<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 27, 1998 Commission file number: 1-5761
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LABARGE, INC.
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(Exact Name of Registrant as specified in its charter)
DELAWARE 73-0574586
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9900A Clayton Road, St. Louis, Missouri 63124
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(Address) (Zip Code)
(314) 997-0800
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(Registrant's telephone number, including Area Code)
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X. No .
-- --
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock as of September 27, 1998. 15,386,979 common stock.
<PAGE> 2
LABARGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(dollars in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
September 27, September 28,
1998 1997
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<S> <C> <C>
NET SALES $ 24,667 $ 21,492
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COSTS AND EXPENSES:
Cost of sales 19,289 16,805
Selling and administrative expense 3,411 2,981
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22,700 19,786
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EARNINGS FROM OPERATIONS 1,967 1,706
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Interest expense 309 130
Equity in loss of joint ventures 28 94
Minority interest income 147
Other (income) expense, net (152) (24)
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EARNINGS BEFORE INCOME TAXES 1,635 1,506
INCOME TAX EXPENSE 603 556
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NET EARNINGS $ 1,032 $ 950
======================================================================================
BASIC NET EARNINGS PER COMMON SHARE $ .07 $ .06
AVERAGE COMMON SHARES OUTSTANDING 15,455 15,658
======================================================================================
DILUTED NET EARNINGS PER COMMON SHARE $ .07 $ .06
AVERAGE COMMON SHARES OUTSTANDING 15,530 15,794
======================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
LABARGE, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 27, JUNE 28,
1998 1998
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,040 $ 540
Accounts and notes receivable, net 16,184 18,332
Inventories 19,048 18,968
Prepaid expenses 832 772
Deferred tax assets, net 1,587 2,087
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TOTAL CURRENT ASSETS 40,691 40,699
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PROPERTY, PLANT AND EQUIPMENT, NET 11,549 11,254
OTHER ASSETS, NET 10,656 7,039
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$ 62,896 $ 58,992
=========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 750 $ 5,020
Current maturities of long-term debt 1,793 1,102
Trade accounts payable 6,787 6,034
Accrued employee compensation 4,407 4,710
Other accrued liabilities 2,216 2,321
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TOTAL CURRENT LIABILITIES 15,953 19,187
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LONG-TERM DEBT 16,788 10,163
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STOCKHOLDERS' EQUITY:
Common stock, $.01 par value. Authorized
40,000,000 shares; issued 15,658,280 shares
at September 27, 1998 and at June 28, 1998, including shares
in treasury 156 156
Additional paid-in capital 13,468 13,468
Retained earnings 17,515 16,683
Less cost of common stock in treasury, 271,301 shares at September 27, 1998
and 163,000 shares
at June 28, 1998 (984) (665)
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TOTAL STOCKHOLDERS' EQUITY 30,155 29,642
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$ 62,896 $ 58,992
=========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
3
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LABARGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
SEPTEMBER 27, SEPTEMBER 28,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,032 $ 950
Adjustments to reconcile net cash provided (used) by operating
activities:
Undistributed loss (earnings) in equity of joint venture 28 94
Minority interest in consolidated subsidiary 147 --
Depreciation and amortization 430 269
Deferred taxes 500 457
Changes in assets and liabilities, net of acquisition of majority
business interest:
Accounts and notes receivable, net 2,149 (795)
Inventories (80) (2,075)
Prepaid expenses (60) (724)
Trade accounts payable 753 1,093
Accrued liabilities (554) (843)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 4,345 (1,574)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (697) (453)
Additions to other assets (173) (1,035)
Payments for investments in other companies (1,801) --
Payments for interest in technology (1,700) --
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NET CASH USED BY INVESTING ACTIVITIES (4,371) (1,488)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt 7,336 --
Change in short-term borrowings (4,270) 2,030
Repayments of long-term debt (20) (264)
Sale (purchase) of common stock from (for) treasury (520) --
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NET CASH PROVIDED BY FINANCING ACTIVITIES 2,526 1,766
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,500 (1,296)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 540 1,467
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,040 $ 171
=============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
4
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LABARGE, INC.
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS - BASIS OF PREPARATION
The consolidated balance sheets at September 27, 1998 and June 28, 1998, the
related consolidated statements of operations for the three months ended
September 27, 1998 and September 28, 1997 and the consolidated statements of
cash flows for the three months ended September 27, 1998 and September 28, 1997
have been prepared by LaBarge, Inc. (the "Company") without audit. In the
opinion of management, adjustments, all of a normal and recurring nature,
necessary to present fairly the financial position and the results of operations
and cash flows for the aforementioned periods, have been made. The Company
adopted SFAS No. 130, "Reporting Comprehensive Income" during the first quarter
of fiscal 1999. The adoption of SFAS No. 130 had no impact on the Company's
consolidated financial statements.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in conformity with generally accepted accounting
principles have been condensed or omitted. These consolidated financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 28, 1998.
2. ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable consist of the following:
(dollars in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 28, June 28,
1998 1998
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<S> <C> <C>
Billed shipments, net of progress payments $15,324 $17,556
Less allowance for doubtful accounts 150 150
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Trade receivables - net 15,174 17,406
Notes receivables 918 903
Other current receivables 92 23
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$16,184 $18,332
====================================================================================
</TABLE>
Progress payments are payments from customers in accordance with contractual
terms for contract costs incurred to date. Such payments are credited to the
customer at the time of shipment.
Effective June 2, 1998, LaBarge, Inc. and TransMedica International, Inc.
("TRANSMEDICA") reached revised agreements concerning our exclusive
manufacturing agreement and negotiated payments of then open accounts
receivables. The Company agreed to accept an interest-bearing note secured by
all of the assets of TRANSMEDICA, for the $900,000 then owed for prior work and
to extend future credit up to an additional $1.1 million under the same note for
future work performed. The value of this note at the balance sheet dates is
shown above.
Other current receivables are amounts due from employees for travel advances and
other miscellaneous sources.
5
<PAGE> 6
3. INVENTORIES
Inventories consist of the following:
(dollars in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 27, June 28,
1998 1998
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<S> <C> <C>
Raw materials $11,286 $10,353
Work in progress 9,361 9,070
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20,647 19,423
Less progress payments 1,599 455
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$19,048 $18,968
========================================================================================
</TABLE>
In accordance with contractual agreements, the government has a security
interest in inventories related to contracts for which progress payments have
been received.
4. OTHER ASSETS
Other assets is summarized as follows:
(dollars in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 27, June 28,
1998 1998
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<S> <C> <C>
Cash value of life insurance $ 2,415 $ 2,229
Deposits, licenses, and other 1,859 1,879
Investments in businesses 4,523 2,750
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8,797 6,858
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Software 1,055 1,047
Goodwill 412 412
Investment in technology 1,700 --
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3,167 1,459
Less amortization 1,308 1,278
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$10,656 $7,039
=========================================================================================
</TABLE>
In the first quarter of fiscal 1999, LaBarge and Global Research Systems, Inc.
of Rome, Georgia ("Global") formed NotiCom L.L.C. ("NotiCom"), a Georgia limited
liability company, to develop and market electronic systems providing advance
notice of the impending arrival of passenger motor vehicles. The first product
to be marketed by NotiCom will be BusCall(TM). BusCall notifies parents by
phone when their children's school bus is approaching their bus stop. It will be
marketed to telephone companies which can offer BusCall as a value-added
service, such as call waiting and call forwarding. LaBarge is the exclusive
manufacturer of all products sold by NotiCom in the United States and Canada and
will recognize revenues as it sells products to NotiCom. Each of LaBarge and
Global has a 50% interest in NotiCom, except that after an aggregate of $1.0
million has been distributed by NotiCom, Global will be entitled to 75% of
subsequent distributions until it has received preferred distributions
aggregating $1.3 million. LaBarge has invested $1.8 million in NotiCom and has
committed to contribute $500,000 of development services. In addition, LaBarge
has paid Global $1.7 million for a 50% interest in the intellectual property and
has licensed the technology to NotiCom. The Company has committed to pay Global
up to an aggregate of $23.3 million of additional purchase
6
<PAGE> 7
price for its 50% interest in the technology if NotiCom meets or exceeds
cumulative earnings before income tax ("EBT") targets for the period from July
1, 1998 through December 1, 1999 and through each six-month period thereafter
through December 31, 2001. In order to generate the maximum purchase price,
NotiCom must generate $211.8 million of EBT between July 1, 1998 and December
31, 2001. Because NotiCom is a start-up venture, it is too early to predict if
or to what extent NotiCom may contribute to the Company's revenues or earnings;
therefore, the Company has not recorded the contingent purchase price. The
investment is accounted for using the equity method. For the three months ended
September 27, 1998, LaBarge's share of the losses from the joint venture were
$28,000.
In the second quarter of fiscal 1998, the Company increased its ownership of
LaBarge Clayco Wireless L.L.C. to 51%. Beginning with the second quarter fiscal
1998, LaBarge, Inc. began consolidating 100% of the results of this unit into
its financial statements and deducting the minority interest share before
arriving at pretax profits. The investment was previously recorded using the
equity method.
During fiscal 1998, the Company made a $500,000 investment equating to an
ownership position of approximately 10% in Open Cellular Systems, Inc. of St.
Louis. Open Cellular Systems uses shared access communication networks to
provide wireless communication solutions to the general industrial and utility
markets. The capabilities of Open Cellular complement LaBarge's and management
believes this alliance may provide future opportunities for the Company. The
Company accounts for this investment at cost.
During fiscal 1998, the Company invested an additional $2.0 million in
TRANSMEDICA. Payment for this investment included an exchange of approximately
$1.2 million of current accounts receivable and $800,000 cash. With this
investment, the Company has an investment in TRANSMEDICA of $2.3 million which
is carried on a cost basis and owns approximately 9.5% of its common stock. Also
during this period, LaBarge finalized revised agreements with TRANSMEDICA
concerning our exclusive manufacturing agreement and negotiated payment terms
for open receivables and for future payments for Laser Lancet(R) units.
5. SUBSEQUENT EVENT
On October 16, 1998, LaBarge filed a Petition for Specific Performance and
Declaratory Judgment in the Circuit Court for St. Louis County, Missouri,
seeking resolution of a dispute regarding LaBarge's rights to develop and
manufacture new laser products and determination of the number of Laser Lancet
devices TRANSMEDICA is presently obligated to purchase from LaBarge. The result
of this suit and its effect on LaBarge's valuation of its investment in, or
future sales to, TRANSMEDICA cannot yet be determined.
In October 1998, the Company purchased from Clayco Construction Company an
additional 39% of LaBarge Clayco Wireless L.L.C. for $300,000 to increase its
ownership to 90%. The Company continues to consolidate 100% of the results of
this unit into its financial statements and deducts the minority interest share
before arriving at pretax profits. The investment was previously reported on the
equity method.
7
<PAGE> 8
6. SHORT AND LONG-TERM OBLIGATIONS
Short-term borrowings, long-term debt and the current maturities of long-term
debt consist of the following:
(dollars in thousands)
<TABLE>
<CAPTION>
September 27, June 28,
1998 1998
- --------------------------------------------------------------------------------------------------
Short-term borrowings:
<S> <C> <C>
Revolving credit agreements:
Balance at period end $ 750 $ 5,020
Interest rate at period end 8.75% 6.80%
Average amount of short-term borrowings outstanding during period $ 4,699 $ 4,751
Average interest rate for period 6.68% 6.94%
Maximum short-term borrowings at any month end $ 5,640 $ 9,250
==================================================================================================
Long-term debt:
Senior lender:
Revolving credit agreement -- 2,000
Term loan 11,000 3,000
Mortgage loan 6,145 6,164
Other 1,436 101
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18,581 11,265
Less current maturities 1,793 1,102
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Total long-term debt, less current maturities $16,788 $10,163
==================================================================================================
</TABLE>
The average interest rate was computed by dividing the sum of daily interest
costs by the sum of the daily borrowings for the respective periods.
SENIOR LENDER
The Company amended its lending agreement with NationsBank, N.A. on September
25, 1998. The amended agreement provides a seven-year, unsecured lending
agreement including an $11.0 million term loan payable in quarterly installments
of $393,000 which will begin December 31, 1998 and a $15.0 million working
capital revolver. The interest rate on both loans is variable based on the ratio
of senior debt to earnings and is available as either a premium over LIBOR or a
discount from prime rate at the Company's option.
Through various performance criterion, this rate can be lowered to 150 basis
points below prime, or at the Company's option, 75 basis points over LIBOR. At
September 27, 1998, the Company was at the lowest rate possible under the
agreement, which currently ranges from 6.8% to 7.1%.
In September 1998, the Company successfully completed a ten-year term Industrial
Revenue Bond financing in the amount of $1.4 million to finance an expansion of
its Berryville, Arkansas facility.
8
<PAGE> 9
7. INCOME TAXES
As of June 28, 1998, the Company had alternative minimum tax credit
carryforwards and investment tax credits of approximately $712,000 available to
reduce future regular federal income taxes.
8. CASH FLOWS
Total cash payments for interest for the three months ended September 27, 1998
were $351,000 compared with $93,000 for the three months ended September 28,
1997.
9. EARNINGS PER COMMON SHARE
Earnings per share are computed as follows:
<TABLE>
<CAPTION>
SEPTEMBER 27, September 28,
1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
NUMERATOR:
Net earnings $ 1,032 $ 950
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DENOMINATOR:
Denominator for basic net earnings per share- weighted-average
shares 15,455 15,658
Effect of dilutive securities-employee stock options 75 136
- ---------------------------------------------------------------------------------------------------
POTENTIAL COMMON SHARES:
Denominator for diluted net earnings per shares- adjusted
weighted-average shares and assumed conversions
15,530 15,794
- ---------------------------------------------------------------------------------------------------
BASIC NET EARNINGS PER COMMON SHARE $ .07 $ .06
===================================================================================================
DILUTED NET EARNINGS PER COMMON SHARE $ .07 $ .06
===================================================================================================
</TABLE>
9
<PAGE> 10
LABARGE, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Statements contained herein which are not historical facts are forward-looking
statements that involve risks and uncertainties. Future events and the Company's
actual results could differ materially from those contemplated by those
forward-looking statements. For a summary of important factors which could cause
the Company's actual results to differ materially from those projected in, or
inferred by, the forward-looking statements, see the Company's Form 10-K for the
fiscal year ended June 28, 1998, which is on file with the Securities and
Exchange Commission and available to stockholders from the Company.
LaBarge, Inc. designs, engineers and manufactures sophisticated electronic
assemblies and complex interconnect systems on a custom basis for its customers.
As such, the Company relies heavily on establishing new and maintaining existing
relationships with its customers. The customers are primarily in the commercial
aerospace, defense, geophysical, medical and wireless telecommunications
markets. The Company employs approximately 850 people.
The Company's backlog of firm, unshipped orders at September 27, 1998 was
approximately $52.6 million compared to $64.9 million at September 28, 1997. The
backlog at September 27, 1998 consisted of approximately $31.5 million for
various defense customers and approximately $21.1 million for commercial
electronics customers, compared with $45.1 million for defense and $19.8 million
for commercial for the quarter ended September 28, 1997. Approximately $14.4
million of the total backlog is not scheduled to ship within the next 12 months
pursuant to the shipment schedules outlined by our customers.
For the three months ended September 27, 1998, approximately 50.0% of the
Company's sales were to customers in commercial markets, including
telecommunications (17.8%), geophysical (16.3%), aerospace (11.8%) and other
(4.1%). Two customers account for in excess of 10% each of total sales for the
three months: Schlumberger in the geophysical market at 12.6% of total sales;
and Lockheed Martin in the aerospace and defense markets at 28.6% of total
sales.
The Company has designed and developed the Laser Lancet(R), a small medical
laser, for TransMedica International, Inc., ("TRANSMEDICA") under a licensing
agreement from TRANSMEDICA. TRANSMEDICA retains responsibility for sales and
marketing of the Laser Lancet.
Early in fiscal 1998, the Company invested $2.0 million in the common stock of
TRANSMEDICA. Payment for this investment included an exchange for approximately
$1.2 million of accounts receivable and $800,000 cash. The Company has invested
a total of $2.3 million in TRANSMEDICA, which is carried at cost, and owns
approximately 9.5% of TRANSMEDICA's common stock.
Effective June 2, 1998, LaBarge and TRANSMEDICA reached revised agreements
concerning LaBarge's exclusive manufacturing rights, and negotiated payment
terms for open receivables and for future payments for Laser Lancet units.
With the agreement, LaBarge became the exclusive manufacturer for all of North
and South Americas and Europe. Secondly, the Company agreed to accept an
interest-bearing note, secured by all the assets of TRANSMEDICA, for the
$900,000 then owed for prior work, and for up to $1.1 million in funding for new
production of Laser Lancets. As part of the agreement, LaBarge received
10
<PAGE> 11
warrants to purchase an additional 4% of TRANSMEDICA's common stock for $25 per
share.
As a result of certain disputes that have arisen between the Company and
TRANSMEDICA, on October 16, 1998, LaBarge filed a Petition for Specific
Performance and Declaratory Judgment in the Circuit Court for St. Louis County,
Missouri, seeking resolution of LaBarge's rights to develop and manufacture new
laser products and determination of the number of Laser Lancet devices
TRANSMEDICA is presently obligated to purchase from LaBarge. It is too early to
determine what, if any, effect this suit will have on either the value of
LaBarge's investment in TRANSMEDICA (which is accounted for at cost), or on its
future revenues from TRANSMEDICA.
In the first quarter of fiscal 1999, LaBarge and Global Research Systems, Inc.
of Rome, Georgia ("Global") formed NotiCom L.L.C. ("NotiCom"), a Georgia limited
liability company, to develop and market electronic systems providing advance
notice of the impending arrival of passenger motor vehicles. The first product
to be marketed by NotiCom will be BusCall(TM). BusCall notifies parents by
phone when a their children's school bus is approaching their bus stop. It will
be marketed to telephone companies which can offer BusCall as a value-added
service, such as call waiting and call forwarding. LaBarge is the exclusive
manufacturer of all products sold by NotiCom in the United States and Canada and
will recognize revenues as it sells products to NotiCom. Each of LaBarge and
Global has a 50% interest in NotiCom, except that after an aggregate of $1.0
million has been distributed by NotiCom, Global will be entitled to 75% of
subsequent distributions until it has received preferred distributions
aggregating $1.3 million. LaBarge has invested $1.8 million in NotiCom and has
committed to contribute $500,000 of development services. In addition, LaBarge
has paid Global $1.7 million for a 50% interest in the intellectual property and
has licensed the technology to NotiCom. The Company has committed to pay Global
up to an aggregate of $23.3 million of additional purchase price for its 50%
interest in the technology if NotiCom meets or exceeds cumulative earnings
before income tax ("EBT") targets for the period from July 1, 1998 through
December 1, 1999 and through each six-month period thereafter through December
31, 2001. In order to generate the maximum purchase price, NotiCom must generate
$211.8 million of EBT between July 1, 1998 and December 31, 2001. Because
NotiCom is a start-up venture, it is too early to predict if or to what extent
NotiCom may contribute to the Company's revenues or earnings; therefore, the
Company has not recorded the contingent purchase price.
11
<PAGE> 12
LABARGE, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 27, 1998
COMPARED TO THREE MONTHS ENDED SEPTEMBER 28, 1997
Net sales for the three months ended September 27, 1998 were $24.7 million
compared to $21.5 million for the three months ended September 28, 1997, an
increase of $3.2 million or 14.9%. This increase was due to inclusion of LaBarge
Clayco Wireless sales of $3.6 million for the three months ended September 27,
1998. LaBarge Clayco Wireless L.L.C. was not consolidated until the second
quarter of fiscal 1998.
Gross profit for the three months ended September 27, 1998 was $5.4 million,
21.8% of sales, compared to $4.7 million, 21.8% of sales, for the three months
ended September 28, 1997.
Selling and administrative expenses for the three months ended September 27,
1998 were $3.4 million or 13.8% of sales, compared to $3.0 million or 13.9% of
sales for the three months ended September 28, 1997.
Interest expense for the three months ended September 27, 1998 was $309,000
compared to $130,000 for the three months ended September 28, 1997. Interest
expense has increased due to an increase in debt incurred in connection with:
the purchase of the Company's headquarters in St. Louis, Missouri for $6.2
million in January 1998; the investment in NotiCom L.L.C. and technology related
thereto, totaling $3.5 million in July 1998; and, the financing of the expansion
of our Berryville, Arkansas facility for $1.4 million in September 1998.
Equity in loss of joint venture for the three months ended September 27, 1998
was $28,000 compared to $94,000 for the three months ended September 28, 1997.
These amounts represent the Company's share of losses (gains) incurred by
NotiCom L.L.C. for the period ending September 27, 1998 and LaBarge Clayco
Wireless L.L.C. for the period ending September 28, 1997. In the second quarter
of fiscal 1998, the Company increased its ownership of LaBarge Clayco Wireless
L.L.C. to 51%. Beginning with the second quarter, LaBarge, Inc. began
consolidating 100% of the results of this unit into its financial statements and
deducting the minority interest before arriving at pretax profits. The minority
interest profit for the three months ended September 27, 1998 was $147,000.
Other income for the three months ended September 27, 1998, was $152,000
compared to $24,000 for the three months ended September 28, 1997. This increase
is the result of the purchase of our corporate headquarters in St. Louis,
Missouri and the revenues and expenses resulting from the leasing of space in
that building to third parties.
Income tax expense for the three months ended September 27, 1998 was $603,000
compared to $556,000 for the three months ended September 28, 1997, an increase
of $47,000. The effective tax rate for both quarters was 37%.
12
<PAGE> 13
Diluted earnings per common share were $.07 for the three months ended September
27, 1998, and $.06 for the three months ended September 28, 1997.
FINANCIAL CONDITION & LIQUIDITY
Cash and cash equivalents at September 27, 1998 were $3.0 million compared with
$540,000 at June 28, 1998.
Accounts receivable at September 27, 1998, were $16.2 million compared with
$18.3 million at June 28, 1998; a decrease of $2.1 million.
Inventories at September 27, 1998 and June 28, 1998 were $19.0 million and $19.0
million, respectively.
Also during the three months ended September 27, 1998, the Company purchased
$697,000 in property, plant and equipment. For the quarter ended September 28,
1997, $453,000 was purchased.
During the first three months of the current fiscal year, the Company invested
$3.5 million in NotiCom L.L.C., a joint venture between the Company and Global
Research Systems, Inc.
In September 1998, the Company amended its lending agreement with NationsBank,
N.A., extending the term of the agreement, converting its short-term debt of
$4.3 million to long-term and adding additional long-term debt of $1.8 million.
In addition, long-term debt of $1.4 million was added via an Industrial Revenue
Bond to expand the Berryville plant.
YEAR 2000
THE COMPANY'S STATE OF READINESS:
We are currently reviewing our exposure to Year 2000 computer-related risks. We
are reviewing all internal systems, as well as those of suppliers and customers,
to evaluate any potential impact on January 1, 2000 and beyond.
COST:
The total historical or anticipated cost for Year 2000 remediation activity are
not material. The cost of this effort thus far has been immaterial and has been
included in operating expenses.
RISKS AND CONTINGENCY PLANS:
To date, we believe that all internal systems will be compliant or at least have
no material adverse effect on our ability to operate on or after January 1,
2000. No major program revisions have been identified which would result in
significant cost in future periods. Third parties having a material relationship
with the Company may be a potential risk based on their individual Year 2000
preparedness which may not be within the Company's reasonable control. The
Company is in the process of identifying, reviewing, and logging the Year 2000
preparedness of critical third parties. Pending the results of that review, the
Company will then determine what course of action and contingencies will need to
be made.
We anticipate, but cannot be assured, that should a problem arise, we will be
able to take necessary steps to minimize the impact with minimal or no material
effect on the results of the Company or its customers.
13
<PAGE> 14
PART II
Item 6. Exhibits and Report on Form 8-K
a. Exhibit 10.10 Amended Loan Agreement between Page 17
NationsBank, N.A. and LaBarge, Inc.
14
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LABARGE, INC.
--------------------------------
Date November 9, 1998
----------------
/s/ William J. Maender
-------------------------------
William J. Maender
Vice President - Finance,
Treasurer and Secretary
15
<PAGE> 1
EXHIBIT 10.10
AMENDMENT
EFFECTIVE SEPTEMBER 25, 1998
TO
ORIGINAL LOAN AGREEMENT
AMONG
NATIONSBANK, N.A.
(SUCCESSOR BY MERGER TO THE BOATMEN'S NATIONAL BANK OF ST. LOUIS)
AND
LABARGE, INC.,
LABARGE/STC, INC., AND
LABARGE WIRELESS, INC.
An AMENDMENT to LOAN AGREEMENT (this "Amendment") by and among LABARGE, INC.,
LABARGE/STC, INC., and LABARGE WIRELESS, INC.(collectively and separately,
"Borrower") and NATIONSBANK, N.A. (successor by merger to The Boatmen's National
Bank of St. Louis) ("Bank").
RECITALS:
A. Borrower and Bank are parties to that certain Loan Agreement dated as of
June 25, 1996, as amended prior to the effective date hereof (the
"Original Loan Agreement").
B. Borrower has requested that Bank reduce the Revolving Commitment and
increase the Term Commitment under the Original Loan Agreement and make
certain other changes to the provisions of the Original Loan Agreement.
Bank is willing to do so subject to, and in reliance upon, the terms and
conditions contained herein.
Therefore, in consideration of the mutual agreements herein and other sufficient
consideration, the receipt of which is hereby acknowledged, Borrower and Bank
hereby amend the Original Loan Agreement as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein have
the meanings given them in the Original Loan Agreement.
2. EFFECTIVE DATE; UP-FRONT FEE. This Amendment shall become effective as of
September 25, 1998, (the "Effective Date") provided that Borrower has paid to
Lender an up-front fee of $13,750 in consideration of the increase in the Term
Commitment provided by this Amendment and has delivered to Lender an amended and
restated Revolving Note in the form of Exhibit A hereto and an amended and
restated Term Note in the form of Exhibit B hereto.
3. AMENDMENTS TO ORIGINAL LOAN AGREEMENT.
3.1. REDUCTION IN REVOLVING LOAN COMMITMENT. Section 3.1.1 of the
Original Loan Agreement is amended to read in its entirety as follows:
"Subject to the limitations in Section 3.1.2 and elsewhere herein, Lender
commits to make available from the Effective Date to the Maturity Date, a
revolving credit facility of $15,000,000, or such lesser Dollar amount to
which it may have been changed as provided herein, available as Revolving
Advances made from time to time as provided herein. Subject to the
limitations in Section 3.1.2 and elsewhere herein, payments and
prepayments that are applied to reduce the Revolving Loans may be
<PAGE> 2
reborrowed. Borrower may reduce the Revolving Commitment in whole
multiples of $1,000,000 at any time and from time to time, but only if (i)
Borrower gives Lender written notice of Borrower's intention to make such
reduction at least one Business Day prior to the effective date of the
reduction, and (ii) Borrower makes on the effective date of the reduction
any payment on the Revolving Loan required under Section 7.3 as a
consequence of the reduction. Any such reduction of the Revolving
Commitment shall be permanent."
3.2. INCREASE IN TERM LOAN COMMITMENT. Section 3.2.1 of the Original
Loan Agreement is amended by replacing the amount of $4,000,000 with the amount
of $11,000,000.
3.3. EXTENSION OF MATURITIES; SCHEDULED PAYMENTS. Sections 6.1 and 6.3
of the Original Loan Agreement are amended to read in their entirety as follows:
" 6.1. MATURITY DATES. Borrower shall repay the Revolving Loan
and all unpaid accrued interest thereon on February 1, 2001. Borrower
shall repay the Term Loan and all unpaid accrued interest thereon on
September 15, 2005."
" 6.3. PRINCIPAL PAYMENTS ON TERM LOAN BEFORE MATURITY DATE.
Borrower shall make consecutive quarterly installment payments of
principal on the Term Loan on December 31, 1998, and on the last day of
each calendar quarter thereafter until the Maturity Date. The amount of
each principal installment shall be $392,857."
3.4. CBR DECREMENTS AND LIBOR INCREMENTS. Section 4.3 of the Loan
Agreement is amended by deleting the table therein and replacing it with the
following table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
If the ratio of Funded Debt The LIBOR Increment the CBR Decrement
to EBITDA is: shall be: shall be:
- ---------------------------------------------------------------------------------------------
for each for the for each For the
Revolving Term Loan Revolving Term Loan
Loan Loan
- ------------------------------------ -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Greater than or equal to 2.50 to 2.50% 2.825% -0.00% +0.125%
1.00
- ------------------------------------ -------------- ------------- ------------- -------------
Less than 2.50 to 1.00 and greater 2.00% 2.125% -0.25% -0.125%
than or equal to 2.00 to 1.00
- ------------------------------------ -------------- ------------- ------------- -------------
Less than 2.00 to 1.00 and greater 1.75% 1.875% -0.50% -0.375%
than or equal to 1.75 to 1.00
- ------------------------------------ -------------- ------------- ------------- -------------
Less than 1.75 to 1.00 and greater 1.25% 1.375% -1.00% -0.625%
than or equal to 1.50 to 1.00
- ------------------------------------ -------------- ------------- ------------- -------------
Less than 1.50 to 1.00 and greater 1.00% 1.125% -1.25% -0.875%
than or equal to 1.25 to 1.00
- ------------------------------------ -------------- ------------- ------------- -------------
Less than 1.25 to 1.00 0.75% 0.875% -1.50% -1.125%
- ------------------------------------ -------------- ------------- ------------- -------------
</TABLE>
2
<PAGE> 3
3.5. PERMITTED INDEBTEDNESS. A new section 15.2.6 is added to the
Original Loan Agreement as follows:
"15.2.6. The Indebtedness of Borrower to the Arkansas Development Finance
Authority with respect to the expansion of Borrower's plant in Berryville,
Arkansas."
3.6. CERTAIN DEFINITIONS. The definitions of "Fixed Charges" and
"Interest" in Section 16.1 of the Original Loan Agreement are amended to read in
their entirety as follows:
"Fixed Charges" means, for any period of calculation, the sum of (i)
interest expense, (ii) the sum of all scheduled principal payments on any
Indebtedness of Borrower (including the Loans, (iii) federal, state and
local income tax expense, (iv) Capital Expenditures, (v) dividends paid,
and (vi) current maturities of long term Indebtedness."
"Interest Expense" means, for any period of calculation, all interest on
Indebtedness properly accrued as a liability during such period."
3.7. CAPITAL EXPENDITURES. Section 16.2 of the Original Loan
Agreement is amended to read in its entirety as follows:
"Borrower shall not make Capital Expenditures (including the Capital
Expenditure Equivalent of Capital Leases entered into) that in the
aggregate exceed $3,000,000 in any one fiscal year of Borrower. The
"Capital Expenditure Equivalent" of a Capital Lease entered into in any
fiscal year of Borrower shall be the amount which would have been the
aggregate cost of the property leased if it had been purchased instead."
3.8. USE OF PROCEEDS. Section 14.1 of the Original Loan Agreement is
amended to read in its entirety as follows:
"All proceeds of the Loans shall be used by Borrower solely for working
capital and capital expenditures related to Borrower's business and for
Borrower's general corporate purposes; provided, however, that no more
than $5,000,000 of the total proceeds of the Loans may be used other than
for working capital and general corporate purposes."
3.9. DEFINITIONS. The definition of Maturity Date in Exhibit 2.1 to
the Original Loan Agreement (Glossary and Index of Defined Terms) is amended to
read in its entirety as follows:
"'Maturity Date: for each Revolving Loan and the Term Loan, the respective
dates specified in Section 6.1 as the dates when they are payable in full
with unpaid accrued interest."
4. ADDITIONAL TERM LOAN ADVANCE. The Interest Period for the Term Loan shall
expire automatically on the Effective Date, and Borrower shall not be obligated
to make any payment to Lender under Section 4.10 of the Original Loan Agreement
as a consequence thereof. Lender will make a single additional Term Advance on
the Effective Date in the amount of the difference between the amount of the
Term Loan on the Effective Date and the amount of the Term Loan Commitment as
amended hereby. A Borrowing Officer shall designate whether the Term Loan upon
the making of the Term Advance is to be subject to LIBOR Accrual or Alternate
Base Rate Accrual and shall specify the Interest Period therefor if it is to be
subject to LIBOR Accrual.
3
<PAGE> 4
5. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby represents and
warrants to Bank as of the date hereof that (i) this Amendment has been duly
authorized by Borrower's Board of Directors, (ii) no consents are necessary from
any third parties for Borrower's execution, delivery or performance of this
Amendment, (iii) this Amendment constitutes the legal, valid and binding
obligation of Borrower enforceable against Borrower in accordance with its terms
except as the enforcement thereof may be limited by bankruptcy, insolvency or
other laws related to creditors rights generally or by the application of equity
principles, (iv) the representations and warranties in the Original Loan
Agreement are true and correct and have been true and correct at all times since
the Effective Date, and (v) there exists no Default or Event of Default under
the Original Loan Agreement, as amended by this Amendment. Borrower further
represents and warrants to Lender that (1) Borrower has (i) begun analyzing the
operations of Borrower and its subsidiaries and affiliates that could be
adversely affected by failure to become Year 2000 compliant (that is, that
computer applications, imbedded microchips and other systems will be able to
perform date-sensitive functions prior to and after December 31, 1999) and; (ii)
developed a plan for becoming Year 2000 compliant in a timely manner, the
implementation of which is on schedule in all material respects; (2) Borrower
reasonably believes that it will become Year 2000 compliant for its operations
and those of its subsidiaries and affiliates on a timely basis except to the
extent that a failure to do so could not reasonably be expected to have a
material adverse effect upon the financial condition of Borrower; and (3)
Borrower reasonably believes any suppliers and vendors that are material to the
operations of Borrower or its subsidiaries and affiliates will be Year 2000
compliant for their own computer applications except to the extent that a
failure to do so could not reasonably be expected to have a material adverse
effect upon the financial condition of Borrower.
6. YEAR 2000 COVENANT. Borrower covenants and agrees to promptly notify Bank
in the event Borrower determines that any computer application which is material
to the operations of Borrower, its subsidiaries or any of its material vendors
or suppliers will not be fully Year 2000 compliant on a timely basis, except to
the extent that such failure could not reasonably be expected to have a material
adverse effect upon the financial condition of Borrower.
7. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of Bank
under the Original Loan Agreement or any of the other Loan Documents, nor
constitute a waiver of any provision of the Original Loan Agreement, any of the
other Loan Documents or any existing Default or Event of Default, nor act as a
release or subordination of the security interests of Bank under the Security
Documents. Each reference in the Original Loan Agreement to "the Agreement",
"hereunder", "hereof", "herein", or words of like import, shall be read as
referring to the Original Loan Agreement as amended by this Amendment.
8. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i) except
as expressly amended hereby, the Original Loan Agreement remains in full force
and effect, (ii) the Original Loan Agreement, as amended hereby, is in full
force and effect, (iii) Borrower has no defenses to its obligations under the
Original Loan Agreement as amended hereby and the other Loan Documents, and (iv)
Borrower has no claim against Bank arising from or in connection with the
Original Loan Agreement or the other Loan Documents.
9. GOVERNING LAW. This Amendment has been executed and delivered in St.
Louis, Missouri, and shall be governed by and construed under the laws of the
State of Missouri without giving effect to choice or conflicts of law principles
thereunder.
4
<PAGE> 5
9. SECTION TITLES. The section titles in this Amendment are for
convenience of reference only and shall not be construed so as to modify any
provisions of this Amendment.
10. COUNTERPARTS; FACSIMILE TRANSMISSIONS. This Amendment may be executed in
one or more counterparts and on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Signatures to this Amendment may be given by facsimile or other
electronic transmission, and such signatures shall be fully binding on the party
sending the same.
11. INCORPORATION BY REFERENCE. Bank and Borrower hereby agree that all of the
terms of the Loan Documents are incorporated in and made a part of this
Amendment by this reference.
12. STATUTORY NOTICE. The following notice is given pursuant to Section
432.045 of the Missouri Revised Statutes; nothing contained in such notice will
be deemed to limit or modify the terms of the Loan Documents or this Amendment:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING
SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT.
BORROWER AND BANK HEREBY AFFIRM THAT THERE IS NO UNWRITTEN ORAL CREDIT AGREEMENT
BETWEEN BORROWER AND BANK WITH RESPECT TO THE SUBJECT MATTER OF THIS AMENDMENT.
[SIGNATURE PAGE FOLLOWS]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
appropriate duly authorized officers as of the Effective Date hereof.
LABARGE/STC, INC. LABARGE WIRELESS, INC.
by its VP-Secretary by its VP-Secretary
/s/ William J. Maender /s/ William J. Maender
- -------------------------- --------------------------
Notice Address: Notice Address:
C/O LaBarge, Inc. C/O LaBarge, Inc.
9900A Clayton Road 9900A Clayton Road
St. Louis, MO 63124 St. Louis, MO 63124
Attn: William J. Maender Attn: William J. Maender
FAX # 812-9438 FAX # 812-9438
TEL # 997-0800 TEL # 997-0800
LABARGE, INC. NATIONSBANK, N.A.
by its VP-Finance & Secretary by its Vice President
/s/ William J. Maender /s/ Jeffrey S. Potts
- -------------------------- --------------------------
Jeffrey S. Potts
Notice Address: Notice Address:
LaBarge, Inc. 800 Market Street
9900A Clayton Road Mail Code MO1800-12-01
St. Louis, MO 63124 St. Louis, MO 63101
Attn: William J. Maender Attn: Jeffrey S. Potts
FAX # 812-9438
TEL # 997-0800 FAX # 466-6744
TEL # 466-6061
6
<PAGE> 7
EXHIBIT A
FORM OF AMENDED AND RESTATED REVOLVING NOTE
AMENDED AND RESTATED REVOLVING NOTE
$15,000,000.00 St. Louis, Missouri
September 25, 1998
For value received, LABARGE, INC., a Delaware corporation ("LaBarge"),
LABARGE/STC, INC., a Texas corporation ("LSTC"), and LABARGE WIRELESS, INC., a
Missouri corporation ("LWI") (LaBarge, LSTC, and LWI are referred to both
individually and collectively herein as "Borrower"), promise, jointly and
severally, to pay to the order of NATIONSBANK, N.A. (successor by merger to The
Boatmen's National Bank Of St. Louis) ("Lender") the principal sum of FIFTEEN
MILLION DOLLARS ($15,000,000.00) or such lesser aggregate unpaid principal
amount as shall be outstanding under this Revolving Note (this "Note"), plus all
interest accrued thereon, on the Maturity Date.
Borrower further promises to pay interest from the date hereof on the
balance of said principal from time to time outstanding at a per annum rate or
rates determined pursuant to the Loan Agreement (defined below). Upon the
occurrence of any Event of Default as defined in the Loan Agreement, or at the
option of Lender upon the occurrence of a Default as defined in the Loan
Agreement, all outstanding principal and, to the extent permitted by law,
accrued interest in respect of this Note and all other amounts owing hereunder
shall bear interest, payable on demand, at the Default Rate set forth in the
Loan Agreement. In addition, such default rate of interest shall apply after
Maturity, whether by acceleration or otherwise. All such interest shall be
computed on the basis of a year deemed to consist of 360 days and paid for the
actual number of days elapsed. Interest shall be payable on such dates as are
provided under the Loan Agreement.
Both principal and interest are payable in Dollars to Lender at its office
at 800 Market Street, St. Louis, Missouri 63101 (Attention: Jeffrey S. Potts).
This Note is the Revolving Note referred to in, and is issued under the
terms of, and pursuant to the provisions of, that certain Loan Agreement dated
as of even date herewith, between Lender and Borrower (as it may be amended,
restated, extended, renewed, replaced, or otherwise modified from time to time,
the "Loan Agreement"). All capitalized terms used and not otherwise defined
herein shall have the same meanings as given them in the Loan Agreement.
This Note is secured by the Collateral described in the Loan Documents,
executed from time to time by Borrower in favor of Lender as set forth in the
Loan Agreement and reference to the Loan Documents and the Loan Agreement is
made for a statement of the rights of the Lender with respect to such
Collateral.
Borrower shall prepay the principal amount of this Note to the extent
provided in the Loan Agreement. Borrower may prepay the principal amount of this
Note to the extent and upon the conditions provided in the Loan Agreement.
The date and amount of all disbursements and receipts representing
principal and receipts of interest by Lender with respect to the Revolving Loan
shall be recorded by Lender in the records it maintains with respect thereto.
The failure to record, or any error in recording, any of the foregoing shall
i
<PAGE> 8
not, however, affect the obligations of Borrower under this Note to repay the
principal amount advanced hereunder together with all interest accruing thereon.
Such record as maintained by Lender shall constitute prima facie evidence of the
amount outstanding under this Note.
Reference is made to the Loan Agreement for provisions regarding the
acceleration of the maturity hereof on the occurrence of any Event of Default,
which provisions are incorporated herein by this reference.
If Borrower sells, assigns, transfers or conveys all or any part of the
Real Property Collateral or any interest therein without the prior written
consent of Lender as required by the Loan Agreement, all outstanding principal
and accrued interest under this Note shall become immediately due and payable.
If any payment required under this Note or the Loan Agreement is not made
when due, or upon any other Event of Default, Borrower shall pay all costs of
collection on this Note, including but not limited to court costs and reasonable
attorneys fees and actual expenses of such attorneys, whether or not litigation
is commenced, including representation of Lender in connection with any
bankruptcy or insolvency proceeding of Borrower.
Demand for payment, protest, notice of dishonor, and all other notices and
demands under this Note and any and all lack of diligence in the enforcement of
this Note are hereby waived by all who are or shall become parties to this Note
and the same hereby assent to each and every extension or postponement of the
time of payment, at or after demand, or other indulgence, and hereby waive any
and all notice thereof. Every such party by becoming a party to this Note
further waives any and all defenses which such party may have based on
suretyship or impairment of collateral with respect to this Note.
No amendment, modification or waiver of any provision of this Note, nor
consent to any departure by Borrower herefrom, shall be effective unless the
same shall be in writing signed by an authorized officer of Lender, and then
only in the specific instance and for the purpose for which given. No failure on
the part of Lender to exercise, and no delay in exercising, any right under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by Lender of any right under this Note preclude any other or further exercise
thereof, or the exercise of any other right. Each and every right granted to
Lender under this Note or allowed to it at law or in equity shall be deemed
cumulative and such remedies may be exercised from time to time concurrently or
consecutively at Lender's option.
All notices required to be given or which may be given in connection with
this Note shall be given in the manner required for notices under the Loan
Agreement.
This Note is governed by and shall be interpreted in accordance with the
laws of the State of Missouri, without regard to choice or conflict of laws
rules.
This Note is an amendment and restatement of the revolving note from
Borrower to The Boatmen's National Bank of St. Louis dated as of June 25, 1996.
[SIGNATURE PAGE FOLLOWS]
ii
<PAGE> 9
LABARGE/STC, INC. LABARGE WIRELESS, INC.
by its ____________________________ by its ____________________________
___________________________________ ___________________________________
Notice Address: Notice Address:
C/O LaBarge, Inc. C/O LaBarge, Inc.
9900A Clayton Road 9900A Clayton Road
St. Louis, MO 63124 St. Louis, MO 63124
Attn: William J. Maender Attn: William J. Maender
FAX # 812-9438 FAX # 812-9438
TEL # 997-0800 TEL # 997-0800
LABARGE WIRELESS, INC.
by its ____________________________
___________________________________
Notice Address:
LaBarge, Inc.
9900A Clayton Road
St. Louis, MO 63124
Attn: William J. Maender
FAX # 812-9438
TEL # 997-0800
iii
<PAGE> 10
EXHIBIT B
FORM OF AMENDED AND RESTATED TERM NOTE
AMENDED AND RESTATED TERM NOTE
$11,000,000.00 St. Louis, Missouri
September 25, 1998
For value received, LABARGE, INC., a Delaware corporation ("LaBarge"),
LABARGE/STC, INC., a Texas Corporation ("LSTC"), and LABARGE WIRELESS, INC., a
Missouri corporation ("LWI") (LaBarge, LSTC, and LWI are referred to both
individually and collectively herein as "Borrower") promise, jointly and
severally, to pay to the order of NATIONSBANK, N.A. (successor by merger to The
Boatmen's National Bank Of St. Louis) ("Lender") the principal sum of ELEVEN
MILLION DOLLARS ($11,000,000.00) in accordance with the amortization schedule
contained in the Loan Agreement (defined below), plus all interest accrued
thereon, on the Maturity Date.
Borrower further promises to pay interest from the date hereof on the
balance of said principal from time to time outstanding at a per annum rate or
rates determined pursuant to the Loan Agreement. Upon the occurrence of any
Event of Default as defined in the Loan Agreement, or at the option of Lender
upon the occurrence of a Default as defined in the Loan Agreement, all
outstanding principal and, to the extent permitted by law, accrued interest in
respect of this Term Note (this "Note"), and all other amounts owing hereunder
shall bear interest, payable on demand, at the Default Rate set forth in the
Loan Agreement. In addition, such default rate of interest shall apply after
Maturity, whether by acceleration or otherwise. All such interest shall be
computed on the basis of a year deemed to consist of 360 days and paid for the
actual number of days elapsed. Interest shall be payable on such dates as are
provided under the Loan Agreement.
Both principal and interest are payable in Dollars to Lender at its office
at 800 Market Street, St. Louis, Missouri 63101 (Attention: Jeffrey S. Potts).
This Note is the Term Note referred to in, and is issued under the terms
of, and pursuant to the provisions of, that certain Loan Agreement dated as of
even date herewith between Lender and Borrower (as it may be amended, restated,
extended, renewed, replaced, or otherwise modified from time to time, the "Loan
Agreement"). All capitalized terms used and not otherwise defined herein shall
have the same meanings as given them in the Loan Agreement.
This Note is secured by the Collateral described in the Loan Documents,
executed from time to time by Borrower in favor of Lender as set forth in the
Loan Agreement and reference to the Loan Documents and the Loan Agreement is
made for a statement of the rights of the Lender with respect to such
Collateral.
Borrower shall prepay the principal amount of this Note to the extent
provided in the Loan Agreement. Borrower may prepay the principal amount of this
Note to the extent and upon the conditions provided in the Loan Agreement.
The date and amount of all disbursements and receipts representing
principal and receipts of interest by Lender with respect to the Term Loan shall
be recorded by Lender in the records it maintains with respect thereto. The
failure to record, or any error in recording, any of the foregoing shall not,
i
<PAGE> 11
however, affect the obligations of Borrower under this Note to repay the
principal amount advanced hereunder together with all interest accruing thereon.
Such record as maintained by Lender shall constitute prima facie evidence of the
amount outstanding under this Note.
Reference is made to the Loan Agreement for provisions regarding the
acceleration of the maturity hereof on the occurrence of any Event of Default,
which provisions are incorporated herein by this reference.
If Borrower sells, assigns, transfers or conveys all or any part of the
Real Property Collateral or any interest therein without the prior written
consent of Lender as required by the Loan Agreement, all outstanding principal
and accrued interest under this Note shall become immediately due and payable.
If any payment required under this Note or the Loan Agreement is not made
when due, or upon any other Event of Default, Borrower shall pay all costs of
collection on this Note, including but not limited to court costs and reasonable
attorneys fees and actual expenses of such attorneys, whether or not litigation
is commenced, including representation of Lender in connection with any
bankruptcy or insolvency proceeding of Borrower.
Demand for payment, protest, notice of dishonor, and all other notices and
demands under this Note and any and all lack of diligence in the enforcement of
this Note are hereby waived by all who are or shall become parties to this Note
and the same hereby assent to each and every extension or postponement of the
time of payment, at or after demand, or other indulgence, and hereby waive any
and all notice thereof. Every such party by becoming a party to this Note
further waives any and all defenses which such party may have based on
suretyship or impairment of collateral with respect to this Note.
No amendment, modification or waiver of any provision of this Note, nor
consent to any departure by Borrower herefrom, shall be effective unless the
same shall be in writing signed by an authorized officer of Lender, and then
only in the specific instance and for the purpose for which given. No failure on
the part of Lender to exercise, and no delay in exercising, any right under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by Lender of any right under this Note preclude any other or further exercise
thereof, or the exercise of any other right. Each and every right granted to
Lender under this Note or allowed to it at law or in equity shall be deemed
cumulative and such remedies may be exercised from time to time concurrently or
consecutively at Lender's option.
All notices required to be given or which may be given in connection with
this Note shall be given in the manner required for notices under the Loan
Agreement.
This Note is governed by and shall be interpreted in accordance with the
laws of the State of Missouri, without regard to choice of conflict of laws
rules.
This Note is an amendment and restatement of the Term Note from Borrower
to The Boatmen's National Bank of St. Louis dated as of June 25, 1996.
[SIGNATURE PAGE FOLLOWS]
ii
<PAGE> 12
LABARGE/STC, INC. LABARGE WIRELESS, INC.
by its ____________________________ by its ____________________________
___________________________________ ___________________________________
Notice Address: Notice Address:
C/O LaBarge, Inc. C/O LaBarge, Inc.
9900A Clayton Road 9900A Clayton Road
St. Louis, MO 63124 St. Louis, MO 63124
Attn: William J. Maender Attn: William J. Maender
FAX # 812-9438 FAX # 812-9438
TEL # 997-0800 TEL # 997-0800
LABARGE WIRELESS, INC.
by its ____________________________
___________________________________
Notice Address:
LaBarge, Inc.
9900A Clayton Road
St. Louis, MO 63124
Attn: William J. Maender
FAX # 812-9438
TEL # 997-0800
iii
<PAGE> 13
EXHIBIT C
ADDITIONS TO THE DISCLOSURE SCHEDULE OF THE ORIGINAL LOAN AGREEMENT
If none listed, there are none.
i
<PAGE> 14
AMENDED AND RESTATED TERM NOTE
$11,000,000.00 St. Louis, Missouri
September 25, 1998
For value received, LABARGE, INC., a Delaware corporation ("LaBarge"),
LABARGE/STC, INC., a Texas Corporation ("LSTC"), and LABARGE WIRELESS, INC., a
Missouri corporation ("LWI") (LaBarge, LSTC, and LWI are referred to both
individually and collectively herein as "Borrower") promise, jointly and
severally, to pay to the order of NATIONSBANK, N.A. (successor by merger to The
Boatmen's National Bank Of St. Louis) ("Lender") the principal sum of ELEVEN
MILLION DOLLARS ($11,000,000.00) in accordance with the amortization schedule
contained in the Loan Agreement (defined below), plus all interest accrued
thereon, on the Maturity Date.
Borrower further promises to pay interest from the date hereof on the
balance of said principal from time to time outstanding at a per annum rate or
rates determined pursuant to the Loan Agreement. Upon the occurrence of any
Event of Default as defined in the Loan Agreement, or at the option of Lender
upon the occurrence of a Default as defined in the Loan Agreement, all
outstanding principal and, to the extent permitted by law, accrued interest in
respect of this Term Note (this "Note"), and all other amounts owing hereunder
shall bear interest, payable on demand, at the Default Rate set forth in the
Loan Agreement. In addition, such default rate of interest shall apply after
Maturity, whether by acceleration or otherwise. All such interest shall be
computed on the basis of a year deemed to consist of 360 days and paid for the
actual number of days elapsed. Interest shall be payable on such dates as are
provided under the Loan Agreement.
Both principal and interest are payable in Dollars to Lender at its office
at 800 Market Street, St. Louis, Missouri 63101 (Attention: Jeffrey S. Potts).
This Note is the Term Note referred to in, and is issued under the terms
of, and pursuant to the provisions of, that certain Loan Agreement dated as of
even date herewith between Lender and Borrower (as it may be amended, restated,
extended, renewed, replaced, or otherwise modified from time to time, the "Loan
Agreement"). All capitalized terms used and not otherwise defined herein shall
have the same meanings as given them in the Loan Agreement.
This Note is secured by the Collateral described in the Loan Documents,
executed from time to time by Borrower in favor of Lender as set forth in the
Loan Agreement and reference to the Loan Documents and the Loan Agreement is
made for a statement of the rights of the Lender with respect to such
Collateral.
Borrower shall prepay the principal amount of this Note to the extent
provided in the Loan Agreement. Borrower may prepay the principal amount of this
Note to the extent and upon the conditions provided in the Loan Agreement.
The date and amount of all disbursements and receipts representing
principal and receipts of interest by Lender with respect to the Term Loan shall
be recorded by Lender in the records it maintains with respect thereto. The
failure to record, or any error in recording, any of the foregoing shall not,
however, affect the obligations of Borrower under this Note to repay the
principal amount advanced hereunder together with all interest
<PAGE> 15
accruing thereon. Such record as maintained by Lender shall constitute prima
facie evidence of the amount outstanding under this Note.
Reference is made to the Loan Agreement for provisions regarding the
acceleration of the maturity hereof on the occurrence of any Event of Default,
which provisions are incorporated herein by this reference.
If Borrower sells, assigns, transfers or conveys all or any part of the
Real Property Collateral or any interest therein without the prior written
consent of Lender as required by the Loan Agreement, all outstanding principal
and accrued interest under this Note shall become immediately due and payable.
If any payment required under this Note or the Loan Agreement is not made
when due, or upon any other Event of Default, Borrower shall pay all costs of
collection on this Note, including but not limited to court costs and reasonable
attorneys fees and actual expenses of such attorneys, whether or not litigation
is commenced, including representation of Lender in connection with any
bankruptcy or insolvency proceeding of Borrower.
Demand for payment, protest, notice of dishonor, and all other notices and
demands under this Note and any and all lack of diligence in the enforcement of
this Note are hereby waived by all who are or shall become parties to this Note
and the same hereby assent to each and every extension or postponement of the
time of payment, at or after demand, or other indulgence, and hereby waive any
and all notice thereof. Every such party by becoming a party to this Note
further waives any and all defenses which such party may have based on
suretyship or impairment of collateral with respect to this Note.
No amendment, modification or waiver of any provision of this Note, nor
consent to any departure by Borrower herefrom, shall be effective unless the
same shall be in writing signed by an authorized officer of Lender, and then
only in the specific instance and for the purpose for which given. No failure on
the part of Lender to exercise, and no delay in exercising, any right under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by Lender of any right under this Note preclude any other or further exercise
thereof, or the exercise of any other right. Each and every right granted to
Lender under this Note or allowed to it at law or in equity shall be deemed
cumulative and such remedies may be exercised from time to time concurrently or
consecutively at Lender's option.
All notices required to be given or which may be given in connection with
this Note shall be given in the manner required for notices under the Loan
Agreement.
This Note is governed by and shall be interpreted in accordance with the
laws of the State of Missouri, without regard to choice of conflict of laws
rules.
This Note is an amendment and restatement of the Term Note from Borrower
to The Boatmen's National Bank of St. Louis dated as of June 25, 1996.
[SIGNATURE PAGE FOLLOWS]
2
<PAGE> 16
LABARGE/STC, INC. LABARGE WIRELESS, INC.
by its VP-Secretary by its VP-Secretary
/s/ William J. Maender /s/ William J. Maender
- ----------------------------------- -----------------------------------
Notice Address: Notice Address:
C/O LaBarge, Inc. C/O LaBarge, Inc.
9900A Clayton Road 9900A Clayton Road
St. Louis, MO 63124 St. Louis, MO 63124
Attn: William J. Maender Attn: William J. Maender
FAX # 812-9438 FAX # 812-9438
TEL # 997-0800 TEL # 997-0800
LABARGE WIRELESS, INC.
by its VP - Finance & Secretary
/s/ William J. Maender
-----------------------------------
William J. Maender
Notice Address:
LaBarge, Inc.
9900A Clayton Road
St. Louis, MO 63124
Attn: William J. Maender
FAX # 812-9438
TEL # 997-0800
3
<PAGE> 17
AMENDED AND RESTATED REVOLVING NOTE
$15,000,000.00 St. Louis, Missouri
September 25, 1998
For value received, LABARGE, INC., a Delaware corporation ("LaBarge"),
LABARGE/STC, INC., a Texas corporation ("LSTC"), and LABARGE WIRELESS, INC., a
Missouri corporation ("LWI") (LaBarge, LSTC, and LWI are referred to both
individually and collectively herein as "Borrower"), promise, jointly and
severally, to pay to the order of NATIONSBANK, N.A. (successor by merger to The
Boatmen's National Bank Of St. Louis) ("Lender") the principal sum of FIFTEEN
MILLION DOLLARS ($15,000,000.00) or such lesser aggregate unpaid principal
amount as shall be outstanding under this Revolving Note (this "Note"), plus all
interest accrued thereon, on the Maturity Date.
Borrower further promises to pay interest from the date hereof on the
balance of said principal from time to time outstanding at a per annum rate or
rates determined pursuant to the Loan Agreement (defined below). Upon the
occurrence of any Event of Default as defined in the Loan Agreement, or at the
option of Lender upon the occurrence of a Default as defined in the Loan
Agreement, all outstanding principal and, to the extent permitted by law,
accrued interest in respect of this Note and all other amounts owing hereunder
shall bear interest, payable on demand, at the Default Rate set forth in the
Loan Agreement. In addition, such default rate of interest shall apply after
Maturity, whether by acceleration or otherwise. All such interest shall be
computed on the basis of a year deemed to consist of 360 days and paid for the
actual number of days elapsed. Interest shall be payable on such dates as are
provided under the Loan Agreement.
Both principal and interest are payable in Dollars to Lender at its office
at 800 Market Street, St. Louis, Missouri 63101 (Attention: Jeffrey S. Potts).
This Note is the Revolving Note referred to in, and is issued under the
terms of, and pursuant to the provisions of, that certain Loan Agreement dated
as of even date herewith, between Lender and Borrower (as it may be amended,
restated, extended, renewed, replaced, or otherwise modified from time to time,
the "Loan Agreement"). All capitalized terms used and not otherwise defined
herein shall have the same meanings as given them in the Loan Agreement.
This Note is secured by the Collateral described in the Loan Documents,
executed from time to time by Borrower in favor of Lender as set forth in the
Loan Agreement and reference to the Loan Documents and the Loan Agreement is
made for a statement of the rights of the Lender with respect to such
Collateral.
Borrower shall prepay the principal amount of this Note to the extent
provided in the Loan Agreement. Borrower may prepay the principal amount of this
Note to the extent and upon the conditions provided in the Loan Agreement.
The date and amount of all disbursements and receipts representing
principal and receipts of interest by Lender with respect to the Revolving Loan
shall be recorded by Lender in the records it maintains with respect thereto.
The failure to record, or any error in recording, any of the foregoing shall
not, however, affect the obligations of Borrower
<PAGE> 18
under this Note to repay the principal amount advanced hereunder together with
all interest accruing thereon. Such record as maintained by Lender shall
constitute prima facie evidence of the amount outstanding under this Note.
Reference is made to the Loan Agreement for provisions regarding the
acceleration of the maturity hereof on the occurrence of any Event of Default,
which provisions are incorporated herein by this reference.
If Borrower sells, assigns, transfers or conveys all or any part of the
Real Property Collateral or any interest therein without the prior written
consent of Lender as required by the Loan Agreement, all outstanding principal
and accrued interest under this Note shall become immediately due and payable.
If any payment required under this Note or the Loan Agreement is not made
when due, or upon any other Event of Default, Borrower shall pay all costs of
collection on this Note, including but not limited to court costs and reasonable
attorneys fees and actual expenses of such attorneys, whether or not litigation
is commenced, including representation of Lender in connection with any
bankruptcy or insolvency proceeding of Borrower.
Demand for payment, protest, notice of dishonor, and all other notices and
demands under this Note and any and all lack of diligence in the enforcement of
this Note are hereby waived by all who are or shall become parties to this Note
and the same hereby assent to each and every extension or postponement of the
time of payment, at or after demand, or other indulgence, and hereby waive any
and all notice thereof. Every such party by becoming a party to this Note
further waives any and all defenses which such party may have based on
suretyship or impairment of collateral with respect to this Note.
No amendment, modification or waiver of any provision of this Note, nor
consent to any departure by Borrower herefrom, shall be effective unless the
same shall be in writing signed by an authorized officer of Lender, and then
only in the specific instance and for the purpose for which given. No failure on
the part of Lender to exercise, and no delay in exercising, any right under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by Lender of any right under this Note preclude any other or further exercise
thereof, or the exercise of any other right. Each and every right granted to
Lender under this Note or allowed to it at law or in equity shall be deemed
cumulative and such remedies may be exercised from time to time concurrently or
consecutively at Lender's option.
All notices required to be given or which may be given in connection with
this Note shall be given in the manner required for notices under the Loan
Agreement.
This Note is governed by and shall be interpreted in accordance with the
laws of the State of Missouri, without regard to choice or conflict of laws
rules.
This Note is an amendment and restatement of the revolving note from
Borrower to The Boatmen's National Bank of St. Louis dated as of June 25, 1996.
[SIGNATURE PAGE FOLLOWS]
2
<PAGE> 19
LABARGE/STC, INC. LABARGE WIRELESS, INC.
by its VP-Secretary by its VP-Secretary
/s/ William J. Maender /s/ William J. Maender
- ----------------------------------- -----------------------------------
Notice Address: Notice Address:
C/O LaBarge, Inc. C/O LaBarge, Inc.
9900A Clayton Road 9900A Clayton Road
St. Louis, MO 63124 St. Louis, MO 63124
Attn: William J. Maender Attn: William J. Maender
FAX # 812-9438 FAX # 812-9438
TEL # 997-0800 TEL # 997-0800
LABARGE WIRELESS, INC.
by its VP-Finance & Secretary
/s/ William J. Maender
-----------------------------------
William J. Maender
Notice Address:
LaBarge, Inc.
9900A Clayton Road
St. Louis, MO 63124
Attn: William J. Maender
FAX # 812-9438
TEL # 997-0800
3
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1998
<PERIOD-END> SEP-27-1998
<CASH> 3,040
<SECURITIES> 0
<RECEIVABLES> 16,184
<ALLOWANCES> 150
<INVENTORY> 19,048
<CURRENT-ASSETS> 40,691
<PP&E> 11,549
<DEPRECIATION> 11,096
<TOTAL-ASSETS> 62,896
<CURRENT-LIABILITIES> 15,953
<BONDS> 0
156
0
<COMMON> 0
<OTHER-SE> 29,999
<TOTAL-LIABILITY-AND-EQUITY> 62,896
<SALES> 24,667
<TOTAL-REVENUES> 24,667
<CGS> 19,289
<TOTAL-COSTS> 22,700
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<INCOME-PRETAX> 1,635
<INCOME-TAX> 603
<INCOME-CONTINUING> 1,032
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