<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5483
WHITEHALL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 41-0838460
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
POST OFFICE BOX 29709 75229
2659 NOVA DRIVE (Zip Code)
DALLAS, TEXAS
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: 214-247-8747
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, $0.10 PAR VALUE
NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
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 / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART II OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. / /
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT ON MARCH 23, 1995 WAS $36,866,944.
ON MARCH 23, 1995 THERE WERE ISSUED AND OUTSTANDING 2,707,300 SHARES OF THE
REGISTRANT'S COMMON STOCK, $0.10 PAR VALUE EXCLUDING 1,080,656 SHARES OF
TREASURY STOCK.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE DEFINITIVE PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS PRESENTLY SCHEDULED TO BE HELD ON MAY 1, 1995, ARE INCORPORATED
INTO PARTS II AND III BY REFERENCE.
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<PAGE> 2
PART I
ITEM 1. BUSINESS
Whitehall Corporation ("Whitehall" or the "Company" hereinafter) was
incorporated under the laws of Delaware in 1963 as a successor to a Minnesota
corporation organized in 1960.
The Company operates in three segments: Ocean Systems, Aircraft Maintenance
and Electronics. Reference is made to Note I of the Notes to Consolidated
Financial Statements on page 17 herein for pertinent financial data of each
segment as well as information regarding the Company's major customers.
Ocean Systems Segment: Operations of the Ocean Systems segment include the
manufacture and sale of underwater sensing systems used for naval surveillance
and offshore geophysical surveys. The principal subsidiary of the Company
constituting the Ocean Systems segment is Hydroscience, Inc. ("Hydroscience"),
which is engaged in the design and manufacture of marine sensor systems for
geophysical and military applications. The Company formerly conducted these
activities through two separate subsidiaries, Seismic Engineering Company
("Seismic") and Hydroscience. Effective January 1, 1993, the two subsidiaries
were merged.
Because of reductions in defense spending, the Company is placing increased
emphasis on the commercial geophysical market. In 1994 the Company began
aggressively marketing an innovative new towed streamer trademarked as
CenturyMux(TM). The CenturyMux is a 2() diameter 24-bit digital seismic streamer
used for offshore oil and gas exploration. In addition to its wide electronic
dynamic range, the advantages to the market place include uniform distribution
of electronics, a 40% decrease in storage volume, channel expandability to 1,280
and module interchangability. The Company believes this is the first major
improvement in streamer technology in almost ten years. At the heart of this
technology is the CenturyMux multiplexing telemetry. The Company believes other
applications of this telemetry, such as ocean bottom cables used in shallow
water surveying, are available and opportunities are being vigorously pursued.
In late December of 1994 the Company received its first contract for a
CenturyMux system and additional orders are expected to follow. Revenues from
this new product will be recognized in 1995. The Company will also continue to
support existing military customers and aggressively pursue opportunities in the
military market. Hydroscience currently provides support for the Surveillance
Towed Array Sonar System (SURTASS) program by operating the array maintenance
facility in Norfolk, Virginia. Other work includes support contracts for the
SURTASS and AN/SQR-18 programs and contracts with the Naval Research Laboratory.
Rogers Explorations, Inc., an additional subsidiary in this segment, which
experienced no operating activity during the past several years is expected to
be liquidated in 1995.
Currently, the principal customer of this segment is the U.S. Government.
Loss of this customer may have a material adverse impact on future results of
operations of the Company. However, the Company is vigorously pursuing
opportunities in the commercial market.
Aircraft Maintenance Segment: The Company's wholly-owned subsidiary, Aero
Corporation ("Aero"), located in Lake City, Florida, rebuilds, modifies and
maintains turboprop and jet aircraft. Aero operates as a service business.
Aero's primary business is the modification and maintenance of commercial
passenger and freighter aircraft. Over the last three years Aero has invested
heavily in a major renovation of its facility in Lake City, Florida and has
expanded its employee base in order to attract additional commercial customers.
Aero's facility can accommodate most narrow-body aircraft and has undergone
modification to accommodate nearly all wide-body aircraft in current production.
The Company includes in its customer base passenger airlines, cargo carriers and
private and corporate executive jets. The Company believes that the commercial
market represents a significant opportunity because of the potential associated
with the maintenance and modification of aging aircraft in commercial fleets and
because the current downsizing trend in the airline industry could lead to the
outsourcing of maintenance work to low-cost facilities. As an FAA approved
repair station, Aero is qualified to work on DC-8, DC-9, DC-10, 707, 727, 737,
L-100, L-188, C-130 and other military and commercial aircraft. During 1994 Aero
acquired a 40% interest in AvAero, a joint venture which
<PAGE> 3
developed jet engine Hushkits for Boeing 737-100/200 aircraft (see Note M page
21). Aero is also aggressively pursuing contracts with the United States Air
Force.
Electronics Segment: Crystek Crystals Corporation, ("Crystek") a division
of the Company located in Fort Myers, Florida, manufactures and distributes
quartz crystals and oscillators. The products are utilized in various electronic
end products including communications equipment, computers and timing devices.
The Electronics segment provides products to customers in the computer and
communication industries.
Raw Materials: The primary basic raw materials utilized by the Company are
wire, plastics and electronic components primarily used in the Ocean Systems
segment. The Company is not dependent upon any single supplier or group of
suppliers for any of the raw materials it uses in manufacturing its products and
has encountered no difficulties in purchasing sufficient quantities in the open
market.
Patents, Trademarks, Licenses, Franchises and Concessions: Most technology
utilized by the Company is proprietary technology and attributed to the Ocean
Systems segment. The Company has applied for patent protection for its
CenturyMux product. In the opinion of the Company, no single patent or group of
patents is material to any segment of its business, and it does not pay or
receive substantial royalties under license agreements. The Company seeks patent
protection in the normal course of business with respect to inventions and
improvements developed by its employees which it considers patentable. The
Company holds no franchises or concessions.
Competitive Conditions: The Company is subject to severe competitive
conditions in all segments of its business. Although the Company does not have
data available to determine its exact relative market position, the Company does
not believe that it presently has a substantial position in any of the markets
for its products and services. The Ocean Systems segment has a strong technical
understanding of underwater acoustics and transducer systems. This expertise
should enable the Company to take advantage of opportunities in the commercial
and military markets. In the Aircraft Maintenance segment, the Company believes
that the commercial market represents a significant opportunity because of the
potential associated with the maintenance and modification of aging aircraft in
commercial fleets. The Company has also serviced the military market, primarily
through a long association with the U.S. Air Force for maintenance on C-130
aircraft.
Customers: The Company has four customers that account for at least 10% of
1994 consolidated revenues: the United States Government, Emery Worldwide,
Southern Air Transport and ValuJet . The United States Government accounted for
approximately 10% of consolidated net sales in 1994, 14% of consolidated net
sales in 1993, and 34% of consolidated net sales in 1992. Such contracts are
subject to termination at the convenience of the Government. Emery Worldwide
accounted for 25% of consolidated net sales in 1994, 27% of consolidated net
sales in 1993, and 11% of consolidated net sales in 1992. Southern Air Transport
accounted for approximately 18% of consolidated net sales in 1994, 6% of
consolidated net sales in 1993, and 19% of consolidated net sales in 1992.
ValuJet accounted for approximately 11% of consolidated net sales in 1994. The
Mexican Government accounted for approximately 3% of consolidated net sales in
1994, and 13% of consolidated net sales in 1993.
Environmental Regulation: Aero has been subject to Environmental Protection
Agency ("EPA") regulations at the Lake City, Florida facility. The Company does
not anticipate any material direct effects upon the capital expenditures,
earnings and competitive position of the Company from compliance with present
Federal, State and local provisions which have been enacted or adopted
regulating the discharge of materials into the environment, or otherwise
relating to the protection of the environment. The Company does expect, however,
that compliance with such regulations will require, from time to time, both
increased operating costs and capital expenditures which may be substantial. As
of December 31, 1994 and 1993, the Company had reserved approximately $736,000
and $538,000 respectively for anticipated environmental remediation costs at the
Aero facility. The increase in accrued environmental remediation costs was based
on additional information obtained relating to the nature and extent of required
remediation. The Company will install a clay barrier over one section of the
leased property and is currently performing additional testing to determine
whether another clay barrier will be required over a second section of the
property. Other remaining costs to be incurred will include testing and
monitoring to be performed over a 20 to 30 year period. Actual
2
<PAGE> 4
costs to be incurred in future periods may vary from the estimate, given the
inherent uncertainties in evaluating environmental exposures. These
uncertainties include the extent of required remediation based on testing and
evaluation not yet completed and the varying costs and effectiveness of
remediation methods.
Backlog: At December 31, 1994, the Company's consolidated firm backlog
totaled $21,874,000 compared to $3,938,000 at the end of 1993, and $6,630,000 at
the end of 1992. The year-end backlog should not be taken as indicative of sales
volume for the coming year, as only the portion of commercial aircraft
maintenance work considered firm is included in backlog.
Research and Development Expenditures: Reference is made to Note A of the
Notes to Consolidated Financial Statements on page 13 herein for the amounts of
research and development expenditures during the past three calendar years.
Number of Employees: The Company and its subsidiaries employed a total of
512 persons at December 31, 1994. The Company has generally enjoyed good
relations with its employees.
ITEM 2. PROPERTIES
The following are the locations and general character of the principal
plants and other materially important physical properties of the Company and its
subsidiaries:
<TABLE>
<CAPTION>
APPROXIMATE
APPROXIMATE SQUARE FEET
INDUSTRY SEGMENT AND TOTAL OF FLOOR OWNED OR
LOCATION ACREAGE SPACE DESCRIPTION LEASED
---------------------------- ----------- ------------ ---------------------------- ---------
<S> <C> <C> <C> <C>
OCEAN SYSTEMS
Dallas, Texas 5.3 80,000 Executive offices of the Owned
Company and manufacturing
facilities and offices of
Hydroscience, Inc.
Virginia Beach, Virginia 1.8 42,000 Repair facilities of Lease
Hydroscience, Inc. expiring
1995
AIRCRAFT MAINTENANCE
Lake City, Florida 120.0 625,000 Offices and aircraft Lease
rebuilding and expiring
modification facilities of 2022
Aero Corporation
ELECTRONICS
Fort Myers, Florida 3.0 20,000 Offices and manufacturing Owned
facilities of Crystek
Crystals Corporation
OTHER
Dallas, Texas 2.1 21,000 Former offices of Owned*
Electroscience and
Avionics Divisions
</TABLE>
---------------
* This property was sold in January 1995.
The Company believes that its plants and other physical properties are
adequate for its intended operations. Aero has undertaken significant
renovations to the Lake City, Florida property in order to position itself to
attract additional commercial customers and to better serve the military market.
The Company also owns one motor vessel, the "M/V Midnight Dancer", which is
currently on lease.
3
<PAGE> 5
ITEM 3. LEGAL PROCEEDINGS
On May 10, 1991, an action was filed in the District Court of Dallas
County, Texas, by Lee D. Webster, former Chairman, Chief Executive Officer and
President of Whitehall, against the Company, each of its directors (other than
Mr. Webster) and Cambridge Capital Fund, L.P., alleging, among other things,
that (i) the defendants' actions, both individually and in concert, constituted
willful interference with Mr. Webster's employment relationship with the Company
and were the direct cause of Mr. Webster's termination as its President and
Chairman of the Board, and (ii) the defendants' actions forced Mr. Webster into
retirement without providing Mr. Webster with retirement benefits which Mr.
Webster was purportedly promised. On August 17, 1994, the defendants were
granted a partial summary judgment. On October 24, 1994, Mr. Webster filed a
third amended petition and alleged the following causes of action: Tortious
interference with contractual relations against Cambridge Capital Fund, L.P.,
and directors George F. Baker and John J. McAtee; intentional infliction of
emotional distress, and breach of oral contracts. The third amended petition
sought compensatory and punitive damages in excess of $35 million. On January
12, 1995, the Court entered an abatement on one of the breach of oral contract
claims against the Company and entered a summary judgment, in the defendant's
favor, on all remaining claims alleged by Mr. Webster. The Company anticipates
that Mr. Webster will appeal the summary judgment when it becomes a final
judgment. Management intends to vigorously defend any appeal.
On September 22, 1992, Mr. Webster filed an action in the District Court of
Dallas County, Texas, against First City, Texas-Dallas ("First City"), the
Company and an employee of the Company. As receiver for First City, the Federal
Deposit Insurance Corporation has intervened and removed this case to the U.S.
District Court for the Northern District of Texas. The petition alleged, among
other things, that (i) the Company interfered with Mr. Webster's existing and
prospective contractual relationship with the employee and First City, a
national banking institution; (ii) the Company has converted to its own use the
employee's Company stock which allegedly was owned by Mr. Webster; (iii) the
Company, First City and the employee conspired to commit fraud against Mr.
Webster; and (iv) the actions of the Company, First City, and the employee were
intentionally done to cause Mr. Webster emotional distress. The petition sought,
among other things, not less than $1 million in compensatory damages, not less
than $5 million in exemplary damages and not less than $1 million as damages for
emotional distress. By orders dated June 2, 1994, the Company was granted a
summary judgment on all claims alleged by Mr. Webster. The Company anticipates
that Mr. Webster will appeal the summary judgment when it becomes a final
judgment. Management intends to vigorously defend any appeal.
On January 11, 1993, Mr. Webster filed an action in the District Court of
Dallas County, Texas, against NationsBank of Texas, N.A., the Company and a
former employee of the Company. As receiver for First Republic Bank Dallas,
N.A., the Federal Deposit Insurance Corporation has intervened and removed this
case to the U.S. District Court for the Northern District of Texas. The petition
alleged, among other things, that (i) the Company has converted to its own use
the former employee's Company stock which allegedly was owned by Mr. Webster;
(ii) the Company, NationsBank and the former employee conspired to commit fraud
against Mr. Webster; and (iii) the actions of the Company, NationsBank and the
former employee were intentionally done to cause Mr. Webster emotional distress.
The petition sought, among other things, not less than $1 million in
compensatory damages, not less than $5 million in exemplary damages and not less
than $1 million as damages for emotional distress. On April 29, 1994, the
Company's motion for summary judgment was granted by the court and this case was
dismissed. Mr. Webster filed an appeal of this case. On September 16, 1994 the
appeals court dismissed this case for lack of prosecution.
The Company is also involved in certain legal proceedings in the normal
course of its business.
After consultation with counsel, management is of the opinion that the
outcome of the above-mentioned proceedings will not have a material effect on
the financial position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
<PAGE> 6
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists the names and ages of all executive officers of
the Company, all positions and offices of the Company presently held by such
persons, the commencement of the period of continuous service as an executive
officer, and the business experience of each operating officer during the past 5
years.
<TABLE>
<CAPTION>
OFFICES WITH COMPANY AND BUSINESS EXPERIENCE DURING
NAME AGE PAST 5 YEARS
------------------------ --- -----------------------------------------------------
<S> <C> <C>
George F. Baker 55 Chairman of the Board and Chief Executive Officer of
the Company since April 1991; President of the
Company since October 1991; a Managing Partner of
Cambridge Capital Fund, L.P. since its formation in
1988; a Managing Partner of Baker Nye Investments,
L.P., since 1967.
E. Forrest Campbell, III 38 Vice President and Treasurer of the Company since
June 1990; Assistant Treasurer of the Company since
1985; various other positions with the Company
since 1975.
Daniel R. Donham 41 Vice President and Controller of the Company since
June 1990; Assistant Controller of the Company
since 1985; various other positions with the
Company since 1981.
Mark A. Owen 46 President of Aero Corporation since June 1994;
President of Safety Signal Systems 1993 to June
1994; CEO of Tramco 1991 to 1993; various
Management positions with BFGoodrich 1982 to 1991;
aerospace engineer for Wright-Patterson Air Force
base 1971 to 1982.
John H. Wilson 52 Director of the Company since July 1983. Served as
interim President of the Company from April 1991
until October 1991. Director of Capital Southwest
Corporation and Encore Wire Corporation and has
been President of U.S. Equity Corporation since
1983.
</TABLE>
There are no family relationships between any of the executive officers.
Executive officers of the Company are not elected for a fixed term but
serve subject to the earlier of their resignation or removal by the Board of
Directors and until their respective successors are elected and qualified.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock, $0.10 par value (the "Common Stock") is listed
on the New York Stock Exchange ("NYSE"), the principal market in which these
securities are traded. The Company's only listing agreement is with the NYSE. At
March 23, 1995, the Company had 722 stockholders of record.
The table below shows the high and low sales prices of the Common Stock as
reported for the NYSE Composite Transactions for each quarter during the two
most recent calendar years.
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------------- ----------------- ----------------- -----------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994.............. $14.625 $12.625 $12.625 $11.000 $20.500 $10.750 $24.625 $17.250
1993.............. $18.000 $15.250 $17.750 $15.125 $17.750 $14.500 $15.500 $13.875
</TABLE>
The Company has not paid any cash dividends on its Common Stock, and its
policy is to retain earnings for use in its business.
5
<PAGE> 7
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Net sales............................. $ 32,098 $ 30,910 $ 25,612 $ 22,048 $ 16,193
Cost of sales......................... 27,586 26,455 22,474 22,886 19,298
Gross profit (loss)................... 4,512 4,455 3,138 (838) (3,105)
Income (loss) before taxes............ (1,224) (3,190) (2,276) (12,952) (4,055)
Net income (loss)..................... (1,224) (1,868) (1,486) (10,152) 3,050
Net income (loss) per share........... (0.45) (0.67) (0.49) (3.06) 0.90
Average shares outstanding............ 2,698,615 2,781,174 3,063,774 3,315,550 3,389,141
Cash flow from operations............. 1,990 (2,001) 2,187 (1,433) (9,081)
Capital expenditures.................. 467 2,313 1,735 1,359 234
YEAR-END POSITION:
Total assets.......................... 32,213 32,863 37,858 43,559 55,428
Working capital....................... 17,739 20,813 26,869 32,508 43,144
Current ratio......................... 4.5 5.7 7.6 7.8 10.7
Property, plant and
equipment -- net.................... 6,384 7,099 6,209 5,178 7,831
Common shareholders' equity........... 26,989 28,239 33,548 38,719 50,670
Per share outstanding............... 9.97 10.44 11.49 12.16 15.25
YEAR-END STATISTICS:
Common shares outstanding............. 2,706,300 2,706,000 2,920,600 3,183,900 3,322,000
Number of shareholders................ 740 793 867 938 998
Number of employees................... 512 528 538 522 390
Funded Backlog........................ 21,874 3,938 6,630 9,576 8,187
Plant area (thousand sq. ft.)......... 767 846 846 846 846
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Operating Results
Consolidated sales totaled $32,098,000 for 1994, an increase of 4% over
sales of $30,910,000 in 1993. Aircraft Maintenance segment sales increased by
$3,221,000 to $25,403,000 in 1994, as a result of its continued expansion into
the third party commercial aircraft maintenance market. Sales in the Ocean
Systems segment declined by $1,706,000 to $3,822,000 in 1994. Revenues in the
Ocean Systems segment have continued to decline as a result of defense spending
reductions. Sales in the Electronics segment decreased from $3,201,000 in 1993
to $2,873,000 in 1994. Information about the Company's operations in each
segment is summarized in Note I on page 17.
Sales in 1993 increased by 21% over sales in 1992. As a result of increased
commercial aircraft maintenance business and foreign military contracts, the
Aircraft Maintenance segment's sales increased to $22,182,000 in 1993 from
$13,914,000 in 1992. Sales in the Ocean Systems segment declined to $5,527,000
in 1993 from $9,235,000 in 1992 as a result of the decline in military business.
Sales in the Electronics segment increased to $3,201,000 in 1993 from $2,463,000
in 1992.
The Company recorded a loss from operations of $2,588,000 in 1994 compared
to an operating loss of $4,140,000 in 1993. This improvement resulted from
increased profitability (operating profit of $743,000 in 1994 compared to
operating profit of $506,000 in 1993) in the Aircraft Maintenance segment,
accomplished through stringent cost control measures coupled with an increase in
sales volume. The Ocean Systems segment reduced operating losses (operating loss
of $2,156,000 in 1994 compared to an operating loss of $2,859,000 in 1993)
through cost containment. The Ocean Systems operating loss includes expenses of
approximately $1,200,000 in 1994 and $800,000 in 1993 related to production of
the CenturyMux streamer prototype. The Electronics segment's profitability
improved (operating profit of $580,000 in 1994 compared to operating profit of
$259,000 in 1993) despite lower sales volume, through improved operating
efficiencies.
6
<PAGE> 8
Reductions in corporate office general and administrative expenses ($1,672,000
in 1994 compared to $2,137,000 in 1993) provided additional improvement.
The Company recorded a loss from operations of $4,140,000 in 1993 compared
to an operating loss of $3,205,000 in 1992. As a result of an increase in sales
volume, the Aircraft Maintenance segment reported an operating profit of
$506,000 in 1993 compared to an operating loss of $2,466,000 in 1992. The Ocean
Systems segment recorded a loss from operations of $2,589,000 in 1993 compared
to an operating profit of $1,312,000 in 1992. The decline in the Ocean Systems
segment's profitability resulted from declining military revenues coupled with
research and development expenditures in 1993 totaling $1,936,000 compared to
$285,000 in 1992. The Electronics segment reported an operating profit of
$259,000 in 1993 compared to an operating profit of $313,000 in 1992. Corporate
office general and administrative expenses totaled $2,137,000 in 1993 compared
to $2,102,000 in 1992.
Other income increased to $1,364,000 in 1994 from $950,000 in 1993. Other
income includes gains on sales of fixed assets of $512,000 in 1994, $159,000 in
1993, and $185,000 in 1992 as well as interest earned of $791,000 in 1994,
$610,000 in 1993 and $787,000 in 1992.
The Company did not record a net income tax benefit related to the loss
before income taxes recorded in 1994 since the Company has used all available
loss carrybacks and any tax benefits resulting from losses must now be carried
forward. The income tax benefit of $1,322,000 was recorded in 1993 since a
carryback to 1990 was available. (See Note E on Page 15).
Liquidity and Capital Resources
During 1994, cash provided by operating activities totaled $1,990,000
compared to cash used in operating activities of $2,001,000 in 1993. Cash
collected from recoverable income taxes of $4,596,000 in 1994 was the primary
source of the cash. Increases in prepaid expenses and operating losses
contributed to the negative cash flow in 1993. Collection of accounts receivable
and recoverable income taxes were the primary sources of the cash provided by
operations of $2,187,000 in 1992.
The Company made capital expenditures during 1994 of approximately $467,000
compared to $2,313,000 and $1,735,000 in 1993 and 1992, respectively. The
majority of the capital expenditures in 1994 relate to CenturyMux test equipment
in the Ocean Systems segment. In 1993 and 1992 the majority of the expenditures
relate to the Aircraft Maintenance segment and were made to renovate the Aero
facility in Lake City, Florida. The Company will make capital and other
expenditures during 1995 as conditions warrant. The Company believes its cash
balances are sufficient to meet its short and long-term capital requirements.
Cash and cash equivalents and marketable securities decreased from
approximately $9,789,000 in 1993 to $9,456,000 in 1994. The decrease is
primarily the result of capital expenditures ($467,000) and advances related to
the joint venture, see Note M on page 21, ($2,500,000), offset by cash generated
from operating activities ($1,990,000) and the sale of fixed assets ($712,000).
Outlook
Facing major revenue reductions as a result of defense cutbacks, in 1992
the Ocean Systems segment embarked upon an aggressive research and development
program to develop a product to transition itself back into the commercial
offshore geophysical market. During 1994 an extensive marketing campaign was
pursued and in December of 1994, Hydroscience was awarded its first contract for
the production and installation of its state-of-the-art CenturyMux seismic data
acquisition system.
The CenturyMux is a 2() diameter 24-bit digital seismic streamer. The
Company believes this is the first major improvement in streamer technology in
almost ten years. At the heart of this technology is the CenturyMux multiplexing
telemetry. The Company believes other applications of this telemetry are
available and opportunities are being vigorously pursued.
In the military market, Hydroscience will continue to support its customer
and to pursue new military business.
7
<PAGE> 9
In the Aircraft Maintenance segment, Aero is positioned for growth. Besides
serving the foreign and domestic military markets, Aero has aggressively pursued
the foreign and domestic commercial market. The Company has succeeded in gaining
new customers in the commercial market such as passenger airlines, cargo
carriers and private and corporate executive jets.
During 1994 the Company made an investment in a joint venture that has
developed a jet engine Hushkit for Boeing 737-100/200 aircraft.
In the Electronics segment, Crystek will continue to manufacture and
distribute microprocessor products and support its loyal customers.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.............................................. 9
Consolidated Balance Sheets at December 31, 1994 and 1993............................. 10
Consolidated Statements of Operations and Retained Earnings for the Years Ended
December 31, 1994, 1993, and 1992................................................... 11
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993, and 1992................................................... 12
Notes to Consolidated Financial Statements............................................ 13
Schedule VIII -- Valuation and Qualifying Accounts..................................... 25
</TABLE>
8
<PAGE> 10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Whitehall Corporation and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Whitehall
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of operations and retained
earnings and cash flows for each of the three years in the period ended December
31, 1994. These consolidated financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements and schedule
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Whitehall
Corporation and subsidiaries as of December 31, 1994 and 1993, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Dallas, Texas,
March 17, 1995
9
<PAGE> 11
WHITEHALL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1994 1993
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 9,456,314 $ 5,325,041
Marketable securities......................................... -- 4,463,743
Accounts receivable, net...................................... 6,431,340 5,109,250
Recoverable Federal income taxes.............................. -- 3,909,970
Inventories................................................... 6,303,726 4,702,265
Prepaid expenses and other.................................... 581,815 1,739,039
----------- -----------
TOTAL CURRENT ASSETS.................................. 22,773,195 25,249,308
PROPERTY, PLANT AND EQUIPMENT:
Land.......................................................... 499,022 682,499
Buildings..................................................... 1,485,435 2,054,927
Machinery and equipment....................................... 18,147,889 37,170,085
Leasehold improvements........................................ 6,263,118 6,225,124
----------- -----------
26,395,464 46,132,635
Allowances for depreciation and amortization.................. 20,011,602 39,033,688
----------- -----------
6,383,862 7,098,947
NOTES RECEIVABLE FROM EMPLOYEES................................. 556,213 515,012
OTHER NOTES RECEIVABLE.......................................... 2,500,000 --
----------- -----------
TOTAL ASSETS.......................................... $32,213,270 $32,863,267
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities...................... $ 4,098,253 $ 3,559,539
Accrued environmental costs................................... 735,679 538,231
Deferred income tax liability................................. 200,453 338,601
----------- -----------
TOTAL CURRENT LIABILITIES............................. 5,034,385 4,436,371
DEFERRED INCOME TAX LIABILITY................................... 189,965 112,983
OTHER NON-CURRENT LIABILITIES................................... -- 75,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $5.00 par value:
Authorized 500,000 shares -- none issued................... -- --
Common stock, $.10 par value:
Authorized 5,000,000 shares, issued 3,787,956 and 3,773,756
at December 31, 1994 and 1993............................ 378,696 377,376
Additional paid-in capital.................................... 1,200,391 1,053,211
Retained earnings............................................. 41,555,115 42,779,163
----------- -----------
43,134,202 44,209,750
Less -- treasury stock (1,080,656 and 1,067,756 shares at
December 31, 1994 and 1993), at cost....................... (16,145,282) (15,970,837)
----------- -----------
26,988,920 28,238,913
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............ $32,213,270 $32,863,267
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
10
<PAGE> 12
WHITEHALL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Net sales:
Products.......................................... $ 6,695,344 $ 8,728,685 $11,697,469
Services.......................................... 25,402,912 22,181,584 13,914,318
----------- ----------- -----------
32,098,256 30,910,269 25,611,787
Cost of sales:
Products.......................................... 4,470,996 6,763,504 7,721,388
Services.......................................... 23,114,688 19,691,031 14,752,681
----------- ----------- -----------
27,585,684 26,454,535 22,474,069
GROSS PROFIT.............................. 4,512,572 4,455,734 3,137,718
Selling, engineering and administrative............. 7,100,198 8,595,688 6,342,402
----------- ----------- -----------
LOSS FROM OPERATIONS...................... (2,587,626) (4,139,954) (3,204,684)
Other income, net................................... 1,363,578 950,385 928,338
----------- ----------- -----------
LOSS BEFORE INCOME TAXES.................. (1,224,048) (3,189,569) (2,276,346)
Income tax benefit.................................. -- 1,322,000 790,000
----------- ----------- -----------
NET LOSS.................................. (1,224,048) (1,867,569) (1,486,346)
Retained earnings at beginning of year.............. 42,779,163 44,646,732 46,133,078
RETAINED EARNINGS AT END OF
YEAR.................................... $41,555,115 $42,779,163 $44,646,732
=========== =========== ===========
Net loss per share.................................. $ (0.45) $ (0.67) $ (0.49)
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 13
WHITEHALL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1994 1993 1992
---------- ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................... $(1,224,048) $(1,867,569) $ (1,486,346)
Adjustments to reconcile net loss to cash provided
by (used in) operating activities --
Depreciation and amortization................... 982,136 1,113,903 704,208
Gain on sale of fixed assets.................... (511,698) (159,450) (185,000)
Changes in operating assets and liabilities --
Accounts receivable, net...................... (1,322,090) 352,091 1,661,386
Recoverable Federal income taxes.............. 3,909,970 (1,801,882) 2,201,995
Deferred income taxes......................... 76,982 1,216,399 175,274
Inventories................................... (1,601,462) 305,246 (879,171)
Prepaid expenses and other.................... 1,157,224 (1,290,085) 119,308
Other non-current assets...................... -- 154,626 404,852
Accounts payable and accrued expenses......... 598,014 (12,656) (687,464)
Other liabilities............................. (75,000) (12,017) 158,007
----------- ----------- ------------
Total adjustments.......................... 3,214,076 (133,825) 3,673,395
----------- ----------- ------------
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES............................... 1,990,028 (2,001,394) 2,187,049
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of marketable securities..................... 4,463,743 5,924,840 --
Purchases of marketable securities................. -- -- (10,388,583)
Capital expenditures............................... (467,029) (2,313,452) (1,734,779)
Notes Receivable................................... (2,541,201) -- --
Proceeds from sale of fixed assets................. 711,677 469,103 185,000
----------- ----------- ------------
CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES............................... 2,167,190 4,080,491 (11,938,362)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock from exercise of
stock options................................... 148,500 -- --
Purchases of treasury stock........................ (174,445) (3,441,489) (3,684,864)
----------- ----------- ------------
CASH USED IN FINANCING
ACTIVITIES............................... (25,945) (3,441,489) (3,684,864)
----------- ----------- ------------
Net increase (decrease) in cash and cash
equivalents........................................ 4,131,273 (1,362,392) (13,436,177)
Cash and cash equivalents at beginning of period..... 5,325,041 6,687,433 20,123,610
----------- ----------- ------------
Cash and cash equivalents at end of period........... $ 9,456,314 $ 5,325,041 $ 6,687,433
=========== =========== ============
SUPPLEMENTAL INFORMATION:
Cash paid during the year for:
Income taxes....................................... $ -- $ -- $ 554,841
Interest........................................... $ 19,129 $ 17,753 $ 19,789
Cash received during the year for:
Income taxes....................................... $ 4,596,378 $ 1,828,746 $ 4,195,076
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 14
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- ACCOUNTING POLICIES AND PRACTICES
Consolidation: The consolidated financial statements of Whitehall
Corporation and subsidiaries (the "Company") include the accounts of all
subsidiaries after elimination of intercompany accounts and transactions.
Reclassifications: Certain reclassifications have been made to 1993 and
1992 amounts to conform with the 1994 presentation.
Long-Term Contracts: Revenue on long-term contracts, principally U.S.
Government defense contracts, is recognized using the percentage of completion
or unit of delivery method. On contracts where the percentage of completion
method is applied, revenue and income is accrued in the proportion that costs
incurred bear to management's estimate of total contract costs. Any known or
anticipated losses are provided for currently.
Concentration of Credit Risk: Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
temporary cash investments and accounts receivable. The Company places its
temporary cash investments with credit worthy financial institutions and, thus,
limits the amount of credit exposure to any one entity. The Company's customer
base is comprised primarily of the U.S. and foreign governments and air
transport companies located throughout the world.
Inventories: Inventories are carried at average cost, not in excess of
market.
Property, Plant and Equipment: Property, plant and equipment is stated at
cost. Provisions for depreciation and amortization have been computed generally
using the straight-line method over the estimated useful lives of the assets.
Research and Development: Research and development costs are included in
selling, engineering and administrative expenses and amounted to approximately
$1,993,000 in 1994, $1,936,000 in 1993 and $285,000 in 1992.
Federal Income Taxes: The Company accounts for income taxes using an asset
and liability approach for financial accounting and income tax reporting.
Deferred tax liabilities and assets are recognized for the estimated future tax
effects attributable to temporary differences and carryforwards and are adjusted
whenever tax rates or other provisions of income tax statutes change.
The Company and all domestic subsidiaries file a consolidated Federal
income tax return. Deferred Federal income taxes have been provided for
temporary differences between tax and financial reporting resulting primarily
from depreciation provisions, allowances and expense accruals.
Per Share Amounts: Per share computations are based on the weighted average
number of common shares outstanding of 2,698,615 in 1994, 2,781,174 in 1993, and
3,063,774 in 1992.
Joint Venture Investment: See Note M on page 21.
Cash Equivalents: Cash equivalents consist of highly liquid debt
instruments purchased with an original maturity of three months or less.
Marketable Securities: Marketable securities are recorded at cost, which
approximates market. Such securities are classified as current as management
intends to hold these bonds only in the short-term and plans to use the funds in
operations as needed.
Treasury Shares: During 1991, the Board of Directors authorized the
repurchase of up to 500,000 shares of the Company's common stock. An additional
authorization of 250,000 shares was made by the Board of Directors in March
1993. As of December 31, 1994, a total of 628,900 shares had been purchased
under these
13
<PAGE> 15
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE A -- ACCOUNTING POLICIES AND PRACTICES -- (CONTINUED)
authorizations. The Company acquired 12,900, 214,600, and 263,300 shares of its
common stock in 1994, 1993, and 1992, at prices averaging $13.52, $16.03, and
$14.00 per share, respectively.
Other Income: Other income includes interest earned of $791,000 in 1994,
$610,000 in 1993, and $787,000 in 1992. Other income also includes gains on
sales of fixed assets of $512,000 in 1994, $159,000 in 1993, and $185,000 in
1992.
Employee Benefits: The Company offers no significant post-employment or
post-retirement benefits.
NOTE B -- ACCOUNTS RECEIVABLE, NET
Accounts receivable were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1993
--------- ---------
<S> <C> <C>
Receivables from U.S. Government:
Accrued sales not billed.......................................... $ 462,320 $ 484,225
Billed............................................................ 329,757 348,382
---------- ----------
792,077 832,607
Receivables from foreign governments................................ 9,644 648,636
Commercial accounts................................................. 6,487,229 4,456,461
---------- ----------
7,288,950 5,937,704
Less -- allowance for doubtful accounts............................. 857,610 828,454
---------- ----------
$6,431,340 $5,109,250
========== ==========
</TABLE>
Accrued sales not billed will be billed on the basis of contract terms and
deliveries. All accrued amounts at December 31, 1994, are expected to be billed
and collected in 1995.
NOTE C -- INVENTORIES
The components of inventories were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1993
---------- ----------
<S> <C> <C>
Finished goods...................................................... $ 965,630 $1,150,406
Work in process..................................................... 781,761 300,754
Raw materials....................................................... 4,556,335 3,251,105
---------- ----------
$6,303,726 $4,702,265
========== ==========
</TABLE>
Costs included in inventories include raw materials and related labor and
overhead costs.
14
<PAGE> 16
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE D -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1993
--------- ---------
<S> <C> <C>
Accounts payable............................................ $3,487,647 $2,943,924
Salaries, wages and payroll taxes........................... 610,606 615,615
---------- ----------
$4,098,253 $3,559,539
========== ==========
</TABLE>
NOTE E -- INCOME TAXES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1994 1993 1992
------------------ ------------------------ ----------------------
CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED
------- -------- ----------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Federal.............. $62,000 (62,000) $(2,845,000) $1,523,000 $(1,406,000) $616,000
State................ -- -- -- -- -- --
------- -------- ----------- ---------- ----------- --------
$62,000 (62,000) $(2,845,000) $1,523,000 $(1,406,000) $616,000
======= ======== =========== ========== =========== ========
</TABLE>
The benefit for income taxes differs from the amount computed by applying
the Federal income tax rate to income before income taxes. The following table
summarizes the reasons for this difference:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1993 1992
--------- ---------- --------
<S> <C> <C> <C>
Income tax benefit at statutory rate............... $ 416,000 $1,084,000 $774,000
Tax-exempt interest income......................... 4,000 133,000 89,000
Research and development tax credit................ -- 172,000 --
Alternative minimum tax............................ (62,000) -- --
Change in deferred tax allowance................... (343,000) (164,000) --
Other items -- net................................. (15,000) 97,000 (73,000)
--------- ---------- --------
$ -- $1,322,000 $790,000
========= ========== ========
</TABLE>
15
<PAGE> 17
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE E -- INCOME TAXES -- (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of December 31, 1994 and
1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Deferred tax assets:
Short-term--
Uniform cost capitalization............................... $215,000 $226,000
Expense accruals not deducted for tax purposes............ 403,000 234,000
-------- --------
Total short-term..................................... 618,000 460,000
Long-term--
Other..................................................... 239,000 54,000
-------- --------
Total deferred tax assets................................. 857,000 514,000
Less -- Valuation allowance.................................. (857,000) (514,000)
-------- --------
Net deferred tax asset............................... -- --
======== ========
Deferred tax liabilities--
Short-term--
Costs deducted for tax purposes........................... 200,000 339,000
Long-term--
Difference for depreciation of property, plant, and
equipment............................................... 190,000 113,000
-------- --------
Total deferred tax liability......................... $390,000 $452,000
======== ========
</TABLE>
NOTE F -- STOCK OPTION PLANS
In May 1992, the stockholders approved the Whitehall Corporation Incentive
Stock Option Plan ("Incentive Plan") and the Whitehall Corporation Non-Employee
Directors Stock Option Plan ("Directors Plan"). The Incentive Plan provides for
the grant of incentive stock options for up to 325,000 shares of Common Stock to
key employees. The Directors Plan provides for the grant of incentive stock
options for up to 65,000 shares of Common Stock to non-employee Directors of the
Company. Under the Plans, the exercise price for stock options will not be less
than the fair market value of the optioned stock at the date of grant. The
options granted generally become exercisable over a five-year period beginning
one year from the date of grant. At December 31, 1994, 68,800 options were
exercisable. The option period under both Plans may not be more than ten years
from the date the option is granted. Transactions involving the Plans are
summarized as follows:
<TABLE>
<CAPTION>
1994 1993
-------- -------
<S> <C> <C>
Options outstanding January 1................................... 272,000 272,000
Options granted ($11.875-$12.625 per share)..................... 50,000 10,000
Options canceled ($11.25-$17.00 per share)...................... (106,800) (10,000)
Options exercised ($11.25 per share)............................ (13,200) --
-------- -------
Options outstanding December 31 ($11.25-$17.00 per share)....... 202,000 272,000
======== =======
</TABLE>
16
<PAGE> 18
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE G -- SAVINGS PLAN
The Company implemented a voluntary 401(k) savings plan for eligible
employees (as defined by the Plan document) effective September 1, 1992. The
Company contributed $50 per enrolling employee in 1994 and 1993 and may make
future matching contributions at its discretion. Total Company contributions in
1994 and 1993 were approximately $1,300 in each year. The Company's
contributions vest over a six-year period.
NOTE H -- LEASES
Total rental expense amounted to approximately $219,064 in 1994, $318,000
in 1993, and $337,000 in 1992.
The aggregate future minimum rental commitments as of December 31, 1994,
for all noncancelable operating leases are as follows:
<TABLE>
<S> <C>
1995............................................................. $ 168,772
1996............................................................. 29,244
1997............................................................. 24,000
1998............................................................. 25,000
1999............................................................. 30,000
----------
Thereafter....................................................... 1,891,666
----------
$2,168,682
==========
</TABLE>
NOTE I -- INDUSTRY SEGMENTS AND MAJOR CUSTOMERS
The Company operates in three segments: Ocean Systems, Aircraft Maintenance
and Electronics. Operations of the Ocean Systems segment include the manufacture
and sale of underwater sensing systems used for naval surveillance and offshore
geophysical surveys. The Aircraft Maintenance segment rebuilds and modifies
aircraft airframes and electronic systems. The Electronics segment manufactures
and markets quartz crystals and oscillators.
Operating profit represents total revenue less operating expenses,
excluding general corporate expenses and interest expense. Total revenue for the
segments includes interest income earned by the segments of approximately
$1,400, $4,000, and $107,000 in 1994, 1993 and 1992, respectively. Identifiable
assets are those assets used in each segment. Corporate assets are principally
cash and prepaid items.
17
<PAGE> 19
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE I -- INDUSTRY SEGMENTS AND MAJOR CUSTOMERS -- (CONTINUED)
Information about the Company's operations in the different segments is
summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales:
Ocean Systems........................................ $ 3,822 $ 5,527 $ 9,235
Aircraft Maintenance................................. 25,403 22,182 13,914
Electronics.......................................... 2,873 3,201 2,463
------- ------- -------
$32,098 $30,910 $25,612
======= ======= =======
Operating profit and income (loss) before taxes:
Ocean Systems........................................ $(2,156) $(2,859) $ 1,312
Aircraft Maintenance................................. 743 506 (2,466)
Electronics.......................................... 580 259 313
------- ------- -------
$ (833) $(2,094) $ (841)
======= ======= =======
Corporate:
Interest income...................................... $ 791 $ 606 $ 680
Gain on sale of assets............................... 512 447 --
General and administrative expenses.................. (1,672) (2,137) (2,102)
Interest expense..................................... (22) (12) (13)
------- ------- -------
Loss before taxes................................. $(1,224) $(3,190) $(2,276)
======= ======= =======
Identifiable assets:
Ocean Systems........................................ $ 4,934 $ 6,349 $ 5,836
Aircraft Maintenance................................. 14,520 10,120 12,902
Electronics.......................................... 1,747 1,744 1,948
Corporate............................................ 11,012 14,650 17,172
------- ------- -------
$32,213 $32,863 $37,858
======= ======= =======
Depreciation and amortization:
Ocean Systems........................................ $ 153 $ 72 $ 5
Aircraft Maintenance................................. 757 717 599
Electronics.......................................... 33 262 48
Corporate............................................ 39 63 52
------- ------- -------
$ 982 $ 1,114 $ 704
======= ======= =======
Capital expenditures:
Ocean Systems........................................ $ 275 $ 617 $ 69
Aircraft Maintenance................................. 164 1,456 1,565
Electronics.......................................... 28 25 76
Corporate............................................ -- 215 25
------- ------- -------
$ 467 $ 2,313 $ 1,735
======= ======= =======
</TABLE>
18
<PAGE> 20
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE I -- INDUSTRY SEGMENTS AND MAJOR CUSTOMERS -- (CONTINUED)
Sales to U.S. Government agencies were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Ocean Systems.......................................... $ 3,137 $ 3,355 $ 7,797
Aircraft Maintenance................................... 7 1,124 959
Electronics............................................ -- -- --
------- ------- -------
$ 3,144 $ 4,479 $ 8,756
======= ======= =======
</TABLE>
The Company has four customers that account for at least 10% of 1994
consolidated revenues: the United States Government, Emery Worldwide, Southern
Air Transport and ValuJet. The United States Government accounted for
approximately 10% of consolidated net sales in 1994, 14% of consolidated net
sales in 1993, and 34% of consolidated net sales in 1992. Such contracts are
subject to termination at the convenience of the Government. Emery Worldwide
accounted for 25% of consolidated net sales in 1994, 27% of consolidated net
sales in 1993, and 11% of consolidated net sales in 1992. Southern Air Transport
accounted for approximately 18% of consolidated net sales in 1994, 6% of
consolidated net sales in 1993, and 19% of consolidated net sales in 1992.
ValuJet accounted for approximately 11% of consolidated net sales in 1994. The
Mexican Government accounted for approximately 3% of consolidated net sales in
1994, and 13% of consolidated net sales in 1993.
NOTE J -- SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------
MAR. 31 JUNE 30 SEP. 30 DEC. 31 TOTAL
------- ------- ------- ------- -------
(IN THOUSANDS EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1994:
Net sales...................................... $5,554 $ 9,233 $ 8,698 $ 8,613 $32,098
Gross profit................................... 585 1,405 1,104 1,418 4,512
Net income (loss).............................. (959) (284) (172) 191 (1,224)
Net income (loss) per common share............. $(0.36) $ (0.11) $ (0.06) $ 0.07 $ (0.45)
1993:
Net sales...................................... $6,400 $ 8,722 $ 8,079 $ 7,709 $30,910
Gross profit................................... 903 1,436 1,236 881 4,456
Net loss....................................... (330) (316) (69) (1,153) (1,868)
Net loss per common share...................... (0.11) (0.11) (0.03) (0.42) (0.67)
</TABLE>
NOTE K -- COMMITMENTS AND CONTINGENCIES
On May 10, 1991, an action was filed in the District Court of Dallas
County, Texas, by Lee D. Webster, former Chairman, Chief Executive Officer and
President of Whitehall, against the Company, each of its directors (other than
Mr. Webster) and Cambridge Capital Fund, L.P., alleging, among other things,
that (i) the defendants' actions, both individually and in concert, constituted
willful interference with Mr. Webster's employment relationship with the Company
and were the direct cause of Mr. Webster's termination as its President and
Chairman of the Board, and (ii) the defendants' actions forced Mr. Webster into
retirement without providing Mr. Webster with retirement benefits which Mr.
Webster was purportedly promised. On August 17, 1994, the defendants were
granted a partial summary judgment. On October 24, 1994, Mr. Webster filed a
third amended petition and alleged the following causes of action: Tortious
interference with contractual relations against Cambridge Capital Fund, L.P.,
and directors George F. Baker and John J. McAtee; intentional infliction of
emotional distress, and breach of oral contracts. The third
19
<PAGE> 21
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE K -- COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
amended petition sought compensatory and punitive damages in excess of $35
million. On January 12, 1995 the Court entered an abatement on one of the breach
of oral contract claims against the Company and entered a summary judgment, in
favor of the defendants, on all remaining claims alleged by Mr. Webster. The
Company anticipates that Mr. Webster will appeal the summary judgment when it
becomes a final judgment. Management intends to vigorously defend any appeal.
On September 22, 1992, Mr. Webster filed an action in the District Court of
Dallas County, Texas, against First City, Texas-Dallas ("First City"), the
Company and an employee of the Company. As receiver for First City, the Federal
Deposit Insurance Corporation has intervened and removed this case to the U.S.
District Court for the Northern District of Texas. The petition alleged, among
other things, that (i) the Company interfered with Mr. Webster's existing and
prospective contractual relationship with the employee and First City, a
national banking institution; (ii) the Company has converted to its own use the
employee's Company stock which allegedly was owned by Mr. Webster; (iii) the
Company, First City and the employee conspired to commit fraud against Mr.
Webster; and (iv) the actions of the Company, First City, and the employee were
intentionally done to cause Mr. Webster emotional distress. The petition sought,
among other things, not less than $1 million in compensatory damages, not less
than $5 million in exemplary damages and not less than $1 million as damages for
emotional distress. By orders dated June 2, 1994, the Company was granted a
summary judgment on all claims alleged by Mr. Webster. The Company anticipates
that Mr. Webster will appeal the summary judgment when it becomes a final
judgment. Management intends to vigorously defend any appeal.
On January 11, 1993, Mr. Webster filed an action in the District Court of
Dallas County, Texas, against NationsBank of Texas, N.A., the Company and a
former employee of the Company. As receiver for First Republic Bank Dallas,
N.A., the Federal Deposit Insurance Corporation has intervened and removed this
case to the U.S. District Court for the Northern District of Texas. The petition
alleged, among other things, that (i) the Company has converted to its own use
the former employee's Company stock which allegedly was owned by Mr. Webster;
(ii) the Company, NationsBank and the former employee conspired to commit fraud
against Mr. Webster; and (iii) the actions of the Company, NationsBank and the
former employee were intentionally done to cause Mr. Webster emotional distress.
The petition sought, among other things, not less than $1 million in
compensatory damages, not less than $5 million in exemplary damages and not less
than $1 million as damages for emotional distress. On April 29, 1994, the
Company's motion for summary judgment was granted by the court and this case was
dismissed. Mr. Webster filed an appeal of this case. On September 16, 1994 the
appeals court dismissed this case for lack of prosecution.
Aero has been subject to Environmental Protection Agency ("EPA")
regulations at the Lake City, Florida facility. The Company does not anticipate
any material direct effects upon the capital expenditures, earnings and
competitive position of the Company from compliance with present Federal, State
and local provisions which have been enacted or adopted regulating the discharge
of materials into the environment, or otherwise relating to the protection of
the environment. The Company does expect, however, that compliance with such
regulations will require, from time to time, both increased operating costs and
capital expenditures which may be substantial. As of December 31, 1994 and 1993,
the Company had reserved approximately $736,000 and $538,000 respectively for
anticipated environmental remediation costs at the Aero facility. The increase
in accrued environmental remediation costs was based on additional information
obtained relating to the nature and extent of required remediation. The Company
will install a clay barrier over one section of the leased property and is
currently performing additional testing to determine whether another clay
barrier will be required over a second section of the property. Other remaining
costs to be incurred will include testing and monitoring to be performed over a
20 to 30 year period. Actual costs to be incurred in future periods may vary
from the estimate, given the inherent uncertainties in evaluating environmental
exposures. These uncertainties
20
<PAGE> 22
WHITEHALL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE K -- COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
include the extent of required remediation based on testing and evaluation not
yet completed and the varying costs and effectiveness of remediation methods.
The Company is also involved in certain legal proceedings in the normal
course of its business.
After consultation with counsel, management is of the opinion that the
outcome of the above-mentioned proceedings will not have a material effect on
the financial position or results of operations of the Company.
To comply with the financial assurances required by the Florida Department
of Environmental Protection (FDEP), the Company requested and a bank issued a
standby letter of credit in favor of the FDEP. This letter of credit meets all
conditions required by the FDEP.
NOTE L -- RELATED PARTY TRANSACTIONS
Notes receivable from employees consist of demand promissory notes executed
between 1986 and 1990 by two officers of the Company. The notes bear interest at
8%.
A company owned by an officer of the Company was paid $9,000 in 1994 and
$66,000 in 1993 for facilities and services provided in connection with Company
functions held for personnel and clients.
The Company paid $18,400 in 1994 in consulting fees to a member of the
Board of Directors. The Company paid $101,000 in 1992 in consulting fees to a
member of the Board of Directors. A former officer of the Company served as a
consultant to the Company prior to becoming an officer and received $74,000 in
1992 for such services.
NOTE M -- JOINT VENTURE INVESTMENT
During 1994, the Company obtained 40% ownership of a joint venture involved
in the development of aircraft-related technology for an investment of $1,000.
The Company obtained a promissory note for an advance of $2,000,000 to the joint
venture. The principal balance of the promissory note accrues interest at a
maximum rate of 5% per annum, and the principal balance with accrued interest
are due January 5, 1999. The note is secured by certain assets of the joint
venture. The Company also advanced $500,000 to another partner of the joint
venture. This advance is payable with interest at a rate of prime plus 1% per
annum in five equal monthly installments beginning March 31, 1995.
Summarized financial information for the joint venture as of December 31,
1994, is as follows:
<TABLE>
<S> <C>
Current assets........................................................... $8,137,000
Non-current assets....................................................... 798,000
Current liabilities...................................................... 4,073,000
Long-term debt........................................................... 2,000,000
Partners' capital........................................................ 2,862,000
</TABLE>
For the period of inception (January 5, 1994) through December 31, 1994:
<TABLE>
<S> <C>
Net sales................................................................ $1,545,000
Cost and expenses........................................................ 1,684,000
Net loss................................................................. 139,000
</TABLE>
21
<PAGE> 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the Executive Officers of the Registrant is
contained in Part I of this Annual Report under the caption "Executive Officers
of the Registrant." Information with respect to the Directors of the Registrant
is contained in the definitive proxy statement under the captions "Election of
Directors," "Nominees for Election as Directors," "Security Ownership of Certain
Beneficial Owners," "Security Ownership of Management" and "Compliance with
Section 16(a) of the Securities Exchange Act of 1934" is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
"Executive Compensation" in the definitive proxy statement is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"Security Ownership of Certain Beneficial Owners" and "Security Ownership
of Management" in the definitive proxy statement are incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"Certain Relationships and Related Transactions" in the definitive proxy
statement are incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The following consolidated financial statements of the Company and
its subsidiaries are included in Item 8:
Consolidated Balance Sheets at December 31,
1994 and 1993
Consolidated Statements of Income and Retained
Earnings for the
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the
years ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
2. The following consolidated financial statement schedule of the Company
and its subsidiaries is included herewith on page 25:
<TABLE>
<S> <C> <C>
Schedule VIII -- Valuation and qualifying accounts
</TABLE>
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.
22
<PAGE> 24
3. EXHIBITS
<TABLE>
<CAPTION>
INCORPORATED
EXHIBIT BY REFERENCE TO DESCRIPTION
------- ------------------- ----
<S> <C> <C>
(3) Form 10-K a. Restated Certificate of Incorporation
December 31, 1987
-- b. Restated bylaws
(10) Material contracts
Form 10-K a. Resolutions adopted by the Compensation Committee of the
December 31, 1987 Board of Directors of Whitehall Corporation on March 14,
1988, approved by the full Board of Directors on March
22, 1988, relating to benefits payable to survivors of
Mr. Lee D. Webster.
Form 10-K b. Whitehall Corporation Management Security Agreement
December 31, 1974
Form 10-K c. Whitehall Corporation Incentive Stock Option Plan
December 31, 1992
Form 10-K d. Whitehall Corporation Non-Employee Directors Stock
December 31, 1992 Option Plan, as amended by Amendment No. 1 thereto
Form 10-K e. Lease between Aero Corporation and City of Lake City,
December 31, 1992 Florida dated December 30, 1992
(22) -- Subsidiaries of the Registrant
(23) -- Consent of Independent Public Accountants
(27) Financial Data Schedule
</TABLE>
The Registrant will furnish, upon request, a copy of any Exhibit upon the
payment of its reasonable expenses for duplicating and mailing such Exhibit.
(b) Reports on Form 8-K
The Company has not filed a report on Form 8-K during the last quarter of
the period covered by this report.
23
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
WHITEHALL CORPORATION
By /s/ GEORGE F. BAKER
George F. Baker
Chairman of the Board and President
Date: , 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------------------------------------------- ------------------------------ ---------------
<S> <C> <C>
/s/ GEORGE F. BAKER Chairman of the Board and , 1995
George F. Baker President (Principal
executive officer)
/s/ E. FORREST CAMPBELL, III Vice President and Treasurer , 1995
E. Forrest Campbell, III (Principal financial
officer)
/s/ DANIEL R. DONHAM Vice President and Controller , 1995
Daniel R. Donham (Principal accounting
officer)
/s/ BRUCE C. CONWAY Director , 1995
Bruce C. Conway
/s/ ARTHUR H. HUTTON Director , 1995
Arthur H. Hutton
/s/ JOHN J. McATEE, JR. Director , 1995
John J. McAtee, Jr.
/s/ JACK S. PARKER Director , 1995
Jack S. Parker
/s/ LEWIS S. WHITE Director , 1995
Lewis S. White
/s/ JOHN H. WILSON, III Director , 1995
John H. Wilson, III
</TABLE>
24
<PAGE> 26
SCHEDULE VIII
WHITEHALL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COL. C
--------------------------
COL. B ADDITIONS
--------- --------------------------
BALANCE CHARGED COL. D COL. E
COL. A AT TO COSTS CHARGED TO -------------- --------------
----------- BEGINNING AND OTHER ACCOUNTS DEDUCTIONS BALANCE AT END
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE OF PERIOD
------------ --------- --------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994:
Reserves and allowances deducted
from asset accounts --
Allowance for uncollectible
accounts..................... $ 828,454 $ 93,848 $ -- $ 64,692(1) $ 857,610
Allowance for obsolete
inventory.................... 28,942 -- -- 28,942(4) --
---------- --------- ------- ----------- -----------
Totals.................... $ 857,396 $ 93,848 $ -- $ 93,634 857,610
========== ========= ======= =========== ===========
Accrued environmental cost........ $ 538,231 $ 415,871 $ -- $ 218,423(3) $ 735,679
========== ========= ======= =========== ===========
YEAR ENDED DECEMBER 31, 1993:
Reserves and allowances deducted
from asset accounts --
Allowance for uncollectible
accounts..................... $1,492,189 $ 127,440 $ -- $ 791,175(1) $ 828,454
Allowance for obsolete
inventory.................... 821,431 -- -- 792,489(2) 28,942
---------- --------- ------- ----------- -----------
Totals.................... $2,313,620 $ 127,440 $ -- $ 1,583,664 $ 857,396
========== ========= ======= =========== ===========
Accrued environmental cost........ $ 886,980 -- $ -- $ 348,749(3) $ 538,231
========== ========= ======= =========== ===========
YEAR ENDED DECEMBER 31, 1992:
Reserves and allowances deducted
from asset accounts --
Allowance for uncollectible
accounts..................... $1,424,189 $ 275,314 $ -- $ 207,314(1) $ 1,492,189
Allowance for obsolete
inventory.................... 3,012,249 191,161 -- 2,381,979(2) 821,431
---------- --------- ------- ----------- -----------
Totals.................... $4,436,438 $ 466,475 $ -- $ 2,589,293 $ 2,313,620
========== ========= ======= =========== ===========
Accrued environmental cost........ $1,232,506 -- $ -- $ 345,526(3) $ 886,980
========== ========= ======= =========== ===========
</TABLE>
---------------
(1) Uncollectible accounts written off, net of recoveries.
(2) Disposal of inventory.
(3) Environmental clean-up costs incurred.
(4) Inventory cost adjustments.
25
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
INCORPORATED
EXHIBIT BY REFERENCE TO DESCRIPTION
------- ------------------- ----
<S> <C> <C>
(3) Form 10-K a. Restated Certificate of Incorporation
December 31, 1987
-- b. Restated bylaws
(10) Material contracts
Form 10-K a. Resolutions adopted by the Compensation Committee of the
December 31, 1987 Board of Directors of Whitehall Corporation on March 14,
1988, approved by the full Board of Directors on March
22, 1988, relating to benefits payable to survivors of
Mr. Lee D. Webster.
Form 10-K b. Whitehall Corporation Management Security Agreement
December 31, 1974
Form 10-K c. Whitehall Corporation Incentive Stock Option Plan
December 31, 1992
Form 10-K d. Whitehall Corporation Non-Employee Directors Stock
December 31, 1992 Option Plan, as amended by Amendment No. 1 thereto
Form 10-K e. Lease between Aero Corporation and City of Lake City,
December 31, 1992 Florida dated December 30, 1992
(22) -- Subsidiaries of the Registrant
(23) -- Consent of Independent Public Accountants
(27) Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT (22)
WHITEHALL CORPORATION
ANNUAL REPORT ON FORM 10K
ITEM 14(a)3
(22) Subsidiaries of the Registrant
The following table lists the subsidiaries of the Registrant and the
jurisdiction of incorporation of each subsidiary:
Name Jurisdiction of Incorporation
---- -----------------------------
Aero Corporation Florida
Hydroscience, Inc. Texas
Rogers Explorations, Inc. Texas
Each of the subsidiaries conducts business only under its corporate name.
<PAGE> 1
EXHIBIT (23)
CONSENT OF INDEPENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10K into the Company's previously filed
Registration Statement on Form S-8 File No. 33-48215.
ARTHUR ANDERSEN LLP
Dallas, Texas
March 30, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,456,314
<SECURITIES> 0
<RECEIVABLES> 6,431,340
<ALLOWANCES> 0
<INVENTORY> 6,303,726
<CURRENT-ASSETS> 22,773,195
<PP&E> 26,395,464
<DEPRECIATION> 20,011,602
<TOTAL-ASSETS> 32,213,270
<CURRENT-LIABILITIES> 5,034,385
<BONDS> 0
<COMMON> 378,696
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 32,213,270
<SALES> 32,098,256
<TOTAL-REVENUES> 32,098,256
<CGS> 27,585,684
<TOTAL-COSTS> 34,685,882
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,224,048)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,224,048)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,224,048)
<EPS-PRIMARY> (0.45)
<EPS-DILUTED> (0.45)
</TABLE>
