<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________________ TO ____________________
Commission File Number: 000-24373
GLOBAL IMAGING SYSTEMS, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 59-3247752
- -------------------------------------------- ----------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)
3820 Northdale Boulevard, Suite 200A 33624
Tampa, Florida
- -------------------------------------------- ----------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 813-960-5508
________________________________________________________________________________
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The registrant had 19,136,613 Shares of Common Stock, $.01 par value,
outstanding as of November 12, 1999.
<PAGE>
INDEX
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1 - Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 1999 (Unaudited)
and March 31, 1999 3
Consolidated Statements of Operations for the three and six
months ended September 30, 1999 and 1998 (Unaudited) 4
Consolidated Statements of Cash Flows for the six months ended
September 30, 1999 and 1998 (Unaudited) 6
Consolidated Statement of Stockholders' Equity for the six
months ended September 30, 1999 (Unaudited) 7
Notes to Consolidated Financial Statements (Unaudited) 8
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk 20
PART II - OTHER INFORMATION
ITEM 2 - Changes in Securities and Use of Proceeds 20
ITEM 4 - Submission of Matters to a Vote of Security Holders 20
ITEM 6 - Exhibits and Reports on Form 8-K 21
SIGNATURE 22
EXHIBIT INDEX 23
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
---------------- ----------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,606 $ 5,175
Accounts receivable, net of allowance for doubtful accounts ($1,695
and $1,353 at September 30, 1999 and March 31, 1999, respectively) 63,021 45,700
Inventories 44,142 36,793
Deferred income taxes 3,167 2,591
Prepaid expenses and other current assets 2,544 1,940
Income taxes receivable 523 -
---------------- ----------------
Total current assets 115,003 92,199
Rental equipment, net 9,057 4,377
Property and equipment, net 7,114 6,409
Other assets 1,587 829
Intangible assets, net:
Goodwill 241,022 201,307
Noncompete agreements 1,763 1,207
Financing fees 5,466 4,091
---------------- ----------------
Total assets $ 381,012 $ 310,419
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,231 $ 16,718
Accrued liabilities 6,221 6,709
Accrued compensation and benefits 7,381 5,221
Accrued interest 1,351 874
Current maturities of long-term debt 3,666 176
Deferred revenue 18,313 16,196
Income taxes payable - 1,383
---------------- ----------------
Total current liabilities 58,163 47,277
Deferred income taxes 251 142
Long-term debt, less current maturities 214,715 168,101
---------------- ----------------
Total liabilities 273,129 215,520
Stockholders' equity:
Preferred stock, $.01 par value:
10,000,000 shares authorized: No shares issued. - -
Common stock, $.01 par value:
50,000,000 shares authorized: 19,025,266 and 18,727,436 shares
issued; and 19,023,671 and 18,725,841 shares outstanding at
September 30, 1999 and March 31, 1999, respectively 190 187
Common stock held in treasury, at cost (35) (35)
Additional paid-in capital 88,575 83,817
Retained earnings 19,153 10,930
---------------- ----------------
Total stockholders' equity 107,883 94,899
---------------- ----------------
Total liabilities and stockholders' equity $ 381,012 $ 310,419
================ ================
</TABLE>
See accompanying notes.
3
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
-------- --------
<S> <C> <C>
Revenues:
Equipment and supplies sales $ 91,281 $ 51,998
Service and rentals 29,742 15,048
-------- --------
Total revenues 121,023 67,046
Costs and operating expenses:
Cost of equipment and supplies sales 63,509 37,922
Service and rental costs 14,446 7,549
Selling, general and administrative expenses 26,982 14,044
Intangible asset amortization 1,980 943
-------- --------
Total costs and operating expenses 106,917 60,458
-------- --------
Income from operations 14,106 6,588
Interest expense 5,517 1,456
-------- --------
Income before income taxes and extraordinary item 8,589 5,132
Income taxes 3,800 2,295
-------- --------
Income before extraordinary item 4,789 2,837
Extraordinary charge for early retirement of debt, net of tax
benefit of $774 - (1,133)
-------- --------
Net income $ 4,789 $ 1,704
======== ========
Basic earnings per share:
Income before extraordinary item $ 0.25 $ 0.16
Extraordinary charge for early retirement of debt, net of tax
benefit of $774 - (0.06)
-------- --------
Net income per share $ 0.25 $ 0.10
======== ========
Diluted earnings per share:
Income before extraordinary item $ 0.25 $ 0.16
Extraordinary charge for early retirement of debt, net of tax
benefit of $774 - (0.06)
-------- --------
Net income per share $ 0.25 $ 0.10
======== ========
Weighted average number of shares outstanding:
Basic 19,022 17,642
Diluted 19,329 17,700
</TABLE>
See accompanying notes
4
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
1999 1998
-------- --------
<S> <C> <C>
Revenues:
Equipment and supplies sales $166,813 $ 95,448
Service and rentals 54,734 29,916
-------- --------
Total revenues 221,547 125,364
Costs and operating expenses:
Cost of equipment and supplies sales 115,081 68,809
Service and rental costs 26,720 14,555
Selling, general and administrative expenses 50,385 27,449
Intangible asset amortization 3,724 1,844
-------- --------
Total costs and operating expenses 195,910 112,657
-------- --------
Income from operations 25,637 12,707
Interest expense 9,760 3,686
-------- --------
Income before income taxes and extraordinary item 15,877 9,021
Income taxes 7,000 4,096
-------- --------
Income before extraordinary item 8,877 4,925
Extraordinary charge for early retirement of debt, net of tax benefit of
$436 and $1,241 for 1999 and 1998, respectively (654) (1,817)
-------- --------
Net income 8,223 3,108
Yield adjustment on Class A common stock and accretions - (901)
-------- --------
Net income available to common stockholders $ 8,223 $ 2,207
======== ========
Basic earnings per share:
Income before extraordinary item, including yield adjustment and accretions $ 0.47 $ 0.28
Extraordinary charge for early retirement of debt, net of tax benefit of
$436 and $1,241 for 1999 and 1998, respectively (0.03) (0.13)
-------- --------
Net income per share $ 0.44 $ 0.15
======== ========
Diluted earnings per share:
Income before extraordinary item, including yield adjustment and accretions $ 0.46 $ 0.27
Extraordinary charge for early retirement of debt, net of tax benefit of
$436 and $1,241 for 1999 and 1998, respectively (0.03) (0.12)
-------- --------
Net income per share $ 0.43 $ 0.15
======== ========
Weighted average number of shares outstanding:
Basic 18,884 14,601
Diluted 19,121 15,122
</TABLE>
See accompanying notes
5
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
1999 1998
-------- --------
<S> <C> <C>
Operating activities:
Net income $ 8,223 $ 3,108
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 3,790 2,162
Amortization 4,114 2,006
Extraordinary charge for early retirement of debt 654 1,817
Deferred income taxes (545) 220
Changes in operating assets and liabilities, net of amounts acquired in
purchase business combinations:
Accounts receivable (9,976) (7,355)
Inventories (2,846) (2,693)
Prepaid expenses and other current assets (558) (626)
Other assets 399 (148)
Accounts payable (951) 3,735
Accrued liabilities, compensation and benefits (959) 89
Deferred revenue (581) 86
Income taxes payable (569) 948
-------- --------
Net cash provided by operating activities 195 3,349
Investing activities:
Purchase of property, equipment and rental equipment (3,429) (2,037)
Payment for purchase of businesses, net of cash acquired (47,585) (20,101)
-------- --------
Net cash used in investing activities (51,014) (22,138)
Financing activities:
Borrowings under line of credit 119,000 87,600
Payments under line of credit (68,813) (97,252)
Reduction of other debt (83) (114)
Financing fees (2,854) (623)
Cost of initial public offering - (976)
Common stock repurchased and retired - (35,339)
Common stock issued for cash - 65,832
-------- --------
Net cash provided by financing activities 47,250 19,128
-------- --------
Net increase (decrease) in cash and cash equivalents (3,569) 339
Cash and cash equivalents, beginning of period 5,175 4,496
-------- --------
Cash and cash equivalents, end of period $ 1,606 $ 4,835
======== ========
</TABLE>
See accompanying notes.
6
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
(IN THOUSANDS EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
Common Stock Additional
------------------------------
Treasury Paid-in Retained
Shares Par Value Stock Capital Earnings Total
------------- ----------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances at March 31, 1999 18,725,841 $187 $(35) $83,817 $10,930 $ 94,899
Common stock issued in
conjunction with acquisitions 297,430 3 4,753 4,756
Stock options exercised 400 - 5 5
Net income 8,223 8,223
------------- ----------- ---------- ----------- ---------- ---------
Balances at September 30, 1999 19,023,671 $190 $(35) $88,575 $19,153 $107,883
============= =========== ========== =========== ========== =========
</TABLE>
See accompanying notes.
7
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
NOTE 1. BASIS OF PRESENTATION
The accompanying consolidated balance sheet as of September 30, 1999,
consolidated statements of operations for the three and six months ended
September 30, 1999 and 1998, the consolidated statements of cash flows for the
six months ended September 30, 1999 and 1998, and the consolidated statement of
stockholders' equity for the six months ended September 30, 1999 are unaudited.
In the opinion of management, all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation of the results of operations for the
interim periods presented have been reflected herein. The results of operations
for the interim periods are not necessarily indicative of the results which may
be expected for the entire fiscal year. The consolidated financial statements
should be read in conjunction with the consolidated financial statements and the
notes thereto included in Global Imaging Systems, Inc. (together with its
subsidiaries, "Global" or the "Company") Annual Report for the year ended March
31, 1999. Certain prior year amounts have been reclassified to conform to the
current year presentation.
NOTE 2. EARNINGS PER SHARE
Basic earnings per share ("EPS") is computed by dividing net income by the
weighted average number of shares outstanding for the period. Diluted EPS
reflects the potential dilution from the exercise of stock options or the
conversion of securities into stock.
The following table reconciles the numerators and denominators of the basic
and diluted EPS computations (shares in thousands):
<TABLE>
<CAPTION>
For Three Months Ended For Six Months Ended
----------------------------------- ------------------------------------
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Numerator:
Income before extraordinary item $ 4,789 $ 2,837 $ 8,877 $ 4,925
Extraordinary charge for early retirement of
debt, net of tax benefit - (1,133) (654) (1,817)
--------------- -------------- -------------- -------------
Net income 4,789 1,704 8,223 3,108
Yield adjustment on Class A common stock and
accretions - - - (901)
--------------- -------------- -------------- -------------
Numerator for basic and diluted earnings per
share-income available to common stockholders $ 4,789 $ 1,704 $ 8,223 $ 2,207
=============== ============== ============== =============
Denominator:
Denominator for basic earnings per share 19,022 17,642 18,884 14,601
Effect of dilutive securities:
Contingent stock-redemption of A
shares in June 1998 - - - 490
Employee stock options 307 58 237 31
--------------- -------------- -------------- -------------
Dilutive potential common shares 307 58 237 521
--------------- -------------- -------------- -------------
Denominator for diluted earnings per
share-adjusted weighted average shares and
assumed conversions 19,329 17,700 19,121 15,122
=============== ============== ============== =============
</TABLE>
See accompanying notes.
8
<PAGE>
NOTE 3. ACQUISITIONS
During the six months ended September 30, 1999 the Company acquired two
businesses that provide office-imaging solutions and network integration
services. Aggregate consideration for these acquisitions was approximately $57
million, including $52 million in cash, plus 297,430 shares of the Company's
stock and acquisition related expenses of $203. Liabilities totaling
approximately $10.5 million were assumed by the Company in connection with these
acquisitions. Goodwill of approximately $43.6 million was recorded related to
these acquisitions. These acquisitions were accounted for by the purchase method
of accounting and accordingly are included in the results of operations from
their dates of acquisitions.
Under the terms of one of its acquisition agreements, the Company is
committed to make contingent payments (the Earn-out) of up to $15 million in
cash and up to $5 million in stock to the former owners of the acquired company
on or before May 31, 2004. These contingent payments are based on the future
profitability, specifically earnings before interest and taxes, of the acquired
company.
The unaudited pro forma results presented below include the effects of the
Company's acquisitions as if they had been consummated as of April 1, 1998. The
unaudited pro forma financial information below is not necessarily indicative of
either future results of operations or results that might have been achieved had
the acquisitions been consummated at the beginning of the year prior to
acquisition.
<TABLE>
<CAPTION>
Unaudited Pro forma
Six Months ended September 30,
----------------------------------------------
1999 1998
------------------- ---------------------
<S> <C> <C>
Revenues.................................................................. $ 233,194 $ 214,786
Income before extraordinary item.......................................... 7,725 6,889
Less extraordinary item................................................... (654) (1,817)
------------------- ---------------------
Net income................................................................ $ 7,071 $ 5,072
=================== =====================
Basic earnings per share:
Income before extraordinary item, including yield adjustment
and accretions......................................................... $ 0.41 $ 0.37
Net income per share.................................................... $ 0.37 $ 0.26
Diluted earnings per share:
Income before extraordinary item, including yield adjustment
and accretions......................................................... $ 0.40 $ 0.36
Net income per share.................................................... $ 0.37 $ 0.25
</TABLE>
NOTE 4. RETIREMENT OF DEBT
In June 1999, the Company retired the balance of $62 million of long-term
debt outstanding under the previous First Union loan with proceeds from a
replacement credit agreement. The new credit agreement is with a syndicate of
banks and financial institutions with First Union as Administrative Agent (the
"Credit Agreement"). Recognition of deferred financing costs of $1.1 million
related to the debt repayment resulted in an extraordinary charge of $654 ($.03
per share), net of related income tax benefit of $436. The company's new Credit
Agreement consists of a $25 million five-year senior term loan, a $75 million
seven-year senior term loan and a $150 million five-year revolving line of
credit. The new revolving credit line of the senior credit facility and the $25
million senior term loan bear interest at rates ranging from 2.00% to 3.00% over
LIBOR or from .75% to 1.75% over a base rate related to prime rate, and will
vary according to Global's ratio of its total funded debt to earnings
9
<PAGE>
before interest, taxes, depreciation and amortization. The $75 million senior
term loan bears interest at a rate of 3.25% over LIBOR or 2.00% over a base rate
related to prime rate. Amounts borrowed under the revolving credit line of the
new senior credit facility may be repaid and borrowed over the life of the
senior credit facility, with a final maturity date of June 23, 2004. Under the
Credit Agreement, the Company has pledged substantially all of its assets,
including the capital stock of the Company's subsidiaries, to the lenders.
Amounts borrowed under the Credit Agreement may be used to fund working capital
and general corporate purposes, including acquisitions.
In September 1999, the Company entered into an interest rate swap agreement
on a notional amount of $28 million, under which the Company pays a fixed rate
of interest and receives a LIBOR-based floating rate. The interest differential
is accrued for in accrued interest and recorded in interest expense. In
September 1999, an interest rate cap agreement on a notional amount of $22
million was entered into which caps the interest rate at 9% a base rate. The
cap's premium is amortized straight-line as interest expense over the cap's
life. The swap and the cap both mature in 2002. The swap and cap are intended to
reduce the Company's exposure to the risks of variable interest rates related to
the credit agreement.
NOTE 5. STOCK OPTION PLAN
The Board of Directors adopted a stock option plan, effective upon the
closing of the initial public offering in June 1998. Under the terms of the
stock option plan 1,820,000 shares of the Company's common stock may be sold
pursuant to stock options or granted or sold as restricted stock to directors,
officers, employees, and consultants to the Company. Under the stock option plan
as of September 30, 1999, options to purchase 1,364,340 shares of the Company
common stock were outstanding. During the six months ended September 30, 1999,
options to purchase an aggregate of 867,000 shares were granted with exercise
prices ranging from $13.125 to $18.125. In addition to options outstanding under
the plan, 10,000 shares of Global's common stock are issuable upon the exercise
of an option granted outside the plan. This option is exercisable at a price of
$12.00 per share.
NOTE 6. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
The Company has issued $100 million of 10 3/4% Senior Subordinated Notes,
that are fully and unconditionally guaranteed on a joint and several basis by
all the Company's existing subsidiaries (the Guarantors), each of which is
wholly owned, directly or indirectly, by the Company. The Company is a holding
company all of whose operations are conducted by the Guarantors and the Company
has no operations or assets separate from its investment in its subsidiaries.
The aggregate assets, liabilities, earnings and equity of the Guarantors are
substantially equivalent to the aggregate assets, liabilities, earnings and
equity of the Company, on a consolidated basis. Therefore, separate financial
statements of the Guarantors have not been presented. Separate financial
statements and other disclosures concerning the Guarantors and the Company are
not presented because management believes that such information would not be
material to investors.
10
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
The following discussion and analysis should be read in conjunction with
the accompanying financial statements and related notes included elsewhere in
this Report on Form 10-Q and the Company's annual report for the year ended
March 31, 1999. Much of the discussion in this section involves forward-looking
information. Global's actual results may differ significantly from the results
suggested by these forward-looking statements. Some factors that may cause the
Company's results to differ from these statements are described in the "Risk
Factors" section of the Company's Report on Form 10-K for the year ended March
31, 1999.
Overview
Global was founded in June 1994 with the goal of becoming a leading
consolidator in the highly fragmented office imaging solutions industry. Global
is a rapidly growing provider of a number of office imaging solutions. This
includes the sale and service of automated office equipment such as copiers,
facsimile machines, printers and duplicators, network integration services,
electronic presentation equipment and document imaging management ("DIM")
systems. From its founding through September 30, 1999, Global has acquired
thirteen core companies in the United States, and 21 additional satellite
companies that have been integrated into the core companies. The first
acquisition was completed in August 1994. Management believes the acquired
businesses and other businesses that Global plans to acquire will benefit from
various Global programs and operating strategies. These benefits include
increased operating efficiencies, the support of experienced and professional
senior management, expansion of the types of office imaging products and
services offered, increased access to capital, and increased emphasis on
financial management.
Global's revenues come from two sources: (1) sales of equipment and
supplies and (2) sales of complementary services and equipment rentals. The
growth of equipment revenues and the complementary supplies, parts and service
revenues depends on several factors, including the demand for equipment,
Global's reputation for providing timely and reliable service, and general
economic conditions. Revenues generated from the sale of equipment and
complementary supplies, parts and services are affected by price, general
economic conditions, service reputation, and competitors' actions in the
marketplace. Revenues from the sale of complementary supplies, parts and
services are also affected by equipment sales and rental volumes.
Gross profit as a percentage of revenues varies from period to period
depending on a number of variables. Those variables include the mix of revenues
from equipment, supplies, service and rentals; the mix of revenues among the
markets served by Global; and the mix of revenues of the businesses acquired. As
Global acquires businesses, the percentage of its revenues from sales of
equipment and supplies, as opposed to service and rentals, fluctuates depending
on whether the businesses acquired are automated office equipment dealers or are
network integrators or electronic presentation systems or DIM systems dealers.
Automated office equipment dealers typically derive a higher percentage of their
revenues from service and rentals, and a lower percentage from sales of
equipment and supplies, than do network integrators, electronic presentation or
DIM systems dealers. Generally, sales of equipment and supplies have lower gross
profit margins than sales of service and rentals. In addition, equipment sales
in the automated office equipment market generally have higher gross profit
margins than equipment sales in the network integration, electronic presentation
systems or DIM systems markets, as these markets are growing faster than the
automated office equipment market. Therefore, over time a larger percentage of
Global's revenues and gross profits may be derived from sales that have lower
gross profit margins than Global's current gross profit margins.
11
<PAGE>
Cost of goods sold consists primarily of the cost of new equipment, cost of
supplies and parts, labor costs to provide services, rental equipment
depreciation and other direct operating costs. Global depreciates its rental
equipment primarily over a three-year period on a straight-line basis with no
residual value.
Results of Operations
The following table sets forth selected consolidated financial information
as a percentage of total revenues.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------- -------------------------------
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Equipment and supplies sales........................... 75.4% 77.6% 75.3% 76.1%
Service and rentals.................................... 24.6 22.4 24.7 23.9
-------------- ------------- ------------- -------------
Total revenues.......................................... 100.0 100.0 100.0 100.0
Cost and operating expenses:
Cost of equipment and supplies sales................... 52.5 56.6 51.9 54.9
Service and rental costs............................... 11.9 11.3 12.1 11.6
Selling, general, and administrative expenses.......... 22.3 20.9 22.7 21.9
Intangible asset amortization.......................... 1.6 1.4 1.7 1.5
-------------- ------------- ------------- -------------
Total costs and operating expenses...................... 88.3 90.2 88.4 89.9
-------------- ------------- ------------- -------------
Income from operations.................................. 11.7 9.8 11.6 10.1
Interest expense........................................ 4.6 2.2 4.4 2.9
-------------- ------------- ------------- -------------
Income before income taxes and extraordinary item....... 7.1 7.6 7.2 7.2
Income taxes............................................ 3.1 3.4 3.2 3.3
-------------- ------------- ------------- -------------
Income before extraordinary item........................ 4.0 4.2 4.0 3.9
Extraordinary charge for early retirement of
debt, net of tax benefit............................... - (1.7) (0.3) (1.4)
-------------- ------------- ------------- -------------
Net income.............................................. 4.0% 2.5% 3.7% 2.5%
============== ============= ============= =============
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1998
Revenues
Total revenues for the three months ended September 30, 1999 increased to
$121.0 million, 80.5% higher than total revenues of $67.0 million for the same
period in 1998. The majority of revenue growth was due to the acquisition of
businesses during 1998 and 1999, with the remainder coming from internal growth.
Sales of equipment and supplies for the three months ended September 30,
1999 increased to $91.3 million, 75.5% higher than sales of equipment and
supplies of $52.0 million for the same period in 1998.
Service and rental revenues for the three months ending September 30, 1999
increased to $29.7 million, 97.6% higher than service and rental revenues of
$15.0 million for the same period in 1998.
12
<PAGE>
Gross Profit
Gross profit for the three months ending September 30, 1999 increased to
$43.1 million, 99.6% higher than gross profit of $21.6 million for the same
period in 1998. When viewed as a percent of total revenue, gross profit was
35.6% for the three months ending September 30, 1999 versus 32.2% for the same
period in 1998. The change in total gross profit margins was primarily due to
the change in the revenue mix. Office equipment dealers typically receive a
higher percentage of total revenues from service and rentals, while network
integration, electronic presentation systems and DIM systems dealers derive a
higher percentage of total revenues from sales of equipment and supplies. The
automated office equipment component of sales of the businesses acquired in 1998
and 1999 had higher equipment and supplies gross margins than Global's existing
businesses. Combined service and rental gross profit margins were 51.4% for the
three months ended September 30, 1999 and 49.8% for the same period the previous
year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ending
September 30, 1999 increased to $27.0 million, 92.1% higher than selling,
general and administrative expenses of $14.0 million for the same period in
1998. The increase in expenses was mostly due to the acquisition of businesses
in 1998 and 1999. The increase in expenses as a percentage of revenues was the
result of the number of automated office equipment companies acquired during the
fiscal year ended March 31, 1999 and the first six months of the fiscal year
ending March 31, 2000.
Intangible Asset Amortization
Intangible asset amortization was $2.0 million for the three months ended
September 30, 1999. During the same period in 1998, asset amortization was $.9
million. Asset amortization includes the amortization of goodwill and non-
compete agreements from acquisitions.
Income From Operations
Income from operations for the three months ended September 30, 1999 was
$14.1 million, 114.1% higher than $6.6 million from the same period in 1998.
Interest Expense
Interest expense for the three months ended September 30, 1999 was $5.5
million, 278.9% higher than $1.5 million from the same period in 1998. The
increase was due to higher borrowing rates and a higher borrowing base.
Income Taxes
The provision for income taxes for the three months ended September 30,
1999 was $3.8 million, 65.6% higher than $2.3 from the same period in 1998. The
increase in income taxes was primarily due to increased pre-tax income resulting
from the inclusion of businesses acquired during 1998 and 1999. The effective
income tax rate decreased from 44.7% for the three months ending September 30,
1998 to 44.2% for the three months ended September 30, 1999. The effective
income tax rate for 1998 and 1999 was higher than the federal statutory rate of
35.0% plus state and local taxes, primarily due to non-deductible goodwill
amortization relating to businesses acquired.
13
<PAGE>
Extraordinary Charge
During July 1998 the Company retired the remaining $65.8 million of long-
term debt payable to Jackson National Life Insurance Company ("JNL") due in
2004. The write-off of the deferred financing costs of $1,907 related to the
retired debt resulted in an extraordinary charge of $1,133 ($.06 per share), net
of the related income tax benefit of $774.
SIX MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
1998
Revenues
Total revenues for the six months ended September 30, 1999 increased to
$221.5 million, 76.7% higher than total revenues of $125.4 million for the same
period in 1998. The majority of revenue growth was due to the acquisition of
businesses during 1998 and 1999, with the remainder coming from internal growth.
Sales of equipment and supplies for the six months ended September 30, 1999
increased to $166.8 million, 74.8% higher than sales of equipment and supplies
of $95.5 million for the same period in 1998.
Service and rental revenues for the six months ending September 30, 1999
increased to $54.7 million, 83.0% higher than service and rental revenues of
$29.9 million for the same period in 1998.
Gross Profit
Gross profit for the six months ending September 30, 1999 increased to
$79.7 million, 89.9% higher than gross profit of $42.0 million for the same
period in 1998. When viewed as a percent of total revenue, gross profit was
36.0% for the six months ending September 30, 1999 versus 33.5% for the same
period in 1998. The change in total gross profit margins was primarily due to
the change in the revenue mix. Office equipment dealers typically receive a
higher percentage of total revenues from service and rentals, while network
integration, electronic presentation systems and DIM systems dealers derive a
higher percentage of total revenues from sales of equipment and supplies. The
automated office equipment component of sales of the businesses acquired in 1998
and 1999 had higher equipment and supplies gross margins than Global's existing
businesses. Combined service and rental gross profit margins were 51.2% for the
six months ended September 30, 1999 and 51.3% for the same period the previous
year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the six months ending
September 30, 1999 increased to $50.4 million, 83.6% higher than selling,
general and administrative expenses of $27.4 million for the same period in
1998. The increase in expenses was mostly due to the acquisition of businesses
in 1998 and 1999. The increase in expenses as a percentage of revenues was the
result of the number of automated office equipment companies acquired during the
fiscal year ended March 31, 1999.
14
<PAGE>
Intangible Asset Amortization
Intangible asset amortization was $3.7 million for the six months ended
September 30, 1999. During the same period in 1998, asset amortization was $1.8
million. Asset amortization includes the amortization of goodwill and non-
compete agreements from acquisitions.
Income From Operations
Income from operations for the six months ended September 30, 1999 was
$25.6 million, 101.8% higher than $12.7 million from the same period in 1998.
Interest Expense
Interest expense for the six months ended September 30, 1999 was $9.8
million, 164.8% higher than $3.7 million from the same period in 1998. The
increase was due to higher borrowing rates and a higher borrowing base.
Income Taxes
The provision for income taxes for the six months ended September 30, 1999
was $7.0 million, 70.9% higher than $4.1 from the same period in 1998. The
increase in income taxes was primarily due to increased pre-tax income resulting
from the inclusion of businesses acquired during 1998 and 1999. The effective
income tax rate decreased from 45.4% for the six months ending September 30,
1998 to 44.1% for the six months ended September 30, 1999. The effective income
tax rate for 1998 and 1999 was higher than the federal statutory rate of 35.0%
plus state and local taxes, primarily due to non-deductible goodwill
amortization relating to businesses acquired.
Extraordinary Charges
During June 1999 the Company retired $62 million of long-term debt payable
under the First Union Credit Agreement due in 2003. The write off of the
deferred financing costs of approximately $1.1 million related to the retired
debt resulted in an extraordinary charge of $654 ($.03 per share), net of the
related income tax benefit of $436.
During June and July 1998 the Company retired $97.3 million of long-term
debt payable to JNL due in 2004. The write off of the prepayment penalty of $250
and deferred financing costs of $2,808 related to the retired debt resulted in
an extraordinary charge of $1,817 ($.13 per share), net of the related income
tax benefit of $1,241.
Liquidity and Capital Resources
Historically, Global has financed its operations primarily through internal
cash flow, sales of stock and bank financing, including the financing facilities
described below. These sources of funds have been used to fund Global's growth
both internally and through acquisitions. Global is pursuing an acquisition
strategy and expects to acquire more businesses. As Global continues to acquire
more businesses it is likely that Global will incur additional debt and seek
additional equity capital.
In June 1999, the Company repaid the balance of $62 million due under a
loan from First Union with proceeds from a replacement credit agreement. The new
credit agreement is with a syndicate of
15
<PAGE>
banks and financial institutions with First Union serving as Administrative
Agent (the "Credit Agreement"). The Company's new Credit Agreement consists of a
$150 million five-year senior secured revolving line of credit, a $25 million
five-year senior term loan, and a $75 million seven-year senior term loan. The
new revolving credit line of the senior credit facility and the $25 million
senior term loan bear interest at rates ranging from 2.00% to 3.00% over LIBOR
or from .75% to 1.75% over a base rate related to prime rate, and will vary
according to Global's ratio of its total funded debt to earnings before
interest, taxes, depreciation and amortization. The $75 million senior term loan
bears interest at a rate of 3.25% over LIBOR or 2.00% over a base rate related
to prime rate. The senior credit facilities provide for an unused commitment fee
payable to the lenders and certain other fees payable by Global and its Material
Subsidiaries (the "borrowers"). Amounts borrowed under the revolving credit line
of the new senior credit facility may be repaid and borrowed over the life of
the senior credit facility, with a final maturity date of June 23, 2004. The
terms of the senior credit facility require strict compliance with numerous
affirmative, negative and financial covenants. Amounts borrowed under the
revolving line of credit may be used to fund working capital and general
corporate purposes, including acquisitions, subject to the lenders approval in
the case of acquisitions with a cash purchase price of over $25 million or an
aggregate purchase price (cash, stock or other consideration) of over $50
million.
In September 1999, the Company entered into an interest rate swap agreement
on a notional amount of $28 million, under which the Company pays a fixed rate
of interest and receives a LIBOR-based floating rate. The interest differential
is accrued for in accrued interest and recorded in interest expense. In
September 1999, an interest rate cap agreement on a notional amount of $22
million was entered into which caps the interest rate in September 1999 at 9%.
The cap's premium is amortized straight-line as interest expense over the cap's
life. The swap and the cap both mature in 2002. The swap and cap are intended to
reduce the Company's exposure to the risks of variable interest rates related to
the credit agreement.
Under the terms of three of its acquisition agreements, Global may be
required to make payments of up to $18.6 million in cash and up to $5 million in
stock over the next five years to certain former owners of the businesses it has
acquired based on the profitability of those businesses during such time period.
For the six months ended September 30, 1999 the net cash provided by
operations was $.2 million and for the six months ended September 30, 1998 the
net cash provided by operations was $3.3 million. For the six months ended
September 30, 1999 and for the six months ended September 30, 1998 Global's net
cash used in investing activities was $51.0 million and $22.1 million,
respectively, primarily for the purchase of businesses. For the six months ended
September 30, 1999 and the six months ended September 30, 1998, Global's net
cash provided by financing activities was $47.3 million and $19.1 million,
respectively. Net cash provided by financing activities consists of equity
capital provided by the initial public offering in 1998 and net borrowings.
Year 2000 Issues
With the exception of historical information such as Global's costs and
efforts to date relating to year 2000 issues, the discussion in this section
consists of forward-looking statements that involve risks and uncertainties.
Global's success in addressing year 2000 issues, and the impact of year 2000
issues on Global's business, results of operations or financial condition, could
differ materially from the description that follows. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below.
16
<PAGE>
In 1998, Global began formulating a plan to address the risks associated
with the "year 2000 issue," which relates to the possible inability of computer
systems and equipment to function properly as a result of their inability to
recognize or process dates occurring after 1999. Global's year 2000 plan
addresses the following areas: (1) information technology systems, or IT
systems, used in Global's internal operations, including accounting, data
processing and telephone systems; (2) non-IT systems used in Global's internal
operations, including alarm systems and fax machines; (3) the state and impact
of year 2000 readiness of products sold by Global (which Global primarily
purchases from third party vendors); and certain operational systems of Global's
critical suppliers and customers that may affect Global. As discussed below,
Global's year 2000 plan involves identifying and assessing the potential year
2000 risks faced by Global, remediating any year 2000 noncompliance identified
by Global's assessment; testing the year 2000 readiness of Global's systems; and
planning for year 2000 contingencies.
State of Year 2000 Readiness
Global is reviewing its overall exposure to year 2000 risks. Global has
addressed the impact of the year 2000 issue on Global's IT and non-IT systems,
which involves (1) making an inventory of potentially date sensitive devices and
software, (2) assessing the systems affected by these devices and software, (3)
remediating or replacing these systems as necessary and (4) testing its systems
to confirm year 2000 readiness. Both IT and non-IT systems contain embedded
technology, which complicates Global's year 2000 assessment and remediation
efforts.
Global estimates that it has completed approximately 98% (in terms of time
spent) of the inventory and assessment phases of this process for its existing
companies. Global expects to complete these phases for its existing companies by
the end of November 1999. Due to Global's acquisition activity, Global expects
to be continually modifying its year 2000 remediation efforts to address the
year 2000 readiness of businesses Global may acquire throughout this year and
beyond January 1, 2000. Although Global has an indication of the scale of
affected systems and software in its existing companies, future acquisitions
could present additional year 2000 problems. Global began remediating its
systems in November 1998 and expects to complete this phase by the end of
November 1999. Global began the testing phase of its year 2000 plan in January
1999 and expects to complete testing of existing systems by the end of November
1999. The expected timing of these phases is based on management's best
estimates, which were derived using numerous assumptions regarding future
events, including the results of Global's year 2000 assessment, the continued
availability of certain resources and the implementation and success of third
party remediation plans. There can be no assurance that these estimates will
prove to be accurate, and actual results could differ materially as a result of
many factors, including Global's ability to identify, assess, remediate and test
all relevant systems and technology embedded in those systems.
To the extent that Global has completed its year 2000 assessment of its IT
systems, Global's assessment has not revealed substantial year 2000
noncompliance. Specifically, for most of Global's functions, Global utilizes
Optimizing Management Decisions ("OMD") software. The OMD Corporation has
released its year 2000 compliant software and Global began testing it in April
1999. Divisional testing of the OMD software will be completed by the end of
November 1999. Global uses nationally known software providers for both its
general accounting and industry-specific systems and has been assured by the
manufacturers or vendors of such products that these applications are year 2000
compliant. Global believes it has identified any non-compliant, non-IT systems
of its existing companies and remediated the affected systems.
The risk to Global's business, results of operations or financial condition
that third parties and their products will not be year 2000 ready is difficult
to quantify, but could potentially be significant.
17
<PAGE>
Global has analyzed its existing product line and identified potential year 2000
issues with the products Global sells (which are, for the most part,
manufactured by third parties), as well as risks associated with year 2000
unreadiness of its critical suppliers and customers. Global is not aware of any
potentially major disruptions in connection with the equipment and services
currently or previously sold. Global has sent questionnaires to its critical
suppliers and customers to determine their year 2000 readiness, and has reviewed
the responses received to date. Global has assessed the impact of the year 2000
readiness of Global's suppliers and customers and does not believe their year
2000 problems (if any) will be material to the operations of Global.
Global derives a majority of its revenues from the sale of equipment and
from service and supply contracts for such equipment. Accordingly, Global's
success depends on its access to reliable sources of equipment, parts and
supplies at competitive prices. If year 2000 issues impair the ability of
Global's suppliers to provide products timely and at competitive prices,
Global's business, results of operations and financial condition could be
materially and adversely affected. Global does not rely upon any one customer
for the majority of its sales, or one product vendor for the bulk of its
purchases. No individual supplier represents more than 14% of equipment
purchases and Global's top ten customers combined represent less than 8% of
Global's total sales for the twelve month period ended March 31, 1999, giving
effect to Global's acquisitions during that period as if they had occurred on
April 1, 1998. Global believes that its large customer base will minimize the
effect on Global of any year 2000 business disruption experienced by any of its
customers.
Costs to Address Year 2000 Issue
Global has not incurred material historical costs associated with year 2000
remediation. Global operates most of its systems on third party software that it
believes or has been informed is already year 2000 compliant. Global estimates
its costs of remediation will be approximately $500,000 (not including costs to
remediate systems of businesses that may be acquired in the future) and does not
expect these costs to be material in any year to Global's consolidated financial
condition, results of operations or cash flows. All modification costs relating
to the year 2000 issue are expensed as incurred and are expected to be paid for
out of internally generated funds.
Global's estimate of remediation costs is based on numerous assumptions
regarding future events, including the results of Global's year 2000 assessment,
continued availability of certain resources and the implementation and success
of third party remediation plans. There can be no assurance that this estimate
will prove to be accurate, and actual costs could differ materially as a result
of many factors, including those discussed in this section.
Risks Related to the Year 2000 Issue
In evaluating year 2000 risks to Global, Global has identified and
evaluated five mission-critical aspects of the business: sales, billing,
service, delivery and accounting information systems. Should any of these
functions fail due to Year 2000 issues, a material disruption in business could
result.
Sales: Should Global's telecommunications system fail as a result of Year 2000
issues, Global's sales could be adversely affected. Global is currently in the
process of confirming year 2000 compliance by its third party telecommunications
providers. Global believes its sales division could remain fully operational if
it experienced a disruption in telecommunications service. Although Global
expects confirmation of year 2000 compliance from its third party
telecommunications providers, Global is preparing a contingency plan to continue
sales operations without telecommunication support.
18
<PAGE>
Billing: Global is dependent upon computerized billing systems. A breakdown in
IT billing systems could result in delayed or missed customer payments. By the
end of November 1999, Global expects to have completed the inventory and
assessment of all potentially affected IT systems. Based upon the level of
impairment, duplicate manual billing systems will be set in place to facilitate
uninterrupted service where Global anticipates a possible problem.
Service: Global utilizes a combination of manual and computerized service
dispatch systems. A disruption in Global's computerized dispatch system could
result in delayed customer service. By the end of November 1999, Global will
have completed the inventory and assessment of all potentially affected existing
IT systems. Based upon the level of impairments, duplicate dispatch systems will
be set in place to facilitate uninterrupted service with regard to the uncertain
systems.
Delivery: Global is heavily dependent upon timely delivery of products from its
product vendors as well as delivery to its customers. Any disruption in product
supply could result in low customer service and ultimately lost sales. Global is
making every effort to ensure its suppliers and delivery channels are adequately
prepared to transition to the year 2000. If Global determines there is a likely
possibility of untimely deliveries by its suppliers, it will take appropriate
steps to increase inventory of the affected products.
Accounting Information Systems: The majority of Global's accounting information
systems are computerized and susceptible to Year 2000 problems. Failure to
convert all affected systems could result in delayed or lost financial data.
Global has evaluated these systems and believes they are year 2000 compliant.
Liability or Litigation Relating to Year 2000 Issues
In addition to the risk of failure of a function critical to Global's
operations, Global faces risks that are difficult to quantify relating to
potential liability resulting from the year 2000 issue. The breadth of different
products and services offered by Global and the uncertainty relating to the
meaning of the term "year 2000 compliant" could result in Global facing claims
arising from the effect of the year 2000 issue on the products it sells and
services. The year 2000 readiness of the products Global sells depends on the
implementation and success of efforts by the suppliers from whom Global
purchases these products in making them year 2000 compliant. Global cannot
currently estimate the risks it faces from such potential liability or
litigation.
Although Global's year 2000 efforts and the contingency plans described
above are intended to minimize the adverse effects of the year 2000 issue on
Global's business and operations, the actual effects of the issue and the
success or failure of Global's efforts described above cannot be known until the
year 2000. Failure by Global, major suppliers of computer systems and equipment
used in Global's operations, and major vendors and customers of products or
services sold by Global to address adequately their respective year 2000 issues
in a timely manner could have a material adverse effect on Global's business,
results of operations and financial condition.
Contingency Plans
Global is in the process of forming contingency plans to address the year
2000 issue, and expects this planning stage to continue to be an active process
through 1999. Currently, Global has completed approximately 53% (in terms of
time spent), of its corporate-wide contingency planning process. As Global's
identification and evaluation of the risks it faces progresses, Global will
develop additional plans to handle these scenarios. Global expects to
continually revise its contingency planning as it receives information regarding
third party year 2000 readiness, and as it integrates future acquisitions.
19
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued a Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended, which is required to be adopted in years beginning after June 15, 2000.
This statement established requirements for accounting and reporting of
derivative instruments and hedging activities. Management has not completed an
analysis to determine the future impact of this statement on the Company's
results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to changes in interest rates, primarily from the
senior credit agreement with First Union. The Company uses interest rate cap and
swap agreements to reduce certain exposures to interest rate fluctuations. The
Company also has long-term debt that bears a fixed rate. There is a risk that
market rates will decline and the required payments will exceed those based on
current market rates on the long-term debt.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(c) On July 20, 1999, the Company issued 8,726 shares of Common Stock to
the stockholders of Daniel Communications, Inc. ("Daniel") as payment for ten
percent of the outstanding stock of Daniel. The offer and sale of the Company's
Common Stock was made to accredited investors and was exempt from registration
under the Securities Act of 1933 as amended pursuant to Rule 506 thereunder.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's 1999 Annual Meeting of Stockholders held August 16, 1999,
the Company's stockholders approved the following items:
1. Mark M. Lloyd was elected to serve as a Director of the Company with a
term to expire in 2002. The vote upon such proposal was as follows:
For 15,806,655
Against 5,821
2. Edward N. Patrone was re-elected to serve as a Director of the Company
with a term to expire in 2002. The vote upon such proposal was as
follows:
For 15,805,635
Against 6,841
20
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Number Exhibit
------ -------
3.1 Amended and Restated Certificate of Incorporation (1)
3.2 Amended and Restated Bylaws (1)
4.1 Specimen Common Stock Certificate (1)
4.2 Indenture dated as of March 8, 1999 between Global, the subsidiary
guarantors and United States Trust Company of New York, as Trustee,
relating to the 10 3/4% Senior Subordinated Notes Due 2007(2)
4.3 Schedule of Supplemental Indentures adding additional subsidiary
guarantors. (Form of Supplemental Indenture is included in
Indenture filed as Exhibit 4.2.)(3)
4.4 Credit Agreement, dated as of June 23, 1999, by and among the
Company and certain of its subsidiaries, as Borrowers, the Lenders
referred to therein, First Union National Bank, as Administrative
Agent, Key Corporate Capital Inc., as Syndication Agent, and
ScotiaBanc, Inc., as Documentation Agent (3)
11.1 Statement of Computation of Per Share Earnings (4)
27.1 Financial Data Schedule
______________________
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1, No. 333-48103, which was declared effective by the Securities and
Exchange Commission on June 17, 1998.
(2) Incorporated by reference to the Company's Registration Statement on
Form S-4, No. 333-78093, as filed on May 7, 1999.
(3) Incorporated by reference to the Company's Registration Statement on Form
S-4, No. 333-78093, as filed on July 27, 1999.
(4) See Note 2 to the Notes to Consolidated Financial Statements.
(b) Reports on Form 8-K.
On July 6, 1999, the Company filed with the SEC a current report on Form 8-
K to report its acquisition of the outstanding stock of Lewan & Associates, Inc.
The Company filed financial statements relating to this acquisition in
amendments to its current report on Form 8-K/A on July 27, 1999, August 4, 1999
and August 18, 1999.
21
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Global Imaging Systems, Inc.
-------------------------------------------
(Registrant)
November 12, 1999 /s/ Raymond Schilling
- -------------------------------- -------------------------------------------
Date Raymond Schilling
Chief Financial Officer, Secretary, and
Treasurer, (Duly Authorized Officer and
Principal Financial and Accounting Officer)
22
<PAGE>
EXHIBIT INDEX
-------------
(Pursuant to item 601 of Regulation S-K)
Number Exhibit
------ -------
3.1 Amended and Restated Certificate of Incorporation (1)
3.2 Amended and Restated Bylaws (1)
4.1 Specimen Common Stock Certificate (1)
4.2 Indenture dated as of March 8, 1999 between Global, the subsidiary
guarantors and United States Trust Company of New York, as Trustee,
relating to the 10 3/4% Senior Subordinated Notes Due 2007 (2)
4.3 Schedule of Supplemental Indentures adding additional subsidiary
guarantors. (Form of Supplemental Indenture is included in Indenture
filed as Exhibit 4.2.)(3)
4.4 Credit Agreement, dated as of June 23, 1999, by and among the Company
and certain of its subsidiaries, as Borrowers, the Lenders referred to
therein, First Union National Bank, as Administrative Agent, Key
Corporate Capital Inc., as Syndication Agent, and ScotiaBanc, Inc., as
Documentation Agent (3)
11.1 Statement of Computation of Per Share Earnings (4)
27.1 Financial Data Schedule
_________________________
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1, No. 333-48103, which was declared effective by the Securities and
Exchange Commission on June 17, 1998.
(2) Incorporated by reference to the Company's Registration Statement on Form
S-4, No. 333-78093, as filed on May 7, 1999.
(3) Incorporated by reference to the Company's Registration Statement on Form
S-4, No. 333-78093, as filed on July 27, 1999.
(4) See Note 2 to the Notes to Consolidated Financial Statements.
23
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