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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 January 24, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_________to_________
Commission file number 1-4737
------
HIGH VOLTAGE ENGINEERING CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS
(State or other jurisdiction of incorporation)
04-2035796
(I.R.S. Employer Identification No.)
401 Edgewater Place, Suite 680, Wakefield, MA 01880
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (781) 224-1001
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 No X
Number of Common Shares outstanding at February 26, 1998: 1,082.7429 shares.
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CONTENTS
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PAGE
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PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
Consolidated Balance Sheets January 24, 1998 (unaudited) and
April 26, 1997................................................................................... 3
Consolidated Statements of Operations for the Three and Nine Months ended
January 24, 1998 (unaudited) and January 25, 1997 (unaudited).................................... 4
Consolidated Statements of Cash Flows Nine Months ended
January 24, 1998 (unaudited) and January 25, 1997 (unaudited).................................... 5
Notes to Consolidated Financial Statements....................................................... 6
ITEM 2. - MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..... 9
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS.......................................................................... 13
ITEM 2. - CHANGES IN SECURITIES...................................................................... 13
ITEM 3. - DEFAULTS UPON SENIOR SECURITIES............................................................ 13
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES.............................................. 13
ITEM 5. - OTHER INFORMATION.......................................................................... 13
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K........................................................... 14
SIGNATURES................................................................................................ 15
</TABLE>
2
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PART I
FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
HIGH VOLTAGE ENGINEERING CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 26, JANUARY 24,
1997 1998
--------- -----------
(Unaudited)
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,542 $ 15,105
Restricted cash 2,210 3,973
Accounts receivable - net 33,333 42,918
Refundable income taxes - 2,157
Inventories 22,334 39,146
Prepaid expenses and other current assets 1,164 1,676
-------- --------
Total current assets 60,583 104,975
PROPERTY, PLANT AND EQUIPMENT 30,966 49,130
INVESTMENT IN JOINT VENTURE - 1,843
ASSETS HELD FOR SALE 5,248 3,858
OTHER ASSETS - Net 7,432 16,598
COST IN EXCESS OF NET ASSETS ACQUIRED 9,358 16,883
-------- --------
$113,587 $193,287
======== ========
LIABILITIES AND STOCKHOLDERS DEFICIENCY
CURRENT LIABILITIES:
Current maturities of long-term debt obligations $ 2,609 $ 1,308
Foreign credit line 2,284 2,610
Accounts payable 17,199 17,290
Accrued interest 8,394 6,781
Accrued liabilities 12,000 21,955
Advance payments by customers 5,294 6,605
Federal, foreign and state income taxes payable 1,261 1,270
Deferred income taxes 2,171 2,322
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Total current liabilities 51,212 60,141
REDEEMABLE PUT WARRANTS 2,800 2,500
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 80,508 152,997
DEFERRED INCOME TAXES 1,834 4,423
OTHER LIABILITIES 2,495 3,252
COMMITMENT AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK 11,474 29,567
STOCKHOLDERS DEFICIENCY
Common stock 1 1
Paid-in-capital 17,326 19,527
Accumulated deficit (54,104) (81,155)
Common stock warrants - 2,200
Cumulative foreign currency translation adjustment 41 (166)
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Total stockholders deficiency (36,736) (59,593)
-------- --------
$113,587 $193,287
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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HIGH VOLTAGE ENGINEERING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
JANUARY 26, JANUARY 24, JANUARY 25, JANUARY 24,
1997 1998 1997 1998
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 39,366 $ 60,911 $122,046 $164,976
Cost of sales 26,541 38,457 81,249 105,962
------- ------- ------- -------
Gross profit 12,825 22,454 40,797 59,014
Administrative and selling expenses 8,828 14,107 26,897 38,755
Research and development expenses 2,443 4,879 6,962 17,731
Reimbursed environmental and litigation
costs - net 228 138 228 458
Other 142 87 788 44
------- ------- ------- -------
Income from operations 1,184 3,243 5,922 2,026
Interest expense 2,731 4,374 8,250 14,291
Interest income (64) (263) (206) (476)
------- ------- ------- -------
Loss from operations before income
taxes and extraordinary item (1,483) (868) (2,122) (11,789)
Income taxes (credit) (1,780) 996 (2,522) 2,769
------- ------- ------- -------
Income (loss) from operations before
extraordinary item 297 (1,864) 400 (14,558)
Extraordinary loss, net of income taxes - - (259) (7,861)
------- ------- ------- -------
NET INCOME (LOSS) 297 (1,864) 141 (22,419)
Preferred dividends (119) (1,029) (356) (2,057)
Accretion of redeemable preferred stock - (95) - (175)
------- ------- ------- -------
Net loss applicable to common stockholders $ 178 $ (2,988) $ (215) $ (24,651)
======= ======= ======= =======
Net income (loss) per common share:
Operations $ 178.00 $ (2,759.00) $ 44.00 $(15,975.26)
Extraordinary item - - (259.00) (7,479.54)
Net income (loss) applicable
to common stockholders $ 178.00 $ (2,759.00) $ (215.00) $(23,454.80)
======= ========== ======== ==========
Net income (loss) per common share - assuming
dilution:
Operations $ 155.73 $ (2,415.52) $ 38.50 $(12,331.39)
Extraordinary item - - (226.60) (6,545.38)
Net income (loss) applicable
to common stockholders $ 155.73 $ (2,415.52) $ (188.10) $(18,876.77)
======= ========== ======== ==========
Weighted average common stock outstanding 1,000 1,083 1,000 1,051
Weighted average common stock and dilutive
equivalents outstanding 1,143 1,237 1,143 1,201
======= ========== ======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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HIGH VOLTAGE ENGINEERING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
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NINE MONTHS ENDED
--------------------------
JANUARY 25, JANUARY 24,
1997 1998
----------- -----------
(Unaudited) (Unaudited)
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Increase (decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Net income (loss) $ 141 $(22,419)
Adjustments to reconcile net loss to net cash used
in operating activities:
Extraordinary item, net of income taxes - 1,574
Depreciation and amortization 3,211 6,076
Write-off of purchased research and development - 5,800
Non-cash interest 1,370 3,231
Deferred income taxes (803) (3,496)
Undistributed earnings of affiliate (99) (131)
(Gain) loss on sale of assets (246) (1,417)
Other - -
Change in assets and liabilities, net of effects of
business acquisitions:
Accounts receivable 1,325 6,079
Inventories (3,345) (1,569)
Prepaid expenses and other current assets 372 372
Other assets (230) 28
Accounts payable, accrued interest and accrued
liabilities (3,716) (4,459)
Advance payments by customers 1,099 (2,787)
Federal, foreign and state income taxes payable (3,307) 974
------ --------
Net cash used in operating activities (4,228) (12,144)
------ --------
Cash flows from investing activities:
Additions to property, plant and equipment (2,945) (4,336)
Proceeds from sales of assets, net of expenses 157 3,352
Acquisition of Physical Electronics, net of cash acquired - (54,272)
Other 49 (166)
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Net cash used in investing activities (2,739) (55,422)
------ --------
Cash flows from financing activities:
Cash overdraft (1,196) 269
Proceeds from the issuance of long-term
obligations, net of issuance costs 63,079 129,466
Proceeds from the issuance of preferred stock,
net of issuance costs - 29,392
Proceeds from the issuance of common stock - 2,200
Proceeds from the issuance of redeemable put
warrants and common stock warrants 2,413 2,200
Net proceeds from foreign credit line (217) 326
Net (increase) decrease in restricted cash 1,406 (1,763)
Net proceeds/(payments) under senior credit agreement 4,444 (7,702)
Distribution to fund Letitia Common Stock repurchase - (2,250)
Redemption of redeemable put warrants - (2,500)
Redemption of redeemable preferred stock - (11,621)
Principal payments on long-term obligations (63,812) (56,649)
------ --------
Net cash provided by financing activities 6,117 81,368
------ --------
Effect of foreign exchange rate changes on cash (55) (239)
------ --------
Net (decrease) increase in cash and cash equivalents (905) 13,563
Cash and cash equivalents, beginning of the period 2,107 1,542
------ --------
Cash and cash equivalents, end of the period $ 1,202 $ 15,105
====== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 5,116 $ 12,756
Income taxes 604 1,635
Supplemental Schedule of Non-cash Investing and Financing
Activities:
Preferred stock dividends-in-kind and issuable preferred
stock dividends-in-kind $ 356 $ 322
Leased asset additions 438 276
</TABLE>
See accompanying notes to consolidated financial statements.
5
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HIGH VOLTAGE ENGINEERING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements of High Voltage Engineering
Corporation and Subsidiaries (the "Company" or "HVE") include accounts of the
Company and its direct and indirect subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation. The condensed
consolidated financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC") and, in the
opinion of management include all adjustments, which are of a normal and
recurring nature, necessary to fairly present the financial position for the
interim periods presented.
The condensed consolidated financial statements do not contain all
disclosures normally included in financial statements normally prepared in
accordance with generally accepted accounting principles pursuant to SEC rules
and regulations. These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements of the Company as
of and for the fiscal year ended April 26, 1997, as filed with the SEC on
November 10, 1997, and are not necessarily indicative of the results that may be
expected for the year ending April 25, 1998.
NOTE 2 - INVENTORIES
Inventories consisted of the following as of:
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<CAPTION>
April 26, January 24,
1997 1998
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Raw materials $14,912 $17,832
Work-in-process 3,977 11,825
Finished goods 3,445 9,489
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Total $22,334 $39,146
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NOTE 3 - ACQUISITION AND OTHER TRANSACTIONS
On August 8, 1997, the Company closed a Purchase and Sale Agreement
("Agreement") among the Company, PHI Acquisition Holdings, Inc. ("PHI") and
Chase Venture Capital Associates, L.P., the principal shareholder of PHI
Acquisition Holdings, Inc., whereby, the Company acquired PHI through a merger,
accounted for as a purchase transaction, of a wholly-owned subsidiary of the
Company with and into PHI Acquisition Holdings, Inc. Under the Agreement, the
current shareholders of PHI received in exchange for their stock an aggregate of
$54.5 million plus an amount of income tax refunds, if any, the Company receives
after the closing of the Merger of taxes paid by PHI for periods prior to the
closing of the Merger. The $54.5 million was reduced by the payment of PHI's
debt, certain transaction costs, and contractual payments to the current and
former Chief Executive Officers of PHI. Based on management's estimate of the
fair value of assets and liabilities purchased, the Company charged historical
earnings $5.8 million for purchased research and development and $1.0 million
from the shipments of purchased finished goods inventory which had been
revalued.
In connection with the acquisition described above, the Company completed a
Rule 144A offering in the amount of $170.2 million consisting of $135.0 million
of Senior Notes, due in 2004 and $35.2 million representing 33,000 units
consisting of 33,000 shares of Series A Senior Redeemable Preferred Stock,
warrants to purchase 82.7429 shares of common stock of the Company and 82.7429
shares of common stock of the Company. The Company also entered into a $25.0
million revolving credit facility. Both of these financings closed
simultaneously with the acquisition, and were used to finance the acquisition,
repay certain indebtedness and all existing redeemable Preferred Stock,
repurchase certain existing put warrants, make distributions to Letitia,
extinguish BBC CIP Agreement, pay fees and for general corporate purposes.
Upon consummation of the Rule 144A offering, the Company recorded an
extraordinary loss of $7.9 million, net of income taxes of $4.8 million, for
premiums, prepayment penalties and the write-off of deferred financing costs
related to the retired indebtedness. In connection with the offering, the
Company repurchased Subordinated Notes Warrants entitling the holders thereof to
purchase 71.43 shares of the Company's Common Stock for $2.5 million. As a
result, the Company charged historical earnings $2.2 million to adjust the
carrying value of the Subordinated Notes Warrants. Under the terms of the CIP
Agreements, the consent of the CIP holder was required for consummation of
certain transactions. By agreement, dated July 26, 1997, the Company, Letitia
and BancBoston Capital, Inc. ("BBC"), a CIP holder, effective on the closing of
the Rule 144A offering agreed to extinguish the CIP Agreement for a cash payment
of $6.8 million. As a result of the Agreement, the Company recorded interest
expense of approximately $951 during the nine months ended January 24, 1998.
6
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The following unaudited pro forma financial data illustrates the
estimated effects as if the acquisition of PHI and the Rule 144A offering had
been completed as of the beginning of the periods presented, after including
the impact of certain adjustments, such as amortization, depreciation,
interest expense, and certain purchase accounting adjustments. The effects of
certain nonrecurring charges to historical earnings, resulting from the
transactions, have been reversed. The pro forma earnings from operations
before extraordinary item and the pro forma net loss applicable to the common
stockholders, for the purpose of calculating pro forma loss per share, is net
of pro forma preferred stock dividends of $1,061 and $1,029 and the accretion
of redeemable preferred stock of $78 and $95 for the three months ended
January 25, 1997 and January 24, 1998, respectively. The pro forma earnings
from operations before extraordinary item and the pro forma net loss
applicable to the common stockholders, for the purpose of calculating pro
forma loss per share, is net of pro forma preferred stock dividends of $3,183
and $3,183 and the accretion of redeemable preferred stock of $233 and $233
for the nine months ended January 25, 1997 and January 24, 1998, respectively.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------ -------------------------
January 25, January 24, January 25, January 24,
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 56,955 $ 60,911 $ 168,746 $ 188,198
Loss from operations before
extraordinary item (63) (1,864) (2,247) (6,590)
Extraordinary item, net of income
taxes -- -- (259) --
Net loss applicable to common
stockholders (1,204) (2,988) (5,922) (10,006)
Net income (loss) per common share:
Operations $ (1,204.00) $ (2,759.00) $ (5,663.00) $ (9,520.46)
Extraordinary item -- -- (259.00) --
Net income (loss) applicable
to common stockholders $ (1,204.00) $ (2,759.00) $ (5,922.00) $ (9,520.46)
========== ========== ========== ==========
Net income (loss) per common share -
assuming dilution:
Operations $ (1,053.37) $ (2,415.52) $ (4,954.51) $ (6,682.76)
Extraordinary item -- -- (226.60) --
Net income (loss) applicable
to common stockholders $ (1,053.37) $ (2,415.52) $ (5,181.10) $ (6,682.76)
========== ========== ========== ==========
Weighted average common stock outstanding 1,000 1,083 1,000 1,051
Weighted average common stock and dilutive
equivalents outstanding 1,143 1,237 1,143 1,201
===== ===== ===== =====
</TABLE>
The pro forma results are not necessarily indicative of the actual results
as if the transactions had been in effect for the entire periods presented. In
addition, they are not intended to be a projection of future results.
NOTE 4 - LITIGATION, CLAIMS AND ENVIRONMENTAL MATTERS
The Company is obligated to clean-up three sites relating to former
manufacturing facilities and has accrued the estimated costs of remediation.
Estimated costs are determined by external and internal environmental
remediation experts. The estimated costs of remediation of one site is based on
its estimated present value. The discount rate used was 6%. There are no
assurances that additional costs will not be incurred or that significant
changes in estimates or changes in environmental laws will not require
additional amounts to be accrued. The Company believes that it can continue to
meet these environmental standards without material adverse effect on its
financial condition. The completion of the clean-up relating to these sites is
estimated at 10 years. The expected future payments for the environmental
liabilities is $303 in fiscal year 1998, $259 in fiscal year 1999 through
fiscal 2001 and $1,469 thereafter. In connection with these matters, the
Company has posted financial assurances that the remediation will be completed
in the form of $1,520 letters of credit and a lien of $1,200 on certain real
property held for sale.
The nature of the Company's business is such that it is regularly involved
in legal proceedings incidental to its business. Although the Company believes
that none of these proceedings is material, the Company, along with six others,
is a defendant in an action commenced in November 1996 by Chicago-Dubuque
Foundry Corporation ("Chicago-Dubuque") and its property insurer, Employers
Mutual Casualty Co. in Iowa state court. The suit concerns a May 1, 1996 fire
that destroyed a Chicago-Dubuque facility located in East Dubuque, Illinois.
According to the complaint, defective products sold by one or more defendants
(including, it is alleged, the Company's Anderson division) to Chicago-Dubuque,
or incorporated in products sold by others to Chicago-Dubuque, caused or
contributed to the casualty. Chicago-Dubuque has not yet quantified the amount
7
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of damages sought, but its property insurer has stated that damages for
property damage will be in excess of $11 million. No estimate of economic
losses caused by business interruption has been made by any plaintiff. At the
present time, the Company is not aware of any personal injuries or deaths
caused by the fire and the Company has been informed that the State Fire
Marshall who investigated the fire has, to date, not been able to render an
opinion as to the cause of the fire. The Company has placed it's insurers on
notice of the claim and at least one insurer has retained legal counsel to
defend the Company. In light of the preliminary stage of the proceedings, the
Company is unable to assess the likelihood of liability in this action, the
amount of any damages that may be assessed against the Company, and the
extent to which any assessed liability will be covered by the Company's
insurance.
Natvar received a sixty (60) day notice of intent to sue on December 11,
1996 from a California citizens group regarding alleged violations of notice
and labeling requirements under California Proposition 65, a "right to know"
provision intended to give consumers clear and reasonable warnings of the
presence of certain potentially hazardous substances in products. Natvar and
the citizens group have signed an agreement delaying the deadline for filing
any lawsuit. The relevant, regulations provide that violations of Proposition
65 are subject to civil penalties of up to $2,500 per day retroactive to the
beginning of an alleged violation of Proposition 65. The substance contained
in Natvar's products and implicated in the notice of intent to sue has been
listed under Proposition 65 since 1988, and Natvar has sold products
containing this substance in California since that time. The Company is
currently conducting fact-finding to determine whether it believes a
violation of Proposition 65 has occurred. If a lawsuit is filed, the Company
intends to defend it vigorously; however, the Company believes, based on
results in similar cases and a preliminary review of the relevant facts, that
any such suit could be settled for substantially less than the maximum
penalty available under the statute. The Company does not believe that it is
likely that it will incur material liability as a result of any lawsuit
arising in connection with this matter.
In February 1997, the Company commenced litigation in Massachusetts
federal court against TVM Group, Inc., ("TVM") of Fremont, California, and
TVM's principal stockholder, Mr. T. Lyn Morris, seeking damages on account of
breach by TVM and Mr. Morris of a December 1996 agreement pursuant to which a
subsidiary of the Company was to acquire TVM. In April 1997, TVM and Mr.
Morris filed a counterclaim alleging breaches by the Company and its
subsidiary of that agreement and seeking damages. In September 1997, TVM and
Mr. Morris moved to amend their counter claim to add, inter alia, a claim for
fraudulent inducement. TVM and Mr. Morris are seeking actual damages in an
amount of $350,000 plus an unspecified amount of acquisition costs, punitive
and consequential damages. In light of the preliminary stage of the
proceedings, the Company is unable to assess the likelihood of liability in
this action. However, the Company believes the counterclaim to be without
merit.
Certain other claims, suits and complaints have been filed or are
pending against the Company. In the opinion of the Company, all such matters
are without merit or are of such kind, or involve such amounts, as would not
have a material effect on the consolidated financial position or the results
of operations of the Company if disposed of unfavorably. If estimates change,
there is no assurances these items will not require additional accruals by
the Company.
NOTE 5 - NEW ACCOUNTING PRONOUNCEMENTS
Earnings per Share
During 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share", which changes the calculation of earnings per share to be more
consistent with countries outside the United States. In general, the
statement requires two calculations of earnings per share to be disclosed,
basic EPS and diluted EPS. Basic EPS is to be computed using only weighted
average shares outstanding, while diluted EPS is computed considering the
dilution of options and warrants. This statement has been adopted by the
Company all prior, interim and annual periods restated.
8
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Other Pronouncements
During 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income", which establishes standards for the reporting and display of
comprehensive income and SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information", which introduces a new model for segment
reporting. The Company does not believe adoption will change its financial
statement disclosures.
NOTE 6 - SUBSEQUENT EVENTS
On November 10, 1997, the Company filed amended registrations statements
with the SEC covering the 10-1/2% Senior Notes due 2004 ("Existing Notes")
and the 12-1/2% Series A Redeemable Preferred Stock ("Series A Preferred
Stock"). The registration statements relating to these securities became
effective on November 18, 1997. The holders of the Existing Notes and Series
A Preferred Stock exchanged these securities for the New Notes and Exchange
Preferred Stock having terms substantially identical to the Existing Notes
and Series A Preferred Stock. This offer expired on January 16, 1998. The
holders of the Existing Securities which did not tender will continue to hold
such securities. The holders of the securities will be subject to the
existing restrictions upon transfer thereof. The Company has no further
obligation to such holders to provide for the registration under the
Securities Act of the Existing Notes or Series A Preferred Stock held by them.
ITEM 2. - MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This report may make forward-looking statements regarding future events
or the future financial performance of the Company. We caution you that these
statements are only predictions and that actual events or results may differ
materially. We refer you to documents the Company files from time to time
with the SEC, and specifically the latest "Risk Factors" section, in the
Registration Statement on Form S-4 on file. This document identifies and
describes important factors that can cause the after-results to differ
materially from those contained in any forward-looking statements we may make.
Results of Operations
Three Months Ended January 24, 1998 Compared to Three Months Ended January 25,
1997
Net sales increased $21.5 million, or 54.7%, from $39.4 million in the
third quarter of Fiscal 1997 to $60.9 million in third quarter of Fiscal
1998. This increase was primarily attributable to: (i) $15.3 million in
revenues due to the acquisition of Physical Electronics on August 8, 1997,
(ii) a $1.8 million, or 8.9%, increase in sales at Robicon primarily due to
the continued growth in sales of medium voltage VFD's, (iii) an increase of
$1.7 million at HVE/Europa attributable to the shipment of a particle
accelerator system during the quarter compared to no systems shipped in the
year ago quarter due to the timing of customer requested delivery dates, (iv)
an increase of $1.4 million, or 28.6%, at Anderson due to continued growth in
the uninterruptible power supply markets as well as telecommunications and
networking equipment markets in North America and Europe, (v) an increase of
$0.7 million, or 10.1%, at Datcon due to higher shipments in both the U.S.
and Europe, (vi) an increase of $483,000, or 13.6%, at Natvar due to
increased medical shipments compared to a weak year ago period, and (vii) an
increase of $198,000, or 6.2%, at General Eastern for which approximately 60%
of the growth was attributable to the acquisition of certain assets of a
small competitor near the end of the first quarter of Fiscal 1998.
Gross profit increased $9.6 million, or 75.1%, from $12.8 million in the
third quarter of Fiscal 1997 to $22.4 million in third quarter of Fiscal
1998. The increase included $6.1 million due to the acquisition of Physical
Electronics. The remaining increase of $3.5 million was primarily
attributable to higher shipments at all operating units as well as improved
gross margin rates at all operating units. The gross margin rate increased
4.3%, from 32.6% to 36.9%, as a result of the higher shipments discussed
above, as well as productivity improvements at Robicon and Datcon compared to
the year ago period.
Administrative and selling expenses at the Company increased $5.3
million over the year ago quarter, or 59.8%, including $2.8 million from the
acquisition of Physical Electronics, $1.0 million at Robicon primarily due to
a step level increase in information technology and other selling and
administrative costs to support higher sales, approximately $900,000 in
higher selling and administrative costs at Datcon and Anderson to support
higher sales levels, as well as $470,000 of severance accrued for certain
former executives of the Company. Administrative and selling expenses
increased as a percent of sales from 22.4% to 23.2% during the periods
compared, as a result of the factors discussed above.
Engineering, research and development expenses increased $2.5 million,
from $2.4 million to $4.9 million, including $2.1 million attributable to the
acquisition of Physical Electronics. As a percentage of net sales, such
expenditures increased from 6.2% to 8.0% as a result of the inclusion of
Physical Electronics.
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Depreciation and amortization increased by $1.4 million from $1.0
million. This increase includes $1.1 million attributable to Physical
Electronics and continued capital investment in automation and information
technology throughout the Company during the past twelve months.
Other expenses, including reimbursed environmental and litigation costs,
declined from $370,000 to $225,000. The current year includes litigation
costs associated with a 1997 aborted acquisition of $0.8 million and a gain
of $0.6 million on the sale of a vacant building in Boston, Massachusetts, as
well as a changes in estimates on certain environmental cleanup costs.
As a result of the above items, HVE's income from continuing operations
increased from $1.2 million in the year ago quarter to $3.2 million in the
current quarter.
Interest expense increased $1.6 million, or 60.2%, to $4.4 million in
the third quarter of Fiscal 1998 compared to the year ago period, due to
higher average indebtedness associated with the sale of Senior Notes on
August 8, 1997. Interest income increased $199,000 to $263,000 due to higher
average cash balances after the offering.
Income tax provisions increased $2.8 million, from a benefit of $1.8
million in the third quarter of Fiscal 1997 to expense of $1.0 million in the
third quarter of Fiscal 1998. The tax expense in the third quarter primarily
related to foreign and state income tax accruals. The increase also
reflects a change in the valuation allowance due to a revaluation of the
realization of net operating loss carryforwards.
Income from operations before extraordinary items decreased $2.2 million
to a loss of $1.9 million in the third quarter of Fiscal 1998 as a result of
the factors discussed above.
Nine Months Ended January 24, 1998 Compared to Nine Months Ended January 25,
1997
Net sales increased $42.9 million, or 35.2%, from $122.0 million for the
nine months ended January 25, 1997 to $165.0 million for the nine months
ended January 24, 1998. This increase was primarily attributable to: (i)$26.6
million in revenues due to the acquisition of Physical Electronics on August
8, 1997, (ii) a $8.9 million, or 15.2%, increase in sales at Robicon
primarily due to the continued growth in sales of medium voltage VFDs, (iii)
an increase of $2.8 million, or 18.0%, at Anderson due to continued growth in
the uninterruptible power supply markets as well as telecommunications and
networking equipment markets primarily in North America, (iv) an increase of
$2.5 million, or 10.7%, at Datcon due to higher shipments in both the U.S.
and Europe, (v) an increase of $1.4 million, or 12.9%, at Natvar due to
increased medical shipments compared to a weak year ago period, and (vi) an
increase of $0.9 million, or 10.4%, at General Eastern for which
approximately $300,000 was attributable to the acquisition of certain assets
of a small competitor near the end of the first quarter of Fiscal 1998.
Gross profit increased $18.2 million, or 44.7%, from $40.8 million for
the nine months ended January 25 1997 to $59.0 million for the nine months
January 24, 1998. The increase included $9.5 million due to the acquisition
of Physical Electronics which included a $1.0 million charge to cost of sales
resulting from the shipments of finished goods inventory which had been
revalued in accordance with purchase accounting procedures. The remaining
increase of $8.7 million was primarily attributable to higher shipments at
all operating units except for HVE/Europa as well as an improved gross margin
rates at all operating units except General Eastern. The gross margin rate
increased 2.4%, from 33.4% to 35.8%, as a result of the higher shipments
discussed above, as well as productivity improvements at Robicon, Datcon,
Anderson and Natvar compared to the year ago period.
Administrative and selling expenses at the Company increased $11.9
million over the year ago period, or 44.1%, including $5.6 million from the
inclusion of Physical Electronics, $3.0 million at Robicon primarily due to a
step level increase in information technology and other selling and
administrative costs to support higher sales, as well as $2.7 million due to
higher selling and administrative costs throughout the remainder of the
Company to support higher sales, as well as $0.6 million of severance accrued
for certain former executives of the Company. Administrative and selling
expenses increased as a percent of sales from 22.0% to 23.5% during the
periods compared, as a result of the factors discussed above.
Engineering, research and development expenses increased $10.8 million,
from $7.0 million to $17.7 million which was primarily attributable to $9.9
million at the newly acquired Physical Electronics, including $5.8 million of
purchased research and development as allocated from the purchase price which
was expensed during the second quarter in accordance with purchase accounting
procedures. The remaining increases included approximately $0.6 million
attributable to increased new product application development at Datcon.
Depreciation and amortization increased $2.9 million from $3.2 million
to $6.1 million, including $2.4 million attributable to Physical Electronics
and continued capital investment in information technology and automation
throughout the Company during the past twelve months.
10
<PAGE>
Other expenses, including reimbursed environmental and litigation costs,
declined from $1.0 million to $0.5 million during the periods compared. The
year ago period included $0.8 million provision to write-off costs associated
with an aborted acquisition and related offering costs. The current year
costs include litigation costs of $1.0 million associated with that aborted
acquisition as well a gain of $0.6 million from the sale of a vacant building
in Boston Massachusetts, as well as a change in estimate on certain
environmental cleanup costs.
As a result of the above items, HVE's income from continuing operations
decreased by $3.9 million, from $5.9 million in the year ago period to $2.0
million for the nine months ended January 24, 1998.
Interest expense increased $6.0 million to $14.3 million for the nine
months ended January 24, 1998 compared to $8.3 million in the year ago period
due to higher average indebtedness associated with the sale of Senior Notes
on August 8, 1997 expense, accretion of redeemable put warrants in the amount
of $2.2 million recorded in the first quarter of Fiscal 1998 ,as well as a
$1.0 million provision for contingent interest payments recorded in the first
quarter of Fiscal 1998. Interest income increased $270,000 to $476,000
primarily due to the higher average cash balances after the offering.
Income tax provisions increased $5.3 million, from a benefit of $2.5
million for the nine months ended January 25, 1997 to a provision of $2.8
million for the nine months ended January 24, 1998. The increase primarily
reflects a change in the valuation allowance due to a revaluation of the
realization of net operating loss carryforwards, net of income tax benefits
allocated to extraordinary items.
Income from operations before extraordinary items decreased $15.0
million to a loss of $14.6 million for the nine months ended January 24, 1998
compared to the year ago period. Extraordinary losses on debt
extinguishment, net of income taxes, in the amounts of $259,000 and $7.9
million were recorded in Fiscal 1997 and 1998, respectively.
The foregoing factors contributed to an increase in net loss of $22.6
million from income of $141,000 for the nine months ended January 25, 1997 to
a loss of $22.4 million for the nine months ended January 24, 1998.
Liquidity and Capital Resources
The Company's liquidity needs are primarily for working capital and
capital expenditures. The Company's primary sources of liquidity have been
funds provided by operations and proceeds from financing activities.
On May 9, 1996, the Company entered into the Existing Revolving Credit
Facility and the $10.0 million Senior Term Loan and completed a private
placement of $20.00 million of Senior Secured Notes, $7.0 million of Senior
Unsecured Notes and $25.0 million principal amount of Subordinated Notes
(issue at 82.086% of the principal amount thereof), the net proceeds of which
were used to refinance existing indebtedness. A portion of the net proceeds
to the Company from the offerings were used to repay such indebtedness
including accrued and unpaid interest thereon and $10.1 million associated
prepayment penalties. In connection with the issuance of the Subordinated
Notes, the Company issued to the holders thereof warrants (the "Subordinated
Notes Warrants") representing 12.5% of the fully-diluted HVE Common Stock.
The holders of such warrants have the right, after May 1, 2000, to require
the Company to purchase all or any portion of such warrants or any sharers of
HVE Common Stock issued upon exercise of such warrants at the greater of (i)
a valuation prepared by an independent financial advisor or (ii) a formula
value as defined in the agreement.
On August 8, 1997 the Company consummated a Rule 144A offering in the
amount of $170.2 million consisting of $135.0 million of Senior Notes, due in
2004 and $35.2 million representing 33,000 units consisting of 33,000 shares
of Series A Senior Redeemable Preferred Stock, warrants to purchase 82.7429
shares of common stock of the Company and 82.7429 shares of common stock of
the Company. The Company also entered into a $25.0 million revolving credit
facility with a $5.0 million sublimit for the issuance of standby letters of
credit. In connection with the offerings, the Company repurchased
Subordinated Notes Warrants representing 6.25% of the fully diluted HVE
Common Stock for $2.5 million.
Simultaneous with the offering the Company closed a Purchase and Sale
Agreement ("Agreement") among the Company, PHI Acquisition Holdings, Inc. and
Chase Venture Capital Associates, L.P., the principal shareholder of PHI
Acquisition Holdings, Inc., whereby, the Company acquired Physical
Electronics through a merger of a wholly-owned subsidiary of the Company with
and into PHI Acquisition Holdings, Inc. Under the Agreement, the current
shareholders of Physical Electronics received in exchange for their stock an
aggregate of $54.5 million plus an amount of income tax refunds, if any, the
Company receives after the closing of the Merger of taxes paid by Physical
Electronics for periods prior to the closing of the Merger. The $54.5 million
was reduced by the payment of Physical Electronics' debt, certain transaction
costs, and contractual payments to the current and former Chief Executive
Officers of Physical Electronics.
The Company does not anticipate any significant principal payment
obligations under any of its outstanding indebtedness prior to maturity of
the senior notes except with respect to the New Revolving Credit Facility
which has a term of five years. The ability of the Company to satisfy its
obligations under existing indebtedness and preferred stock will be primarily
dependent upon the future financial and operating performance of its
operating units and upon the Company's ability to renew or refinance
borrowings or to raise additional equity capital as necessary.
11
<PAGE>
The Company's working capital was $9.4 million and $44.8 million at
April 26, 1997 and January 24, 1997, respectively. The $35.5 million increase
in working capital is partially attributable to an $13.6 million increase in
cash on hand as a result of the Rule 144A offering, an increase in accounts
receivable of $9.6 million of which $12.9 million is from the acquisition of
Physical Electronics, an increase of $2.2 million of refundable income taxes
attributable to Physical Electronics, and increase in inventories of
$16.8 million of which Physical Electronics accounted for $17.4 million of
the increase which was offset by reductions in inventory of $0.6 million in
the remainder of the Company. Another contributing factor to the increase in
working capital was a decrease of $1.7 million in interest expense payable
related to the $6.8 million payment of the BBC CIP obligation partially offset
by additional accruals. Accounts payable and accrued liabilities increased
$10.1 million of which $8.9 million resulted from the acquisition of Physical
Electronics. Short term debt also decreased $1.3 million since the end of the
last fiscal year.
Net cash used in operating activities was $4.2 million and $12.1 million
for the nine months ended January 25, 1997 and January 24, 1998,
respectively. The decrease in net cash for the nine months ended January 25,
1997 was attributable primarily to an increase in inventories of $3.3
million. The decrease in net cash for the nine months ended January 24, 1998
was substantially due to the payment of prepayments fees and penalties of
$6.3 million, net of taxes, resulting from the Rule 144A offering, and the
payment of $6.8 million to extinguish the CIP Agreements.
Net cash used in investing activities was $2.7 million and $55.4 million
for the nine months ended January 25, 1997 and January 24, 1998,
respectively. The decrease in net cash for the nine months ended January 25,
1997 consisted primarily of capital expenditures of $2.9 million which were
partially offset by proceeds from minor asset sales. The decrease in net cash
for the nine months ended January 24, 1998 resulted from the acquisition of
Physical Electronics for $54.3 million, net of cash acquired, capital
expenditures of $4.3 million, and offset by proceeds from asset sales of $3.4
million.
Net cash provided by financing activities was $6.1 million and $81.4
million for the nine months ended January 25, 1997 and January 24, 1998,
respectively. The increase in net cash for the nine months ended January 25,
1997 was the result of increased borrowings of $4.4 million under the
previously existing senior credit agreement credit line and the reduction of
restricted cash accounts of $1.4 million. The increase in cash for the nine
months ended January 24, 1998 was substantially the result of the Rule 144A
offering, consummated on August 8, 1997, which provided $163.3 million (net
of expenses)of which $78.5 million was used to retire existing preferred
stock and indebtedness.
As part of the Rule 144a offering, the Indenture will allow each
Restricted Subsidiary that is an obligor under an Intercompany Note to effect
a Qualified Subsidiary IPO. Upon completion of a Qualified Subsidiary IPO,
such Restricted Subsidiary will become an Unrestricted Subsidiary and the
cash flow of such Unrestricted Subsidiary will no longer be available (i) to
service debt obligations of the Company or its remaining Restricted
Subsidiaries or (ii) for purposes of determining whether the Company or its
remaining Restricted Subsidiaries will be able to incur additional
indebtedness, either of which could affect the liquidity of the Company.
While the Company believes that internally generated funds and amounts
available under the New Revolving Credit Facility will be sufficient to
satisfy its operating requirements and make required interest and principal
payments under the New Revolving Credit Facility, the senior notes and
existing capital leases, IRBs, mortgage notes, notes payable and the foreign
credit line and payments with respect to the redeemable put warrants, there
can be no assurance that such sources will be adequate and that the Company
will not require additional capital from borrowings or securities offerings
to satisfy such requirements. In addition, the Company may require additional
capital to fund future acquisitions. There can be no assurance that such
capital will be available.
Seasonality; Variability of Operating Results
The majority of the Company's operating units have historically recorded
the strongest operating results in the fourth quarter of the fiscal year due
in part to seasonal considerations and other factors, although in recent
years, seasonal fluctuations have been partially mitigated by overall
business growth.
The timing of orders placed by the Company's customers have varied with,
among other factors, the introduction of new products, product life cycles,
customer attempts to manage inventory levels, competitive conditions, general
economic conditions and the funding of scientific and educational research.
The variability of the level and timing of orders has, from time to time,
resulted in significant periodic and quarterly fluctuations in the operations
of the Company's operating units. Such variability is particularly evident at
HVE Europa, which ships on average four particle accelerator systems per
year. These systems are typically sold for between $1.0 million and $2.0
million each and have long lead times. As a result, the timing of HVE
Europa's shipments within any fiscal year can have a material impact on an
individual quarter's results. As a result of the foregoing, the valuation of
the Company's redeemable put warrants could yield a significant adjustment in
the fourth quarter of the fiscal year since it is based on the fair value of
the Company.
12
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
The nature of the Company's business is such that it is regularly
involved in legal proceedings incidental to its business. Although the
Company believes that none of these proceedings is material, the Company,
along with six others, is a defendant in an action commenced in November 1996
by Chicago-Dubuque Foundry Corporation ("Chicago-Dubuque") and its property
insurer, Employers Mutual Casualty Co. in Iowa state court. The suit concerns
a May 1, 1996 fire that destroyed a Chicago-Dubuque facility located in East
Dubuque, Illinois. According to the complaint, defective products sold by one
or more defendants (including, it is alleged, the Company's Anderson
division) to Chicago-Dubuque, or incorporated in products sold by others to
Chicago-Dubuque, caused or contributed to the casualty. Chicago-Dubuque has
not yet quantified the amount of damages sought, but its property insurer has
stated that damages for property damage will be in excess of $11 million. No
estimate of economic losses caused by business interruption has been made by
any plaintiff. At the present time, the Company is not aware of any personal
injuries or deaths caused by the fire and the Company has been informed that
the State Fire Marshall who investigated the fire has, to date, not been able
to render an opinion as to the cause of the fire. The Company has placed it's
insurers on notice of the claim and at least one insurer has retained legal
counsel to defend the Company. In light of the preliminary stage of the
proceedings, the Company is unable to assess the likelihood of liability in
this action, the amount of any damages that may be assessed against the
Company, and the extent to which any assessed liability will be covered by
the Company's insurance.
Natvar received a sixty (60) day notice of intent to sue on December 11,
1996 from a California citizens group regarding alleged violations of notice
and labeling requirements under California Proposition 65, a "right to know"
provision intended to give consumers clear and reasonable warnings of the
presence of certain potentially hazardous substances in products. Natvar and
the citizens group have signed an agreement delaying the deadline for filing
any lawsuit. The relevant, regulations provide that violations of Proposition
65 are subject to civil penalties of up to $2,500 per day retroactive to the
beginning of an alleged violation of Proposition 65. The substance contained
in Natvar's products and implicated in the notice of intent to sue has been
listed under Proposition 65 since 1988, and Natvar has sold products
containing this substance in California since that time. The Company is
currently conducting fact-finding to determine whether it believes a
violation of Proposition 65 has occurred. If a lawsuit is filed, the Company
intends to defend it vigorously; however, the Company believes, based on
results in similar cases and a preliminary review of the relevant facts, that
any such suit could be settled for substantially less than the maximum
penalty available under the statute. The Company does not believe that it is
likely that it will incur material liability as a result of any lawsuit
arising in connection with this matter.
In February 1997, the Company commenced litigation in Massachusetts
federal court against TVM Group, Inc., ("TVM") of Fremont, California, and
TVM's principal stockholder, Mr. T. Lyn Morris, seeking damages on account of
breach by TVM and Mr. Morris of a December 1996 agreement pursuant to which a
subsidiary of the Company was to acquire TVM. In April 1997, TVM and Mr.
Morris filed a counterclaim alleging breaches by the Company and its
subsidiary of that agreement and seeking damages. In September 1997, TVM and
Mr. Morris moved to amend their counter claim to add, inter alia, a claim for
fraudulent inducement. TVM and Mr. Morris are seeking actual damages in an
amount of $350,000 plus an unspecified amount of acquisition costs, punitive
and consequential damages. In light of the preliminary stage of the
proceedings, the Company is unable to assess the likelihood of liability in
this action. However, the Company believes the counterclaim to be without
merit.
Certain other claims, suits and complaints have been filed or are pending
against the Company. In the opinion of the Company, all such matters are
without merit or are of such kind, or involve such amounts, as would not have
a material effect on the consolidated financial position or the results of
operations of the Company if disposed of unfavorably. If estimates change,
there is no assurances these items will not require additional accruals by
the Company.
ITEM 2. - CHANGES IN SECURITIES
None.
ITEM 3. - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. - OTHER INFORMATION
None
13
<PAGE>
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11 Statement of Computation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
HIGH VOLTAGE ENGINEERING CORPORATION
Dated: February 26, 1998 By: /s/ Joseph W. McHugh, Jr.
----------------------------------------
Joseph W. McHugh, Jr.
Chief Financial Officer and Principal
Accounting Officer
15
<PAGE>
Exhibit 11
HIGH VOLTAGE ENGINEERING CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
January 25, January 24, January 26, January 24,
1997 1998 1997 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Income (loss) from operations before
extraordinary item $ 297 $ (1,864) $ 400 $ (14,558)
Effect of dilutive securities:
Redeemable put warrants -- -- 356 1,980
Income (loss) applicable to common
stockholders - assuming dilution 297 (1,864) 787 (12,578)
Extraordinary item, net of income
taxes -- -- (259) (7,861)
Net income (loss) applicable to common
stockholders $ 178 $ (2,988) $ 172 $ (22,671)
Basic Earnings Per Share:
Net income (loss) per share from operations
before extraordinary item $ 178.00 $ (2,759.00) 44.00 $(15,975.26)
Net loss per share from extraordinary
item, net of income taxes -- -- (259.00) (7,479.54)
Net income (loss) per share applicable to
common stockholders $ 178.00 $ (2,759.00) $(215.00) $(23,454.80)
Diluted Earnings Per Share:
Net income (loss) per share from operations
before extraordinary item $ 155.73 $ (2,415.52) $ 38.50 $(12,331.39)
Net loss per share from extraordinary
item, net of income taxes -- -- (226.60) (6,545.38)
Net income (loss) per share applicable to
common stockholders $ 155.73 $ (2,415.52) $(188.10) $(18,876.77)
Weighted average common stock outstanding 1,000 1,083 1,000 1,051
Weighted average common stock and dilutive
equivalents outstanding 1,143 1,237 1,143 1,201
======= ========== ======== ==========
</TABLE>
The income (loss) from operations before extraordinary item and the net
income (loss) applicable to the common stockholders, for the purpose of
calculating earnings (loss) per share, is net of preferred stock dividends of
$119 and $1,029 and the accretion of redeemable preferred stock of $0 and $95
for the three months ended January 25, 1997 and January 24, 1998,
respectively. The income (loss) from operations before extraordinary item and
the net income (loss) applicable to the common stockholders, for the purpose
of calculating earnings (loss) per share, is net of preferred stock dividends
of $356 and $2,057 and the accretion of redeemable preferred stock of $0 and
$175 for the nine months ended January 25, 1997 and January 24, 1998,
respectively.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-25-1998
<PERIOD-START> APR-27-1997
<PERIOD-END> JAN-24-1998
<CASH> 15,105
<SECURITIES> 0
<RECEIVABLES> 42,918
<ALLOWANCES> 0
<INVENTORY> 39,146
<CURRENT-ASSETS> 104,975
<PP&E> 49,130
<DEPRECIATION> 0
<TOTAL-ASSETS> 193,287
<CURRENT-LIABILITIES> 60,141
<BONDS> 0
29,567
0
<COMMON> 1
<OTHER-SE> (59,593)
<TOTAL-LIABILITY-AND-EQUITY> 193,287
<SALES> 164,976
<TOTAL-REVENUES> 0
<CGS> 105,962
<TOTAL-COSTS> 56,988
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,291
<INCOME-PRETAX> (11,789)
<INCOME-TAX> 2,769
<INCOME-CONTINUING> (14,558)
<DISCONTINUED> 0
<EXTRAORDINARY> (7,861)
<CHANGES> 0
<NET-INCOME> (22,419)
<EPS-PRIMARY> (23,454.80)
<EPS-DILUTED> (18,876.77)
</TABLE>
