<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Date of Report (date of earliest event reported): May 6, 1998
Commission File No. 333-29463
International Total Services, Inc.
-----------------------------------
(Exact name of registrant as specified in its charter)
OHIO 34-1264201
- -------------------------------- ------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
5005 Rockside Road, Cleveland, OH 44131
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code 216-642-4522
<PAGE> 2
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On February 20, 1998, International Total Services, Inc. (the "Company" or
"ITS") completed its acquisition of the contracts and assets of Securex, Inc.
("Securex"), a Florida corporation.
The Acquisition was accomplished pursuant to a Plan and Agreement of Acquisition
dated as of February 20, 1998 among the Company and Securex.
Securex provided staffing for commercial security operations, mostly in
Florida, and the Company will conduct similar operations with the assets
acquired.
Total consideration for the Acquisition consisted of the payment to Securex
of $4.2 million, with an additional $1.1 million due in June, 1998, to purchase
the contracts and assets.
The cash consideration for the transaction was made available from the proceeds
of the Company's Initial Public Offering completed on September 24, 1997 and
from cash flows from operations. The acquisition will be accounted for under the
purchase method of accounting for financial reporting purposes.
The purchase price and other terms of the Acquisition Agreement were determined
through arms-length negotiations. The Company is not aware of any pre-existing
material relationships between (i) Securex or any of its shareholders, and (ii)
the Company, any of the Company's affiliates, directors and officers or any
associate of such directors and officers.
2
<PAGE> 3
ITEM 3: FINANCIAL STATEMENTS AND EXHIBITS
The required financial statements are attached.
Exhibit 10.11 - Asset Purchase Agreement Between International Total Services,
Inc. and Securex, Inc. is attached.
3
<PAGE> 4
Securex, Inc.
BALANCE SHEET
December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 384,461
Accounts receivable, net of allowance for doubtful
accounts of $15,000 1,197,642
Prepaid expenses 48,394
----------
Total current assets 1,630,497
PROPERTY AND EQUIPMENT - COST, LESS
ACCUMULATED DEPRECIATION OF $224,622 198,076
OTHER ASSETS
Due from shareholder 50,991
Deposits 14,882
----------
65,873
----------
$1,894,446
==========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 87,325
Accrued expenses
Compensation 666,918
Taxes 98,753
Insurance 422,490
----------
1,188,161
----------
Total current liabilities 1,275,486
COMMITMENTS AND CONTINGENCIES -
SHAREHOLDER'S EQUITY
Common stock -- $1 par value; authorized, issued
and outstanding - 7,500 shares 7,500
Retained earnings 611,460
----------
618,960
----------
$1,894,446
==========
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE> 5
Securex, Inc.
STATEMENT OF EARNINGS AND RETAINED EARNINGS
For the Year Ended December 31, 1997
<TABLE>
<S> <C>
SERVICE REVENUE $16,909,445
COST OF SERVICES PROVIDED
Wages 12,451,331
Payroll taxes 1,084,570
Insurance 361,292
Other 160,147
-----------
14,057,340
-----------
Gross margin 2,852,105
OPERATING EXPENSES 2,316,990
-----------
Operating profit 535,115
OTHER INCOME - NET 31,944
-----------
NET EARNINGS 567,059
Retained earnings, January 1, 1997 738,493
-----------
1,305,552
Distributions to shareholder 694,092
-----------
$ 611,460
===========
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE> 6
Securex, Inc.
STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 567,059
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 33,029
Loss on disposal of equipment 5,688
Change in assets and liabilities
Accounts receivable 238,095
Prepaid expenses 53,154
Deposits 7,133
Accounts payable (13,515)
Accrued expenses (143,003)
--------------
Total adjustments 180,581
Net cash provided by operating activities 747,640
CASH FLOWS FROM INVESTING ACTIVITIES:
Net advances to shareholder (50,991)
Capital expenditures (15,105)
--------------
Net cash used in investing activities (66,096)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to shareholder (694,092)
--------------
Net cash used in financing activities (694,092)
NET DECREASE IN CASH AND CASH EQUIVALENTS (12,548)
Cash and cash equivalents - January 1, 1997 397,009
--------------
Cash and cash equivalents - December 31, 1997 $ 384,461
==============
</TABLE>
The accompanying notes are an integral part of these statements
6
<PAGE> 7
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholder and Board of Directors
SECUREX, INC.
We have audited the accompanying balance sheet of Securex, Inc. as of December
31, 1997 and the related statements of earnings and retained earnings and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Securex, Inc. as of December
31, 1997 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Cleveland, Ohio
April 3, 1998
7
<PAGE> 8
Securex, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE A - NATURE OF OPERATIONS
Securex, Inc. (the "Company") was incorporated on June 17, 1976 and is in
the business of providing security guards, mobile patrol services and other
security and related services for clients located primarily in central
Florida.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
----------------
Preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make 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 and the reported revenues and expenses during the reporting
period. Actual results could vary from the estimates that are used.
PROPERTY AND EQUIPMENT
----------------------
The Company provides for depreciation over the estimated useful lives of the
assets, using both accelerated and straight-line methods for financial
reporting and the accelerated cost-recovery method for income tax reporting.
Service lives range from three to thirty-one years.
Expenditures for maintenance and repairs are charged to expenses as
incurred. Expenditures for additions, substantial improvements, and
replacements are added to the property accounts. Property retired or
otherwise disposed of, together with the related accumulated depreciation,
is eliminated from the accounts. Gains and losses from disposals are
recognized in earnings for the period of such disposals.
INCOME TAXES
------------
The Company has elected under Section 1361 of the Internal Revenue Code to
have its income taxed directly to its shareholder. Accordingly, no
provision, either current or deferred, has been made for federal or state
income taxes.
8
<PAGE> 9
Securex, Inc.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
December 31, 1997
NOTE A - NATURE OF OPERATIONS (CONTINUED)
STATEMENT OF CASH FLOWS
-----------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
CONCENTRATION OF CREDIT RISK
----------------------------
The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents. The Company
places its cash and temporary cash investments with high credit quality
institutions. At times, such balances may be in excess of the FDIC insurance
limit.
FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
Statement of Financial Accounting Standards No. 107, Disclosure about Fair
Value of Financial Instruments, requires disclosure of the fair value of
financial instruments, both assets and liabilities, recognized and not
recognized in the balance sheet of the Company, for which it is practicable
to estimate fair value.
The Company believes that the carrying amounts of cash and cash equivalents,
receivables and accounts payable approximate fair value due to their short-
term nature.
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1997 consist of the following:
<TABLE>
<S> <C>
Furniture and fixtures $255,535
Automobiles 75,147
Leasehold improvements 81,146
Security equipment 10,870
--------
422,698
Less accumulated depreciation 224,622
--------
$198,076
========
</TABLE>
9
<PAGE> 10
Securex, Inc.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
December 31, 1997
NOTE D - COMMITMENTS AND CONTINGENCIES
The Company leases certain of its facilities and equipment under
noncancelable operating leases, which include a lease of its main
facility from the Company's sole shareholder.
Future minimum lease payments by years approximate the following:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1998 $ 98,000
1999 54,000
2000 17,000
2001 3,000
2002 1,000
--------
$173,000
========
</TABLE>
Rent expense for 1997 approximated $148,000, including $38,000 on the
facility lease with the sole shareholder.
The Florida Department of Insurance has undertaken an investigation
with regard to certain of the Company's workers' compensation
classifications. At this time the Company cannot estimate the outcome
of this matter, however, management does not believe that the
ultimate resolution will have a significant impact on its financial
position or future operating results.
NOTE E - SUBSEQUENT EVENT - SALE OF ASSETS
On February 20, 1998, the Company entered into an Asset Purchase
Agreement with International Total Services, Inc. (ITS). Under the
Agreement, ITS acquired substantially all of the Company's security
services contracts and property and equipment for $5,312,500, subject
to adjustments as described in the contract. The Company received
$4,250,000 at closing with the balance due approximately three months
later. The Agreement also contained a two year covenant not to
compete against ITS.
10
<PAGE> 11
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
BALANCE SHEET
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31 1997
-----------------------------------------------------
Pro forma Adjusted
ITS Securex Adjustments Pro forma
--- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,755 $ 384 $ (384) (5) $ 3,755
Accounts receivable, net 19,316 1,198 (1,198) (5) 19,316
Deferred tax assets 1,694 - - 1,694
Other current assets 3,285 48 (48) (5) 3,285
-------- ------- ------- --------
Total current assets 28,050 1,630 (1,630) 28,050
Property, plant and equipment, net 5,044 198 (114) (5) 5,128
Intangibles, net 18,668 - 5,341 (6) 24,009
Security deposits and other 152 66 (66) (5) 152
-------- ------- ------- --------
$ 51,914 $ 1,894 $ 3,531 $ 57,339
========= ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations $ - $ - $ 5,312 (3) $ 5,312
Trade accounts payable 5,128 87 26 (5) 5,241
Accrued payroll and other liabilities 7,884 1,188 (1,188) (5) 7,884
Income taxes payable 877 - - 877
-------- ------- ------- --------
Total current liabilities 13,889 1,275 4,150 19,314
Deferred tax liability 564 - - 564
STOCKHOLDERS' EQUITY:
Common shares 67 8 (8) (5) 67
Additional paid-in capital 31,078 - - 31,078
Cumulative translation adjustment (272) - - (272)
Retained earnings 6,588 611 (611) (5) 6,588
-------- ------- ------- --------
Total stockholders' equity 37,461 619 (619) 37,461
-------- ------- ------- --------
$ 51,914 $ 1,894 $ 3,531 $ 57,339
========= ======== ======== ========
</TABLE>
11
<PAGE> 12
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
INCOME STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------------------------------------------
ITS Securex Pro forma Adjusted
March 31, 1997 December 31, 1996 Adjustments Pro forma
-------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues $ 115,242 $ 17,081 $ 132,323
Cost of operating revenues 98,338 14,245 (261)(1) 112,322
---------- ------- ------ ----------
Gross profit 16,904 2,836 261 20,001
General and administrative expenses 13,334 1,636 19 (2) 14,989
---------- ------- ------ ----------
Operating income 3,570 1,200 242 5,012
Other (income) expense 637 (20) 434 (3) 1,051
---------- ------- ------ ----------
Income before income taxes 2,933 1,220 (192) 3,961
Income taxes 1,237 - 426 (4) 1,663
---------- ------- ------ ----------
Net income $ 1,696 $ 1,220 $ (618) $ 2,298
========== ======= ====== ==========
Basic earnings per share $ 0.33 n/a n/a $ 0.45
========== ==========
Weighted average shares outstanding 5,089,480 n/a n/a 5,089,480
========== ==========
<CAPTION>
Nine Months Ended December 31, 1997
-------------------------------------------------------------------
Pro forma Adjusted
ITS Securex Adjustments Pro forma
--- ------- ----------- ---------
<S> <C> <C> <C>
Operating revenues $ 123,208 $ 12,465 $ 135,673
Cost of operating revenues 102,938 10,462 (144)(1) 113,256
---------- -------- ------ ----------
Gross profit 20,270 2,003 144 22,417
General and administrative expenses 13,103 1,874 (408)(2) 14,569
---------- -------- ------ ----------
Operating income 7,167 129 552 7,848
Other (income) expense 700 (25) 325 (3) 1,000
---------- -------- ------ ----------
Income before income taxes 6,467 154 227 6,848
Income taxes 2,663 - 145 (4) 2,808
---------- -------- ------ ----------
Net income $ 3,804 $ 154 $ 82 $ 4,040
========== ======== ====== ==========
Basic earnings per share $ 0.79 n/a n/a $ 0.83
========== ==========
Weighted average shares outstanding 4,852,605 n/a n/a 4,852,605
========== ==========
</TABLE>
12
<PAGE> 13
1. Represents a reduction in Securex's historical costs for workers'
compensation insurance to conform them to the cost structure associated
with the company's programs.
2. Represents a reduction in compensation expense associated with the
elimination of certain salaries paid to Securex's officers not
employed by the Company subsequent to the acquisition. In addition,
this amount includes the removal of certain legal expenses
that would not be borne by ITS.
These reductions are offset by the additional amortization costs to
be charged to expense after allocation of the purchase price in the
Securex acquisition as follows:
<TABLE>
<CAPTION>
12 Mos 9 Mos
------ -----
<S> <C> <C>
amortization of service contracts (5 years) $ 52 $ 39
amortization of goodwill (20 years) 324 243
------ ------
$ 376 $ 282
====== ======
</TABLE>
3. Represents the increase in debt and interest expense for the
acquisition purchase price.
4. Represents an adjustment to the historical provision for income taxes
to reflect the application of the Company's estimated effective tax
rate of 42 percent for the year ended March 31, 1997 and 41 percent for
the nine months ended December 31, 1997 after giving effect to the
forgoing adjustments.
5. Represents the elimination of assets and liabilities reflected on the
historical financial statements of Securex but not acquired by the
Company.
6. Represents adjustments associated with the allocation of the purchase
price for the Securex acquisition. The allocation of the purchase price
for the Securex acquisition is as follows:
<TABLE>
<CAPTION>
<S> <C>
Service contracts $ 261
Equipment 84
Goodwill 5,080
------
$5,425
======
</TABLE>
7. Earnings per share are computed by dividing net earnings by the
weighted average number of shares outstanding.
13
<PAGE> 14
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS CURRENT REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THERETO DULY AUTHORIZED.
INTERNATIONAL TOTAL SERVICES, INC.
By: /s/ BRIAN S. KENYON
--------------------------------
BRIAN S. KENYON
VICE PRESIDENT - FINANCE
(Chief Financial Officer)
Dated: May 6, 1998
14
<PAGE> 1
Exhibit 10.11
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") made as of the 20TH day of
FEBRUARY, 1998, by and between INTERNATIONAL TOTAL SERVICES, INC. ("Buyer"
and/or ITS. Inc.), an Ohio corporation, and SECUREX, INC. a Florida corporation
("Seller").
WITNESSETH THAT:
----------------
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller, subject to the terms and conditions hereof, certain assets of
Seller including, without limitation, goodwill, comprising the security guard
business of Seller.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. PURCHASE AND SALE OF ACQUIRED CONTRACTS AND ACQUIRED ASSETS.
------------------------------------------------------------
Subject to the terms and conditions hereof, on the Closing Date (as
defined in Article 6), Seller shall sell, transfer and assign to Buyer, and
Buyer shall purchase and acquire from Seller, all the right, title and interest
of Seller in and to the Acquired Contracts and the Acquired Assets (as
respectively defined in Section 1.1).
1.1 ACQUIRED CONTRACTS AND ACQUIRED ASSETS. The "Acquired Contracts"
shall mean those certain security services contracts performed by Seller as
listed on Schedule A. As used herein, "Acquired Assets" shall mean those certain
assets listed on Schedule B. The "Acquired Assets" shall include the goodwill
and reputation associated with the security guard business of Seller upon which
both Buyer and Seller place high value.
1.2 LEASE AGREEMENTS. At the Closing, Seller shall transfer to Buyer
any and all rights under Lease Agreements as reflected on Schedule C.
1.3 SCHEDULES EXCLUSIVE. Other than those assets specifically described
and set forth in Schedules A, B, and C to this Agreement, the parties hereto
acknowledge and agree that Seller is not transferring to Buyer under this
Agreement any other assets or rights of Seller.
1.4 ASSURANCES. After the Closing, for no further consideration, Seller
shall perform all such other acts (including without limitation the use of
Seller's reasonable efforts to obtain or achieve transfer of the Acquired
Contracts and the Acquired Assets as contemplated by this Agreement) and shall
execute, acknowledge and deliver all such assignments, transfers, consents and
other documents as Buyer or its counsel may reasonably request to vest in Buyer,
and perfect and
<PAGE> 2
protect Buyer's right, title and interest in, and enjoyment of, the Acquired
Contracts and the Acquired Assets. Buyer shall similarly perform all such other
actions and shall execute, acknowledge and deliver all such other documents as
Seller or its counsel may reasonably request to perfect and protect Seller's
rights under this Agreement. Seller hereby acknowledges and agrees that the
Acquired Contracts and the Acquired Assets are unique and not available on the
open market and that Buyer shall have, in addition to all other legal remedies
available to it, the right to enforce the terms of this Agreement by a decree of
specific performance. Seller shall cooperate with Buyer to the extent Buyer may
reasonably request in the defense of any proceeding seeking to invalidate or set
aside the sale and purchase of the Acquired Contracts or the Acquired Assets.
1.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, legal representatives
and assigns, but this Agreement may not be assigned by any party without the
prior written consent of the other party.
2. ASSUMPTION OF OBLIGATIONS AND LIABILITIES.
------------------------------------------
2.1 CONTRACTS ASSUMED. Buyer shall assume as of the Closing, and
perform when due, Seller's obligations to be performed after the Closing Date
under the following Contracts (as hereinafter defined): all the Acquired
Contracts reflected in Schedule A hereto; and all other contracts, leases and
Lease Agreements as listed on Schedules B and C hereto; all such Contracts
described in this paragraph, to the extent assumed by Buyer, being referred to
hereinafter as "Assumed Contracts". Seller shall have the right to provide, and
to collect fees and charge for services under the assumed contracts on or before
the Closing Date. If Seller fails to obtain any consent necessary for the
assignment of any Assumed Contracts to Buyer, Seller will use reasonable efforts
to obtain for, and provide to Buyer the benefits under such Assumed Contracts,
including any and all rights of Seller against the other parties thereto.
2.2 NON-ASSUMPTION OF LIABILITIES. Notwithstanding Section 2.1, Buyer
will not by the execution or performance of this Agreement, by the exercise of
any rights with respect to the Acquired Contracts and Acquired Assets, or by any
other action, assume, become responsible for or incur any liability or
obligation of any nature of Seller, matured or unmatured, liquidated or
unliquidated, fixed or contingent, or known or unknown, arising out of
occurrences prior to the Closing; and Seller shall indemnify and hold harmless
Buyer, its successors and assigns, and the Acquired Contracts and Acquired
Assets against and from, such liabilities and obligations of Seller and against
and from any and all claims asserted, and costs and expenses (including
reasonable attorneys' fees) incurred with respect to the same; provided,
however, that Buyer shall assume all obligations of Seller remaining unperformed
on the Closing date under the Assumed Contracts. Without limiting the generality
of the foregoing, Buyer shall not assume, become responsible for or incur any
liability of obligation of any nature arising from occurrences prior to the
Closing with respect to:
(a) any liability whatsoever arising out of Seller's service
contracts;
<PAGE> 3
(b) any and all tax liability prior to closing including
without limitation Federal, State, and Local Taxes, payroll and withholding
taxes, worker's compensation and unemployment taxes;
(c) any income taxes relating to or arising out of the
transactions contemplated by this Agreement;
(d) salaries and related expenses of Seller's employees prior
to the Closing Date, fees, costs, expenses, premiums, commissions and charges to
be paid by Seller as provided in Section 4.6; and
(e) any Contract with, or liability or obligation to, any
affiliate of Seller.
3. PURCHASE PRICE.
---------------
3.1 DETERMINATION OF PURCHASE PRICE. The purchase price ("Purchase
Price") for the Acquired Contracts and Acquired Assets shall be $5,312,500
provided, however, that the Purchase Price shall be subject to adjustment
pursuant to Section 6.4 of this Agreement.
3.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be payable
as follows:
(a) $4,250,000 at Closing payable to Seller;
(b) the balance due one hundred and five (105) days from the
Closing Date payable to Seller; subject to adjustment pursuant to Section 6.4
of this Agreement
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
-----------------------------------------
Seller represents and warrants to Buyer that:
4.1 ORGANIZATION AND OWNERSHIP. Seller Corporation validly exists and
is in good standing under the laws of the State of Florida. Seller is qualified
as a foreign corporation in each state where its activities would require it to
qualify as a foreign corporation in such State.
4.2 AUTHORITY; BINDING EFFECT. Seller has full power and authority (a)
to own the Acquired Contracts and Acquired Assets and (b) to execute, deliver
and perform this Agreement and the other instruments, agreements and documents
to be executed by it hereunder, and to perform its obligations hereunder and
thereunder and to consummate the transactions provided for herein and therein.
Such execution, delivery and performance have been duly authorized by all
necessary action on the part of Seller, and do not and will not (a) contravene
the Articles of Incorporation or by-laws of Seller; (b) result in the creation
or imposition of any security interest, lien, easement, right-of-way, charge,
assessment, encumbrance, claim, restriction or title defect of any nature
whatsoever upon
<PAGE> 4
any of the Acquired Assets or (c) result in any violation of any law, rule or
regulation applicable to Seller, the Acquired Contracts or the Acquired Assets.
Seller is not a party to, or subject to or bound by, and none of the Acquired
Assets are subject to or bound by, any judgment, injunction or decree of any
court or governmental authority which may restrict or interfere with the
performance of this Agreement, or such other instruments, agreements and
documents as are to be executed by Seller, in connection herewith on or prior to
the Closing Date. This Agreement is, and each of such other instruments,
agreements and documents will be when executed and delivered, a valid and
binding obligation of Seller.
4.3 FINANCIAL INFORMATION. Seller will deliver to Buyer prior to the
Closing, financial information to be mutually designated in the process of
Buyer's due diligence.
4.4 ACQUIRED ASSETS.
----------------
(a) TITLE. Except for those assets covered under leases to be assumed
by Buyer, Seller as of the Closing Date will convey to Buyer good title to all
the Acquired Assets and the Acquired Contracts free and clear of all title
defects and objections, security interests, liens, charges and encumbrances of
any nature whatsoever, including without limitation, leases, mortgages, deeds of
trust, security interests, pledges, liens conditional sales agreements, claims,
restrictions, reservations, covenants, encumbrances, charges, special or other
assessments, restraints on transfer or other title defect; except, however, no
warranty is given as to assignability of the Acquired Contracts. In addition, no
financing statement under the Uniform Commercial Code with respect to any of the
Acquired Contracts and/or Acquired Assets has been filed in any jurisdiction,
and Seller has not signed any such financing statements or any Security
Agreement authorizing any secured party thereunder to file any such financing
statement, which will not be released as of the date of closing.
(b) INSURANCE. Seller has maintained a reasonable and customary program
of insurance with respect to the Acquired Assets and Acquired Contracts, and
have insured the Acquired Assets and Acquired Contracts with reputable insurance
companies in such manner as may be required pursuant to any franchises,
agreements, licenses or permits applicable to the Acquired Assets and Acquired
Contracts.
(c) PERMITS. Schedule D hereto sets forth a complete and accurate list
of all material Permits used or held for use in connection with the conduct of
the Acquired Contracts. Except as set forth on Schedule D, Seller has all
Permits, the absence of which would have a material adverse effect on the
Acquired Contracts. Except as indicated on such schedule, all Permits listed
thereon may be freely assigned or transferred to Buyer at the Closing. To the
extent that such Permits may not be assigned, Seller shall maintain the same
until such time as Buyer obtains its own permits.
4.5 CONTRACTS. Schedule A hereto contains a true and complete list of
the Acquired Contracts being transferred to Buyer by Seller. To the best of
Seller's knowledge (i) each Assumed Contract is valid and binding upon each
party thereto and is in full force and effect and (ii) there is
<PAGE> 5
no default or claim of default under any provision of any such Assumed Contract,
and no event has occurred which, with the passage of time or the giving of
notice (or both), would constitute a default by Seller (or, to the best of
Seller's knowledge, by any other party thereto) under any provision thereof, or
would permit modification, acceleration or termination of such Assumed Contract
by any party thereto. Neither the consummation of the transactions contemplated
hereby nor the transfer of any such Assumed Contract hereunder will constitute
such a default or event. Seller has delivered to Buyer a true, correct and
complete copy of each Assumed Contract. Seller has not received any notice that
any person intends or desires to modify, waive, amend, rescind, release, cancel
or terminate any Assumed Contract.
4.6 EMPLOYEES; LABOR RELATIONS. Schedule E contains a complete list of
wage rates and commission arrangements for all employees of Seller who are
employed with respect to the Acquired Assets and the Acquired Contracts,
together with information as to any employment, consulting or other compensation
contracts, arrangements and policies, written and oral, relating to any such
employees, including without limitation any bonus, vacation or severance
policies or arrangements. Seller has paid or made provision for the payment of
all salaries and wages through the Closing Date for the benefit of such
employees on Schedule E and has complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining and the payment
and withholding of taxes, and has withheld and paid to the appropriate
governmental authority, or is holding for payment not yet due to such authority,
all amounts required by law or agreement to be withheld from the wages or
salaries of such employees.
4.7 TAXES. Seller has filed on a timely basis all federal, state, local
and foreign tax returns, reports and declarations required to be filed by it.
Seller has paid all taxes, interest and penalties which were due pursuant to
such returns or otherwise due, levied or assessed against Seller or its Assets,
other than taxes or charges, the payment of which is not yet due (or which, if
due, is not yet delinquent or is being contested in good faith or has not been
finally determined). There is no agreement for the extension of the time of any
assessment of any tax with respect to Seller and no notice of any federal tax
lien relating to Seller has been filed against them or any of its Assets in any
jurisdiction. Seller has not had any tax deficiency or claim outstanding, and
all required deposits with respect to employees' withholding taxes have been
duly made. No examination of Seller or the Acquired Contracts or the Acquired
Assets by the Internal Revenue Service or any state, local or foreign tax
authority is currently in progress.
4.8 FULL DISCLOSURE. All documents and other papers delivered by or on
behalf of Seller in connection with this Agreement are true, complete and
authentic. No representation or warranty of the Seller contained in this
Agreement contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements made, in the context in which
made, not materially false or misleading.
<PAGE> 6
5. REPRESENTATIONS AND WARRANTIES.
-------------------------------
Buyer hereby represents and warrants to Seller that:
5.1 ORGANIZATION. Buyer is a corporation validly existing and in good
standing under the laws of the State of Ohio.
5.2 AUTHORITY; BINDING EFFECT. Buyer has full power and authority to
execute, deliver and perform this Agreement and the other instruments,
agreements and documents to be executed by it hereunder and to consummate the
transactions provided for herein and therein. Such execution, delivery and
performance have been duly authorized by all necessary action on the part of
Buyer and do not and will not (i) contravene the Articles of Incorporation or
by-laws of Buyer, (ii) conflict with, result in a breach of, or entitle any
party (with due notice or lapse of time or both) to terminate, accelerate or
call a default with respect to any agreement or instrument to which Buyer is a
party or by which Buyer or any of its assets are bound; or (iii) result in any
violation of any law, rule or regulation applicable to Buyer. The Buyer is not a
party to or is subject to or bound by, any judgment, injunction or decree of any
court or governmental authority which may restrict or interfere with the
performance of this Agreement or such other instruments, agreements and
documents as are to be executed by Buyer in connection herewith on or prior to
the Closing Date. This Agreement is, and each of such other instruments,
agreements and documents will be when executed and delivered a valid and binding
obligation of Buyer.
5.3 CONSENTS. No consent, approval, authorization or order of, or
registration, qualification or filing with, any court, regulatory authority or
other governmental body is required for the execution, delivery and performance
by Buyer of this Agreement and the other instruments, agreements and documents
required or contemplated hereunder or the consummation by Buyer of the
transactions contemplated hereby and thereby. No consent of any person
(including without limitation any party to any contract, mortgage, indenture,
agreement or other arrangement to which Buyer is a party or by which it is
bound) is required for the execution, delivery and performance by Buyer of this
Agreement and such other instruments, agreements and documents or the
consummation of the transactions contemplated hereby and thereby.
5.4 BROKERS AND FINDERS. Buyer has not dealt with anyone in a fashion
that would incur any broker's, finder's or similar fees or commissions in
connection with the transactions contemplated by this Agreement.
6. CLOSING
-------
The transfers and deliveries to be made pursuant to this Agreement (the
"Closing") shall take place by facsimile or mail by February 20, 1998, or at
such other time and place as the parties shall agree. The date on which the
Closing is to occur is herein referred to as the "Closing Date". Time is of the
essence with respect to closing.
<PAGE> 7
6.1 DELIVERIES BY SELLERS. Seller shall deliver to Buyer at the
Closing:
(a) Bills of sale, instruments of transfer, assignment and conveyance,
required consents thereto and other instruments in form and
substance satisfactory to Buyer and sufficient to convey,
transfer, and assign to Buyer and effectively vest in Buyer all of
Seller's right, title and interest in and to the Acquired
Contracts and the Acquired Assets;
(b) All written contracts and lease Agreements;
(c) All Permits listed on Schedule D, to the extent such Permits are
assignable;
(d) Certification that each of Seller's representations and warranties
contained in this Agreement are true and correct at and as of the
Closing Date and that the Acquired Assets shall remain on
its locations;
(e) Certified minutes of Seller's Board of Directors authorizing the
Transaction; and
(f) Such other instruments and documents as may be reasonably requested
by, and in form and substance satisfactory to, Buyer and
Buyer's counsel.
6.2 DELIVERIES BY BUYER.
--------------------
Buyer shall deliver to Seller at the Closing:
(a) Cash in the amount required pursuant to Section 3.2; and
(b) Such other instruments and documents as may be reasonably requested
by, and in form and substance satisfactory to Seller and Seller's
counsel.
6.3 ALLOCATION. The parties agree to allocate the Purchase Price among
the Acquired Contracts and the Acquired Assets for all purposes in accordance
with the allocation schedule attached hereto as Schedule G.
6.4 POST-CLOSING ADJUSTMENT.
------------------------
That remaining portion of the Purchase Price payable to Seller shall be
adjusted as follows:
(i) The actual billings generated by the security guard
contracts set forth on Schedule A during the 92-day
period after Closing shall be totaled and divided by
3 to obtain a monthly average ("Figure 1").
<PAGE> 8
(ii) The actual billings generated by any seasonal and
specials accounts as set forth on Schedule F attached
hereto for the period from February 20, 1997 through
February 28, 1998 (but excluding those accounts with
respect to which Seller has confirmation of
termination) shall be totaled, and then divided by 12
to obtain a monthly average ("Figure 2").
(iii) The projected monthly billings to be generated by
those new accounts, which may commence on or after
the Closing negotiated by Seller,and which accounts
in fact become firm contracts at any time during the
92-day period after Closing, shall be totaled to
obtain a monthly average ("Figure 3"). Any new
account which begins other than the 1st day of a
month shall be given a full month credit for
purposes of such calculation.
(iv) The amount equal to the sum of Figures 1, 2, and 3
shall be multiplied by a factor of 3.75 ("Figure 4")
("Adjusted Purchase Price").
(v) The Adjusted Purchase Price shall be compared to the
figure in Section 3.2(a) for the purpose of
calculating the final payment to be paid by Buyer,
and to the extent the Adjusted Purchase Price is
greater than the figure in Section 3.2(a), the
difference shall be immediately paid by wire transfer
to Seller's account as the balance of the purchase
price due Seller. A statement shall accompany the
final payment from Buyer providing, in reasonable
detail, the calculations used in determining the
Adjusted Purchase Price and such final payment. The
parties agree that notwithstanding anything herein to
the contrary, Seller shall not be obligated to refund
any amount paid under Section 3.2(a) as a result of
any adjustment to the Purchase Price.
7. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
---------------------------------------------
7.1 SURVIVAL. All representations, warranties, covenants, indemnities
and agreements contained in or made pursuant to this Agreement (including any
exhibit, certificate, document or statement delivered pursuant hereto) shall
survive for one (1) year after Closing.
7.2 Indemnification.
----------------
(a) BUYER. Buyer agrees to indemnify and hold Seller harmless from, and
to reimburse Seller for, any loss, fee, cost, expense, damage, liability or
claim (including, without limitation, any and all fees, costs and expenses
whatsoever, reasonably incurred by them, or their counsel in investigating,
preparing for, defending against, or providing evidence, producing documents or
taking any other action in respect of any threatened or asserted claim) arising
out of, based upon or resulting from (i) the inaccuracy as of the Closing Date
of any representation or warranty of Buyer which is contained in or made
pursuant to this Agreement; (ii) Buyer's breach of or failure to perform
<PAGE> 9
any of their covenants or agreements contained in or made pursuant to this
Agreement; (iii) any and all liability relating to the operation of "Acquired
Contracts" arising from occurrences after closing.
(b) SELLER. Seller hereby agrees to indemnify and hold Buyer harmless
from, and to reimburse Buyer for, any loss, fee, cost, expense, damage,
liability or claim (including, without limitation, any and all fees, costs and
expenses whatsoever, reasonably incurred by Buyer, or its counsel in
investigating, preparing for, defending against, or providing evidence,
producing documents or taking any other action in respect of any threatened or
asserted claim) ("Liabilities") arising out of, based upon or resulting from (i)
the inaccuracy as of the Closing Date of any representation or warranty of
Seller which is contained in or made pursuant to this Agreement; (ii) Seller's
breach of or failure to perform any of their covenants or agreements to be
performed after the Closing, contained in or made pursuant to this Agreement;
(iii) any and all liability arising from acts of Seller and/or resulting from
any conduct of Seller, including but not limited to violations of Federal, State
or Local laws; (iv) any and all liability arising from its relationship with
employees, prior to date of closing resulting from injuries and/or damages
sustained as a result of the employment relationship.
(c) LIQUIDATION OR DISSOLUTION OF SELLER. The liquidation or
dissolution of Seller shall not terminate, modify or otherwise affect the rights
of Buyer to indemnification pursuant to this Section.
8. CONDUCT OF CONTRACTS PENDING CLOSING.
-------------------------------------
8.1 AFFIRMATIVE COVENANTS PENDING CLOSING. During the period from the
date of this Agreement to the Closing Date, Seller shall:
(a) INSPECTION OF BOOKS AND RECORDS. Afford Buyer and its authorized
representatives reasonable access to all Acquired Assets and Acquired Contracts,
files, books, records, contracts, agreements and other documents of Seller
during normal business hours, permit the reasonable copying of any of the
foregoing and furnish or cause to be furnished to Buyer and its authorized
representatives all financial, commercial, operating and other information of
Seller as Buyer may reasonably request.
(b) OPERATION OF CONTRACTS. Keep each of the Assumed Contracts in full
force and effect without modification or amendment and conduct the Acquired
Contracts in compliance with all applicable laws, rules and regulations,
maintain its books of account and records in a manner consistent with past
practice, prepare properly and file on or prior to the due date thereof all tax
returns or reports required by any jurisdiction and pay all taxes due for any
period ending prior to or at the Closing Date, and exercise due diligence in
safeguarding, repairing, replacing and maintaining the Acquired Assets.
<PAGE> 10
(c) PRESERVATION OF ORGANIZATION. Use its best efforts (without making
any commitment on behalf of Buyer) to preserve the Assumed Contracts intact and
to preserve its relationship with employees, agents, suppliers, customers and
others having contracts relations with it.
8.2 NEGATIVE COVENANTS PENDING CLOSING. From and after the date of this
Agreement until the Closing Date, except with the prior written approval of the
Buyer, Seller shall not:
(a) GENERAL. Carry on the Acquired Contracts other than in the usual
and ordinary course.
(b) SALES OR PURCHASES OF PROPERTY. Seller shall in no way diminish or
waste the assets made a party of this Agreement and to be assumed by Buyer.
(c) INSURANCE. Fail to carry at all times between the date hereof and
the Closing Date insurance in accordance with Section 4.4(b).
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
--------------------------------------------
The obligations of Buyer to be performed at the Closing shall be
subject to the satisfaction at or before the Closing of all of the following
conditions (unless waived by Buyer in writing):
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller set forth in Article 4 of this Agreement shall have been true and
correct in all respects when made and shall be true and correct in all respects
at and as of the Closing Date as though such representations and warranties were
made at and as of such date.
9.2 PERFORMANCE. Seller shall have, in all material respects, performed
and complied with, or caused the performance of and compliance with, all
obligations under this Agreement which are to be performed or complied with by
it or on its behalf at or prior to the Closing.
9.3 CERTIFICATES. Seller shall have delivered to Buyer at the closing,
a Certificate of its President to the effect that the conditions set forth in
this Article 9 have been satisfied.
9.4 LITIGATION. There shall be no pending or threatened claim,
litigation, action, suit, proceeding, investigation or inquiry, judicial or
administrative (i) which, if adversely determined, would materially and
adversely affect the Acquired Assets, or the Acquired Contracts; or (ii) which
has been brought or threatened for the purpose of enjoining or preventing the
consummation of this Agreement or the transactions contemplated hereby, which
otherwise claims that this Agreement or the consummation of the transactions
contemplated hereby is improper or which asserts that Buyer would be liable as a
transferee of the Acquired Assets to any creditor or creditors of Seller or any
affiliate of Seller.
<PAGE> 11
9.5 NO MATERIAL ADVERSE EFFECT. Neither the Acquired Contracts nor the
Acquired Assets shall have been materially adversely affected as a result of any
change, occurrence, circumstance, condition, loss, damage or destruction
(whether or not covered by insurance) of any character, or any combination
thereof, and there shall exist no change, occurrence, circumstance, condition,
loss, damage or destruction (whether or not covered by insurance) of any
character, or any combination thereof, which might reasonably be expected to
result in any such material adverse effect. In the event any loss, damage,
condemnation, or destruction with respect to the Acquired Contracts or the
Acquired Assets should occur and, notwithstanding such occurrence, the
transactions contemplated by this Agreement are consummated, any insurance
recovery or condemnation award, or the right of Seller thereto, in respect of
any such loss, damage condemnation or destruction, shall be paid, or assigned,
as the case may be, to Buyer at the Closing as part of the Acquired Assets, or
as promptly thereafter as practical.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
----------------------------------------------
The obligations of Seller to be performed at the Closing shall be
subject to the satisfaction at or before the Closing of the following
conditions:
10.1 REPRESENTATIONS AND WARRANTIES. Buyer's representations and
warranties contained in Article 5 of this Agreement shall have been true and
correct in all respects when made and shall be true and correct in all respects
at and as of the Closing Date as though such representations and warranties were
made at and as of such date.
10.2 PERFORMANCE. Buyer shall have, in all material respects, performed
and complied with, or caused the performance of and compliance with, its
obligations under this Agreement which are to be performed or complied with by
it or on its behalf at or prior to the Closing.
10.3 CERTIFICATES. Buyer shall have delivered to Seller at the closing,
a Certificate of its President to the effect that the conditions set forth in
this Article 10 have been satisfied.
10.4 LITIGATION. At the Closing, there is no pending or threatened
claim, litigation, action, suit, proceeding, judicial or administrative against
Buyer for the purpose of enjoining or preventing the consummation of this
Agreement or otherwise claiming that this Agreement or the consummation hereof
is improper.
11. MISCELLANEOUS PROVISIONS AND AGREEMENTS.
----------------------------------------
11.1 TRANSFER AND OTHER EXPENSES. Buyer shall pay all costs incurred,
whether at or subsequent to the Closing, in connection with transferring the
Acquired Contracts and the Acquired Assets to Buyer as contemplated in this
Agreement, including, without limitation, all sales, use, and other transfer
taxes. Buyer will agree to reimburse Seller for any penalty incurred by Seller
as a result of Seller canceling its business insurance policies.
<PAGE> 12
11.2 ACCESS TO RECORDS AND PERSONNEL. After the Closing, Buyer shall
provide Seller with access at reasonable times and upon reasonable prior notice
to such documents and records acquired by Buyer hereunder as are necessary for
Seller's tax, accounting or legal purposes.
11.3 Conduct Following Closing.
--------------------------
(a) Buyer shall have no obligation to employ any existing
employees of Seller prior to, at or after the Closing.
(b) Seller warrants that it will not hire any present Seller
employee retained by Buyer for a period of one year from the
date of Closing.
(c) Buyer warrants that it will in no way use or maintain the name
"Securex, Inc." following the 90-day period after the
Effective Date. During said 90-day period, Seller hereby
grants to Buyer a nontransferable, nonexclusive license to use
the Securex name. Said license shall automatically terminate
at the end of the 90-day period after the Closing Date. Buyer
shall indemnify Seller from any liability arising from the use
of the Securex name.
(d) At its discretion, Buyer will retain any and all personnel and
management at the existing account locations, and their
regional offices, including the general manager of the
operations.
(e) Buyer and Seller shall enter into a Noncompetition Agreement
in the form attached hereto as Exhibit A.
11.4 NOTICES. All notices, requests, demands and other communications
made hereunder shall be in writing and shall be deemed duly given when
personally delivered, sent by facsimile or sent by registered or certified mail,
postage prepaid, as follows, or to such other address or person as any party may
designate by notice to the other party:
If to Seller:
Securex, Inc.
9502 N. Florida Ave.
Tampa, Florida 33612
Attention: John W. Osterweil
Copy to:
Stephen H. Reynolds, Esq.
P.O. Box 1531
Tampa, Florida 33601
Fax No. (813) 273-4396
<PAGE> 13
If to Buyer:
ITS, Inc.
Crown Centre
5005 Rockside Rd.
Cleveland, Ohio 44131
Attn: Legal Department
Facsimile No.: (216) 642-4539
11.5 AMENDMENTS. This Agreement cannot be changed or terminated orally
and no waiver of compliance with any provision or condition hereof and no
consent provided for herein shall be effective unless evidenced by an instrument
in writing duly executed by Seller and Buyer.
11.6 ENTIRE AGREEMENT; CAPTIONS; COUNTERPARTS. This Agreement and the
Exhibits attached hereto, the Schedules delivered pursuant hereto and the other
writings specifically identified herein or contemplated hereby contain the
agreement among the parties hereto with respect to the transactions contemplated
herein and supersede all previous written or oral negotiations, commitments and
writings. The Section headings of this Agreement are for convenience of
reference only and do not form a party hereof and do not in any way modify,
interpret or construe the intentions of the parties. This Agreement may be
executed in two or more counterparts, and all such counterparts shall constitute
one and the same instrument.
11.7 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
11.8 SEC AUDIT. Seller agrees to cooperate with the Buyer in conducting
the necessary Securities and Exchange Commission (SEC) audit, and will use all
reasonable efforts to obtain any and all information required by Buyer in
completing the audit. Buyer shall bear all costs associated with the audit or
complying with all SEC requirements.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BUYER: INTERNATIONAL TOTAL SERVICES, INC.
(AN OHIO CORPORATION)
By: /s/ James O. Singer
-------------------------------------
James O. Singer
Its: President
Witness: /s/ Scott Brewer
----------------------------------
SELLER: SECUREX, INC.
(A FLORIDA CORPORATION)
By: /s/ John W. Osterweil
-------------------------------------
Its: President
-------------------------------------
Witness: /s/ Stephen H. Reynolds
----------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE SECUREX, INC.
DECEMBER 31, 1997 CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1997
<CASH> 384,461
<SECURITIES> 0
<RECEIVABLES> 1,212,642
<ALLOWANCES> 15,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,630,497
<PP&E> 422,698
<DEPRECIATION> 224,622
<TOTAL-ASSETS> 1,894,446
<CURRENT-LIABILITIES> 1,275,486
<BONDS> 0
0
0
<COMMON> 7,500
<OTHER-SE> 611,460
<TOTAL-LIABILITY-AND-EQUITY> 1,894,446
<SALES> 16,909,445
<TOTAL-REVENUES> 16,909,445
<CGS> 14,057,340
<TOTAL-COSTS> 16,374,330
<OTHER-EXPENSES> (31,944)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 567,059
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 567,059
<EPS-PRIMARY> 75.61
<EPS-DILUTED> 0
</TABLE>
