<PAGE> 1
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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 JANUARY 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 333-42117
TRANSWESTERN HOLDINGS L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 33-0560667
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
------------------------
COMMISSION FILE NUMBER 333-42117-1
TWP CAPITAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 33-0779058
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
8344 CLAIREMONT MESA BOUVELVARD 92111
SAN DIEGO, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
(619) 467-2800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether each 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.
<TABLE>
<S> <C>
TransWestern Holdings L.P. [ ] Yes No [X]
TWP Capital Corp. [ ] Yes No [X]
</TABLE>
As of March 17, 1998, TWP Capital Corp. has 1,000 shares of Common Stock
outstanding, all of which are owned by TransWestern Holdings L.P.
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<PAGE> 2
TRANSWESTERN HOLDINGS L.P.
FORM 10-Q INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
EXPLANATORY NOTE...................................................... 2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements........................... 3
Consolidated Balance Sheets as of January 31, 1998
(unaudited) and April 30, 1997.............................. 3
Consolidated Statements of Operations (unaudited) for the
Nine Months Ended January 31, 1998 and 1997 (unaudited)..... 4
Consolidated Statements of Cash Flows (unaudited) for the
Nine Months Ended January 31, 1998 and 1997 (unaudited)..... 5
Notes to Consolidated Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 18
Item 2. Changes in Securities....................................... 18
Item 3. Defaults upon Senior Securities............................. 18
Item 4. Submission of Matters to a Vote of Security Holders......... 18
Item 5. Other Information........................................... 18
Item 6. Exhibits and Reports on Form 8-K............................ 18
</TABLE>
EXPLANATORY NOTE
This integrated Form 10-Q is filed pursuant to the Securities Exchange Act
of 1934, as amended, for each of TransWestern Holdings L.P., a Delaware limited
partnership ("Holdings") and TWP Capital Corp., a Delaware corporation,
("Capital"), a wholly-owned subsidiary of Holdings. Capital was formed solely to
act as a co-issuer (and as a joint and several obligor) with Holdings of
$57,916,000 aggregate principal amount at maturity of 11 7/8% Senior Discount
Notes due 2008. Capital does not hold any assets or other properties or conduct
any business. No separate financial information for Capital has been provided
herein because management believes such information would not be meaningful
because Capital has no financial or other data to report in response to the
requirements of Form 10-Q and thus, there is no separate information regarding
Capital to report herein.
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRANSWESTERN HOLDINGS L.P.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
1998 1997
----------- ---------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash...................................................... $ 9,840 $ 1,254
Trade receivable, (less allowance for doubtful accounts of
$7,626 in 1997 and $8,192 at January 31, 1998)......... 17,594 23,279
Deferred directory costs.................................. 9,217 6,412
Other current assets...................................... 1,253 518
--------- --------
Total current assets........................................ 37,905 31,463
Property, equipment and leasehold improvements, net......... 2,805 2,840
Acquired intangibles, net................................... 15,976 12,093
Other assets, primarily debt issuance costs, net............ 10,169 1,835
--------- --------
Total assets................................................ $ 66,855 $ 48,231
========= ========
LIABILITIES AND PARTNERSHIP DEFICIT
Current liabilities:
Accounts payable.......................................... $ 3,014 $ 3,901
Salaries and benefits payable............................. 2,837 4,112
Accrued acquisition costs................................. 8,175 986
Accrued Equity Compensation Plan Contribution............. 2,840 --
Accrued interest.......................................... 2,586 69
Other accrued liabilities................................. 534 448
Amount due general partner................................ -- 805
Customer deposits......................................... 15,366 10,197
Current portion, long-term debt........................... 2,821 10,921
--------- --------
Total current liabilities................................... 38,172 31,439
Long-term debt:
Senior Credit Facility.................................... 83,475 67,514
9 5/8% Senior Subordinated Notes.......................... 100,000 --
11 7/8% Senior Discount Notes, net........................ 33,353 --
Partnership deficit:
General Partner........................................... (3,198) (517)
limited Partner........................................... (184,947) (50,205)
--------- --------
Total partnership deficit................................... (188,146) (50,722)
--------- --------
Total Liabilities and partnership deficit................... $ 66,855 $ 48,231
========= ========
</TABLE>
See accompanying notes
3
<PAGE> 4
TRANSWESTERN HOLDINGS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
------------------ -------------------
1998 1997 1998 1997
------- ------- -------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues...................................... $21,954 $23,503 $ 60,208 $61,553
Cost of revenues.................................. 4,506 4,774 13,679 13,770
------- ------- -------- -------
Gross profit...................................... 17,448 18,729 46,530 47,783
Operating expenses:
Sales and marketing............................. 8,980 9,167 26,094 25,056
General and administrative...................... 4,038 4,284 11,931 12,154
Contribution to Equity Compensation Plan........ -- -- 5,543 --
------- ------- -------- -------
Total operating expenses.......................... 13,018 13,451 43,568 37,210
------- ------- -------- -------
Income from operations............................ 4,430 5,277 2,962 10,573
Other income (expense), net....................... 119 15 13 33
Interest expense, net............................. (5,442) (1,951) (9,775) (5,979)
------- ------- -------- -------
(5,323) (1,935) (9,762) (5,947)
------- ------- -------- -------
Income (loss) before extraordinary item........... (892) 3,342 (6,800) 4,626
Extraordinary loss................................ $(3,400) -- $ (4,791) --
------- ------- -------- -------
Net income (loss)................................. $(4,292) $ 3,342 $(11,591) $ 4,626
======= ======= ======== =======
Net income (loss) allocated to General Partner
units........................................... $ (73) $ 33 $ (197) $ 46
======= ======= ======== =======
Net income (loss) allocated to Limited Partner
units........................................... $(4,219) $ 3,308 $(11,394) $ 4,580
======= ======= ======== =======
Net income (loss) per General Partner unit........ $ (7.45) $ 3.41 $ (20.11) $ 4.72
======= ======= ======== =======
Net income (loss) per Limited Partner unit........ $ (1.66) $ 0.83 $ (4.48) $ 1.15
======= ======= ======== =======
</TABLE>
See accompanying notes
4
<PAGE> 5
TRANSWESTERN HOLDINGS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JANUARY 31,
-----------------------
1998 1997
----------- --------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $ (11,591) $ 4,626
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Extraordinary item........................................ 4,791 --
Depreciation and amortization............................. 4,940 4,723
Amortization of deferred debt issuance costs.............. 680 533
Unamortized discount...................................... 853 --
Provision for doubtful accounts........................... 5,601 5,988
Changes in operating assets & liabilities, net of effects
of purchase of directories:
Trade receivables...................................... 5,119 (320)
Write-off of doubtful accounts......................... (5,417) (5,332)
Recoveries of doubtful accounts........................ 382 507
Deferred directory costs............................... (2,547) (1,892)
Other current assets................................... (416) 160
Accounts payable....................................... (887) (302)
Accrued liabilities.................................... (33) (1,349)
Accrued interest, non current.......................... 2,517 --
Customer deposits...................................... 4,608 2,143
--------- --------
Net cash provided by operating activities................... 8,600 9,486
INVESTING ACTIVITIES
Purchase of property, equipment and leasehold
improvements.............................................. (794) (316)
Increase in other assets.................................... (13,482) --
Payment for purchase of directories......................... -- (2,558)
--------- --------
Net cash used for investing activities...................... (14,276) (2,874)
FINANCING ACTIVITIES
Borrowings under long-term debt agreements:
Senior Term Loan.......................................... 85,000 --
Revolving Credit Facility................................. 34,173 19,800
9 5/8% Senior Subordinated Notes.......................... 100,000 --
Senior Subordinated Facility.............................. 75,000 --
11 7/8% Senior Discount Notes............................. 32,500 --
Repayments of long-term debt:
Revolving Credit Facility................................. (38,478) (16,075)
Senior Subordinated Facility.............................. (75,000) --
Senior Term Loan.......................................... (73,100) (6,000)
Equity transaction costs.................................... (3,858) --
Contributions from partner.................................. 85,756 --
Distributions to partners................................... (207,731) (4,201)
--------- --------
Net cash provided by (used for) financing activities........ 14,262 (6,476)
--------- --------
Net increase (decrease) in cash............................. 8,586 136
Cash at beginning of period................................. 1,254 1,320
--------- --------
Cash at end of period....................................... $ 9,840 $ 1,456
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest...................................... $ 5,781 $ 5,510
========= ========
</TABLE>
See accompanying notes
5
<PAGE> 6
TRANSWESTERN HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)
1. BASIS OF PRESENTATION, ORGANIZATION AND BUSINESS ACTIVITIES
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine-month periods ended
January 31, 1998 are not necessarily indicative of the results that may be
expected for the year ending April 30, 1998. For further information, refer to
the consolidated financial statements and footnotes thereto included in
Holdings' Registration Statement on Form S-4 (SEC File No. 333-42085), which
became effective on March 3, 1998.
In November 1997, TransWestern Publishing Company L.P. (the "Partnership")
changed its name to TransWestern Holdings L.P. ("Holdings") and formed and
contributed substantially all of its assets to TransWestern Publishing Company
LLC ("TransWestern" or the "Company"). TransWestern assumed or guaranteed all of
the liabilities of the Partnership. As a result, Holdings' only assets consist
of TransWestern's Member Units (as defined) and all of Capital's (as defined)
capital stock. All of the operations that were previously conducted by the
Partnership are now being conducted by TransWestern. Holdings has formed TWP
Capital Corp. ("Capital") as a wholly-owned subsidiary and TransWestern has
formed TWP Capital Corp. II ("Capital II") as a wholly-owned subsidiary. Neither
Capital nor Capital II has any significant assets or operations.
The membership interests of TransWestern consist of a single class of
authorized common units (the "Member Units"). Holdings is the sole member of
TransWestern and accordingly, holds all 1,000 of the issued and outstanding
Member Units.
The general partner of Holdings is TransWestern Communications Company,
Inc. ("TCC"), which held approximately 1.0% of Holdings outstanding partnership
units in the period from formation of the Partnership (1993) through September
1997. Upon the consummation of the Recapitalization (as defined) in October
1997, TCC held approximately 1.7% of Holdings outstanding partnership units.
The accompanying consolidated financial statements give retroactive effect
to the formation of the Company and the contribution of assets and liabilities
by Holdings as if these events had occurred on the date of the Partnership's
formation. The accompanying financial statements present the historical
financial position and results of operations of TransWestern.
TransWestern publishes and distributes local yellow page directories in
thirteen states.
2. RECAPITALIZATION TRANSACTION
In October 1997, the Partnership completed a $312,700 Recapitalization
transaction (the "Recapitalization"). In the Recapitalization, new investors
including Thomas H. Lee Equity Fund III, L.P. and its affiliates and other
investors, the existing limited partners of the Partnership and the
Partnership's senior managers invested new and continuing capital of $130,009 in
the Partnership and TCC. The proceeds of the equity investment together with
approximately $182,700 of senior and senior subordinated debt financing were
used (i) for $224,500 of consideration of which $174,300 was used to redeem a
portion of the limited partnership interests from existing limited partners,
(ii) to repay $75,600 outstanding under credit facilities in existence since
1995, (iii) to pay $10,600 of fees and expenses associated with the
Recapitalization and (iv) for $2,000 for general corporate purposes, including
working capital.
6
<PAGE> 7
TRANSWESTERN HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. RECAPITALIZATION TRANSACTION (CONTINUED)
The Recapitalization was financed with (i) borrowings of $107,700 under a
$125,000 (maximum) variable interest rate Senior Credit Facility (the "Senior
Credit Facility") and (ii) borrowings of $75,000 under a Senior Subordinated
Financing Facility (the "Senior Subordinated Facility"). The assets and
liabilities of the Company are stated at historical cost and were not revalued
to fair market value at the date of the Recapitalization. As a result of the
Recapitalization, Thomas H. Lee Equity Fund III, L.P. and its affiliates
collectively own approximately 59% of the equity of Holdings.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition, Deferred Directory Costs and Customer Deposits
Revenues from the sale of advertising placed in each directory are
recognized upon the distribution of directories in their individual market
areas. Advance payments received for directory advertising are shown as customer
deposits in the accompanying balance sheets. Expenditures directly related to
sales, production, printing and distribution of directories are capitalized as
deferred directory costs and matched against related revenues upon directory
distribution.
Concentration of Credit Risk
Credit is extended based upon customer collection history and generally a
deposit is required. The Company is not subject to a concentration of credit
risk due to the geographic and economic diversity of its customer base, however
credit losses have represented a cost of doing business due to the nature of the
customer base (predominantly small businesses) and the use of extended credit
terms.
A provision for doubtful accounts based on historical experience is
recorded at the time revenue is recognized for individual directories. Actual
write-offs are taken against the allowance when management determines that an
account is uncollectible. In general, management makes this determination when
an account has declared bankruptcy, has gone out of business or fails to renew
advertising for the following year's directory.
4. FINANCIAL STATEMENT DETAILS
Property, Equipment and Leasehold Improvements (in thousands)
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1997 1998
--------- -----------
(UNAUDITED)
<S> <C> <C>
Computer and office equipment.......................... $4,335 $5,001
Furniture and fixtures................................. 1,370 1,471
Leasehold improvements................................. 233 260
------ ------
5,938 6,732
Less accumulated depreciation and amortization......... (3,098) (3,927)
------ ------
$2,840 $2,805
====== ======
</TABLE>
7
<PAGE> 8
TRANSWESTERN HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. FINANCIAL STATEMENT DETAILS (CONTINUED)
Acquired Intangibles (in thousands)
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1997 1998
--------- -----------
(UNAUDITED)
<S> <C> <C>
Customer Base.......................................... $27,693 $35,645
Less accumulated amortization.......................... (15,600) (19,669)
------- -------
$12,093 $15,976
======= =======
</TABLE>
Other Assets (in thousands)
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1997 1998
--------- ------------
(UNAUDITED)
<S> <C> <C>
Debt issuance costs.................................... $ 2,827 $8,804
Other.................................................. 264 629
------- ------
3,091 9,433
Less accumulated amortization.......................... (1,256) (486)
------- ------
$ 1,835 $8,947
======= ======
</TABLE>
5. FINANCING ARRANGEMENTS
Long-term financing arrangements consist of the following (in thousands):
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1997 1998
--------- ------------
(UNAUDITED)
<S> <C> <C>
9 5/8% Senior Subordinated Notes....................... $ -- $100,000
Senior Credit Facility:
Senior Term Loan..................................... 68,100 80,000
Revolving loan....................................... 9,400 5,600
11 7/8% Senior Discount Notes.......................... -- 32,500
Other notes payable.................................... 935 696
------- --------
78,435 218,796
Less current portion................................... 10,921 2,821
------- --------
Senior Term Loan....................................... $67,514 $215,975
======= ========
</TABLE>
Fees. In connection with the Recapitalization, the Company incurred loan
fees of $16.1 million, $3.3 million for the Senior Credit Facility, $3.4 million
for the Senior Subordinated Facility, $5.5 million for the Discount Notes (as
defined), and $3.9 million for transaction costs. Of the $16.1 million, $12.7
million was capitalized as other assets in the accompanying balance sheet at
January 31, 1998. The $3.4 million was subsequently written-off as an
extraordinary item (see discussion below). Capitalized Loan Fees are amortized
over the term of the related debt using the weightedaverage beginning balance
method (which approximates the interest method).
SENIOR CREDIT FACILITY
In connection with the Recapitalization, the Company entered into the
Senior Credit Facility with Canadian Imperial Bank of Commerce ("CIBC"), First
Union National Bank ("First Union") and other lenders, pursuant to which the
Company may borrow up to $125.0 million consisting of a revolving credit
facility of up to $40.0 million (the "Revolving Credit Facility") and Senior
Term Loan in an aggregate principal amount of $85.0 million (the "Senior Term
Loan").
8
<PAGE> 9
TRANSWESTERN HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. FINANCING ARRANGEMENTS (CONTINUED)
Repayment. Commitments under the Revolving Credit Facility will be reduced
on a quarterly basis commencing on January 1, 2000 and the Senior Term Loan will
be amortized on a quarterly basis commencing, January 1, 1998 each in accordance
with the following schedule:
<TABLE>
<CAPTION>
SENIOR REVOLVING
DATE TERM LOAN CREDIT FACILITY
---- --------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
1998........................................ $ 2,125 $ --
1999........................................ 2,125 --
2000........................................ 2,125 6,000
2001........................................ 2,125 6,000
2002........................................ 2,125 6,000
2003........................................ 27,625 22,000
2004........................................ 46,750 --
------- -------
Total............................. $85,000 $40,000
======= =======
</TABLE>
Security; Guaranty. The Revolving Credit Facility and the Senior Term Loan
are secured by a first priority lien on substantially all of the properties and
assets of the Company and its future subsidiaries, including a pledge of all of
the shares of the Company's future subsidiaries. Future subsidiaries of the
Company (if any) will be required to guarantee the Revolving Credit Facility and
the Senior Term Loan.
Covenants. The Senior Credit Facility contains covenants restricting the
ability of the Company and its subsidiaries to, among others (i) declare
dividends or redeem or repurchase capital stock, (ii) prepay, redeem or
repurchase debt, (iii) incur liens and engage in sale lease-back transactions,
(iv) make loans and investments, (v) incur additional indebtedness, (vi) amend
or otherwise alter debt and other material agreements, (vii) make capital
expenditures, (viii) engage in mergers, acquisitions and asset sales, (ix)
transact with affiliates, (x) alter its line of business, (xi) enter into
guarantees of indebtedness, and (xii) make optional payments on or modify the
terms of subordinated debt. The Company must also make certain customary
indemnifications of the lenders and their agents and will also be required to
comply with financial covenants with respect to: (a) a minimum interest coverage
ratio, (b) a minimum EBITDA (as defined in the Senior Credit Facility), (c) a
maximum leverage ratio, and (d) a minimum fixed charge coverage ratio. The
Senior Credit Facility also contains certain customary affirmative covenants.
SENIOR SUBORDINATED FACILITY
In connection with the Recapitalization, the Company also entered into the
Senior Subordinated Facility with CIBC and First Union. The Company initially
borrowed $75.0 million under this agreement in October 1997 and capitalized
associated loan fees of $3.4 million. Upon the issuance of the $100 million of
9 5/8% Senior Subordinated Notes in November 1997, (see discussion below), the
Company exercised its permitted redemption rights under this agreement and
prepaid the $75.0 million principal balance outstanding under the agreement and
the agreement was terminated. In connection with the redemption, the capitalized
loan fees of $3.4 million were written off as an extraordinary expense and is
included in the results of operations for the Company in the three and nine
month periods ended January 31, 1998.
9 5/8% SENIOR SUBORDINATED NOTES
On November 12, 1997, the Company issued $100.0 million of 9 5/8% Senior
Subordinated Notes due 2007 (the "Senior Subordinated Notes") to various
investors and used a portion of the proceeds from the Senior Subordinated Notes
to repay existing indebtedness under the Senior Subordinated Facility.
9
<PAGE> 10
TRANSWESTERN HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. FINANCING ARRANGEMENTS (CONTINUED)
Interest on the Senior Subordinated Notes is payable in cash semiannually
on each May 15 and November 15, commencing May 15, 1998. The Senior Subordinated
Notes mature on November 15, 2007.
Repayment. The Company will pay interest on the principal amount of the
Senior Subordinated Notes semiannually on May 15 and November 15 of each year
commencing on May 15, 1998, at the rate of 9 5/8% per annum. Interest is
computed on the basis of a 360-day year of twelve 30-day months. Interest on the
Senior Subordinated Notes will accrue from the most recent date to which
interest is paid or, if no interest is paid, from the date of the original
issuance of the Senior Subordinated Notes. The Company will pay interest on
overdue principal (including post-petition interest in a proceeding under any
Bankruptcy Law), and overdue interest, to the extent lawful, at the rate
specified in the Senior Subordinated Notes.
Covenants. The Senior Subordinated Indenture Notes contains covenants
restricting the ability of the Company and its subsidiaries to, among other
things, (i) incur additional indebtedness; (ii) prepay, redeem or repurchase
debt; (iii) make loans and investments; (iv) incur liens and engage in sale
lease-back transactions; (v) transact with affiliates; (vi) engage in mergers,
acquisitions and asset sales; (vii) make optional payments on or modify the
terms of subordinated debt; (viii) restrict preferred and capital stock of
subsidiaries and (ix) declare dividends or redeem or repurchase capital stock.
DISCOUNT NOTES
On November 12, 1997 Holdings and Capital issued $32.5 million initial
aggregate principal amount ($57.9 million principal amount at maturity) of their
11 7/8% Senior Discount Notes due 2008 (the "Discount Notes"). The Discount
Notes are joint and several obligations of Holdings and Capital.
The Discount Notes were issued at a substantial discount to their principal
amount at maturity. The issue price to investors per Discount Note was $561.16,
which represents a yield to maturity on the Discount Notes of 11 7/8% per annum
(computed on a semi-annual bond equivalent basis and assuming no Discount Notes
were issued in lieu of cash interest thereon). Holders of Discount Notes will be
required to include the accretion of the original issue discount as gross income
for U.S. federal income tax purposes prior to the receipt of the cash payments
to which such income is attributable.
Interest on the Discount Notes will not accrue or be payable prior to
November 15, 2002. Thereafter, interest on the Discount Notes will accrue on the
principal amount at maturity at a rate of 11 7/8% per annum, and will be payable
semiannually on each May 15 and November 15, commencing May 15, 2003. Interest
will be payable at the option of Holdings at a rate of 13 3/8% per annum by the
issuance of additional Discount Notes (valued at 100% of the face amount
thereof) in lieu of cash interest.
The Discount Notes are redeemable at the option of Holdings, in whole or in
part, at any time on or after November 15, 2002, at the redemption prices set
forth in the Discount Note Indenture, together with accrued and unpaid interest
thereon, if any, to the redemption date. In addition, Holdings, at its option,
may redeem all, but not less than all, of the principal amount of the Discount
Notes outstanding at any time on or prior to November 15, 2002 at a redemption
price equal to 111.875% of the Accreted Value (as defined in the Discount Note
indenture) thereof, out of the net proceeds of one or more public equity
offerings, provided, however, that any such redemption occurs within 90 days
following the closing of any such public equity offering.
The Discount Note Indenture contains covenants for the benefit of the
holders of the Discount Notes that, among other things, restrict the ability of
Holdings and any of its Restricted Subsidiaries (including the Company) to (i)
incur additional Indebtedness, (ii) pay dividends and make distributions, (iii)
issue stock of subsidiaries, (iv) make certain investments, (v) repurchase
stock, (vi) enter into transactions with affiliates, (vii) enter into sale
lease-back transactions and (viii) merge or consolidate the Company. Holdings
10
<PAGE> 11
TRANSWESTERN HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. FINANCING ARRANGEMENTS (CONTINUED)
is also limited in its ability to create liens and transfer or sell assets.
These covenants are subject to a number of important exceptions, including the
allowance of Permitted Tax Distributions as a result of Holdings' status as a
limited partnership.
In connection with the issuance of the Discount Notes, Holdings granted the
initial purchasers certain exchange and registration rights. Based upon the
terms of such agreement, Holdings filed a Registration Statement on Form S-4,
which became effective March 3, 1998, in connection with its offer to exchange
new Discount Notes registered under the Securities Act of 1933, as amended, for
the Old Discount Notes.
The net proceeds from the sale of the Discount Notes were used to redeem
approximately one-half of the existing Preferred Units of Holdings held by its
limited partners.
6. DIRECTORY ACQUISITIONS
On February 2, 1998, the Company acquired eight directories from Mast
Advertising and Publishing, Inc. ("Mast") for cash of approximately $7.7 million
and a $265,000 promissory note due in one year. In connection with the
acquisition, the Company also assumed certain liabilities of Mast totaling
approximately $1,095,000. The acquisition has been accounted for as an asset
purchase and accordingly the purchase price has been allocated to the tangible
and intangible assets acquired based on their respective fair values at the date
of acquisition, as follows:
<TABLE>
<S> <C>
Customer List............................................ $8,058,000
Deferred directory costs................................. 258,000
Other current and non-current assets..................... 778,000
</TABLE>
Assuming that the acquisition of Mast Advertising & Publishing, Inc. had
occurred on the first day of the Company's nine month period ended January 31,
1998 and fiscal year ended April 30, 1997, unaudited pro forma results of
operations would be as follows:
<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
1998 1997
----------- ---------
(UNAUDITED)
<S> <C> <C>
Net revenues................................... $ 63,727 $95,882
Net income (loss).............................. (10,832) 10,517
</TABLE>
The above pro forma results give effect to pro forma adjustments for the
amortization of acquired intangibles.
7. SUBSEQUENT EVENT
On March 3, 1998, Holdings commenced an exchange offer to exchange $57,916
of aggregate principal amount outstanding of the 11 7/8% Discount Notes (the
"Old Discount Notes") due 2008 for $100 million of aggregate principal amount at
maturity of Series B 11 7/8% Discount Notes due 2008 (the "Discount Exchange
Notes"). The form and terms of the Discount Exchange Notes are the same as the
form and term of the Old Discount Notes except that (i) the Discount Exchange
Notes will bear a Series B designation and (ii) the Discount Exchange Notes have
been registered under the Securities Act of 1933 as amended and therefore, will
not bear legends restricting the transfer thereof. The Discount Exchange Notes
evidence the same debt as the Old Discount Notes (which they replace). The
Exchange offer expires on April 3, 1998 unless extended by the Company.
On March 3, 1998, the Company commenced an exchange offer to exchange $100
million of aggregate principal amount outstanding of the 9 5/8% Senior
Subordinated Notes (the "Old Notes") for $100 million of aggregate principal of
Series B 9 5/8% Senior Subordinated Notes due 2007 (the "Exchange Notes"). The
form
11
<PAGE> 12
TRANSWESTERN HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. SUBSEQUENT EVENT (CONTINUED)
and terms of the Exchange Notes are the same as the form and term of the Old
Notes except that (i) the Exchange Notes will bear a Series B designation and
(ii) the Exchange Notes have been registered under the Securities Act of 1933 as
amended and therefore, will not bear legends restricting the transfer thereof.
The Exchange Notes evidence the same debt as the Old Notes (which they replace).
The Exchange offer expires on April 3, 1998 unless extended by the Company.
12
<PAGE> 13
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Partnership was formed in May 1993 to acquire the TransWestern business
from US West. In November, 1997, the Partnership formed and contributed
substantially all of its assets to TransWestern Publishing Company LLC,
TransWestern assumed or guaranteed all of the liabilities of the Partnership,
and the Partnership changed its name to TransWestern Holdings, L.P.
The Company recognizes net revenues from the sale of advertising placed in
each directory when the completed directory is distributed. Costs directly
related to sales, production, printing and distribution of each directory are
capitalized as deferred directory costs and then matched against related net
revenues upon distribution. All other operating costs are recognized during the
period when incurred. As the number of directories increases, the publication
schedule is periodically adjusted to accommodate new books. In addition, changes
in distribution dates are affected by market and competitive conditions and the
staffing level required to achieve the individual directory revenue goals. As a
result, the Company's directories may be published in a month earlier or later
than the previous year which may move recognition of related revenues from one
fiscal quarter or year to another. Year to year results depend on both timing
and performance factors.
Notwithstanding significant monthly fluctuation in net revenues recognized
based on actual distribution dates of individual directories, the Company's
bookings and cash collection activities generally occur at a steady pace
throughout the year. The table below demonstrates that quarterly bookings,
collection of advance payments and total cash receipts vary less than net
revenues or EBITDA:
<TABLE>
<CAPTION>
YEAR ENDING APRIL 30, 1998
-----------------------------------------------
1(ST) QUARTER 2(ND) QUARTER 3(RD) QUARTER
------------- ------------- -------------
<S> <C> <C> <C>
Net revenues................ $19.2 $19.1 $21.9
EBITDA (a).................. $ 4.0 $ 3.3 $ 6.2
Bookings (b)................ $22.7 $27.2 $23.0
Advance payments............ $11.1 $11.8 $11.0
Total cash receipts(c)...... $22.6 $24.1 $20.4
</TABLE>
- ---------------
(a) "EBITDA" is defined as income (loss) before extraordinary item plus interest
expense, discretionary contributions to the Company's Equity Compensation
Plan (such contributions represent special distributions to the Company's
Equity Compensation Plan in connection with refinancing transactions) and
depreciation and amortization and is consistent with the definition of
EBITDA in the Discount Note Indenture and in the Senior Credit Facility.
EBITDA is not a measure of performance under generally accepted accounting
principles (GAAP). EBITDA should not be considered in isolation or as a
substitute for net income, cash flows from operating activities and other
income or cash flow statement data prepared in accordance with GAAP, or as a
measure of profitability or liquidity. However, management has included
EBITDA because it may be used by certain investors to analyze and compare
companies on the basis of operating performance, leverage and liquidity and
to determine a company's ability to service debt. The Company's definition
of EBITDA may not be comparable to that of other companies.
(b) "Bookings" is defined as the daily advertising orders received from accounts
during a given period and generally occur at a steady pace throughout the
year.
(c) Includes both advance payments and collections of accounts receivable.
13
<PAGE> 14
RESULTS OF OPERATIONS
The following table summarizes the Company's results of operations as a
percentage of revenue for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED JANUARY 31, ENDED JANUARY 31,
------------------ --------------------
1998 1997 1998 1997
------ ------ ------- -------
<S> <C> <C> <C> <C>
Net revenues.................................. 100.0% 100.0% 100.0% 100.0%
Cost of revenue............................... 20.5 20.3 22.7 22.4
------ ------ ------- -------
Gross profit.................................. 79.5 79.7 77.3 77.6
Sales and marketing........................... 40.9 39.0 43.3 40.7
General and administrative.................... 18.4 18.2 19.8 19.7
Contribution to Equity Compensation Plan...... 0.0 0.0 9.2 0.0
------ ------ ------- -------
Income from operations........................ 20.2% 22.5% 4.9% 17.2%
====== ====== ======= =======
EBITDA data (a):
Income (loss) before extraordinary item..... $ (892) $3,342 $(6,800) $(4,626)
Interest expense............................ 5,442 1,951 9,775 5,979
Contribution to Equity Compensation Plan.... -- -- 5,543 --
Depreciation and amortization............... 1,666 1,601 4,940 4,723
------ ------ ------- -------
EBITDA (a).................................... $6,216 $6,894 $13,458 $15,329
====== ====== ======= =======
EBITDA Margin (b)........................ 28.3% 29.3% 22.4% 24.9%
</TABLE>
- ---------------
(a) "EBITDA" is defined as income (loss) before extraordinary item plus interest
expense, discretionary contributions to the Company's Equity Compensation
Plan (such contributions represent special distributions to the Company's
Equity Compensation Plan in connection with refinancing transactions) and
depreciation and amortization and is consistent with the definition of
EBITDA in the Discount Note Indenture and in the Senior Credit Facility.
EBITDA is not a measure of performance under GAAP. EBITDA should not be
considered in isolation or as a substitute for net income, cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with GAAP, or as a measure of profitability or liquidity.
However, management has included EBITDA because it may be used by certain
investors to analyze and compare companies on the basis of operating
performance, leverage and liquidity and to determine a company's ability to
service debt. The Company's definition of EBITDA may not be comparable to
that of other companies.
(b) "EBITDA Margin" is defined as EBITDA as a percentage of net revenues.
Management believes that EBITDA margin also provides a valuable indication
of the Company's ability to generate cash flows available for debt service.
THREE MONTHS ENDED JANUARY 31, 1998 COMPARED TO THREE MONTHS ENDED JANUARY 31,
1997
Net revenue decreased $1.5 million, from $23.5 million for the three months
ended January 31, 1997 to $22.0 million during the same three month period of
fiscal 1998. The Company published 34 directories during both periods of fiscal
1997 and fiscal 1998, 30 of which were the same directories. Revenue for the
same 30 directories increased $1.7 million or 10.1% for the three month period.
Cost of revenues for the three months ended January 31, 1998 decreased
$268,000 to $4.5 million from $4.8 million for the same period in fiscal 1997
primarily due to lower costs for the same 30 directories. Cost of revenues for
the same 30 directories published in both periods decreased $194,000, from 19.6%
of revenue to 16.7% and was attributable to a reduction in printing and
distribution expenses.
Gross profit for the three months ended January 31, 1998 decreased $1.3
million, to $17.4 million from $18.7 million for the same period in fiscal 1997
due primarily to changes in the publication schedule. These timing changes led
to the publication during the three months of ended January 31, 1998 of four
directories
14
<PAGE> 15
with lower profit contributions than the four published during the same period
in fiscal 1997, the effect of which was partially offset by an increase in gross
profits of $1.8 million, or 14.7%, for the same 30 directories published in both
periods. Gross margin decreased from 79.7% during the three months ended January
31, 1997 to 79.5% during the same period in fiscal 1998.
Sales and marketing expense decreased $187,000 from $9.2 million for the
three months ended January 31, 1997 to $9.0 million for the same period in
fiscal 1998. This decrease was attributable to the change in the mix of
directories published. Selling costs for the same 30 directories published in
both periods increased $353,000, or 10.8%. The provision for bad debt as a
percentage of net revenues decreased from 9.2% to 8.0% due to the change in the
mix of directories published. Sales and marketing expense as a percentage of net
revenues increased from 39.0% during the three months ended January 31, 1997 to
40.9% during the same period in fiscal 1998 due to an increase in the number of
sales representatives selling advertising for the same 30 books and an increase
in sales management costs.
General and administrative expense decreased $249,000 from $4.3 million in
the three months ended January 31, 1997 to $4.0 million in the same period of
fiscal 1998 as a result of a miscellaneous spending reductions. General and
administrative expense as a percentage of net revenues increased from 18.2% for
the three months ended January 31, 1997 to 18.4% during the same period in
fiscal 1998.
As a result of the above factors, income (loss) from operations decreased
$844,000, from $5.3 million for the three months ended January 31, 1997 to $4.5
million for the same period in fiscal 1998. Income (loss) from operations as a
percentage of net revenues decreased from 22.5% during the three months ended
January 31, 1997 to 20.2% during the same period of fiscal 1998.
Interest expense increased $2.6 million from $2.0 million for the three
months ended January 31, 1997 to $4.6 million in fiscal 1998 due to the higher
debt levels resulting from the Recapitalization.
As a result of the above factors, income (loss) before extraordinary item
decreased $3.3 million from $3.3 million for the three months ended January 31,
1997 to break-even in fiscal 1998.
Extraordinary item charges of $3.4 million in the three month period ended
January 31, 1998 were associated with the Recapitalization and consisted of loan
fees related to the Senior Subordinated Facility. Upon the issuance of the
Senior Subordinated Notes, amounts owed by the Company were repaid and the
Senior Subordinated Facility was terminated and, accordingly, such fees were
written-off.
NINE MONTHS ENDED JANUARY 31, 1998 COMPARED TO NINE MONTHS ENDED JANUARY 31,
1997
The Company's financial results were affected by changes in the publishing
schedule during the first nine months of fiscal 1998 compared to the same period
in fiscal 1997, resulting in differences in the number and mix of directories
published. As a result, interim results are not indicative of results that may
be expected for the entire year.
Net revenue decreased $1.3 million, from $61.5 million for the first nine
months of fiscal 1997 to $60.2 million during the first nine months of 1998. The
Company published 91 directories during the first nine months of fiscal 1998 and
83 directories during the first nine months of fiscal 1997. The decrease in net
revenues was due to $5.8 million from publication timing changes resulting in
the publication dates for 11 directories moving into the period and the
publication dates for seven directories moving out of the period and was offset
by $0.6 million of net revenue attributable to four new directories added in the
nine months ended January 31, 1998 and $3.8 million year to year net revenue
growth of the same 76 directories published during both periods.
Same book revenue growth for the 76 directories published in both periods
was 7.3% and the average revenue per account was 5.6% higher in the first nine
months of fiscal 1998 than in the first nine months of fiscal 1997.
Cost of revenues for the first nine months of fiscal 1998 of $13.7 million
decreased by $92,000 from $13.8 million for the same period in fiscal 1997,
primarily due to changes in the mix of publications. Cost of revenues for the
same 76 directories published in both periods decreased $0.5 million, from 19.6%
of revenue to 17.3% and was attributable to a reduction in printing and
distribution expenses.
15
<PAGE> 16
Gross profit for the nine months ended January 31, 1998 decreased $1.3
million, to $46.5 million from $47.8 million for the same period in fiscal 1997
due primarily to changes in the publication schedule. These timing changes led
to the publication during the first nine months of fiscal 1998 of more
directories with lower profit contributions than those published during the same
period in fiscal 1997, the effect of which was partially offset by an increase
in gross profits of $4.1 million, or 10.5%, for the same 76 directories
published in both periods. Gross margin decreased from 77.6% during the first
nine months of fiscal 1997 to 77.3% during the same period in fiscal 1998.
Sales and marketing expense increased $1.0 million from $25.1 million for
the first nine months of fiscal 1997 to $26.1 million for the same period in
fiscal 1998. This increase was attributable to increased selling costs of $1.1
million for the same 76 directories published in both periods and $0.4 million
for the four new directories partially offset by reduced bad debt of $261,000
and $301,000 attributable to directory timing changes. The provision for bad
debt as a percentage of net revenues decreased from 8.9% to 8.7% due to the
change in the mix of directories published. Sales and marketing expense as a
percentage of net revenues increased from 40.7% during the first nine months of
fiscal 1997 to 43.3% during the same period in fiscal 1998 due to an increase in
the number of sales representatives selling advertising for the same 76 books,
an increase in sales management costs and higher start-up selling costs for the
four new directories.
General and administrative expense increased $226,000 from $11.9 million in
the first nine months of fiscal 1997 to $12.1 million in the same period of
fiscal 1998 as a result of reductions in overall miscellaneous expense. General
and administrative expense as a percentage of net revenues remained flat at
19.8% for both periods.
The contribution to the equity compensation plan of $5.5 million made in
the first nine months of fiscal 1998 was in connection with the
Recapitalization. There were no contributions to the equity compensation plan
made in the first nine months of fiscal 1997.
As a result of the above factors, income (loss) from operations decreased
$7.6 million, from $10.6 million for the first nine months of fiscal 1997 to
$3.0 million for the same period in fiscal 1998. Income (loss) from operations
as a percentage of net revenues decreased from 17.2% during the first nine
months of fiscal 1997 to 4.9% during the same period of fiscal 1998.
Interest expense increased $2.9 million from $6.0 million for the first
nine months of fiscal 1997 to $8.9 million in the same period of fiscal 1998 due
to the higher debt levels resulting from the Recapitalization.
Income (loss) before extraordinary item decreased $10.5 million from $4.6
million for the first nine months of fiscal 1997 to ($5.9) million in fiscal
1998.
Extraordinary item charges of $4.8 million in the nine month period ended
January 31, 1998 were recorded in connection with the Recapitalization and
consisted of $1.4 million of unamortized debt issuance costs related to the
repayment of debt prior to maturity and $3.4 million of unamortized loan fees
associated with the Senior Subordinated Facility.
Liquidity and Capital Resources
Net cash provided by operating activities was approximately $8.6 million in
the nine months ended January 31, 1998 as compared to approximately $9.5 million
in the same period in 1997. The $1.0 million decline in operating cash flow
resulted from the $16.2 million change in operating results partially offset by
a combination of sources totaling $15.3 million. The sources of cash were a
reduction of receivables and an increase in customer deposits totaling $7.9
million, non-cash charges related to the Recapitalization totaling $4.8 million
and a $2.5 million increase in accrued interest and $0.9 million from
amortization of deferred debt issuance costs of the Discount Notes. Receivables
were favorably impacted by higher customer advance payments and improvements in
collections of customer accounts. Write-offs of $1.4 million in unamortized debt
issuance costs related to repayment of debt prior to maturity and $3.4 million
in Senior Subordinated Facility fees related to the Recapitalization accounted
for the $4.8 million extraordinary items. The change in accrued interest is
primarily due to the Recapitalization which caused substantial changes in the
amount and timing of interest payments. Results of operations were also impacted
by a net use of funds related to non-cash
16
<PAGE> 17
expenses. Publication timing changes and a change in the mix of directories
published resulted in a reduced provision for doubtful accounts which was
partially offset by higher depreciation and amortization expense related to
acquisitions and amortization of deferred debt issuance costs resulting from the
Recapitalization.
Net cash used by investing activities totaled approximately $14.3 million
in the nine months ended January 31, 1998 as compared to approximately $2.9
million in the same period in 1997. This $11.4 million increase in use of funds
was primarily the result of debt issuance costs related to the Recapitalization
and fees related to issuance of the Senior Discount Notes partially offset by
reductions in cash paid for directory acquisitions compared to 1997.
Net cash by financing activities was approximately $14.3 million in the
first nine months of fiscal 1998 as compared to approximately $6.5 million in
the same period in 1997. This $20.8 million increase was primarily the result of
net proceeds from the Recapitalization and issuance of the Senior Discount
Notes.
Holdings is a holding company which has no significant assets other than
its investments in its direct and indirect subsidiaries, and therefore, its
ability to service its indebtedness is dependent upon the receipt of dividends
or debt service in respect to inter-company indebtedness from in direct and
indirect subsidiaries.
The Company's principal sources of funds following the Recapitalization are
anticipated to be cash flows from operating activities and borrowings under the
Revolving Credit Facility. The Company believes that these sources of funds will
provide it with sufficient liquidity and capital resources to meet current and
future financial obligations, including the payment of debt principal and
interest on the Senior Subordinated Notes, as well as to provide funds for the
Company's working capital, capital expenditures and other needs for the next
twelve months. The Company's future operating performance and ability to service
or refinance the Senior Subordinated Notes and to repay, extend or refinance the
Senior Credit Facility will be subject to future economic conditions and to
financial, business and other factors, many of which are beyond the Company's
control. There can be no assurance that such sources of funds will be adequate
and that the Company will not require additional capital from borrowings or
securities offerings to satisfy such requirements. In addition, the Company may
require additional capital to fund future acquisitions and there can be no
assurance that such capital will be available. As of January 31, 1998 the
Company's total indebtedness was $219.7 million. The indebtedness consisted of
$80.0 million on the Senior Term Loan, $5.6 million on the Revolving Credit
Facility, $100.0 million of the 9 5/8% Senior Subordinated Notes, $33.4 million
of the 11 7/8% Senior Discount Notes, and $0.7 million of Seller Notes related
to directory acquisitions.
As of January 31, 1998 the Company had cash and cash equivalents totaling
approximately $9.8 million and an available balance on the Revolving Credit
Facility of $34.4 million. In February 1998, the Company purchased certain
tangible and intangible assets of Mast Advertising & Publishing, Inc. for cash
due at funding of $7,734. The acquisition funding occurred on February 2, 1998
and was funded solely from the cash on-hand as of January 31, 1998.
17
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBIT INDEX
2.1 Asset Purchase Agreement with Mast Advertising and Publishing,
Inc. dated January 30, 1998+ (filed as Exhibit 2.1 to the
Quarterly Report on Form 10Q filed by TransWestern Publishing
Company LLC (File No. 333-42085) with the Securities Exchange
Commission on March 17, 1998)
27.1 Consolidated Financial Data Schedule
(B) No reports on Form 8-K were filed during the nine months ending January
31, 1998
- ---------------
+ Holdings agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the Commission.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on March 17, 1998 on their
behalf by the undersigned thereunto duly authorized.
TRANSWESTERN HOLDINGS L.P.
----------------------------------------
(Registrant)
By: TransWestern Communications
Company, Inc.
-------------------------------------
(General Partner)
By: /s/ JOAN M. FIORITO
-------------------------------------
Name: Joan M. Fiorito
Title: Chief Financial Officer
(Principal Financial and
Accounting Officer)
TWP CAPITAL CORP.
----------------------------------------
(Registrant)
By: /s/ JOAN M. FIORITO
-------------------------------------
Name: Joan M. Fiorito
Title: Vice President and Assistant
Secretary
(Principal Financial and
Accounting Officer)
19
<TABLE> <S> <C>
<ARTICLE> 5
<CIK>0001050934
<NAME>TWP CAPITAL CORP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 9,840
<SECURITIES> 0
<RECEIVABLES> 25,786
<ALLOWANCES> (8,192)
<INVENTORY> 0
<CURRENT-ASSETS> 37,905
<PP&E> 6,732
<DEPRECIATION> (3,927)
<TOTAL-ASSETS> 66,855
<CURRENT-LIABILITIES> 38,172
<BONDS> 216,828
0
0
<COMMON> 0
<OTHER-SE> (188,146)
<TOTAL-LIABILITY-AND-EQUITY> 66,855
<SALES> 60,208
<TOTAL-REVENUES> 60,208
<CGS> 0
<TOTAL-COSTS> 43,568
<OTHER-EXPENSES> 13
<LOSS-PROVISION> 5,601
<INTEREST-EXPENSE> 9,775
<INCOME-PRETAX> (6,800)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 4,791
<CHANGES> 0
<NET-INCOME> (11,591)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
