<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
---------------
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number. 333-64745
---------------
PENHALL INTERNATIONAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ARIZONA 86-0634394
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1801 PENHALL WAY, ANAHEIM, CA 92803
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(714) 772-6450
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
---------------
Indicate by check mark whether the Registrant (1) 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS AND TITLE OF SHARES OUTSTANDING AS OF
CAPITAL STOCK NOVEMBER 10, 1999
Common Stock, $.01 Par Value 994,477
================================================================================
<PAGE> 2
PENHALL INTERNATIONAL CORP.
Index
<TABLE>
<CAPTION>
Part I - Financial Information
Page No.
--------
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1999 and September 30, 1999 3
Condensed Consolidated Statements of Operations for the three month periods ended
September 30, 1998 and 1999 4
Condensed Consolidated Statements of Cash Flows for the three month periods
ended September 30, 1998 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 17
Item 3. Quantitative and Qualitative Disclosures about Market Risk 20
Part II - Other Information
Items 1-5 are not applicable
Item 6. Exhibits and Reports on Form 8-K. 21
a) Exhibits.
27. Financial Data Schedule
b) Reports on Form 8-K
None
</TABLE>
2
<PAGE> 3
Item 1. Financial Information
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1999
------------- --------------
ASSETS
<S> <C> <C>
Current assets:
Cash................................................................ $ 3,085,000 $ 4,992,000
Receivables:
Contract and trade receivables........................... 27,808,000 35,374,000
Contract retentions...................................... 4,957,000 5,388,000
Income taxes receivable.................................. -- --
------------- --------------
32,765,000 40,762,000
Less allowance for doubtful receivables.................. 1,277,000 1,896,000
------------- --------------
Net receivables................................. 31.488,000 38,866,000
Costs and estimated earnings in excess of billings on uncompleted
contracts.......................................................... 3,154,000 2,262,000
Deferred tax assets................................................. 3,663,000 3,663,000
Inventories......................................................... 1,316,000 1,926,000
Prepaid expenses and other current assets........................... 580,000 788,000
------------- --------------
Total current assets............................ 43,286,000 52,497,000
Property, plant and equipment, at cost:
Land................................................................ 5,229,000 5,229,000
Buildings and leasehold improvements................................ 7,472,000 7,553,000
Construction and other equipment.................................... 85,931,000 90,862,000
------------- --------------
98,632,000 103,644,000
Less accumulated depreciation and amortization...................... 43,035,000 45,686,000
------------- --------------
Net property, plant and equipment............... 55,597,000 57,958,000
Goodwill, net of accumulated amortization............................. 8,255,000 8,083,000
Debt issuance costs, net of accumulated amortization.................. 5,824,000 5,603,000
Other assets, net..................................................... 1,201,000 1,091,000
------------- --------------
$ 114,163,000 $ 125,232,000
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of long-term debt.............................. $ 3,274,000 $ 4,407,000
Trade accounts payable.............................................. 8,908,000 11,399,000
Accrued liabilities................................................. 12,735,000 14,479,000
Billings in excess of costs and estimated earnings on uncompleted
contracts.......................................................... 1,050,000 674,000
------------- --------------
Total current liabilities....................... 25,967,000 30,959,000
Long-term debt, excluding current installments........................ 27,437,000 31,362,000
Senior notes.......................................................... 100,000,000 100,000,000
Deferred tax liabilities.............................................. 4,993,000 4,993,000
Senior Exchangeable Preferred Stock, redemption value $11,294,000
at September 30, 1999. Authorized, issued and outstanding 10,000
shares at June 30, 1999 and September 30, 1999...................... 10,999,000 11,294,000
Series A Preferred Stock, redemption value $12,123,000 at
September 30, 1999. Authorized 25,000 shares; issued and outstanding
10,428 shares at June 30, 1999 and September 30, 1999............. 11,732,000 12,123,000
Stockholders' equity (deficit):
Series B Preferred Stock, par value $.01 per share. Authorized
50,000 shares; issued and outstanding 18,556 shares at
June 30, 1999 and September 30, 1999.............................. 20,880,000 21,573,000
Common stock, $.01 par value. Authorized 5,000,000 shares; issued
and outstanding 994,477 shares at June 30, 1999 and
September 30, 1999................................................ 10,000 10,000
Additional paid-in capital.......................................... 985,000 985,000
Accumulated deficit................................................. (88,840,000) (88,067,000)
------------- --------------
Total stockholders' equity (deficit)............ (66,965,000) (65,499,000)
Commitments and contingencies....................................... $ 114,163,000 $ 125,232,000
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTH PERIODS
ENDED SEPTEMBER 30,
-------------------------------
1998 1999
------------ ------------
<S> <C> <C>
Revenues......................................... $ 38,913,000 $ 49,857,000
Cost of revenues................................. 27,868,000 33,843,000
------------ ------------
Gross profit................................... 11,045,000 16,014,000
General and administrative expenses.............. 17,211,000 8,577,000
Other operating income net....................... 260,000 301,000
------------ ------------
Earnings (loss) before interest expense and
income taxes................................. (5,906,000) 7,738,000
Interest expense................................. 2,616,000 3,952,000
------------ ------------
Earnings (loss) before income taxes............ (8,522,000) 3,786,000
Income tax expense (benefit)..................... (1,721,000) 1,634,000
------------ ------------
Net earnings (loss).............................. (6,801,000 2,152,000
------------ ------------
Accretion of preferred stock to redemption
value........................................... (395,000) (686,000)
Accrual of cumulative dividends on preferred
stock........................................... (388,000) (693,000)
------------ ------------
Net earnings (loss) available to common
stockholders................................... $ (7,584,000) $ 773,000
============ ===========
Earnings (loss) per share:
Basic and diluted.............................. $ (3.32) $ .78
Weighted average number of shares outstanding:
Basic and diluted.............................. 2,286,725 994,477
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTH PERIODS
ENDED SEPTEMBER 30,
---------------------------------
1998 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss).................................................... $ (6,801,000) $ 2,152,000
Adjustments to reconcile net earnings (loss) to net cash
used in operating activities:
Depreciation and amortization....................................... 2,488,000 3,468,000
Amortization of debt issuance costs................................. 123,000 221,000
Provision for doubtful accounts..................................... 38,000 619,000
Provision for deferred taxes........................................ 511,000 --
(Gain) loss on sale of assets....................................... 4,000 (43,000)
Changes in assets and liabilities:
Receivables...................................................... (5,743,000) (7,997,000)
Inventories, prepaid expenses and other assets................... (203,000) (822,000)
Costs and estimated earnings in excess of billings on
uncompleted contracts.......................................... 306,000 892,000
Trade accounts payable and accrued liabilities................... (431,000) 1,202,000
Billings in excess of costs and estimated earnings on
uncompleted contracts.......................................... 266,000 (376,000)
Accrued compensation............................................. (5,233,000) --
------------- -------------
Net cash used in operating activities........................ (14,675,000) (684,000)
------------- -------------
Cash flows from investing activities:
Proceeds from sale of assets........................................... 121,000 156,000
Capital expenditures................................................... (3,337,000) (3,394,000)
------------- -------------
Net cash used in investing activities........................ (3,216,000) (3,238,000)
------------- -------------
Cash flows from financing activities:
Borrowings under long-term debt........................................ 23,495,000 5,000,000
Repayments of long-term debt........................................... (16,606,000) (2,204,000)
Paydown on notes payable to stockholders............................... (48,000) --
Book overdraft......................................................... -- 3,033,000
Borrowings on Senior Notes............................................. 100,000,000 --
Debt issuance costs.................................................... (5,205,000) --
Proceeds from issuance of common stock................................. 399,000 --
Repurchase of common stock............................................. (93,050,000) --
Issuance of Series A Preferred Stock................................... 10,427,000 --
Issuance of Series B Preferred Stock................................... 237,000 --
------------- -------------
Net cash provided by financing activities.................... 19,649,000 5,829,000
------------- -------------
Net increase in cash......................................... 1,758,000 1,907,000
Cash at beginning of period.............................................. 234,000 3,085,000
------------- -------------
Cash at end of period.................................................... $ 1,992,000 $ 4,992,000
============= =============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes........................................................... $ -- $ 123,000
Interest............................................................... $ 478,000 $ 6,876,000
============= =============
Supplemental disclosure of noncash investing and financing activities:
Borrowings related to capital leases and equipment financing agreements.. $ -- $ 2,262,000
============= =============
Issuance of Senior Exchangeable Preferred Stock in connection with
the Recapitalization Mergers......................................... $ 10,000,000 $ --
============= =============
Accretion of Preferred Stock to redemption value....................... $ 395,000 $ 686,000
============= =============
Accrual of cumulative dividends on preferred stock..................... $ 388,000 $ 693,000
============= =============
Issuance of Series B Preferred Stock................................... $ 18,335,000 $ --
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
(1) BASIS OF PRESENTATION
Penhall International, Inc. ("PII") was founded in 1957 and was
incorporated in the state of California on April 19, 1988. On August 4, 1998,
$100,000,000 of 12% Senior Notes (the Senior Notes) were sold by Penhall
Acquisition Corp., an Arizona corporation formed by an unrelated third party
(the Third Party) to effect the recapitalization of PII. As part of the
recapitalization, a series of mergers (the Recapitalization Mergers) were
consummated pursuant to which Phoenix Concrete Cutting, Inc., a wholly-owned
subsidiary of PII, became the corporate parent of PII, the Third Party acquired
a 62.5% interest in Phoenix Concrete Cutting, Inc. and Phoenix Concrete Cutting,
Inc. became the successor obligor of the Senior Notes. Following the
consummation of the Recapitalization Mergers, Phoenix Concrete Cutting, Inc.
changed its name to Penhall International Corp., and PII changed its name to
Penhall Rental Corp.
Under generally accepted accounting principles, the Recapitalization
Mergers were accounted for as a leveraged recapitalization transaction in a
manner similar to a pooling-of-interests. Under this method, the transfer of
controlling interest in PII to the Third-Party did not change the accounting
basis of the assets and liabilities in PII's separate stand-alone financial
statements.
On October 1, 1998 all of the operating assets and liabilities of Penhall
International Corp. were transferred to Penhall Company. As a result, all of the
operating divisions of the Company are owned by Penhall Company.
The accompanying unaudited condensed consolidated financial statements of
Penhall International Corp. ("Penhall" or the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with 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.
Results of operations for the three month period ended September 30, 1999
are not necessarily indicative of the results that may be expected for the year
ending June 30, 2000. The unaudited condensed consolidated financial statements
included herein should be read in conjunction with the Company's audited
consolidated financial statements and footnotes thereto included in the Form
10-K for the year ended June 30, 1999.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing adjusted net
earnings (loss) available to common stockholders by the weighted average number
of common shares outstanding during the period.
All common shares included in the condensed consolidated financial
statements and earnings (loss) per share calculations for three month period
ended September 30, 1998 have been restated to reflect a 10.56 to one
common stock split effected as part of the Recapitalization Mergers.
6
<PAGE> 7
RECLASSIFICATIONS
Certain reclassifications have been made to prior years' balances to
conform to the current presentation.
(2) SENIOR NOTES AND LONG-TERM DEBT
SENIOR NOTES
On August 4, 1998, in connection with the Recapitalization Mergers, the
Company issued $100,000,000 of Senior Notes guaranteed by the wholly-owned
subsidiaries of Penhall International Corp. Interest at 12% is payable
semiannually in arrears beginning February 1, 1999; all unpaid principal and
interest is due August 1, 2006. In addition, the Senior Notes are redeemable at
the Company's option, in whole at any time or in part from time to time, on or
after August 1, 2003, at certain redemption rates ranging from 106% to 102%. The
Senior Notes contain certain financial and non-financial covenants. As of
September 30, 1999 the Company was in compliance with all such covenants.
7
<PAGE> 8
LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1999
------------ -------------
<S> <C> <C>
Note payable secured by certain equipment, bearing interest at 5.51%;
payable on April 29, 2000.............................................. $ 1,896,000 $ 1,896,000
Note payable secured by certain equipment, stated interest of 0%, imputed
interest at 9.25% which resulted in a discount of $200,000; payable
$400,000 due June 1, 2000 and 2001, and $428,000 due June 1, 2002...... 1,028,000 1,028,000
Note payable secured by certain equipment bearing interest at 6.0%; all
unpaid principal and interest due November 1, 1999..................... 876,000 876,000
Revolving Loan in the maximum credit amount of $30,000,000 secured by
certain assets of the Company. The Company may elect to maintain the
Revolving Loan as a Base Rate Loan, which accrues interest quarterly at
1.25% plus the higher of the Federal Funds Effective Rate (as defined)
or the then current prime rate and is payable quarterly, and/or convert
into a Eurodollar Loan, which accrues interest at 2.25% plus the
Eurodollar Rate (as defined) and is payable on the last day of each
elected interest period, which shall range from one to six months,
as elected by the Company. All unpaid principal and interest is due
June 15, 2004. The effective interest rate at September 30, 1999
was 7.38%.............................................................. 6,500,000 9,500,000
$20,000,000 Term Loan secured by certain assets of the Company; quarterly
principal payments of $750,000 per quarter commencing September 15,
2000 through June 15, 2001, $1,250,000 per quarter through June 15,
2002, and $1,500,000 per quarter through June 15, 2004. The Company
may elect to maintain the Term Loan as a Base Rate Loan, which accrues
interest quarterly at 1.25% plus the higher of the Federal Funds
Effective Rate (as defined) or the current prime rate and is payable
quarterly, and/or convert into a Eurodollar Loan, which accrues
interest at 2.25% plus the Eurodollar Rate (as defined) and is payable
on the last day of each elected interest period, which shall range
from one to six months, as elected by the Company. All unpaid principal
and interest is due June 15, 2004. The effective interest rate at
September 30, 1999 was 7.44%........................................... 20,000,000 20,000,000
Various capital leases and equipment financing agreements due through
October 2001 with interest rates ranging from 0% to .12% annually...... -- 2,058,000
Other..................................................................... 411,000 411,000
------------ -------------
30,711,000 35,769,000
Less current installments of long-term debt............................... 3,274,000 4,407,000
------------ -------------
Long-term debt, excluding current installments............................ $ 27,437,000 $ 31,362,000
============ =============
</TABLE>
8
<PAGE> 9
(3) COMMITMENTS AND CONTINGENCIES
LITIGATION
There are various lawsuits and claims pending against and claims being
pursued by the Company and its subsidiaries arising out of the normal course of
business. It is management's present opinion that the outcome of these
proceedings will not have a material effect on the Company's consolidated
financial statements taken as a whole.
(4) CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following consolidating financial information is presented for purposes
of complying with the reporting requirements of the Guarantor Subsidiaries,
(Penhall Rental Corp. and Penhall Company). Separate financial statements and
other disclosures with respect to the Guarantor Subsidiaries are not presented
because the Company believes that such financial statements and other
information would not provide additional information that is material to
investors.
9
<PAGE> 10
The condensed consolidating financial information presents condensed
financial statements as of June 30, 1999 and September 30, 1999 and for the
three month periods ended September 30, 1998 and 1999 of:
a) Penhall International Corp. on a parent company only basis ("Parent")
(carrying its investments in the subsidiaries under the equity method),
b) the Guarantor Subsidiaries (Penhall Rental Corp. and Penhall Company)
c) elimination entries necessary to consolidate the parent company and its
subsidiaries, and
d) the Company on a consolidated basis.
10
<PAGE> 11
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
CONDENSED CONSOLIDATING BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1999
--------------------------------------------------------------------------------------
PENHALL PENHALL
INTERNATIONAL RENTAL PENHALL
CORP. CORP. COMPANY ELIMINATIONS CONSOLIDATED
------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Receivables, net............... $ -- $ -- $ 31,488,000 $ -- $ 31,488,000
Inventories.................... -- -- 1,316,000 1,316,000
Costs and estimated earnings
in excess of billings on
uncompleted contracts........ -- 3,154,000
Intercompany assets............ 58,069,000 -- -- (58,069,000) 3,154,000
Other current assets........... 3,481,000 1,877,000 3,103,000 (1,133,000) 7,328,000
------------- ------------ ------------ ------------- -------------
Total current assets......... 61,550,000 1,877,000 39,061,000 (59,202,000) 43,286,000
Net property, plant and equipment -- 9,171,000 46,426,000 55,597,000
Other assets, net................. 5,824,000 -- 9,456,000 15,280,000
Investment in parent.............. -- 4,001,000 -- (4,001,000) --
.
Investment in subsidiaries........ 25,989,000 -- -- (25,989,000) --
------------- ------------ ------------ ------------- -------------
$ 93,363,000 $ 15,049,000 $ 94,943,000 $ (89,192,000) $ 114,163,000
============= ============ ============ ============= =============
Liabilities and Stockholders' Equity
(Deficit):
Current installments of long-term
debt........................... $ -- $ 2,000 $ 3,272,000 $ -- $ 3,274,000
Trade accounts payable............ -- 165,000 8,743,000 8,908,000
Accrued liabilities............... 5,158,000 -- 7,577,000 12,735,000
Billings in excess of costs and
estimated earnings on
uncompleted contracts.......... -- -- 1,050,000 1,050,000
Intercompany liabilities.......... 1,939,000 41,679,000 20,893,000 (64,511,000) --
------------- ------------ ------------ ------------- -------------
Total current liabilities.... 7,097,000 41,846,000 41,535,000 (64,511,000) 25,967,000
Long-term debt, excluding current
installments................... 26,500,000 213,000 724,000 27,437,000
Senior notes...................... 100,000,000 -- -- -- 100,000,000
Deferred tax liabilities.......... -- (5,406,000) 5,090,000 5,309,000 4,993,000
Accrued compensation.............. -- -- -- --
Senior Exchangeable Preferred
stock........................... 10,999,000 -- -- 10,999,000
Series A Preferred stock.......... 11,732,000 -- -- 11,732,000
Stockholders' equity (deficit).... (62,965,000) (21,604,000) 47,594,000 (29,990,000) (66,965,000)
------------- ------------ ------------ ------------- -------------
$ 93,363,000 $ 15,049,000 $ 94,943,000 $ (89,192,000) $ 114,163,000
============= ============ ============ ============= =============
</TABLE>
11
<PAGE> 12
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
CONDENSED CONSOLIDATING BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
--------------------------------------------------------------------------------------
PENHALL PENHALL
INTERNATIONAL RENTAL PENHALL
CORP. CORP. COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Receivables, net............. $ -- $ -- $38,866,000 $ 38,866,000
Inventories.................. -- -- 1,926,000 1,926,000
Costs and estimated
earnings in excess of
billings on uncompleted
contracts................... -- -- 2,262,000 2,262,000
Intercompany assets.......... 62,522,000 -- -- (62,522,000) --
Other current assets......... 3,550,000 4,164,000 2,863,000 (1,134,000) 9,443,000
------------ ------------ ------------ -------------- ------------
Total current assets...... 66,072,000 4,164,000 45,917,000 (63,656,000) 52,497,000
------------ ------------ ------------ ------------- ------------
Net property, plant and
equipment................... -- 9,060,000 48,898,000 57,958,000
Other assets, net............ 5,603,000 -- 9,174,000 14,777,000
Investment in parent......... -- 4,001,000 -- (4,001,000) --
Investment in subsidiaries... 30,448,000 -- -- (30,448,000) --
------------ ------------ ------------ ------------- ------------
$102,123,000 $ 17,225,000 $103,989,000 $ (98,105,000) $125,232,000
============ ============ ============ ============= ============
Liabilities and Stockholders'
Equity (Deficit)
Current installments of
long-term debt ............. $ -- $ 2,000 $ 4,405,000 $ 4,407,000
Trade accounts payable....... -- 162,000 11,237,000 11,399,000
Accrued liabilities.......... 10,704,000 (123,000) 10,340,000 (6,442,000) 14,479,000
Billings in excess of
costs and estimated
earnings on uncompleted
contracts................. -- -- 674,000 674,000
Intercompany liabilities. -- 43,863,000 18,659,000 (62,522,000) --
------------ ------------ ------------ ------------- ------------
Total current liabilities 10,704,000 43,904,000 45,315,000 (68,964,000) 30,959,000
------------ ------------ ------------ ------------- ------------
Long-term debt, excluding
current installments........ 29,500,000 213,000 1,649,000 31,362,000
Senior notes................. 100,000,000 -- -- 100,000,000
Deferred tax liabilities..... -- (5,405,000) 5,090,000 5,308,000 4,993,000
Senior Exchangeable
Preferred stock............. 11,294,000 -- -- 11,294,000
Series A Preferred stock..... 12,123,000 -- -- 12,123,000
Stockholders' equity
(deficit)................... (61,498,000) (21,487,000) 51,935,000 (34,449,000) (65,499,000)
------------ ------------ ------------ ------------- ------------
$102,123,000 $ 17,225,000 $103,989,000 $ (98,105,000) $125,232,000
============ ============ ============ ============= ============
</TABLE>
12
<PAGE> 13
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998
--------------------------------------------------------------------------------------------
PENHALL PENHALL
INTERNATIONAL RENTAL PENHALL
CORP. CORP. COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues.......................... $ 5,905,000 $ 294,000 $ 33,008,000 $ (294,000) $ 38,913,000
Cost of revenues.................. 3,569,000 5,000 24,294,000 27,868,000
------------ ------------ ----------- ----------- ------------
Gross profit..................... 2,336,000 289,000 8,714,000 (294,000) 11,045,000
General and administrative
expenses........................ 1,099,000 12,142,000 4,287,000 (317,000) 17,211,000
Other operating income, net........ 29,000 801,000 130,000 (700,000) 260,000
Equity earnings in subsidiaries... (5,224,000) -- -- 5,224,000 --
------------ ------------ ----------- ----------- ------------
Earnings (loss) before interest
expense and income taxes. (3,958,000) (11,052,000) 4,557,000 4,547,000 (5,906,000)
Interest expense................... 2,331,000 155,000 107,000 23,000 2,616,000
------------ ------------ ----------- ----------- ------------
Earnings (loss) before
income taxes..................... (6,289,000) (11,207,000) 4,450,000 4,524,000 (8,522,000)
Income taxes....................... (188,000) (3,030,000) 1,497,000 - 0 - (1,721,000)
------------ ------------ ----------- ----------- ------------
Net earnings (loss)................ $ (6,101,000) $ (8,177,000) $ 2,953,000 $ 4,524,000 $ (6,801,000)
============ ============ =========== =========== ===========
</TABLE>
13
<PAGE> 14
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999
-------------------------------------------------------------------------------------------
PENHALL PENHALL
INTERNATIONAL RENTAL PENHALL
CORP. CORP. COMPANY ELIMINATIONS CONSOLIDATED
---------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues......................... $ -- $319,000 $49,857,000 $ (319,000) $49,857,000
Cost of revenues................. -- -- 33,843,000 33,843,000
---------- -------- ----------- ----------- -----------
Gross profit................... -- 319,000 16,014,000 (319,000) 16,014,000
General and administrative
expenses....................... 122,000 121,000 8,653,000 (319,000) 8,577,000
Other operating income, net...... 17,000 -- 284,000 301,000
Equity earnings in subsidiaries.. 4,459,000 -- -- (4,459,000) --
---------- -------- ----------- ----------- -----------
Earnings before interest
expense and income taxes...... 4,354,000 198,000 7,645,000 (4,459,000) 7,738,000
Interest expense................. 3,806,000 -- 146,000 -- 3,952,000
---------- -------- ----------- ----------- -----------
Earnings before income taxes... 548,000 198,000 7,499,000 (4,459,000) 3,786,000
Income taxes..................... (1,604,000) 81,000 3,157,000 1,634,000
---------- -------- ----------- ----------- -----------
Net earnings..................... $2,152,000 $117,000 $ 4,342,000 $(4,459,000) $ 2,152,000
========== ======== =========== =========== ===========
</TABLE>
14
<PAGE> 15
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998
-----------------------------------------------------------------------------------------
PENHALL PENHALL
INTERNATIONAL RENTAL PENHALL
CORP. CORP. COMPANY ELIMINATIONS CONSOLIDATED
------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities................ $ (3,452,000) $(14,326,000) $ 3,803,000 $(700,000) $(14,675,000)
------------ ------------ ----------- --------- ------------
Cash flows from investing activities:
Proceeds from sale of assets... 9,000 59,000 53,000 121,000
Capital expenditures.............. (762,000) (800,000) (1,775,000) (3,337,000)
------------ ------------ ----------- --------- ------------
Net cash used in
investing activities............. (753,000) (741,000) (1,722,000) (3,216,000)
------------ ------------ ----------- --------- ------------
Cash flows from financing activities:
Due to (from) affiliates.......... (28,228,000) 29,096,000 (868,000) --
Borrowings under long-term debt... 20,000,000 3,495,000 23,495,000
Repayments of long-term debt...... -- (16,603,000) (3,000) (16,606,000)
Paydown on notes payable to
stockholders..................... -- (48,000) -- (48,000)
Borrowings on Senior Notes........ 100,000,000 -- -- 100,000,000
Book overdraft.................... -- -- -- --
Debt issuance costs............... (5,205,000) -- -- (5,205,000)
Dividends paid.................... (700,000) -- -- 700,000 --
Proceeds from issuance of common
stock............................ 399,000 -- -- 399,000
Repurchase of common stock........ (93,050,000) -- -- (93,050,000)
Issuance of Series A Preferred
Stock............................ 10,427,000 -- -- 10,427,000
Issuance of Series B Preferred
Stock............................ 237,000 -- -- 237,000
----------- ------------ ----------- --------- ------------
Net cash provided by
(used in) financing
activities................. 3,880,000 15,940,000 (871,000) 700,000 19,649,000
----------- ------------ ----------- --------- ------------
Net increase (decrease)
in cash.................... (325,000) 873,000 1,210,000 1,758,000
Cash at beginning of period......... (100,000) 542,000 (208,000) 234,000
----------- ------------ ----------- --------- ------------
Cash at end of period............... $ (425,000) $ 1,415,000 $ 1,002,000 $ -- $ 1,992,000
=========== ============ =========== ========= ============
</TABLE>
15
<PAGE> 16
PENHALL INTERNATIONAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999
------------------------------------------------------------------------------------------
PENHALL
INTERNATIONAL RENTAL PENHALL
CORP. CORP. COMPANY ELIMINATIONS CONSOLIDATED
----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities........... $(3,050,000) $ 99,000 $2,267,000 $ $ (684,000)
----------- ----------- ---------- ---------- ------------
Cash flows from investing
activities:
Proceeds from sale of assets.. -- 16,000 140,000 156,000
Capital expenditures.......... -- (3,000) (3,391,000) (3,394,000)
----------- ----------- ---------- ---------- ------------
Net cash used in
investing activities... -- 13,000 (3,251,000) (3,238,000)
----------- ----------- ---------- ---------- ------------
Cash flows from financing
activities:
Due to (from) affiliates...... 50,000 2,184,000 (2,234,000) --
Book overdraft................ -- -- 3,033,000 3,033,000
Borrowings under long-term debt 5,000,000 -- -- 5,000,000
Repayments of long-term debt.. (2,000,000) -- (204,000) (2,204,000)
----------- ----------- ---------- ---------- ------------
Net cash provided by
financing activities... 3,050,000 2,184,000 595,000 5,829,000
----------- ----------- ---------- ---------- ------------
Net increase (decrease)
in cash................ -- 2,296,000 (389,000) 1,907,000
Cash at beginning of period..... -- 1,853,000 1,232,000 3,085,000
----------- ----------- ---------- ---------- ------------
Cash at end of period........... $ -- $ 4,149,000 $ 843,000 $ $ 4,992,000
=========== =========== ========== ========== ============
</TABLE>
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of the results of operations and financial
condition of Penhall International Corp. (Penhall) should be read in conjunction
with the unaudited condensed consolidated financial statements and footnotes
thereto included in this quarterly report on Form 10-Q and the Company's audited
consolidated financial statements and footnotes thereto included in the annual
report on Form 10-K, filed with the Securities and Exchange Commission.
GENERAL
Penhall was founded in 1957 in Anaheim, California with one piece of
equipment, and today is one of the largest Operated Equipment Rental Services
companies in the United States. Penhall differentiates itself from other
equipment rental companies by providing specialized services in connection with
infrastructure projects through renting equipment along with skilled operators
to serve customers in the construction, industrial, manufacturing, governmental
and residential markets. In addition, Penhall complements its Operated Equipment
Rental Services with fixed-price contracts, which serve to market its operated
equipment rental services business and increase utilization of its operated
equipment rental fleet. Penhall provides its services from 33 locations in
twelve states, with a presence in some of the fastest growing states in terms of
construction spending and population growth.
The operated equipment rental industry is a specialized niche of the highly
fragmented United States equipment rental industry, in which there are
approximately 17,000 companies. Penhall has taken advantage of consolidation
opportunities by acquiring small companies in targeted markets as well as by
establishing new offices in those markets. Since 1994, Penhall has effected
eight strategic acquisitions, including Concrete Coring Company, an Austin-based
company acquired in 1995, Zig Zag Company, a Denver-based company acquired in
1996, Metro Concrete Cutting, an Atlanta-based company acquired in 1996, Highway
Services, a Minnesota-based company acquired in April 1998, Daley Concrete
Cutting, a South Carolina-based division of U.S. Rentals acquired in October
1998, Lipscomb Concrete Cutting, a North Carolina-based company acquired in
November 1998, Diamond Concrete Services, an Alabama-based company acquired in
April 1999, and Prospect Drilling and Sawing, a Minneapolis-based company
acquired in June 1999. During the same period, Penhall established operations in
four new markets by opening offices in Las Vegas, Salt Lake City, Portland and
Dallas.
Penhall derives its revenues primarily from services provided for
infrastructure related jobs. Penhall's Operated Equipment Rental Services are
complemented by long-term fixed-price contracts. Approximately 51% of Penhall's
revenues are derived from highway-related projects, approximately 24% of
revenues are generated from building-related projects and the remainder of
revenues is generated from airport, residential and other projects. The
following table shows the breakdown of the components of revenue for the periods
indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------
1998 1999
-----------------------------------------------
$ % OF TOTAL $ % OF TOTAL
-----------------------------------------------
<S> <C> <C> <C> <C>
Operated Equipment
Rental Services..... $ 24,331 62.5% $32,652 65.5%
Contract Services(1).... 14,582 37.5% 17,205 34.5%
-------- ----- ------- ------
Total Revenues...... $ 38,913 100.0% $49,857 100.0%
======== ===== ======= ======
</TABLE>
(1) Contract services revenues exclude services performed by the operated
equipment rental divisions on long-term contracts.
Revenue growth is influenced by infrastructure change, including new
construction, modification and natural disasters, such as the 1989 and 1994
earthquakes in Northern and Southern California. Other factors that influence
Penhall's operations are demand for operated rental equipment, the amount and
quality of equipment available for rent, rental rates and general economic
conditions. Historically, revenues have been seasonal, as weather conditions in
the spring and summer months result in stronger performance in the first and
fourth fiscal quarters than in the second and third fiscal quarters.
17
<PAGE> 18
The principal components of Penhall's operating costs include the cost of
labor, equipment rental fleet maintenance costs including parts and service,
equipment rental fleet depreciation, insurance and other direct operating costs.
Given the varied, and in some cases specialized, nature of its rental equipment,
Penhall utilizes a range of periods over which it depreciates its equipment on a
straight-line basis. On average, Penhall depreciates its equipment over an
estimated useful life of six years with a 10% residual value.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998
Revenues. Revenues for the three months ended September 30, 1999 ("Interim
2000") were $49.9 million, an increase of $10.9 million or 28.1% over the three
months ended September 30, 1998 ("Interim 1999"). The increase was due primarily
to the acquisitions of Daley Concrete Cutting, Lipscomb Concrete Cutting,
Diamond Concrete Services and Prospect Drilling and Sawing which added $6.2
million of revenues in Interim 2000. In addition, construction markets remained
strong in Interim 2000 in the areas which the Company serves.
The Company operated through 33 locations in twelve states at September 30,
1999, compared to 22 locations in nine states at September 30, 1998. The
Company's equipment fleet grew from 513 to 623 or 21.4% during this period.
Gross Profit. Gross profit totaled $16.0 million in Interim 2000, an
increase of $5.0 million or 45.0% from Interim 1999. Gross profit as a
percentage of revenues increased from 28.4% in Interim 1999 to 32.1% in Interim
2000. The increase in gross profit was due primarily to the increase in revenues
in Interim 2000. The increase in gross profit as a percentage of revenues was
due to better utilization of the equipment rental fleet in Interim 2000.
General and Administrative Expenses. General and administrative expenses
were $8.6 million in Interim 2000 compared to $17.2 million in Interim 1999. As
a percent of revenues, general and administrative expenses were 17.2% in Interim
2000 compared to 44.2% in Interim 1999. Included in general and administrative
expenses in Interim 1999 is $8.9 million of stock compensation expense related
to the Company's Employee Stock Purchase Plans, and $3.1 million in
reorganization costs, which consisted primarily of closing fees and legal
expenses. These expenses occurred as a result of the Recapitalization Mergers
and are non-recurring. Without the compensation expense and reorganization
expenses, general and administrative expenses were $5.2 million, or 13.4% of
revenues in Interim 1999.
The increase in general and administrative expenses (net of Interim 1999
stock related compensation expense and reorganization expenses) in Interim 2000
was the result of the increased revenues and number of operating locations
compared to Interim 1999. The remaining increase is attributable to higher bonus
expense, provision for doubtful accounts and accounting and legal fees in
Interim 2000 as compared to Interim 1999.
Interest Expense. Interest expense was $4.0 million in Interim 2000
compared to interest expense of $2.6 million in Interim 1999. The increase was
due to additional debt incurred by the Company as part of the Transactions in
August 1998. This additional debt consists of $100.0 million of Senior Notes and
the New Credit Facility (see Liquidity and Capital Resources below).
Income Tax Expense (Benefit). The Company recorded an income tax provision
of $1.6 million, or 43% of earnings before income taxes in Interim 2000,
compared to an income tax benefit of $1.7 million, or 20% of loss before income
taxes in Interim 1999. The lower effective tax rate in Interim 1999 is
attributable to certain reorganization costs related to the Transactions which
are not deductible for tax purposes.
18
<PAGE> 19
LIQUIDITY AND CAPITAL RESOURCES
It is anticipated that the Company's principal uses of liquidity will be to
fund working capital, meet debt service requirements and finance the Company's
strategy of pursuing strategic acquisitions and expanding through internal
growth. The Company's principal sources of liquidity are expected to be cash
flow from operations and borrowings under the New Credit Facility. The New
Credit Facility consists of two facilities: (i) a six-year senior secured term
loan facility in an aggregate principal amount equal to $20.0 million (the "Term
Loan Facility"); and (ii) a six-year revolving credit facility in an aggregate
principal amount not to exceed $30.0 million (the "Revolving Credit Facility").
The Company drew $20.0 million of loans under the Term Loan Facility ("Term
Loans") on the closing date of the New Credit Facility in connection with the
Recapitalization. The Term Loans amortize on a quarterly basis commencing in
September 2000 and are payable in installments under a schedule set forth in the
New Credit Facility. Advances made under the Revolving Credit Facility
("Revolving Loans") are due and payable in full on June 15, 2004. The Term Loans
and the Revolving Loans are subject to mandatory prepayments and reductions in
the event of certain extraordinary transactions or issuances of debt and equity
by the Company or any subsidiary of the Company that guarantees amounts under
the New Credit Facility. Such loans are also required to be prepaid with 75% of
the Excess Cash Flow (as such term is defined in the New Credit Facility) of the
Company or, if the Company's Leverage Ratio (as such term is defined in the New
Credit Facility) is less than 4.75 to 1.0, 50% of such Excess Cash Flow.
Cash used in operating activities during Interim 2000 was $0.7 million
compared to $14.7 million during Interim 1999. In Interim 2000, the Company's
higher net earnings, increase in accounts payable and accrued liabilities,
higher depreciation and amortization expense offset by increases in accounts
receivable, accounted for the improved cash from operations compared to Interim
1999. In Interim 1999, the Company's net loss, increase in accounts receivable
and a decrease in accrued compensation, were partially offset by increased
depreciation and amortization expense which resulted in the significant use of
cash from operations during that period.
Management estimates that the Company's annual capital expenditures will be
approximately $20.0 million for fiscal 2000, including replacement and
maintenance of equipment, purchases of new equipment, and purchases of real
property.
Cash used in investing activities was $3.2 million in Interim 2000 as
compared to $3.2 million in Interim 1999. Such cash was primarily used for
capital expenditures of $3.4 million in Interim 2000 and $3.3 in Interim 1999.
Net cash provided by financing activities in Interim 2000 was $5.8 million
as compared to $19.6 million in Interim 1999. In Interim 2000, the Company's
financing activities are primarily a result of borrowings and repayments of
long-term debt and a book overdraft. In Interim 1999, the Company's financing
activities are primarily the result of the Transactions associated with the
Reorganization in August 1998.
Historically, the Company has funded its working capital requirements,
capital expenditures and other needs principally from operating cash flows. As a
result of the Transactions, however, the Company has substantial indebtedness
and debt service obligations. As of September 30, 1999, the Company and its
subsidiaries had approximately $135.8 million of total indebtedness outstanding
(including the Notes) and a stockholders' deficit of approximately $65.5
million. As of September 30, 1999 approximately $20.0 million of additional
borrowing was available under the Company's New Credit Facility.
19
<PAGE> 20
YEAR 2000
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. The Company has
established an informal Year 2000 task force, and has developed a plan which
lists the milestones achieved and yet to be completed to become Year 2000 ready.
A checklist of potential failure sources has been compiled and includes both
information technology and embedded technology systems. The Company has
completed its assessment of its information technology and embedded technology
systems and has identified and taken measures to correct potential failures in
those systems, including a recent upgrade of the hardware and software
components of its information technology system.
The Company's basic business is to provide operator assisted equipment for
rental. As such, management believes the Company's main exposure to Year 2000
(Y2K) issues is to the telephone and radio communication systems needed to take
orders for rental, and for certain larger pieces of equipment (excavators, back
hoes, etc.) which have some level of computer operating controls.
The Company's information technology systems include it's accounting
systems, billing, accounts payable, and equipment utilization reports. The
Company has completed testing of all information technology systems, and
believes the systems are Y2K compliant. In addition, major vendors for the
Company's computer hardware, software and data communications network have
informed the Company that their products are Y2K compliant.
The Company's non-information technology systems include primarily rental
location alarm systems, gasoline pumps, radios, telephones and certain types of
heavy equipment. The Company is currently conducting a review for Y2K compliance
for the major non-information technology systems, which it expects to complete
by December 1, 1999. This review includes determining if respective vendors of
the non-information technology systems are also Y2K compliant.
The Company has spent less than $50,000 as of September 30, 1999, including
the cost of outside consultants, to conduct the Y2K compliance reviews and
tests. The Company does not expect to incur additional substantial costs to
complete its Y2K reviews and remediation, if required.
The primary operational risk to the Company is that communication systems
on which the Company relies will not function properly, or that certain heavy
equipment will not function properly, after December 31, 1999. The primary
information technology risk is that accounting data, including billing customers
and paying vendors, will not function properly via computer after December 31,
1999. The Company believes it has adequate contingency plans to mitigate the
aforementioned potential Y2K related problems. The Company does not believe
potential Y2K problems would have a significant, long-term negative effect on
its operations or information technology.
Although Penhall is uncertain as to the extent its customers may be
affected by Year 2000 issues that require commitment of significant resources
and may cause disruptions in its customers' businesses, Penhall does not believe
it has a material relationship with any one third party that would have a
significant impact on Penhall if that third party was not Year 2000 ready.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
MARKET RISK
The Company is exposed to interest rate changes primarily as a result of
its notes payable, including Senior Notes, Term Loan and Revolving Loan which
are used to maintain liquidity and fund capital expenditures and expansion of
the Company's operations. The Company's interest rate risk management objective
is to limit the impact of interest rate changes on earnings and cash flows and
to lower its overall borrowing costs. To achieve its objectives the Company
borrows primarily at fixed rates and has the ability to choose interest rates
under the Term Loan and Revolving Loan. The Company does not enter into
derivative or interest rate transactions for speculative purposes.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-------------------------------------------------
2000 2001 2002 2003 2004 THEREAFTER TOTAL VALUE
---- ---- ---- ---- ---- ----------------------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate debt 3,759 960 490 3 4 $100,179 $105,395 $103,395
Average interest rate 12.00%
Variable rate LIBOR debt (1) 0 3,000 5,000 6,000 15,500 0 29,500 29,500
Current interest rate (1) 7.42%
</TABLE>
- -------------------
(1) The Company has different interest rate options for its variable rate debt.
See Footnote 2 in the condensed consolidated financial statements for
additional information.
20
<PAGE> 21
Part II - Other Information
Items 1-5 are not applicable
Item 6. Exhibits and Reports on Form 8-K.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Penhall International Corp.
/s/ JOHN T. SAWYER
------------------------------
John T. Sawyer
Chairman of the Board
President and Chief
Executive Officer
Date: November 15, 1999
22
<PAGE> 23
EXHIBIT INDEX
Exhibit 27.1 FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 4,992
<SECURITIES> 0
<RECEIVABLES> 40,762
<ALLOWANCES> (1,896)
<INVENTORY> 1,926
<CURRENT-ASSETS> 52,497
<PP&E> 103,644
<DEPRECIATION> (45,686)
<TOTAL-ASSETS> 125,232
<CURRENT-LIABILITIES> 30,959
<BONDS> 131,362
21,573
23,417
<COMMON> 10,000
<OTHER-SE> (88,067)
<TOTAL-LIABILITY-AND-EQUITY> 125,232
<SALES> 49,857
<TOTAL-REVENUES> 49,857
<CGS> 33,843
<TOTAL-COSTS> 33,843
<OTHER-EXPENSES> 8,577
<LOSS-PROVISION> 301
<INTEREST-EXPENSE> 3,952
<INCOME-PRETAX> 3,786
<INCOME-TAX> 1,634
<INCOME-CONTINUING> 2,152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,152
<EPS-BASIC> (.78)
<EPS-DILUTED> (.78)
</TABLE>
