UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
----------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended 9/30/96.
-------
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 0-4538
CYBEX INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 11-1731581
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2100 Smithtown Avenue, Ronkonkoma, New York 11779
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 516-585-9000
------------------------------
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 [_]
On September 30, 1996, the registrant had outstanding 4,369,197 shares of Common
Stock, par value $.10 per share, which is the registrant's only class of common
stock.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
-----------------------------------------------
(Dollars in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------ ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 19,074 $ 17,039 $ 56,863 $ 50,739
Cost and expenses:
Cost of sales 11,602 10,486 33,802 30,208
Selling, general and administrative 7,557 8,965 23,289 26,337
Other income (52) (207) (142) (445)
-------- -------- -------- --------
19,107 19,244 56,949 56,100
-------- -------- -------- --------
Operating loss (33) (2,205) (86) (5,361)
Interest expense 119 480 778 1,134
Interest income 260 402 490 1,181
-------- -------- -------- --------
Income (loss) from continuing operations
before income tax benefit 108 (2,283) (374) (5,314)
Income tax benefit -0- (817) -0- (1,901)
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS 108 (1,466) (374) (3,413)
Income (loss) from discontinued
operations, net -0- 549 (414) 1,350
-------- -------- -------- --------
NET INCOME (LOSS) $ 108 $ 917 $ 788 $ (2,063)
======== ======== ======== ========
INCOME (LOSS) PER SHARE OF COMMON STOCK:
Continuing operations $ 0.02 $ (0.34) $ (0.09) $ (0.78)
Discontinued operations 0.00 0.13 (0.09) 0.31
-------- -------- -------- --------
NET INCOME (LOSS) $ 0.02 $ (0.21) $ (0.18) $ (0.47)
======== ======== ======== ========
</TABLE>
See notes to consolidated condensed financial statements.
2
<PAGE>
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(unaudited)
SEPTEMBER 30, DECEMBER 31,
1996 1995
----- ----
(Dollars in thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 4,808 $ 1,798
Investments -0- 2,476
Accounts receivable 18,157 22,482
Inventories 12,451 12,024
Lease receivables 2,811 574
Net assets of discontinued operations -0- 37,214
Other current assets 5,660 5,466
------- -------
Total Current Assets 43,887 82,034
Property, plant and equipment, net 13,001 13,291
Intangible assets 1,336 1,687
Lease receivables 2,016 1,402
Other assets 405 504
------- -------
$60,645 $98,918
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ -0- $15,250
Current maturities of long term debt 1,655 14,330
Accounts payable 4,875 10,874
Other current liabilities 10,119 13,888
------- -------
Total Current Liabilities 16,649 54,342
Deferred income taxes 1,227 1,227
Long-term debt 3,280 2,715
Stockholders' Equity
Common Stock, par value $.10 per share,
authorized 15,000,000 shares, issued
4,498,802 in 1996 and 4,458,354 in 1995 450 446
Capital surplus 17,485 17,128
Retained earnings 23,313 24,101
Treasury stock at cost (129,605 shares in 1996 and
54,897 shares in 1995) (1,506) (629)
Other (253) (412)
------- -------
Total Stockholders' Equity 39,489 40,634
------- -------
$60,645 $98,918
======= =======
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE>
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
---- ----
(Dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (788) $ (2,063)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,154 3,588
Net changes in operating assets and liabilities (14,943) (18,099)
Change in net assets of discontinued operations 37,214 -0-
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 23,637 (16,574)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,096) (7,418)
Proceeds from sales and maturities of investments 2,476 -0-
Purchases of intangible assets (34) (4,094)
Other -0- (70)
--------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 1,346 (11,582)
FINANCING ACTIVITIES:
Principal payments of short-term borrowings (15,250) -0-
Proceeds from short-term borrowings -0- 13,500
Proceeds from sales of lease receivables 6,168 4,491
Proceeds from long-term debt 2,465 4,500
Principal payments of long-term debt (14,576) (3,055)
Exercise of stock options 232 70
Common shares reacquired (1,012) (2)
Other -0- (158)
--------- ---------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (21,973) 19,346
--------- ---------
INCREASE (DECREASE) IN CASH 3,010 (8,810)
CASH AND CASH EQUIVALENTS -- January 1 1,798 9,746
--------- ---------
CASH AND CASH EQUIVALENTS -- September 30 $ 4,808 $ 936
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE>
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(Dollars in thousands)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and changes in cash flows in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The Company has
reclassified the presentation of certain prior year information to conform to
the current year presentation format.
Effective with the approval of shareholders at the Company's annual meeting of
shareholders on August 7, 1996, the Company's name was changed from Lumex, Inc.
to CYBEX International, Inc.
It is suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the Company's
latest Annual Report on Form 10-K for the year ended December 31, 1995.
NOTE 2 -- DISCONTINUED OPERATIONS
On April 3, 1996, the Company completed the sale of its Lumex Division (the
"Division") to Fuqua Enterprises, Inc. ("Fuqua") for $40,750 in cash and,
accordingly the net assets and operating results of the Division are reflected
as discontinued operations. The sale agreement provides for a post closing
adjustment to the sales price based on the change in the net assets of the
Division from December 31, 1995, through the closing date. The Company has
received notice from Fuqua that it is not in agreement with the stated amount of
certain of the net assets of the Division as of the closing date. Under the
terms of the sale agreement, if the Company and Fuqua are unable to agree on the
recorded amount of net assets, the disputed items will be submitted to
arbitration by an independent accounting firm for resolution.
NOTE 3 -- INVENTORIES
Inventories are valued at the lower of cost or market. Certain inventories
representing 38% and 33% of total inventories at September 30, 1996 and December
31, 1995, respectively, are valued under the last-in first-out (LIFO) method.
The estimated replacement cost of LIFO inventories exceeds stated LIFO cost by
$1,550 and $1,500 at September 30, 1996, and December 31, 1995, respectively.
Inventories were comprised of the following:
September 30, December 31
1996 1995
---- ----
Finished goods $ 4,534 $ 4,160
Work in process 3,590 3,828
Raw materials 4,327 4,036
------- -------
$12,451 $12,024
======= =======
5
<PAGE>
Because the inventory determination under the LIFO method can only be made at
the end of each fiscal year based on the inventory levels and costs at that
point, interim LIFO determinations are based on management's estimates of
expected year-end inventory levels and costs.
Since future estimates of inventory levels and prices are subject to many forces
beyond the control of management, interim financial results are subject to final
year-end LIFO inventory amounts.
NOTE 4 -- REVOLVING CREDIT AGREEMENT
In October 1996, the Company renewed and amended its credit facility to a
committed Revolving Credit Agreement which provides up to $10 million through
October 15, 1998, at the lower of the bank prime rate plus 1/4% or LIBOR plus
2.5% at the time of borrowing. The Company paid a $75,000 facility fee and pays
a commitment fee of 1/4% based on the unused portion of the facility. The credit
facility is principally secured by the Company's trade accounts receivable and
inventories. The Agreement requires the Company to maintain certain financial
ratios and comply with certain other restrictive covenants, including a
restriction on the payment of dividends not to exceed twenty percent (20%) of
current year's net income.
NOTE 5 -- NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common shares and, if applicable, common share
equivalents (dilutive stock options) outstanding during each year as appears
below:
1996 1995
---- ----
Three months ended Sept. 30 4,365,417 4,345,689
Nine months ended Sept. 30 4,400,341 4,350,488
6
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
On April 3, 1996, the Company completed the sale of substantially all the assets
of its Lumex Division for $40,750,000 in cash. Accordingly, the results of
operations of the Lumex Division have been reflected as discontinued operations.
The following discussion, including statistics presented, refers solely to
continuing operations unless otherwise stated.
RESULTS OF OPERATIONS
The following table sets forth selected items from the consolidated statements
of operations as a percentage of sales:
<TABLE>
<CAPTION>
% %
Quarter Ended Inc. Nine Months Ended Inc.
September 30, (Dec.) September 30, (Dec.)
-------------- ------ -------------- -------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 12.0% 100.0% 100.0% 12.1%
Cost of sales 60.8 61.6 10.7 59.5 59.5 11.9
Selling, general and 39.6 52.6 (15.7) 41.0 51.9 (11.6)
administrative
Income/(loss) from continuing
operations before income tax benefit 0.6 (13.4) (0.7) (10.5) 93.0
</TABLE>
1996 vs. 1995:
- --------------
Net sales increased 12.0%, to $19,074,000, in the third quarter 1996 as compared
to net sales of $17,039,000 in the third quarter 1995. For the first nine months
of 1996, net sales increased 12.1%, to $56,863,000, as compared to $50,739,000
for the same period in 1995.
The quarter and year-to-date sales growth was primarily attributable to
significantly higher worldwide shipments of CYBEX variable resistance training
equipment, including the second generation VR2 products, and commercial
treadmills, both introduced in mid 1995. Sales of the Company's other strength
lines, free weight, plate-loaded and modular systems, were also higher in the
periods, while shipments of the BIKE and SEMI were lower due to continued
competitive pricing practices.
Gross margins improved to 39.2% during the third quarter 1996 compared to 38.4%
in the third quarter 1995, due to a favorable product mix offsetting the impact
of increased international shipments which have lower margins. The quarter to
quarter margin comparisons were also affected by production start up costs
incurred in the 1995 quarter for several major new products.
7
<PAGE>
Selling, general and administrative expenses declined $1,408,000, and
$3,048,000, for the three and nine month periods ended September 30, 1996,
respectively, as compared to the same periods in 1995. These expense reductions
were largely attributable to the restructuring plan adopted in the fourth
quarter of 1995, which included the realignment of the Company's sales and
customer service departments, discontinuing its line of consumer products and
workforce reductions. Product development expenses were higher in 1995 due to
accelerated efforts to complete the CYBEX NORM and VR2 product lines which were
successfully introduced in mid 1995.
Interest expense declined significantly as the Company repaid approximately $28
million of bank debt from the proceeds received in the sale of the Company's
Lumex Division in April 1996. Interest income declined due to lower average
balances in the Company's lease receivable portfolio.
The Company has significant carryforward tax losses and has not taken any
additional tax benefit for financial statement purposes.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had a current ratio of 2.64 to 1 and working
capital in excess of $27.2 million, including $4.8 million in cash and cash
equivalents. The Company's financial condition considerably improved during 1996
as a result of the sale of its Lumex Division, completed on April 3, 1996, for
$40.75 million in cash.
Net cash provided by operating activities was $23.6 million during the first
nine months of 1996, including $37.2 million from the sale of the Company's
Lumex Division on April 3, 1996. Cash used in continuing operations of
approximately $13.6 million resulted largely from a $9.7 million decrease in
accounts payable and accrued liabilities, including $2.7 million of payments
made related to $8.2 million of non-recurring charges recorded in the fourth
quarter 1995 and a $2.8 million increase in lease receivables.
Cash provided by investing activities, in excess of $1.3 million, resulted
primarily from $2.5 million of sales and maturities of investments used to fund
operating activities less $1.1 million in purchases of capital equipment during
the quarter.
Cash used in financing activities of $21.9 million resulted primarily from the
repayment of short-term and long-term borrowings of $27.8 million from the
proceeds received in the sale of the Lumex Division less $6.1 million received
from periodic sales of lease receivables.
The Company has a $10 million bank line of credit under which, subsequent to the
sale of its Lumex Division, there were no outstanding borrowings. Management
expects the cash flow generated from its manufacturing operations plus the net
proceeds from the sale of the Lumex Division will be sufficient to meet its
general working capital and capital expenditure requirements, including those
related to the restructuring of its continuing operations. The Company's finance
subsidiary is expected to continue to support its working capital requirements
through periodic sales of its lease portfolios to third party financial
institutions.
8
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Annual Meeting of Stockholders of the Company was held on
August 7, 1996.
(b) Voting for the election of directors of the Company:
For Withheld
--- --------
Kay Knight Clarke 4,298,593 37,181
J. Raymond Elliott 4,301,248 34,526
Thomas W. Kahle 3,736,067 599,707
Robert R. McMillan 4,287,774 48,000
4,312,439 shares were voted in favor of the proposal to approve
an Amendment to the Company's Restated Certificate of
Incorporation to change the name of the Company to CYBEX
International, Inc., with 14,754 shares voted against and 8,581
abstentions.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
10(xviii) Amended and Restated Employment Agreement, dated May 9,
1996, between J. Raymond Elliott and the Company (filed
herewith)
10(xix) Severance Agreement, dated August 22, 1996, between
Robert McNally and the Company (filed herewith)
27 Financial Data Schedules (filed herewith)
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
September 30, 1996.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CYBEX International, Inc.
-------------------------
Date: November 14, 1996 By /s/ J. Raymond Elliott
----------------- ---------------------------------
J. Raymond Elliott
President and
Chief Executive Officer
Date: November 14, 1996 By /s/ Robert McNally
----------------- ---------------------------------
Robert McNally
Sr. Vice President and
Chief Financial Officer
10
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
10(xviii) Amended and Restated Employment Agreement, dated May 9,
1996, between J. Raymond Elliott and the Company (filed herewith)
10(xix) Severance Agreement, dated August 22, 1996, between Robert
McNally and the Company (filed herewith)
27 Financial Data Schedules (filed herewith)
11
EXHIBIT 10 (xviii)
[LETTERHEAD OF LUMEX, INC.]
May 9, 1996
Mr. J. Raymond Elliott
6169-5th Line Eramosa Township
Wellington County, Ontario NOB 2KO
Dear Ray:
This letter confirms our agreement to amend and restate the terms of
your employment with Lumex, Inc. (the "Company"), as follows:
1. Term. Your employment will be for a term of three years beginning
September 1, 1995 through August 31, 1998 (the "Term"). If the Company does not
extend or renew this Agreement at the end of the Term, the Company shall make a
termination payment equal to your Base Salary, at the annual rate in effect at
the time of such termination, for a period of 12 months after the effective date
of termination. In this case, the Base Salary shall be paid to you in such
intervals and in the same manner as it was paid immediately prior to the end of
the Term.
2. Duties.
(a) You shall serve as the Company's President and Chief Executive
Officer, which shall be the most senior officer of the Company. As such, you
shall have all the functions, duties and responsibilities of a President and
Chief Executive Officer, and all other senior executives of the Company shall
report to you.
(b) During the Term, you shall devote your full business time and
energies to the business and affairs of the Company, and shall not accept other
employment, except that, if approved by the Company's Board of Directors (the
"Board"), you may serve as a member of one of the boards of directors of other
companies. You shall use your best efforts and abilities to promote the
interests of the Company, to serve as a director or officer of any subsidiary of
the Company to which you are elected and you shall perform such duties
consistent with your status as Chief Executive Officer as may be assigned to you
by the Board.
(c) So long as you shall comply with your obligations under this
Agreement and you continue to be employed by the Company as its President and
Chief Executive Officer, throughout the Term, you shall be proposed for election
to the Board. As an executive of the
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 2
Company and a member of the Board, you will be a "covered person" under the
Company's policy of directors' and officers' liability insurance.
(d) You will perform your services principally at the Company's
principal executive office in or near Colorado Springs, Colorado, acknowledging
that the nature of your duties will require reasonable domestic and
international travel from time to time.
3. Compensation. Your compensation shall consist of the salary and
benefits described below:
(a) A base salary at the annual rate of $300,000 ("Base Salary").
The Compensation Committee of the Board shall review the Base Salary in 1997,
and depending upon the Company's 1996 Results of Operations, Base Salary shall
be subject to an increase in 1997. Such review shall occur not later than March
31, 1997, and shall be effective as of January 1, 1997. Thereafter, Base Salary
shall be reviewed in accordance with the Company's customary practices
respecting executive compensation, but which in any event will occur at least
once in each calendar year.
(b) You shall participate in the Company's Bonus Incentive
Compensation Plan (the "BIC Plan") in accordance with its terms, except that the
following special provisions shall be applicable to you:
(i) Your "Target" shall be 50%, your "Maximum" 100% and your
"Max-Max" 150%, as each term is defined in the BIC Plan.
(ii) Whether or not the 1996 Target is achieved, you shall
receive on September 1, 1996 a minimum, non-forfeitable allowance of $70,000
under the BIC Plan for the year ending December 31, 1996, and if it develops
that you are entitled under the BIC Plan to more than $70,000 for such year,
such balance shall be paid in 1997 in accordance with the terms of the BIC Plan;
and
(iii) At your election, you may receive between 10% and 40% of
the amount payable to you under the BIC Plan in the form of the Company's common
stock, converted at a value equal to 85% of its market value, all in accordance
with the BIC Plan.
(c) You shall be granted the following under the Company's 1995
Omnibus Incentive Plan, based on the value of the Company's common stock as of
the close of trading on August 2, 1995:
(i) A restricted stock grant of 25,000 shares of restricted
common stock, in accordance with the terms of a Restricted Stock Award agreement
which will provide, among other things, that 20% of such restricted common stock
will vest on each anniversary date of your
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 3
employment, but if any "Change of Control" (as defined in paragraph 9) occurs
sooner, all 25,000 shares of the restricted stock will vest on the effective
date of the Change of Control;
(ii) A restricted stock grant of 20,000 shares of restricted
common stock, in accordance with the terms of a Restricted Stock Award agreement
which will provide, among other things, that 100% of such restricted common
stock will vest on the earliest of (A) February 8, 1995, (B) the effective date
of a Change of Control and (C) if a "Partial Sale" (as defined in paragraph 9)
occurs, on the effective date of the Partial Sale;
(iii) A non-qualified stock option for 25,000 shares of common
stock, in accordance with a grant letter which will provide, among other things,
that such options will vest at the rate of 25% each year beginning on the first
anniversary of your employment, but if any Change of Control or Partial Sale
occurs sooner, the option will 100% vest on the effective date of the Change of
Control or Partial Sale.
(d) You shall receive reimbursement for your reasonable
out-of-pocket expenses in connection with searching for a residence in the
vicinity of the Company's principal executive office, which shall be in the
Colorado Springs area. This shall include real estate broker's fees or
commissions for the sale of your current residence, mortgage "points" and your
actual out-of-pocket moving costs. You also will receive all other amounts which
are payable in accordance with the Company's re-location policies covering its
most senior executives.
(e) The Company will arrange to have your existing residence in
Ontario, Canada purchased through either its relocation service, PHH Home Equity
or a suitable relocation service of your choosing. The Company also shall pay
you up to $35,000 to reimburse you for your "Market Loss" (defined below)
associated with purchasing your existing residence through the relocation
service. Market Loss shall be computed by subtracting from the actual gross
sales price of such residence the market value of same, as determined averaging
two appraisals by companies selected by the relocation service. The Company
shall tax protect you for the amount of the Market Loss it pays to you, by
paying you additional compensation sufficient to reimburse you for the federal
and state income tax, at your highest marginal rate, that you are required to
pay on any Market Loss payment to you under this paragraph ("Tax
Reimbursement"). The amount of the Tax Reimbursement shall be determined by and
set forth in a certificate of your tax accountant, subject to review by the
Company's accountants.
(f) You shall be reimbursed for your actual ordinary and reasonable
out-of-pocket expenses incurred in the conduct of the Company's business. You
shall either receive an annual automobile allowance (payable in monthly
installments) or be furnished with a company-leased automobile, in either case
commensurate with your position as and in accordance with the policies and
procedures that the Company applies to its most senior executive officer.
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 4
(g) A supplemental insurance benefit which will provide you with up
to $10,000 to be used for any one or more of the following purposes:
(i) either (A) your purchase of an individual policy of health
insurance covering any gaps in the coverage for you and your family that is
available under the Company's group health insurance plan or (B) your expenses
for providing medical care to you and your family members that are not paid or
reimbursed under the Company's group health insurance plan due to the
application of deductibles, co-insurance or exclusions;
(ii) your purchase of life insurance to provide benefits up to
three times your Base Salary; and
(iii) a policy of disability insurance which would reduce or
eliminate the waiting period under the Company's group disability program and/or
increase the monthly benefit available to you under that program.
(h) All compensation and benefits shall be subject to all
withholdings that the Company determines are required by federal, state or local
law, and to such deductions as may be applicable under the various benefit plans
in which you participate.
4. Other Benefits. In addition to the compensation and benefits
described in paragraph 3, you shall receive paid vacation of four weeks in each
calendar year, in accordance with the policies and procedures that the Company
applies to a senior executive officer. You shall be eligible for and participate
in sick leave and coverage under any life, health, dental, disability or other
insurance programs made available to other senior executive officers
("Benefits"). You shall also be eligible to participate in any pension,
profit-sharing, restricted stock award, stock option or other future employment
benefit, incentive or compensation program made available to senior executive
officers of the Company, and where appropriate, with special application to you
as Chief Executive Officer ("Executive Benefits").
5. Termination. Termination of employment can occur in the following
manner:
(a) The Company shall have the right to terminate this Agreement
"for cause", which as used herein shall be limited to one or more of the
following:
(i) fraud or embezzlement, or conviction of a felony or the
entry of a plea (including a plea of nolo contendere) for any felony.
(ii) breach of your material obligations under the
confidentiality or non-competition obligations described in paragraph 8;
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 5
(iii) any act of moral turpitude or willful misconduct which
either results in your personal enrichment at the Company's expense or, in the
reasonable judgment of the Board, has a material adverse impact on the business
or reputation of the Company or any of its affiliates; or
(iv) your material breach of or willful failure or refusal to
perform your obligations under this Agreement. You will not be considered to
have materially breached this Agreement or willfully failed to perform your
obligations if you correct the same 30 days after the Board provides notice to
you specifying the nature of the breach, failure or refusal, or if the Board
determines that you did not act in bad faith or that your action or inaction was
based on your reasonable belief that it was in the Company's best interests.
(b) If you should die during the Term.
(c) If you become "disabled" during the Term. For the purpose of
this Agreement, disability shall mean either any disability as defined under the
Company's disability insurance policy that is applicable to you, or if no such
policy is available, a determination by a licensed physician practicing in New
York City or Long Island that you have suffered any physical or mental
disability or incapacity which causes you to be incapable of performing the
services required under paragraph 2. You will be considered "disabled" if the
disability actually prevents you from performing such services for a period of
three consecutive months or a total of three months during any twelve-month
period.
(d) The Company may terminate this Agreement other than for cause,
in which case you shall receive your Base Salary, at the annual rate in effect
at the time of such termination, for a period equal to the greater of (i) the
balance of the Term after the effective date of termination, or (ii) 12 months
from such date ("Severance Pay"). In this case, 50% of the Severance Pay shall
be paid to you in equal payments over three months, and the balance in equal
payments over the applicable Severance Pay continuation period, in such
intervals and in the same manner as Base Salary was paid at the time of
termination. If the Company terminates other than for cause, you also shall
receive a bonus under the BIC Plan if you reach the Target at the date
termination occurs. Any bonus under the BIC Plan will be pro rata, based upon
the month of termination, and shall be paid in the same manner and at the same
time as it would have been paid if you were still employed at the date the BIC
Plan bonus was awarded.
(e) Subject to the provisions of paragraph 9, you shall have the
right to terminate this Agreement if there is a Change of Control.
6. Other Termination Provisions.
(a) Upon any termination of your employment or non-renewal of the
Term, you shall immediately resign from all positions and offices with the
Company and its subsidiaries,
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 6
whether or not you submit a formal letter of resignation. Any termination or
non-renewal shall not affect your confidentiality or non-disclosure obligations
referred to in paragraph 8. At any termination or non-renewal, you shall receive
any restricted stock grants which are then vested, and you shall be entitled to
exercise any stock options which are then exercisable in accordance with the
terms of your stock option grant letter with the Company.
(b) Any termination shall be by notice given in accordance with
paragraph 10(e), shall specify the effective date of termination, and shall
provide the reasons for such action, as required by paragraph 5.
(c) If termination occurs as a result of death, the Company shall
pay to your spouse, if she survives you, or to such persons as your legal
representative may direct if your spouse does not survive you, an amount equal
to your then effective Base Salary and such other compensation or benefits to
which you are entitled, prorated to the date of death. If termination occurs
under paragraphs 5(a), 5(c) or 5(f), the Company's obligations shall be limited
to paying you your then effective Base Salary and any other compensation or
benefits prorated to the effective date of termination.
7. Representations and Covenants.
(a) You represent and warrant to the Company that you are not now
subject to any non-competition, restrictive covenant or other restriction or
agreement which would prevent, limit or impair in any way your ability to
perform all your obligations under this Agreement. You have no obligation to any
former employer or other person which is inconsistent with or conflicts with
your duties and obligations hereunder, and the terms and conditions of the
services to be performed for the Company, as set forth herein. You have not ever
applied for and been denied a resident visa for employment in the United States,
and you know of no reason why you would not be able to obtain the resident visa
necessary for you to enter into this Agreement and perform your services as
contemplated by it.
(b) At the Company's request, you shall complete reasonable medical
examinations from time to time if necessary to obtain insurance on your life for
any "keyman" insurance policy the Company may apply for, or if required under
any Company sponsored benefit plan.
8. Confidentiality, Ownership and Non-Competition Agreements. You
shall sign the same agreements with the Company concerning confidentiality,
ownership of inventions and other discoveries, and non-competition which the
Company customarily requires of its senior executive officers at the same time
you sign this Agreement. A copy of that form of that agreement is annexed.
However, to the extent the non-competition provisions of that agreement cover a
shorter time, the period shall be enlarged to extend through the end of any
period you continue to receive payments under this Agreement, including payments
on Change of Control.
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 7
9. Change of Control.
(a) "Change of Control" means any one of the following:
(i) a change of control of a nature that would be required to
be reported in the Company's proxy statement under the Securities Exchange Act
of 1934, as amended (the "Exchange Act");
(ii) the approval by the Board of a sale of all or
substantially all of the Company's assets to any unrelated third party and the
consummation of such transaction;
(iii) the consummation of any merger, consolidation, or like
business combination or reorganization of the Company which is approved by the
Board and which results either in an event described in clause (i) above.
Change of Control excludes the sale or other disposition (by spin-off, split-off
or otherwise) of all or substantially all of the assets of one of the two
divisions known today as the Lumex and Cybex Divisions of the Company ("Partial
Sale"), under circumstances where you continue to be employed by the remaining
division pursuant to all the terms and conditions of this Agreement. A Partial
Sale, followed by a sale or other disposition of the remaining division does
constitute a Change of Control.
(b) If you wish to exercise your right to terminate your employment
upon a Change of Control you must give the Company at least 90 days' notice not
more than 30 days after any event constituting a Change of Control occurs. Your
failure to give such notice shall preclude you from terminating employment upon
a Change of Control, but only with respect to that occurrence. During the 90 day
period following the delivery of your notice of termination, you shall cooperate
fully with the Company (or its successor) to effect the orderly transfer of your
duties to another person or persons. Notwithstanding the foregoing, upon receipt
of your notice of termination upon a Change of Control, the Company may cause
your termination to become effective prior to the end of the 90 day period (or
if later, the date specified in your notice of termination) upon not less than
two business days' notice.
(c) If you terminate employment upon a Change of Control, the
Company (or its successor) shall pay you an amount equal to the Base Salary, at
the annual rate in effect at the time of such termination, multiplied by 2.99.
Of the amount so determined, 50% shall be paid to you in equal installments for
a period of 12 months after the effective date of termination, and the balance
in equal installments over the next 24 months. In both cases, payments shall be
in such intervals and in the same manner as Base Salary was paid at the time of
termination. In addition, upon your termination of employment due to a Change of
Control, the Company's successor shall for a period of one year after
termination continue for you, and your family where
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 8
applicable, benefits and benefit plans which are essentially equivalent to the
Benefits and Executive Benefits.
(d) Notwithstanding the foregoing, you shall have no right to
terminate upon a Change of Control if you are offered continued employment for
at least three full years following the Change of Control in a comparable
position, with comparable responsibilities at comparable total compensation, all
as provided herein. If, within the three-year period following the Change of
Control, you are offered and accept such comparable employment but (i) you are
subsequently demoted to non-comparable employment, (ii) you are terminated
without Cause (as defined in paragraph 5(a)) or (iii) you terminate for "Good
Reason" (determined below), the Company (or its successor) shall pay to you, in
a single installment, an amount equal to the difference between (i) the amount
you actually received in the new employment following the Change of Control and
(ii) your Base Salary, at the annual rate in effect at the time the Change of
Control occurred, multiplied by 2.99. Good Reason means (i) the assignment of
any duties inconsistent in any material respect with the your position
immediately prior to the Change of Control (including office, titles and
reporting requirements), (ii) material decrease in your authorities, duties and
responsibilities, (iii) any material negative changes to Base Salary, annual
bonuses, incentives, stock plans, savings and incentive plans, welfare/benefits
plans, expense policies, fringe benefits, or your office, support staff, (iv)
failure of the Company's successor to take all measures necessary to maintain in
full force and effect the current status of your H/1B visa (or equivalent status
necessary to enable you to continue to be employed in the United States as
contemplated by this Agreement) or (v) any requirement that you relocate to an
office other than the principal executive office of the Company or its successor
or that you move your personal residence from the Colorado Springs area. Also,
you would have Good Reason to terminate if there was an attempt to terminate
your employment other than for cause, as expressly permitted by paragraph 5(a)
of this Agreement.
(e) If there is a Change of Control prior to May 1, 1997 and at that
time you had not yet sold your Ontario residence, the Company shall pay you for
the full amount of your Market Loss (and Tax Reimbursement), without regard to
the $35,000 limitation described in paragraph 3(e).
10. Miscellaneous.
(a) Your obligations under this Agreement are not assignable (except
as provided in paragraph 6(c)) and shall not be delegated. This Agreement and
all of the Company's rights and obligations hereunder may be assigned or
transferred to and shall be assumed by and be binding upon any corporation or
other business entity which, by merger, consolidation, purchase of the assets or
otherwise, including after a Change of Control, acquires all or a material part
of the assets of the Company.
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 9
(b) If any provision contained in this Agreement or the agreements
referred to in paragraph 8 is determined to be unenforceable for any reason, the
remainder of this Agreement or such other agreements shall be construed as if
such provision was not included, and the remaining parts shall continue in full
effect. If the unenforceability relates to the scope, duration or the area
covered by any non-competition agreement, we agree that the court making such
determination shall have the power to reduce the breadth of its scope or the
duration or area of such restriction, and in reduced form, such restriction
shall then be enforceable.
(c) This Agreement is executed and delivered in the State of New
York and shall be interpreted in accordance with New York law, without regard to
its principles of conflicts of laws. Any action or proceeding to enforce any
provisions of this Agreement may be brought in a federal or state court located
in the Denver/Colorado Springs vicinity, and any such action may be commenced
and process served as provided in the laws or rules applicable to the federal or
state court where the action is brought.
(d) This Agreement and those referred to in paragraph 8 constitute
the entire understanding of the parties with respect to your employment with the
Company, and they may not be amended, and none of their respective provisions
may be waived other than by a writing signed by both of us.
(e) All notices and other communications required or permitted
hereunder shall be in writing and shall be sufficient if delivered personally,
sent by any national overnight courier or mailed by certified mail, return
receipt requested, to the addresses indicated on page one. Any item delivered in
accordance with the provisions of this paragraph shall be deemed to have been
delivered (i) on the date of personal delivery, (ii) on the business day
following the date sent by overnight courier or (iii) on the fifth business day
following the date on which it was so mailed, as the case may be. Notice to the
Company shall be to the attention of its Chief Financial Officer.
(f) You shall receive all your payments in and all dollar references
in this letter are to U.S. dollars.
(g) Subject to your compliance with the agreements referred to in
paragraph 8, your right to receive the payments set forth herein on termination
or non-renewal is otherwise unconditional. Accordingly, you shall not be
required to mitigate by seeking new employment or substitute sources of income.
Further, your obtaining other employment or positions (subject to compliance
with the agreements referred to in paragraph 8) shall not affect your right to
receive and the Company's obligation to pay or provide you with all the
termination or non-renewal payments and benefits provided herein.
<PAGE>
Mr. J. Raymond Elliott
May 9, 1996
Page 10
Please countersign this letter where indicated, whereupon it will
become effective to amend and restate your Employment Agreement, effective the
date hereof.
Sincerely,
LUMEX, INC.
By: /s/ John C. Spratt
--------------------------------
Name: John C. Spratt
Title: Chairman of the Board
Accepted and Agreed to:
/s/ J. Raymond Elliott
- ------------------------------
J. Raymond Elliott
EXHIBIT 10 (xix)
SEVERANCE AGREEMENT
AND GENERAL RELEASE
Lumex, Inc., its successors, predecessors, assigns, related
companies, employees, agents, and directors ("Lumex") and Robert
McNally ("Mr. McNally") hereby agree as follows:
Lumex's Promises
----------------
In return for Mr. McNally's permanent resignation of his
employment and his waiver of claims contained herein, Lumex makes the
following promises:
1. Lumex shall continue to employ Mr. McNally in his present
capacity for a period of time hereinafter called the "Transitional
Period", under the same terms and conditions as his current
employment. This Transitional Period will end on September 1, 1996,
except that Lumex may at its option extend the Transitional Period
through March 31, 1997, or through any date between September 1 and
March 31, 1997.
2. Following the Transitional Period, Lumex shall pay Mr.
McNally severance pay at the rate of $15,750.00 per month, less
appropriate tax withholdings and other applicable payroll deductions,
for a period of twenty-eight (28) months. This 28-month period shall
hereinafter be called the "Severance Period."
3. In addition to the payments described in paragraph 2 above,
Lumex shall pay to Mr. McNally at the end of the
<PAGE>
Transitional Period a supplemental severance bonus in the amount of
$47,250.00, plus payment for any unused accrued vacation time.
4. For the first twelve months of the transitional period,
Lumex shall provide continued health insurance benefits to Mr.
McNally, provided that Mr. McNally shall prepay to Lumex the premiums
for such insurance on a monthly basis, in the same manner as former
Lumex employees prepay insurance premiums under the COBRA law. After
this twelve-month period is over, Lumex shall permit Mr. McNally to
pay the premiums for continued health insurance coverage pursuant to
the COBRA law. Lumex's obligations under this paragraph shall be
deemed fully satisfied if it uses its best efforts to provide
continued health insurance benefits under the conditions set forth in
this paragraph. If for any reason continued health insurance coverage
is not available under the conditions set forth in this paragraph,
despite Lumex's best efforts, then Mr. McNally shall have no claim
against Lumex under this paragraph. The health insurance benefit to
be provided pursuant to this paragraph shall be the same such benefit
as Lumex provides during the month in question for its highest-ranking
corporate executives.
5. Lumex will pay up to $5,000.00 for outplacement services
provided to Mr. McNally.
6. In the event that a "Change of Control" occurs, as
hereinafter defined, all payments still required to be made by
<PAGE>
Lumex to Mr. McNally under this Agreement shall be accelerated, and
due within thirty days of the date of the closing of the transaction
that gave rise to the Change of Control. "Change of Control" means
either of the following: (a) a change of control of such a nature that
would be required to be reported in Lumex's proxy statement under the
Securities Exchange Act of 1934, as amended, and that has been
consummated; (b) the approval by Lumex's Board of Directors of a sale
of all or substantially all of Lumex's assets to any unrelated third
party and the consummation of such transaction. Notwithstanding the
above, a sale of Lumex's rehabilitation product line or any part
thereof shall not be deemed a "Change in Control," and no transaction
shall be deemed a "Change in Control" unless and until it has been
consummated through a closing.
7. Lumex will permit Mr. McNally to revoke this Agreement
within seven (7) days after he signs it, as provided in paragraph 20
below.
8. Lumex shall have no obligation to Mr. McNally whatsoever
other than as set forth in this Agreement, and as required by law. No
promises have been made to Mr. McNally other than as set forth in this
Agreement. This Agreement supersedes all other written or oral
agreements between Lumex and Mr. McNally, except for any
confidentiality and/or noncompetition agreements, which survive
according to their terms to the extent
<PAGE>
consistent with this Agreement; provided, that the twelve-month period
of time in Paragraph 2(c) of the September 28, 1995 Technical
Information and Non-Competition Agreement shall be construed to begin
running at the end of the Severance Period.
Mr. McNally's Promises
----------------------
In return for Lumex's promises set forth above, Mr. McNally makes
the following promises and assurances:
9. Mr. McNally hereby resigns from his employ at Lumex,
effective at the end of the Transitional Period.
10. Mr. McNally's resignation is final and irrevocable, except
to the extent that Mr. McNally revokes this Agreement pursuant to
paragraph 20 below.
11. Immediately upon the end of the Transitional Period, Mr.
McNally agrees to return to Lumex all property owned or leased by
Lumex that is in his possession or control, including but not limited
to all keys, computer printouts, customer lists, manuals,
correspondence, memoranda, and all other documents.
12. Mr. McNally agrees not to use or to disclose to any person
any confidential information obtained by him in the course of his
employment with Lumex. This information includes, but is not limited
to, the identity and location of Lumex's customers, customer ordering
history, pricing information, product development plans, information
concerning manufacturing processes, and other trade secrets.
<PAGE>
13. During the Transitional Period, Mr. McNally shall continue
to devote his full working energies to his duties and his
responsibilities.
14. Mr. McNally agrees to be available on a consulting basis,
without additional compensation, to aid in the 1996 year-end audit and
in l0(k) filings. It is understood that such services shall not be
full-time.
15. Mr. McNally agrees that he shall cooperate with Lumex fully
with regard to Lumex's defense of any legal claim brought or
threatened against it or any of its agents by Darlene Vasconcellos,
Charles Boyle, or any other person or entity, if such lawsuit relates
to events or decisions, actual or alleged, occurring during Mr.
McNally's employment by Lumex. Such cooperation shall include, but
not be limited to: a) providing truthful and comprehensive testimony
in depositions, arbitrations, hearings, trials, and other proceedings,
as requested by Lumex counsel; b) providing truthful and comprehensive
affidavits as requested by Lumex counsel; c) meeting with Lumex
counsel and employees as requested to prepare for such testimony, to
facilitate the preparation of such affidavits, and/or to aid Lumex
otherwise in defending any such claim. The obligations agreed to in
this paragraph shall survive indefinitely. In order to enable Lumex
to contact Mr. McNally for the purposes set forth in this paragraph,
Mr. McNally shall
<PAGE>
keep Lumex informed at all times of his addresses and telephone
numbers at home and at work. To the extent permitted by the
exigencies of litigation and the schedules of other persons involved,
Lumex shall give Mr. McNally reasonable notice of the times when he
will be required to fulfill his obligations under this paragraph.
Lumex shall reimburse Mr. McNally for any out-of-pocket expenses
incurred by him in complying with this paragraph.
16. Mr. McNally freely relinquishes and waives all possible
claims against Lumex which may have arisen from the time of his first
contacts with Lumex through the date of his signature on this
Agreement. "All possible claims" includes, but is not limited to, any
claims under Title VII of the Civil Rights Act of 1964, the Equal Pay
Act, the Americans With Disabilities Act, the Civil Rights Acts of
1866, 1871, and 1991, the Age Discrimination in Employment Act, the
Family and Medical Leave Act, the New York Human Rights Law, and all
other federal, state, or local laws. These laws prohibit
discrimination in employment on the basis of sex, race, color,
religion, age, national origin, or disability. This waiver also
includes any claims for wrongful discharge, breach of contract,
infliction of emotional distress, or any other tort, common law, or
contract claim. This waiver includes claims now known to Mr. McNally,
as well as all currently existing claims that are not now known to
him.
<PAGE>
17. Mr. McNally agrees not to file any claim or bring any
lawsuit for any claim waived in paragraph 16, or to permit anyone else
to do so on his behalf. If Mr. McNally breaches this or any other
provision of this Agreement, Lumex will be entitled to an immediate
return or forfeiture of the money paid under paragraphs 2, 3, 5, and 6
of this Agreement, as well as reimbursement for any reasonable
attorneys' fees and/or court costs it is required to expend in its
defense.
18. Mr. McNally acknowledges that his choice to resign and to
waive any potential claims in return for the benefits set forth above
was made after careful thought, and after opportunity to consult with
a lawyer, which Lumex has advised him to do.
19. Mr. McNally acknowledges that he has been granted twenty-one
days to read and consider this Agreement carefully before signing it,
that this was ample time for him to do so, and that he fully
understands and agrees to all of its terms.
20. Mr. McNally may revoke this Agreement within seven (7) days
after he signs it. Revocation can be made by delivering written
notice of revocation to Lumex's chief executive officer. For this
revocation to be effective, the written notice must be received by the
chief executive officer's office no later than the close of business
on the seventh calendar day after Mr. McNally signs the Agreement; or
else the chief executive officer's office must be notified by
telephone by that day that
<PAGE>
the written notice has been mailed, and the notice must be received no
later than five days thereafter with a postmark consistent with that
notification. Although not required, it is recommended that such
notice be sent by certified mail, return receipt requested. If Mr.
McNally revokes this Agreement, the Agreement shall be rescinded in
its entirety, and Lumex will be under no obligation to pay the monies
set forth in paragraphs 2, 3, 5, and 6.
21. If, during the period of time between Mr. McNally's signing
of this Agreement and the effective date of his resignation, Mr.
McNally believes or suspects that Lumex is mistreating him in any way,
Mr. McNally agrees to so notify Lumex's chief executive officer, and
its chairman of the board, immediately by telecopy, with copies sent
by certified mail, return receipt requested.
General
-------
22. The language of all parts of this Agreement shall be
construed as a whole, according to its fair meaning, and not strictly
for or against either party, regardless of who drafted it.
23. Neither Lumex nor Mr. McNally admits by the signing of this
Agreement any wrongdoing whatsoever.
<PAGE>
24. In this Agreement, "Lumex" shall also mean any or all of its
related companies, successors, predecessors, assigns, employees,
agents, and directors. "Mr. McNally" shall also mean
any or all of his heirs, testators, agents, estates, and
representatives.
25. This Agreement, including this paragraph, may not be altered
except by a signed writing. This Agreement may not be changed orally.
NOTICE
THIS AGREEMENT CONTAINS A WAIVER OF ALL KNOWN OR UNKNOWN LEGAL
CLAIMS. READ THIS ENTIRE AGREEMENT CAREFULLY BEFORE SIGNING.
YOU HAVE TWENTY-ONE DAYS TO THINK THIS AGREEMENT OVER BEFORE
SIGNING, AND YOU HAVE SEVEN DAYS TO REVOKE IT AFTER YOU SIGN IT.
DO NOT SIGN THIS AGREEMENT UNLESS YOU UNDERSTAND AND AGREE WITH
ALL OF ITS TERMS.
/s/ Robert McNally /s/ John C. Spratt
----------------------------- ---------------------------
Robert McNally Lumex, Inc.
By:
------------------------
Sworn to before me this 22 Sworn to before me this 13
day of August, 1996 day of August 1996
/s/ Virginia Simmons /s/ Virginia Simmons
----------------------------- ----------------------------
Notary Public Notary Public
Virginia Simmons Virginia Simmons
Notary Public, State of New York Notary Public, State of New York
No. 4837182, Suffolk County No. 4837182, Suffolk County
Term Expires August 31, 1997 Term Expires August 31, 1997
NYFS10...:\80\60380\0001\6678\AGRN146C.060
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information
extracted from the financial statements contained in the
body of the accompanying Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 4,808
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<RECEIVABLES> 20,968
<ALLOWANCES> 0
<INVENTORY> 12,451
<CURRENT-ASSETS> 43,887
<PP&E> 13,001
<DEPRECIATION> 0
<TOTAL-ASSETS> 60,645
<CURRENT-LIABILITIES> 16,649
<BONDS> 3,280
0
0
<COMMON> 450
<OTHER-SE> 39,039
<TOTAL-LIABILITY-AND-EQUITY> 60,645
<SALES> 56,863
<TOTAL-REVENUES> 56,863
<CGS> 33,802
<TOTAL-COSTS> 33,802
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 778
<INCOME-PRETAX> (374)
<INCOME-TAX> 0
<INCOME-CONTINUING> (374)
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<EXTRAORDINARY> 0
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<EPS-DILUTED> (.18)
</TABLE>
