<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For The Quarterly Period ended June 30, 1998
Commission File Number 0-6955
WALBRO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
38-1358966
(I.R.S. Employer ID No.)
6242 Garfield Street, Cass City, MI 48726
(Address of principal executive offices) (Zip Code)
(517) 872-2131
Registrant's telephone number, including area code
Indicate by check mark whether the registrant 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 (of for such shorter period that the registrant
was required to file such reports) and has been subject to such filing
requirements for the past 90 days.
Yes __X__ No_____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 12, 1998
Common Stock (one class): 8,688,294
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements of Walbro Corporation and
subsidiaries (the "Company") have been prepared by the Company without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
condensed consolidated financial statements of the Company should be read in
conjunction with the financial statements and the notes thereto included in the
Company's Form 10-K as filed with the Securities and Exchange Commission for the
year ended December 31, 1997.
The financial information presented reflects all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of the results to
be expected for the year.
1
<PAGE> 3
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
6/30/98 12/31/97
---------------- ----------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 14,166 $ 13,539
ACCOUNTS RECEIVABLE, NET 156,021 144,985
INVENTORIES, NET 52,561 56,207
OTHER CURRENT ASSETS 30,523 25,924
---------------- ----------------
TOTAL CURRENT ASSETS 253,271 240,655
PROPERTY, PLANT & EQUIPMENT:
LAND, BUILDINGS & IMPROVEMENTS 90,449 95,329
MACHINERY & EQUIPMENT 288,284 297,032
---------------- ----------------
SUBTOTAL 378,733 392,361
LESS: ACCUMULATED DEPRECIATION (116,554) (116,991)
---------------- ----------------
NET PROPERTY, PLANT & EQUIPMENT 262,179 275,370
OTHER ASSETS:
GOODWILL, NET 32,294 32,803
JOINT VENTURES, INVESTMENTS & OTHER 61,950 61,765
---------------- ----------------
TOTAL OTHER ASSETS 94,244 94,568
---------------- ----------------
TOTAL ASSETS $ 609,694 $ 610,593
================ ================
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
2
<PAGE> 4
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
6/30/98 12/31/97
--------------- ---------------
<S> <C> <C>
LIABILITIES (Unaudited)
CURRENT LIABILITIES:
CURRENT PORTION LONG-TERM DEBT $ 780 $ 13,960
NOTES PAYABLE-BANKS 22,061 26,204
ACCOUNTS PAYABLE 78,404 84,209
ACCRUED LIABILITIES 45,951 41,009
--------------- ---------------
TOTAL CURRENT LIABILITIES 147,196 165,382
LONG-TERM LIABILITIES:
LONG-TERM DEBT, NET OF CURRENT 308,424 291,393
OTHER LONG-TERM LIABILITIES 15,877 14,952
--------------- ---------------
TOTAL LONG-TERM LIABILITIES 324,301 306,345
COMPANY-OBLIGATED MANDATORILY REDEEMABLE CON-
VERTIBLE PREFERRED SECURITIES OF WALBRO CAPITAL
TRUST HOLDING SOLELY CONVERTIBLE DEBENTURES 69,000 69,000
STOCKHOLDERS' EQUITY
COMMON STOCK, $.50 PAR VALUE; 4,344 4,341
AUTHORIZED 25,000,000;
OUTSTANDING 8,687,226 IN 1998 AND
8,682,595 IN 1997
PAID-IN CAPITAL 66,194 66,151
RETAINED EARNINGS 34,606 33,938
ACCUMULATED OTHER COMPREHENSIVE INCOME (35,947) (34,564)
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 69,197 69,866
--------------- ---------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 609,694 $ 610,593
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
3
<PAGE> 5
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
06/30/98 06/30/97 06/30/98 06/30/97
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $ 168,136 $ 153,842 $ 337,428 $ 307,861
COST OF SALES & EXPENSES:
COST OF SALES 139,369 131,437 283,427 261,258
SELLING AND ADMINISTRATIVE EXPENSES 12,641 12,538 25,592 24,658
RESEARCH & DEVELOPMENT EXPENSES 5,120 3,874 9,127 7,224
----------- ----------- ----------- -----------
OPERATING INCOME 11,006 5,993 19,282 14,721
OTHER EXPENSE (INCOME):
INTEREST EXPENSE, NET 7,470 5,937 14,973 11,829
ROYALTY INCOME, NET (164) (1,233) (1,115) (2,312)
OTHER (INCOME) EXPENSE (423) 269 (940) 259
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES,
MINORITY INTEREST, AND JOINT VENTURES 4,123 1,020 6,364 4,945
PROVISION FOR INCOME TAXES (1,175) (113) (1,927) (1,493)
MINORITY INTEREST (1,410) (1,413) (2,801) (2,397)
EQUITY IN INCOME OF JOINT VENTURES 30 1,690 504 2,491
----------- ----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 1,568 1,184 2,140 3,546
EXTRAORDINARY ITEM, NET OF TAX (1,473) -- (1,473) --
----------- ----------- ----------- -----------
NET INCOME $ 95 $ 1,184 $ 667 $ 3,546
=========== =========== =========== ===========
BASIC INCOME PER SHARE BEFORE
EXTRAORDINARY ITEM $ 0.18 $ 0.14 $ 0.25 $ 0.41
EXTRAORDINARY ITEM PER SHARE (0.17) -- (0.17) --
----------- ----------- ----------- -----------
BASIC NET INCOME PER SHARE $ 0.01 $ 0.14 $ 0.08 $ 0.41
=========== =========== =========== ===========
DILUTED NET INCOME PER SHARE $ 0.01 $ 0.14 $ 0.08 $ 0.41
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 8,685,590 8,655,313 8,684,104 8,654,032
DILUTIVE OPTIONS ISSUED TO EXECUTIVES 1,686 13,951 2,269 11,850
----------- ----------- ----------- -----------
DILUTED SHARES OUTSTANDING 8,687,276 8,669,264 8,686,373 8,665,882
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE> 6
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) SIX MONTHS ENDED
06/30/98 06/30/97
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited)
NET INCOME $ 667 $ 3,546
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY (USED IN)OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 19,141 16,645
(GAIN) LOSS ON DISPOSITION OF ASSETS (581) 1,854
MINORITY INTEREST (1,021) 128
(INCOME) OF JOINT VENTURES (504) (2,491)
CHANGES IN ASSETS AND LIABILITIES:
DEFERRED INCOME TAXES (772) (655)
PENSION OBLIGATIONS & OTHER 840 (497)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 15,755 (11,366)
ACCOUNTS RECEIVABLE, NET (19,312) (11,688)
INVENTORIES 3,679 (424)
PREPAID EXPENSES AND OTHER (9,000) (996)
--------- ---------
TOTAL ADJUSTMENTS 8,225 (9,490)
--------- ---------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 8,892 (5,944)
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF FIXED ASSETS (17,773) (35,842)
PURCHASE OF OTHER ASSETS 101 (743)
INVESTMENT IN JOINT VENTURES & OTHER 1,974 144
PROCEEDS FROM DISPOSAL OF ASSETS 9,629 1,072
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (6,069) (35,369)
CASH FLOWS FROM FINANCING ACTIVITIES:
BORROWINGS UNDER LINES-OF-CREDIT 100,774 81,674
REPAYMENTS UNDER LINES-OF-CREDIT (48,235) (101,462)
DEBT REPAYMENTS (52,054) (340)
PROCEEDS FROM ISSUANCE OF STOCK
& OPTIONS 45 69,137
FINANCING FEES PAID (1,976) (3,320)
CASH DIVIDENDS PAID (868) (1,731)
--------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (2,314) 43,958
EFFECT OF EXCHANGE RATE CHANGES ON CASH 118 (3,550)
--------- ---------
NET INCREASE (DECREASE) IN CASH 627 (905)
CASH AND CASH EQUIVALENTS BEGINNING BALANCE 13,539 18,213
--------- ---------
CASH AND CASH EQUIVALENTS ENDING BALANCE $ 14,166 $ 17,308
========= =========
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE> 7
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NEW CREDIT FACILITY
In May,1998 the Company completed a new $150 million line of credit,
consisting of a $125 million revolving line of credit (Revolving Credit
Facility) and a $25 million capital expenditure facility (Capital Expenditure
Facility).
Under the terms of the Agreement, for the first year of the
transaction, the Revolving Credit Facility will bear interest at either the
London Interbank Offered Rate (LIBOR), plus 2.25% or at the Prime Rate, plus
0.25%. Availability under the Revolving Credit Facility is subject to a
borrowing base, consisting of 85% of eligible accounts receivable of the Company
and certain of its subsidiaries, 60% of certain raw materials and finished goods
inventory and 70% of commodity raw material resin inventory, less customary
reserves. In addition, the Revolving Credit Facility provides for a $25 million
sub-facility for the issuance of letters of credit. The Capital Expenditure
Facility initially bears interest at the rate equal to the prime rate, plus
0.50% or LIBOR, plus 2.50%. Amounts drawn under the Capital Expenditure Facility
are repayable in 20 equal quarterly principal installments, beginning one
quarter after such draw.
Each of the Revolving Credit Facility and the Capital Expenditure
Facility (collectively, the New Credit Facility) is available for a period of
five years after closing. If the Revolving Credit Facility is terminated by the
Company during the first three years, certain pre-payment fees may be
applicable.
The New Credit Facility contains numerous covenants, including
financial covenants such as a fixed charge ratio and a senior secured funded
indebtedness to EBITDA (earnings before interest, taxes, depreciation and
amortization) ratio, and restrictions on additional indebtedness, liens, capital
expenditures, mergers and sales of assets, and events of default. Obligations
outstanding under the Revolving Credit Facility will be secured by accounts
receivable, inventory and general intangibles of the Company and certain
subsidiaries, and also will be secured by a pledge of the stock of certain of
the material domestic subsidiaries of the Company and 65% of the stock of the
material foreign subsidiaries of the Company. Each advance under the Capital
Expenditure Facility will be secured by the item of equipment purchased with the
proceeds of such advance. The collateral for the Capital Expenditure Facility
will not constitute collateral for the Revolving Credit Facility. In addition,
certain of the subsidiaries of the Company will provide guarantees of the
obligations under the New Credit Facility. Proceeds of the New Credit Facility
were initially used to pay off $30 million under the existing credit facility;
to pay off the Purchase Money Loan Agreement; to pay off the $45 million Senior
Notes due 2004, including an early retirement premium of $2.0 million. In
addition, the remaining facility will be used to finance capital expenditures
and to meet working capital needs.
6
<PAGE> 8
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (con't)
agreement, to refinance the Senior Notes due 2004 including an early retirement
premium of approximately $2.0 million, for capital expenditures and for general
working capital purposes.
(2) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories include raw material and component parts, work-in-process
and finished products. Work-in-process and finished products inventories include
material, labor and manufacturing overhead costs.
Inventories are comprised of the following:
June 30, December 31,
1998 1997
------- -------
(in thousands)
Raw materials and components $28,068 $30,857
Work-in-process 6,186 6,545
Finished products 18,307 18,805
------- -------
$52,561 $56,207
------- -------
(3) COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted SFAS No. 130 "Reporting
Comprehensive Income." The impact of adoption has been to include changes in
deferred compensation, unrealized gain or loss on securities and foreign
currency translation, which have not been recognized in determining net income,
in a new presentation of comprehensive income, as presented below.
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Six Months Ended
06/30/98 06/30/97
-------- --------
(in thousands)
Net income $ 667 $ 3,546
-------- --------
Foreign currency translation (1,462) (16,621)
Unrealized gains (losses) on securities (59) (113)
Deferred compensation 138 413
-------- --------
Other comprehensive income (loss) (1,383) (16,321)
-------- --------
Comprehensive income (loss) $ (716) $(12,775)
======== ========
(4) LIGONIER DISPOSITION
In June 1998, the Company sold its steel fuel rail manufacturing plant
in Ligonier, Indiana to a Michigan-based investment group.
7
<PAGE> 9
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
as of June 30, 1998
----------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
------------- --------------- --------------- -------------- -----------
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ (3,834) $ 13,232 $ 4,768 $ -- $ 14,166
Accounts receivable, net 74,127 42,659 39,235 156,021
Accounts receivable, intercompany (123,371) 6,449 137,185 (20,263) --
Inventories, net 18,430 33,272 859 52,561
Prepaid expenses and other 14,938 4,331 1,403 -- 20,672
Deferred and refundable income taxes 482 1,585 7,784 -- 9,851
--------- --------- --------- --------- ---------
Total current assets (19,228) 101,528 191,234 (20,263) 253,271
--------- --------- --------- --------- ---------
PLANT AND EQUIPMENT, NET 120,235 137,101 4,735 108 262,179
--------- --------- --------- --------- ---------
OTHER ASSETS:
Funds held for construction -- -- -- -- --
Joint ventures 10,448 16,058 -- -- 26,506
Investments 126,585 24,344 59,597 (208,051) 2,475
Goodwill, net 14,114 11,163 (1,524) 8,541 32,294
Notes receivable -- 7,667 -- (7,667) --
Deferred income taxes -- 4,118 4,178 -- 8,296
Other 8,673 3,025 12,975 -- 24,673
--------- --------- --------- --------- ---------
Total other assets 159,820 66,375 75,226 (207,177) 94,244
--------- --------- --------- --------- ---------
Total assets $ 260,827 $ 305,004 $ 271,195 $(227,332) $ 609,694
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 726 $ 54 $ -- $ -- $ 780
Bank and other borrowings -- 22,061 -- -- 22,061
Accounts payable 19,369 55,150 3,885 -- 78,404
Accrued liabilities 10,409 36,813 16,275 (18,466) 45,031
Dividends payable -- 920 -- -- 920
--------- --------- --------- --------- ---------
Total current liabilities 30,504 114,998 20,160 (18,466) 147,196
--------- --------- --------- --------- ---------
LONG-TERM LIABILITIES
Long-term debt, less current portion 164,266 10,969 174,380 (41,191) 308,424
Pension obligations 2,818 2,581 7,489 -- 12,888
Deferred income taxes -- 2,040 (31) -- 2,009
Minority interest -- 980 -- -- 980
--------- --------- --------- --------- ---------
Total long-term liabilities 167,084 16,570 181,838 (41,191) 324,301
--------- --------- --------- --------- ---------
REDEEMABLE PREFERRED STOCK -- 69,000 -- -- 69,000
STOCKHOLDERS' EQUITY
Common stock, $.50 par value;
authorized 25,000,000; outstanding
8,687,226 in 1998; 8,682,595 in 1997 -- 25,667 4,344 (25,667) 4,344
Paid-in capital -- 72,725 66,194 (72,725) 66,194
Retained earnings 65,736 31,795 34,606 (97,531) 34,606
Deferred compensation -- (241) -- (241)
Minimum pension liability adjustment -- -- -- -- --
Unrealized gain on securities available for sale -- -- 9 -- 9
Cumulative translation adjustments (2,497) (25,751) (35,715) 28,248 (35,715)
--------- --------- --------- --------- ---------
Total stockholders' equity 63,239 104,436 69,197 (167,675) 69,197
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 260,827 $ 305,004 $ 271,195 $(227,332) $ 609,694
========= ========= ========= ========= =========
</TABLE>
8
<PAGE> 10
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
as of December 31, 1997
-----------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
-------------- -------------- ----------------- --------------- -----------
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ (744) $ 13,431 $ 852 $ -- $ 13,539
Accounts receivable, net 80,936 63,194 855 144,985
Accounts receivable, intercompany (144,222) (37,755) 171,052 10,925 --
Inventories, net 26,086 29,012 1,109 56,207
Prepaid expenses and other 5,988 9,549 1,868 -- 17,405
Deferred and refundable income taxes 470 1,253 6,796 -- 8,519
--------- --------- --------- --------- ---------
Total current assets (31,486) 78,684 182,532 10,925 240,655
--------- --------- --------- --------- ---------
PLANT AND EQUIPMENT, NET 123,635 144,423 7,204 108 275,370
--------- --------- --------- --------- ---------
OTHER ASSETS:
Funds held for construction -- -- -- -- --
Joint ventures 10,739 15,942 -- -- 26,681
Investments 117,720 24,433 50,959 (189,851) 3,261
Goodwill, net 14,342 11,444 (1,524) 8,541 32,803
Notes receivable -- 6,499 196,198 (202,571) 126
Deferred income taxes -- 4,001 4,178 -- 8,179
Other 9,045 2,860 11,613 -- 23,518
--------- --------- --------- --------- ---------
Total other assets 151,846 65,179 261,424 (383,881) 94,568
--------- --------- --------- --------- ---------
Total assets $ 243,995 $ 288,286 $ 451,160 $(372,848) $ 610,593
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 7,026 $ 76 $ 6,858 $ -- $ 13,960
Bank and other borrowings -- 26,204 -- -- 26,204
Accounts payable 21,540 55,730 6,939 -- 84,209
Accrued liabilities 1,103 18,699 20,127 (708) 39,221
Dividends payable -- 920 868 -- 1,788
--------- --------- --------- --------- ---------
Total current liabilities 29,669 101,629 34,792 (708) 165,382
--------- --------- --------- --------- ---------
LONG-TERM LIABILITIES
Long-term debt, less current portion 164,581 11,818 339,809 (224,815) 291,393
Pension obligations 2,505 2,625 6,693 -- 11,823
Deferred income taxes -- 2,077 -- -- 2,077
Minority interest -- 1,052 -- -- 1,052
--------- --------- --------- --------- ---------
Total long-term liabilities 167,086 17,572 346,502 (224,815) 306,345
--------- --------- --------- --------- ---------
REDEEMABLE PREFERRED STOCK -- 69,000 -- -- 69,000
STOCKHOLDERS' EQUITY
Common stock, $.50 par value;
authorized 25,000,000; outstanding
8,687,226 in 1998; 8,682,595 in 1997 -- 23,935 4,341 (23,935) 4,341
Paid-in capital -- 72,819 66,151 (72,819) 66,151
Retained earnings 49,827 28,747 33,938 (78,574) 33,938
Deferred compensation -- -- (379) -- (379)
Minimum pension liability adjustment -- -- -- -- --
Unrealized gain on securities available for sale -- -- 68 -- 68
Cumulative translation adjustments (2,587) (25,416) (34,253) 28,003 (34,253)
--------- --------- --------- --------- ---------
Total stockholders' equity 47,240 100,085 69,866 (147,325) 69,866
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 243,995 $ 288,286 $ 451,160 $(372,848) $ 610,593
========= ========= ========= ========= =========
</TABLE>
9
<PAGE> 11
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998
----------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
------------ ------------ ------------ ------- -----
(in thousands, except share data)
<C> <S> <S> <S> <S> <S>
NET SALES $ 181,781 $ 168,706 $ 1,225 $ (14,284) $ 337,428
COSTS AND EXPENSES:
Cost of sales 151,556 144,931 1,224 (14,284) 283,427
Selling, administration & other expenses 15,028 13,759 5,932 34,719
--------- --------- --------- --------- ---------
OPERATING INCOME (LOSS) 15,197 10,016 (5,931) -- 19,282
OTHER EXPENSE (INCOME):
Interest expense, net 5,301 1,124 8,548 -- 14,973
Royalty income, net (1,375) 260 -- -- (1,115)
Foreign currency exchange loss(gain) (5) (54) 1 -- (58)
Other 5 49 (936) -- (882)
--------- --------- --------- --------- ---------
Income before provision for income taxes,
minority interest, equity in (income) loss
of joint ventures and subsidiaries 11,271 8,637 (13,544) -- 6,364
Provision for income taxes (2,469) (3,847) 4,389 -- (1,927)
Minority Interest -- (2,801) -- -- (2,801)
Equity in income (loss) of joint ventures (68) 572 -- -- 504
Equity in income (loss) of subsidiaries 3,123 -- 11,295 (14,418) --
--------- --------- --------- --------- ---------
Net Income Before Extraordinary Item $ 11,857 $ 2,561 $ 2,140 $ (14,418) $ 2,140
========= ========= ========= ========= =========
Extraordinary Item $ (1,473) (1,473)
--------- --------- --------- --------- ---------
Net Income $ 11,857 $ 2,561 $ 667 $ (14,418) $ 667
========= ========= ========= ========= =========
</TABLE>
10
<PAGE> 12
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
-----------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
------------ ------------- -------------- ----------------- -------------
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
NET SALES $ 166,548 $ 152,764 $ 653 $ (12,104) $ 307,861
COSTS AND EXPENSES:
Cost of sales 139,499 133,362 501 (12,104) 261,258
Selling, administration & other expenses 17,080 10,193 4,609 -- 31,882
--------- --------- --------- --------- ---------
OPERATING INCOME (LOSS) 9,969 9,209 (4,457) -- 14,721
OTHER EXPENSE (INCOME):
Interest expense, net 5,997 1,051 4,781 -- 11,829
Royalty income, net (2,174) (138) -- (2,312)
Foreign currency exchange loss(gain) 30 128 29 -- 187
Other 34 25 13 -- 72
--------- --------- --------- --------- ---------
Income before provision for income taxes,
minority interest, equity in (income) loss
of joint ventures and subsidiaries 6,082 8,143 (9,280) -- 4,945
Provision for income taxes (2,150) (2,692) 3,349 -- (1,493)
Minority Interest -- (2,397) -- -- (2,397)
Equity in income (loss) of joint ventures 952 1,539 -- -- 2,491
Equity in income (loss) of subsidiaries 4,797 160 9,477 (14,434) --
--------- --------- --------- --------- ---------
Net Income Before Extraordinary Item $ 9,681 $ 4,753 $ 3,546 $ (14,434) $ 3,546
========= ========= ========= ========= =========
Extraordinary Item
Net Income $ 9,681 $ 4,753 $ 3,546 $ (14,434) $ 3,546
========= ========= ========= ========= =========
</TABLE>
11
<PAGE> 13
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998
----------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
------------ ------------ ------------ ------- -----
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $ 7,924 $ 12,865 $(11,897) $ -- $ 8,892
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment (6,316) (11,438) (19) -- (17,773)
Acquisitions, net of cash acquired -- -- -- -- --
Purchase of other assets 699 (551) (47) -- 101
Investment in joint ventures and other (4,397) 3,250 3,121 -- 1,974
Proceeds/(payments) of intercompany note rec. -- -- -- -- --
Proceeds from disposal of assets 5,688 78 3,863 -- 9,629
-------- -------- -------- -------- --------
Net cash provided by(used in) investing activities (4,326) (8,661) 6,918 -- (6,069)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving
line-of-credit agreements (4,563) 57,102 -- 52,539
Debt repayments (6,615) (31) (45,408) -- (52,054)
Proceeds from issuance of long-term debt -- -- -- -- --
Proceeds from issuance of stock
and options -- -- 45 -- 45
Financing fees paid -- -- (1,976) -- (1,976)
Cash dividends paid -- -- (868) -- (868)
-------- -------- -------- -------- --------
Net cash provided by(used in) financing activities (6,615) (4,594) 8,895 -- (2,314)
-------- -------- -------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH (73) 191 -- -- 118
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH (3,090) (199) 3,916 -- 627
CASH AND CASH EQUIV. AT BEGIN OF YEAR (744) 13,431 852 -- 13,539
-------- -------- -------- -------- --------
CASH AND CASH EQUIV. AT END OF PERIOD $ (3,834) $ 13,232 $ 4,768 $ -- $ 14,166
======== ======== ======== ======== ========
-- -- --
</TABLE>
12
<PAGE> 14
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
-----------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
------------ ------------ ------------ ------- -----
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $ 30,411 $ 7,453 $(43,808) $-- $ (5,944)
-------- -------- -------- --- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment (21,284) (14,654) 96 -- (35,842)
Acquisitions, net of cash acquired -- -- -- -- --
Purchase of other assets (872) 35 94 -- (743)
Investment in joint ventures and other (7,904) 3,090 4,958 -- 144
Proceeds/(payments) of intercompany note rec. -- -- -- -- --
Proceeds from disposal of assets 12 272 788 -- 1,072
-------- -------- -------- --- --------
Net cash provided by(used in) investing activities (30,048) (11,257) 5,936 -- (35,369)
-------- -------- -------- --- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving
line-of-credit agreements -- 5,675 (25,463) -- (19,788)
Debt repayments (293) (47) -- -- (340)
Proceeds from issuance of long-term debt -- (69,000) 69,000 -- --
Proceeds from issuance of stock
and options -- 69,000 137 -- 69,137
Financing fees paid -- -- (3,320) -- (3,320)
Cash dividends paid -- -- (1,731) -- (1,731)
-------- -------- -------- --- --------
Net cash provided by(used in) financing activities (293) 5,628 38,623 -- 43,958
-------- -------- -------- --- --------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH -- (2,690) (860) -- (3,550)
-------- -------- -------- --- --------
NET INCREASE (DECREASE) IN CASH 70 (866) (109) -- (905)
CASH AND CASH EQUIV. AT BEGIN OF YEAR 299 17,779 135 -- 18,213
-------- -------- -------- --- --------
CASH AND CASH EQUIV. AT END OF PERIOD $ 369 $ 16,913 $ 26 $-- $ 17,308
======== ======== ======== === ========
</TABLE>
13
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
THREE MONTHS ENDED JUNE 30, 1998 vs. THREE MONTHS ENDED JUNE 30, 1997
Net sales in the second quarter of 1998 increased 9.3% to $168.1
million compared to $153.8 million for the same period of 1997. Sales of
automotive products increased 7.7% to $120.2 million for the second quarter of
1998 compared to $111.6 million for the same period of 1997. Sales of small
engine products increased 11.0% to $36.3 million for the second quarter of 1998
compared to $32.7 million for the same period of 1997. Sales of aftermarket
products increased 3.7% to $8.4 million for the second quarter of 1998 compared
to $8.1 million for the second quarter of 1997.
Sales of automotive products increased in the second quarter of 1998
primarily because of higher plastic fuel tank sales in the U.S., which were up
by $16.5 million. 1998 second quarter operations were impacted by a strike at
General Motors that affected three weeks of the quarter, reducing sales by
approximately $3.0 million and operating earnings by about $0.5 million. The
strike will have a similar or slightly larger impact on operations in the third
quarter of 1998. The second quarter of 1997 was also affected by a strike at
Chrysler Corporation that reduced sales by $4.0 million and operating earnings
by $1.0 million.
U.S. automotive product sales in the 1998 quarter also included $3.3
million (compared to $8.1 million in the 1997 quarter) from the Company's steel
fuel rail plant in Ligonier, Indiana which was divested in June, 1998.
Management expects the sale of the Ligonier plant to reduce sales by
approximately $25 million and increase operating earnings by $3.0 million on a
full year basis. Sales of automotive products in Europe for the second quarter
of 1998 decreased by 10.3% because of foreign currency exchange rates and lower
volume in Norway and Spain.
Sales of small engine products increased as a result of strong volume
growth. The largest increases in sales came from ignition system sales of 28.3%
and increased sales of carburetors in the People's Republic of China by 37.8%.
Sales of small engine products in Japan decreased by 4.1% due to exchange rates.
On a volume basis, sales in Japan increased approximately 10%.
Sales to the aftermarket increased 3.7% to $8.4 million for the second
quarter of 1998 compared to $8.1 million for the same period of 1997 due to
higher sales of carburetors to aftermarket customers.
Cost of sales for the second quarter of 1998 increased 6.1% to $139.4
million compared to $131.4 million for the same period of 1997. Cost of sales as
a percent of net sales was 82.9% for the second quarter of 1998 compared to
85.4% for the same 1997 period resulting in a gross margin improvement of 2.5
percentage points from 14.6% in 1997 to 17.1% in 1998. Automotive products gross
margin improvement resulted in general from the cost reduction programs
initiated in 1998, and additionally from higher volume of fuel pumps and fuel
modules in the U.S., lower start-up costs in Ossian, Indiana, lower warranty
costs and higher volume of plastic fuel tank systems in the U.S. Gross margin in
Europe increased by 1.4 percentage points to 12.5% as the result of cost saving
initiatives and improved efficiency. The small engine products gross margin
improvement of 3.7 percentage points resulted from higher volume and the impact
of exchange rates for products manufactured in Asia, but sold in Europe and the
U.S.
14
<PAGE> 16
Selling and administrative ("S & A") expenses increased 0.8% for the
second quarter of 1998 compared to the second quarter of 1997. S & A expenses as
a percent of net sales were 7.5% for the second quarter of 1998 compared to 8.2%
for the same period of 1997.
Research and development ("R & D") expenses increased 32.2% for the
second quarter of 1998. The increase was due to the new European systems center
in Germany and higher new program costs in Europe.
Interest expense increased 37.4% for the second quarter of 1998
compared to the same period in 1997 because of higher borrowings for additional
working capital, for capital expenditures and a higher interest rate on the $100
million of Senior Notes due 2007 that were issued in December 1997 to refinance
bank borrowings.
Royalty income decreased to $0.2 million in the second quarter of 1998
due to weaker foreign economies and the stronger US dollar.
Other income/expense was $0.4 million of income for the second quarter
of 1998 compared to $0.3 million of expense for the second quarter of 1997. The
change reflects gains on sales of assets.
Provision for income taxes was $1.1 million higher for the second
quarter of 1998 compared to the same period of 1997 primarily due to higher
taxable income.
The equity in income from joint ventures in the second quarter of 1998
was $30,000 versus the comparable period income of $1.7 million in 1997, because
of lower profitability at the joint ventures due to weaker foreign economies;
the stronger U.S. dollar; and start-up costs of the Company's new VITEC joint
venture in Detroit, Michigan.
Extraordinary item of $1.5 million for the second quarter of 1998
reflects costs associated with the early extinguishment of long-term debt, net
of tax.
Net income for the second quarter of 1998 was $0.1 million compared to
$1.2 million for the same period last year, as a result of the reasons described
above. Net income per share for the second quarter or 1998 was $.01 compared
with $.14 for the same 1997 period.
15
<PAGE> 17
SIX MONTHS ENDED JUNE 30, 1998 vs. SIX MONTHS ENDED JUNE 30, 1997
Net sales for the first six months of 1998 increased 9.6% to
$337.4 million compared to $307.9 million for the same period of 1997. Sales of
automotive products increased 9.3% to $246.2 million for the 1998 six-month
period compared to $225.3 million for the same 1997 period. The increased
automotive product sales were primarily the result of higher volume in the U.S.
Sales of small engine products increased 11.8% to $71.8 million for the
first six months of 1998 compared to $64.2 million for the same period of 1997.
The increased small engine product sales were the result of increased sales of
ignition systems products and carburetors in China mostly offset by declines in
diaphragm carburetors in the U.S. for the reasons stated above.
Sales to the aftermarket increased 8.1% to $16.1 million for the first
six months of 1998 compared to $14.9 million for the same period of 1997. Sales
increased because of higher carburetor and automotive product sales to
aftermarket customers.
Cost of sales for the first six months of 1998 increased 8.5% to $283.4
million compared to $261.3 million for the same period of 1997. Cost of sales as
a percent of net sales was 84.0% for the first six months of 1998 compared to
84.8% for the same period of 1997. The lower cost of sales for the first six
months of 1998 was due to the same reasons stated above as a percentage of sales
for the second quarter of 1998.
S & A expenses increased by 3.8% for the first six months of 1998
compared to the same period of 1997. The increase is mainly due to higher
personnel related costs. S & A expenses as a percent of net sales were 7.6% for
the first six months of 1998 compared to 8.0% for the same period of 1997.
R & D expenses increased by 26.3% for the first six months of 1998
compared to the same period of 1997. The increase was due to the same reasons
stated above for the second quarter of 1998.
Interest expense increased 26.6% for the first six months of 1998
compared to the same period in 1997 due to the same reasons stated above for the
second quarter of 1998.
Royalty income decreased to $1.1 million in the second quarter of 1998
due to weaker foreign economies and the stronger US dollar.
Other income/expense was $0.9 million of income for the first six
months of 1998 compared to $0.3 million of expense for the same period of 1997.
The changes reflect gains on sales of assets in 1998 compared to losses in the
second quarter of 1997.
The provision for income taxes was 29.1% higher for the first six
months of 1998 compared to the same period of 1997 because of higher taxable
income.
The equity in income of joint ventures was $0.5 million for the first
six months of 1998 compared to $2.5 million for the same period of 1997 because
of the same reasons stated above for the second quarter of 1998.
Extraordinary item of $1.5 million for the second quarter of 1998
reflects costs associated with early extinguishment of long-term debt, net of
tax.
Net income for the first six months of 1998 was $0.7 million, a
decrease of 83% compared to net income of $3.5 million for the same period of
1997. The decrease was due to the reasons described above. Net income per share
after extraordinary item was $0.08 for the first six months of 1998 compared to
$0.41 for the first six months of 1997.
16
<PAGE> 18
Foreign Currency Transactions
Approximately 48% of the Company's sales during the second quarter of
1998 were derived from international manufacturing operations in Europe, Asia,
South America and Mexico. The financial position and the results of operations
of the Company's subsidiaries in Europe (29% of sales), Japan (5% of sales),
South America (2% of sales) and China (1% of sales) were measured in local
currency of the countries in which they operated and translated into U.S.
dollars.
The effects of foreign currency fluctuations in Europe, South America,
Japan and China are somewhat mitigated by the fact that expenses are generally
incurred in the same currencies in which sales are generated and the reported
income of these subsidiaries will be higher or lower depending on a weakening
or strengthening of the U.S. dollar.
For the Company's subsidiary in Singapore (2% of sales) the expenses
are generally incurred in the local currency, but sales are generated in U.S.
dollars; therefore, results of operations are more directly influenced by a
weakening or strengthening of the local currency. The Company's subsidiary in
Mexico (8% of sales) operates as a maquiladora, or contract manufacturer,
where certain direct manufacturing expenses are incurred in the local currency
and sales are generated in U.S. dollars. Thus, results of operations of the
Company's subsidiary in Mexico are also more directly influenced by a weakening
or strengthening of the local currency.
Approximately 45% of the Company's assets at June 30, 1998, were based
in its foreign operations and these assets are translated into U.S. dollars at
foreign currency exchange rates in effect as of the end of each period.
Accordingly, the Company's consolidated stockholders' equity will fluctuate
depending upon the weakening or strengthening of the U.S. dollar. In addition,
the Company has equity investments in unconsolidated joint ventures in
Argentina, Brazil, France, Japan, Korea and Mexico. The Company's reported
income from these joint ventures will be higher or lower depending upon a
weakening or strengthening of the U.S. dollar.
The Company's strategy for management of currency risk relies primarily
upon the use of forward currency exchange contracts or option contracts to
manage its exposure to foreign currency fluctuations.
17
<PAGE> 19
The Year 2000 Issue
The year 2000 issue is the result of computer programs that were
written using two digits (rather than four) to define the applicable year. Any
of the Company's computer programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000, which
could result in miscalculations or system failures. The Company is working to
resolve the potential impact of the year 2000 on the processing of
date-sensitive information and is in the process of evaluation of the impact of
the issue at all locations. The evaluation includes computer programs used for
management information systems and computer programs used to electronically
control manufacturing equipment and other devices. The evaluation has not
progressed enough to allow management to assess whether the cost of addressing
this issue will have a material impact on the Company's financial position,
results of operations or cash flows in future periods. Failure of the Company
to make required modifications on a timely basis or the inability of other
companies with which the Company does business to complete their Year 2000
modifications on a timely basis could adversely affect the Company's
operations. Management expects this evaluation to be completed during 1998.
Liquidity and Capital Resources
As of June 30, 1998, the Company had outstanding $22.8 million in
short-term debt, including current portion of long-term debt, and $308.4 million
in long-term debt. The approximate minimum principal payments required on the
Company's long-term debt in each of the five fiscal years subsequent to December
31, 1997 are $14.0 million in 1998, $7.4 million in 1999, $30.0 million in 2000,
$7.5 million in 2001, $6.8 million in 2002 and $239.6 million thereafter.
In May 1998, the Company closed a $150 million line of credit ( the
"New Credit Facility") consisting of $125 million revolving line of credit and a
$25 million capital expenditure facility. The New Credit Facility will be
available for five years. Proceeds of the New Credit Facility was initially used
to pay off $30 million under the existing credit facility; to pay off the
Purchase Money Loan Agreement; to pay off the $45 million Senior Notes due 2004
including an early retirement premium of $2.0 million. In addition, the
remaining facility will be used to finance capital expenditures and to meet
working capital needs.
As of June 30, 1998, accounts receivable amounted to $152.8 million, an
increase of $6.0 million, compared to June 30, 1997. The average collection
period at June 30, 1998 was 81.8 days compared to 85.9 days at June 30, 1997.
The increase in accounts receivable was due to higher sales.
The Company's plans for 1998 capital expenditures for facilities,
equipment and tooling total approximately $50 million. The Company intends to
finance the capital expenditures with the New Credit Facility, potential lease
financing, access to capital markets and cash from operations.
Management believes that the Company's long-term cash needs will
continue to be provided principally by operating activities supplemented, to
the extent required, by borrowing under the Company's existing and future
credit facilities and by access to the capital markets. Management expects to
replace these credit facilities as they expire with comparable facilities.
18
<PAGE> 20
Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995
The statements contained in this discussion that are not historical
facts are forward-looking statements subject to the safe harbor created by the
Securities Litigation Reform Act of 1995. Whenever possible, the Company has
identified these forward-looking statements by words such as "anticipating,"
"believes," "estimates," "expects," and similar expressions. The Company
cautions readers of this discussion that a number of important factors could
cause the Company's actual consolidated results for 1998 and beyond to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company. These important factors include, without limitation,
changes in demand for automobiles and light trucks, relationships with
significant customers, price pressures, the timing and structure of future
acquisitions or dispositions including the restructuring program announced
during the fourth quarter of 1997, impact of environmental regulations, the year
2000 computer issue, continued availability of adequate funding sources,
currency and other risks inherent in international sales, and general economic
and business conditions. These important factors and other factors which could
affect the Company's results are more fully disclosed in the Company's filings
with the Securities and Exchange Commission. Readers of this discussion are
referred to such filings. The Company assumes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.
19
<PAGE> 21
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of the Company was held on May 20, 1998.
(b) The Stockholders voted to elect one Class II director to the Company's Board
of Directors, with the following votes:
Authority Broker
Director For Against Withheld Abstentions Non-Votes
- -------- --- ------- -------- ----------- ---------
John E. Utley 7,072,684 --- 109,909 --- ---
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed with this report:
Exhibit No.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter.
20
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WALBRO CORPORATION
(Registrant)
Dated: August 14, 1998 /s/ Frank E. Bauchiero
----------------------
Frank E. Bauchiero, President
and Chief Executive Officer
Dated: August 14, 1998 /s/Michael A. Shope
----------------------
Michael A. Shope
Chief Financial Officer and Treasurer
21
<PAGE> 23
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 14,166
<SECURITIES> 0
<RECEIVABLES> 156,021
<ALLOWANCES> 0
<INVENTORY> 52,561
<CURRENT-ASSETS> 253,271
<PP&E> 378,733
<DEPRECIATION> 116,554
<TOTAL-ASSETS> 609,694
<CURRENT-LIABILITIES> 147,196
<BONDS> 308,424
69,000
0
<COMMON> 4,344
<OTHER-SE> 64,823
<TOTAL-LIABILITY-AND-EQUITY> 609,694
<SALES> 337,428
<TOTAL-REVENUES> 337,428
<CGS> 283,427
<TOTAL-COSTS> 283,427
<OTHER-EXPENSES> 32,664
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,973
<INCOME-PRETAX> 6,364
<INCOME-TAX> 1,927
<INCOME-CONTINUING> 2,140
<DISCONTINUED> 0
<EXTRAORDINARY> (1,473)
<CHANGES> 0
<NET-INCOME> 667
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
