $ 277,582
-------- ---------------- ---------
-------- ---------------- ---------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<S> <C> <C> <C>
Current Liabilities:
Accounts payable...................................................... $ 12,950 $ -- $ 12,950
Accrued liabilities................................................... 26,318 26,318
Current maturities of long-term debt.................................. 3,750 (3,750)(g) --
Other current liabilities............................................. 3,451 3,451
-------- ---------------- ---------
Total current liabilities............................................... 46,469 (3,750) 42,719
Long-term debt.......................................................... 117,142 150,000(a) 452,095
301,829(b)
(116,876)(g)
Deferred income tax liabilities......................................... 4,955 4,955
Other liabilities....................................................... 2,692 2,692
Common stock............................................................ 181 58(c) 81
8(d)
(166)(e)
Additional paid-in capital.............................................. 76,109 154,319(c) --
936(d)
(231,364)(e)
Retained earnings (accumulated deficit)................................. 28,936 (212,615)(e) (224,709)
(29,264)(f)
(1,893)(g)
(6,000)(h)
(3,873)(i)
Foreign currency translation adjustment................................. (251) (251)
-------- ---------------- ---------
Total stockholders' equity (deficit).................................. 104,975 (329,854) (224,879)
-------- ---------------- ---------
$276,233 $ 1,349 $ 277,582
-------- ---------------- ---------
-------- ---------------- ---------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
9
<PAGE>
PANAVISION INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
(a) Reflects the issuance of the Notes, net of the initial purchasers' discount
and related fees and expenses under the Private Offering.
(b) Reflects borrowings of $301,829 under the New Credit Agreement, net of
related fees and expenses.
(c) Reflects the purchase by PX Holding Corporation of 5.8 million shares of
Company Common Stock at $26.69 per share.
(d) Reflects the exercise of stock options prior to the closing of the
Recapitalization.
(e) Reflects the conversion of 11.2 million shares of Company Common Stock owned
by Warburg into redeemable preferred stock of the Company and the redemption
of such stock at a price equivalent to $26.50 in cash per share of Company
Common Stock and the purchase of 5.5 million shares from the public and
management at a price of $27.00 per share of which $17,547 will be charged
to expense in the Company's statement of operations due to the cash
settlement of shares acquired through the exercise of certain stock options.
(f) Reflects the cash payment made to settle unexercised options in connection
with the Recapitalization which will be charged to expense in the Company's
statement of operations.
(g) Reflects the repayment of existing debt of the Company and the write-off of
related deferred charges of $1,893.
(h) Reflects fees and expenses related to the Recapitalization which will be
charged to expense in the Company's statement of operations.
(i) Reflects the increase in the valuation allowance on deferred tax asset in
connection with the Recapitalization.
10
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act, of 1934, as
amended, the registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: January 29, 1998 By: /s/ William C. Scott
--------------------------
William C. Scott
Chairman of the Board and
Chief Executive Officer
11
