FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 4, 1998
---------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ---------------------
Commission File No. 1-6112
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NORTEK, INC.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 05-0314991
- ---------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Kennedy Plaza, Providence, RI 02903-2360
- ---------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(401) 751-1600
- ---------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last year)
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
---------- -----------
The number of shares of Common Stock outstanding as of May 15, 1998 was
10,981,537. The number of shares of Special Common Stock outstanding as of
May 15, 1998, 1997 was 575,743.
<PAGE> -1-
NORTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollar Amounts in Thousands)
April 4, Dec. 31,
Assets 1998 1997
---- ----
(Unaudited)
Current Assets:
Unrestricted
Cash and cash equivalents $81,091 $ 125,842
Marketable securities available for sale 22,210 35,988
Restricted
Investments and marketable
securities at cost, which approximates
market 6,368 6,348
Accounts receivable, less allowances
of $13,727,000 and $11,047,000 204,487 180,414
Inventories
Raw materials 60,088 72,693
Work in process 19,004 18,399
Finished goods 107,810 85,161
------- -------
186,902 176,253
------- -------
Prepaid expenses 11,705 8,391
Other current assets 10,854 12,627
Net assets of a discontinued operation 27,065 22,386
Prepaid income taxes 46,800 46,800
------- -------
Total current assets 597,482 615,049
-------- --------
Property and Equipment, at Cost:
Land 12,083 12,081
Buildings and improvements 96,952 96,606
Machinery and equipment 252,379 250,677
------- -------
361,414 359,364
Less accumulated depreciation 121,282 116,841
------- -------
Total property and equipment, net 240,132 242,523
------- -------
Other Assets:
Goodwill, less accumulated amortization
of $34,387,000 and $31,773,000 375,639 378,232
Intangible assets 8,477 8,752
Notes receivable and other investments 9,848 9,339
Deferred income taxes 10,476 10,022
Deferred debt expense 20,556 21,066
Other 19,896 19,563
------- -------
444,892 446,974
------- -------
$1,282,506 $1,304,546
========== ==========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
<PAGE> -2-
NORTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Continued)
(Dollar Amounts in Thousands)
April 4, Dec. 31,
1998 1997
----------- --------
(Unaudited)
Liabilities and Stockholders' Investment
Current Liabilities:
Notes payable and other short-term
obligations $ 13,427 $ 11,770
Current maturities of long-term debt 5,898 5,969
Accounts payable 115,534 91,488
Accrued expenses and taxes, net 126,345 164,001
------- -------
Total current liabilities 261,204 273,228
------- -------
Other Liabilities 64,152 67,390
------- -------
Notes, Mortgage Notes and Obligations
Payable, Less Current Maturities 833,459 835,840
------- -------
Stockholders' Investment:
Preference stock, $1 par value; authorized
7,000,000 shares, none issued --- ---
Common stock, $1 par value; authorized
40,000,000 shares; 16,213,423 and
16,050,794 shares issued 16,213 16,051
Special common stock, $1 par value;
authorized 5,000,000 shares; 864,581 and
767,287 shares issued 865 767
Additional paid-in capital 136,736 135,345
Retained earnings 60,266 58,966
Cumulative translation, pension
and other adjustments (6,033) (5,327)
Less --treasury common stock at cost,
7,523,224 and 7,032,497 shares (82,399) (75,779)
--treasury special common stock
at cost, 285,987 and
285,304 shares (1,957) (1,935)
------- -------
Total stockholders' investment 123,691 128,088
------- -------
$1,282,506 $1,304,546
========== ==========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
<PAGE> -3-
NORTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands Except Per Share Amounts)
For The
Three Months Ended
------------------
April 4, March 29,
1998 1997
---- ----
(Unaudited)
Net Sales $392,468 $194,238
------- -------
Costs and Expenses:
Cost of products sold 294,654 136,986
Amortization of acquired goodwill 2,560 712
Selling, general and
administrative expense 75,561 43,078
------- -------
372,775 180,776
------- -------
Operating earnings 19,693 13,462
Interest expense (19,458) (7,323)
Investment income 2,265 1,461
Earnings from continuing
operations before provision
for income taxes 2,500 7,600
Provision for income taxes 1,200 2,900
------- -------
Earnings from continuing operations 1,300 4,700
Loss from discontinued operations --- (1,000)
------- -------
Net Earnings $ 1,300 $ 3,700
======= =======
Net Earnings (Loss) Per Share:
Earnings from continuing operations:
Basic $ .14 $ .48
Diluted $ .13 $ .47
Loss from discontinued operations:
Basic $ --- $ (.10)
-------- --------
Diluted $ --- $ (.10)
-------- --------
Net Earnings:
Basic $ .14 $ .38
======== ========
Diluted $ .13 $ .37
======= ========
Weighted Average Number of Shares:
Basic 9,540 9,723
====== ======
Diluted 9,710 9,964
====== ======
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
<PAGE> -4-
NORTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
For the
Three Months Ended
-----------------------
April 4, March 29,
1998 1997
-------- ---------
Cash Flows from operating activities: (Unaudited)
Net earnings from continuing operations $ 1,300 $ 4,700
Loss from discontinued operations --- (1,000)
-------- --------
Net earnings $ 1,300 $ 3,700
-------- -------
Adjustments to reconcile net earnings to cash:
Depreciation and amortization expense 9,978 4,849
Non-cash interest expense 788 320
Deferred federal income tax
provision 300 400
Changes in certain assets and liabilities, net
of effects from acquisitions and dispositions:
Accounts receivable, net (26,311) (10,192)
Prepaids and other current assets (3,198) (1,855)
Inventories (12,624) (6,511)
Net assets of discontinued operations (4,679) (5,160)
Accounts payable 24,539 8,977
Accrued expenses and taxes (33,601) (8,686)
Long-term assets, liabilities and other, net (220) (1,752)
-------- --------
Total adjustments to net earnings (45,028) (19,610)
-------- --------
Net cash used in operating activities $(43,728) $(15,910)
-------- --------
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
<PAGE> -5-
For the
Three Months Ended
-----------------------
April 4, March 29,
1998 1997
------- --------
Cash Flows from investing activities:
Capital expenditures (5,982) (4,160)
Purchase of investments and marketable
securities --- (111,401)
Proceeds from the sale of investments
and marketable securities 13,977 20,940
Other, net (3,377) (1,069)
--------- --------
Net cash provided by (used in)
investing activities 4,618 (95,690)
--------- -------
Cash Flows from financing activities:
Sale of notes, net --- 169,395
Increase in borrowings 2,078 3,862
Payment of borrowings (2,570) (11,015)
Purchase of Nortek Common and Special Common
Stock (6,642) (6,534)
Other, net 1,493 370
--------- -------
Net cash (used in)provided by financing
activities (5,641) 156,078
--------- -------
Net (decrease)increase in unrestricted
cash and cash equivalents (44,751) 44,478
Unrestricted cash and cash equivalents
at the beginning of the period 125,842 41,042
--------- -------
Unrestricted cash and cash equivalents
at the end of the period $ 81,091 $ 85,520
========= ========
Interest paid $ 37,977 $ 11,547
========= ========
Income taxes paid, net $ 2,171 $ 834
========= ========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
<PAGE> -6-
<TABLE>
<CAPTION>
NORTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE THREE MONTHS ENDED MARCH 29, 1997
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Addi- Accumulated
pecial tional Other Compre- Compre-
Common Common Paid-in Retained Treasury hensive hensive
Stock Stock Capital Earnings Stock Income Income
----- ----- ------- -------- -------- -------- ---------
(Unaudited)
Balance, December 31,
1996 $15,966 $ 784 $135,028 $ 37,766 $(67,537) $ (3,212) $ ---
Net earnings --- --- --- 3,700 --- --- 3,700
Other comprehensive
income:
Translation adjustment --- --- --- --- --- (1,386) (1,386)
Unrealized increase
in the value of
marketable
securities --- --- --- --- --- 62 62
------
Comprehensive income $ 2,376
======
10,666 shares of
special common stock
converted into
10,666 shares of
common stock 11 (11) --- --- --- ---
44,319 shares of
common stock and
5,808 shares of
special common stock
issued upon exercise
of stock options 44 6 283 --- --- ---
280,900 shares of
treasury stock
acquired --- --- --- --- (6,534) ---
-------- ------ -------- -------- -------- --------
Balance, March 29,
1997 $ 16,021 $ 779 $135,311 $ 41,466 $(74,071) $ (4,536)
======== ====== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
<PAGE> -7-
<TABLE>
<CAPTION>
NORTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE THREE MONTHS ENDED APRIL 4, 1998
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Addi- Accumulated
Special tional Other Compre- Compre-
Common Common Paid-in Retained Treasury hensive hensive
Stock Stock Capital Earnings Stock Income Income
----- ----- ------- -------- -------- ---------- ---------
(Unaudited)
Balance, December 31,
1997 $ 16,051 $ 767 $135,345 $ 58,966 $(77,714) $ (5,327) $ ---
Net earnings --- --- --- 1,300 --- --- 1,300
Other comprehensive
income:
Translation adjustment --- --- --- --- --- (657) (657)
Unrealized increase in
the value of market-
able securities --- --- --- --- --- 51 51
Minimum pension
liability, net of
$65 tax benefit. --- --- --- --- --- (100) (100)
-------
Comprehensive income $ 594
=======
3,697 shares of
special common stock
converted into
3,697 shares of
common stock 3 (3) --- --- --- ---
158,932 shares of
common stock and
100,991 shares of
special common stock
issued upon exercise
of stock options 159 101 1,391 --- --- ---
205,423 shares of
treasury stock
acquired --- --- --- --- (6,642) ---
------ ----- -------- ------- ------- -------
Balance, April 4,
1998 16,213 865 136,736 60,266 (84,356) (6,033)
====== ===== ======== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
<PAGE> -8-
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 4, 1998 AND MARCH 29, 1997
(A) The unaudited condensed consolidated financial statements presented
("Unaudited Financial Statements") have been prepared by Nortek,
Inc. and include all of its wholly-owned subsidiaries (the
"Company") after elimination of intercompany accounts and
transactions, without audit and, in the opinion of management,
reflect all adjustments of a normal recurring nature necessary for a
fair statement of the interim periods presented. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted, although, the Company believes that
the disclosures included are adequate to make the information
presented not misleading. Certain amounts in the Unaudited
Financial Statements for the prior period have been reclassified to
conform to the presentation at April 4, 1998, and for all periods
presented, reflect the operations of the Plumbing Products Group as
discontinued operations. (See Note F) It is suggested that these
Unaudited Financial Statements be read in conjunction with the
financial statements and the notes included in the Company's latest
Annual Report on Form 10-K.
(B) In March 1997, the Company sold, $175,000,000 principal amount of
9 1/4% Senior Notes due March 15, 2007 ("9 1/4% Notes") at a slight
discount. The net proceeds were used to refinance certain
outstanding indebtedness of the Company's subsidiaries and for
acquisitions and other general corporate purposes, including
investment in plant and equipment.
(C) Acquisitions are accounted for as purchases and, accordingly, have
been included in the Company's consolidated results of operations
since the acquisition date. Purchase price allocations are subject
to refinement until all pertinent information regarding the
acquisitions is obtained.
On August 26, 1997, a wholly owned subsidiary of the Company
completed the acquisition of Ply Gem Industries, Inc. ("Ply Gem") in
a tender offer for a cash price of $19.50 per outstanding share of
common stock. Prior to accepting for payment the tendered shares of
Ply Gem on August 26, 1997, the Company sold $310,000,000 principal
amount of 9 1/8% Senior Notes due September, 2007 (the "9 1/8%
Notes") at a slight discount. The Company used a portion of these
net proceeds, together with available cash, to purchase the shares
of Ply Gem, fund an approximate $45,000,000 payment to terminate Ply
Gem's existing accounts receivable securitization program and pay
certain fees and expenses.
The following presents the approximate unaudited Pro Forma and As
Adjusted net sales, operating earnings, loss from continuing operations
and diluted loss per share of the Company for the first quarter of 1997
and gives pro forma effect to the acquisition of Ply Gem, the sale of
$310,000,000 principal amount of 9 1/8% Notes, the extension of credit
under the Ply Gem credit facility to refinance certain existing
indebtedness and the termination of Ply Gem's accounts receivable
<PAGE> -9-
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 4, 1998 AND MARCH 29, 1997
(CONTINUED)
securitization program, (all of which occurred in August 1997), the
sale, in March 1997, of $175,000,000 principal amount of 9 1/4% Notes,
the refinancing of certain subsidiary indebtedness, and reflects the
estimated cost reductions as described below as if such transactions
and adjustments had occurred on January 1, 1997.
For the First Quarter of 1997
-----------------------------
(In thousands except per
share amounts)
(unaudited)
Pro Forma
---------
Net sales $357,050
Operating earnings 14,700
Loss from continuing operations (3,000)
Diluted loss from continuing operations
per share ($.31)
As Adjusted
-----------
Net sales $357,050
Operating earnings 18,400
Loss from continuing operations (600)
Diluted loss from continuing operations
per share ($.06)
In computing the pro forma losses, losses have been increased by the
net interest income on the aggregate cash portion of the purchase price
of the acquisition at the historical rate earned by the Company and
interest expense on indebtedness incurred in connection with the
acquisition and the refinancing and repayment of certain indebtedness
of Ply Gem. Losses have been increased by amortization of goodwill and
reflect net adjustments to depreciation expense as a result of an
increase in the estimated fair market value of property and equipment
and changes in depreciable lives. Interest expense on the subsidiary
indebtedness refinanced with funds from the sale of the 9 1/4% Notes
was excluded at an average interest rate consistent with the
indebtedness outstanding which was refinanced, net of the tax effect.
Interest expense was included on the 9 1/4% Notes at a rate of
approximately 9 1/4%, plus amortization of deferred debt expense and
debt discount, net of tax effect, and on the 9 1/8% Notes at a rate of
approximately 9 1/8%, plus amortization of deferred debt expense and
debt discount, net of tax effect.
In addition, since the Ply Gem acquisition date, the Company
has realized, and expects to continue to realize, cost savings as a
result of the acquisition. These savings result from several
actions, including: (i) the elimination of expenses associated with
Ply Gem's New York headquarters; (ii) the consolidation of Ply
Gem's corporate functions such as accounting, legal and risk
management into Nortek; and (iii) the identification and
rationalization of under-performing product lines. Pro Forma
operating earnings for the first quarter of 1997 (see above) have
<PAGE> -10-
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 4, 1998 AND MARCH 29, 1997
(Continued)
been adjusted for the pro forma effect of estimated cost reductions
directly attributable to the acquisition totaling approximately
$1,667,000. As Adjusted operating earnings for the first quarter of
1997 (see above) include cost reductions directly attributable to
the acquisition and additional estimated cost savings related to
expenses associated with the elimination of Ply Gem's New York
headquarters, the consolidation of Ply Gem's corporate functions and
the rationalization of certain under-performing product lines which
total approximately $3,678,000.
The pro forma information presented does not purport to be indicative
of the results which would have been reported if these transactions had
occurred on January 1, 1997, or which may be reported in the future.
(D) The Company's Board of Directors has authorized a number of programs to
purchase shares of the Company's Common and Special Common Stock. The
most recent of these programs was announced on April 30, 1997, to
purchase up to 500,000 shares of the Company's Common and Special
Common Stock in open market or negotiated transactions, subject to
market conditions, cash availability and provisions of the Company's
outstanding debt instruments. As of May 15, 1998, the Company has
purchased approximately 317,250 shares of its Common and Special Common
Stock under this program for approximately $9,300,000 and accounted for
such share purchases as Treasury Stock.
At May 15, 1998, after the sale of Common Stock as described in Note J,
approximately $66,492,000 was available for the payment of cash
dividends or stock purchases under the terms of the Company's most
restrictive Indenture.
(E) In the fourth quarter of 1997, the Company adopted the provisions of
SFAS No. 128, "Earnings Per Share." This statement requires a
restatement of all prior-period earnings per share ("EPS") data
presented. Accordingly, the first quarter of 1997 EPS has been
restated.
Basic earnings per share amounts have been computed using the weighted
average number of common and common equivalent shares outstanding
during each period. Special Common Stock is treated as the equivalent
of Common Stock in determining earnings per share results. Diluted
earnings per share amounts have been computed using the weighted
average number of common and common equivalent shares and the dilutive
potential common shares outstanding during each period.
<PAGE> -11-
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 4, 1998 AND MARCH 29, 1997
(Continued)
<TABLE>
<CAPTION>
A reconciliation between basic and diluted earnings per share is as
follows:
For the Three Months Ended
-----------------------------------
April 4, 1998 March 29, 1997
------------- --------------
(In Thousands Except Per Share Amounts)
<S> <C> <C>
Earnings from continuing
Operations $1,300 $4,700
Basic EPS:
Basic common shares 9,540 9,723
====== ======
Basic EPS $ .14 $ .48
====== ======
Diluted EPS:
Basic common shares 9,540 9,723
Plus: Impact of stock options 170 241
------ ------
Diluted common shares 9,710 9,964
====== ======
Diluted EPS $ .13 $ .47
====== ======
</TABLE>
(F) In the fourth quarter of 1997, the Company adopted a plan of
disposition for its Plumbing Products Group and provided a pre-tax
reserve of $2,500,000 for future expenses including interest expense.
In the first quarter of 1998, approximately $475,000 of corporate
interest expense was allocated to this reserve. Loss from discontinued
operations includes an allocation of corporate interest expense of
approximately $475,000 in the first quarter of 1997. The following is
an unaudited summary of the results of discontinued operations for the
first three months ended March 29, 1997:
March 29, 1997
--------------------
(Amounts in Thousands)
Net sales $25,389
Loss before income taxes (1,600)
Income tax benefit 600
Loss from discontinued operations $(1,000)
(G) In the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," ("SFAS No. 130") which requires the display of comprehensive
income and its components in the financial statements. Comprehensive
income includes net earnings and unrealized gains and losses from
currency translation, marketable securities and pension liability
adjustments. The components of the Company's comprehensive income and
the effect on earnings, for the first quarter of 1997 and 1998, are
detailed in the Statements of Stockholders' Investment.
<PAGE> -12-
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 4, 1998 AND MARCH 29, 1997
(Continued)
(H) On March 9, 1998, the Company through a wholly owned subsidiary,
entered into an agreement to purchase NuTone, Inc., a wholly owned
subsidiary of Williams plc, for approximately $242,500,000 in cash.
The proposed acquisition is subject to the requirements of the Hart-
Scott-Rodino Antitrust Improvements Act. In connection with its review
of the proposed acquisition under the Act, the Federal Trade Commission
("FTC") has issued a "second request" for certain additional
information. The FTC has taken no position with respect to the
proposed acquisition and there can be no assurance that the proposed
acquisition will be consummated. If the proposed acquisition is not
consummated, the Company expects that it would incur an approximate
$3,100,000 net after tax charge to its earnings as a result of fees,
expenses and other acquisition related costs.
(I) On May 8, 1998, the Company announced that it had sold the assets of
its Ply Gem subsidiary Studley Products, Inc. ("Studley"). Studley had
sales of approximately $22,000,000 in 1997. Studley has been treated
as a discontinued operation since the Ply Gem acquisition. No gain or
loss will be recognized as a result of this transaction.
(J) On May 15, 1998, the Company sold 2,000,000 shares of its Common Stock
at $31.50 per share and received net proceeds of approximately
$58,900,000 after deducting underwriting discounts, commissions and
estimated offering expenses. The Company has granted the Underwriters
a 30-day option to purchase up to 300,000 additional shares of Common
Stock to cover over-allotments, if any. The Company intends to use the
net proceeds from this sale of stock to partially fund the proposed
acquisition of NuTone, Inc. In the event the acquisition of NuTone is
not consummated, the Company intends to use the net proceeds for
general corporate purposes, including working capital requirements,
capital additions, other acquisitions and possible reduction of
indebtedness.
<PAGE> -13-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED APRIL 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
The Company is a diversified manufacturer of residential and commercial
building products, operating within four principal product groups: the
Residential Building Products Group; the Air Conditioning and
Heating("HVAC") Products Group; the Windows, Doors and Siding Group; and the
Specialty Products and Distribution Group. Through these product groups,
the Company manufactures and sells, primarily in the United States, Canada
and Europe, a wide variety of products for the residential and commercial
construction, manufactured housing, and the do-it-yourself and professional
remodeling and renovation markets.
On August 26, 1997, the Company acquired Ply Gem, which has been accounted
for under the purchase method of accounting. Accordingly, the results of
Ply Gem are included in the Company's consolidated results since that date.
(See "Liquidity and Capital Resources" and Note C of the Notes to the
Unaudited Financial Statements included elsewhere herein.)
In the fourth quarter of 1997, the Company adopted a plan to discontinue its
Plumbing Products Group. Accordingly, the results of the Plumbing Products
Group have been excluded from earnings from continuing operations and
classified separately as discontinued operations for all periods presented.
(See Note F of the Notes to the Unaudited Financial Statements included
elsewhere herein.)
<PAGE> -14-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED APRIL 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
Results of Operations
The tables below and on the next page set forth, for the periods presented,
(a) certain consolidated operating results, (b) the change in the amount and
the percentage change of such results as compared to the prior comparable
period, (c) the percentage which such results bear to net sales and (d) the
change of such percentages as compared to the prior comparable period. The
results of operations for the first quarter ended April 4, 1998 are not
necessarily indicative of the results of operations to be expected for any
other interim period or the full year.
<TABLE>
<CAPTION>
First Quarter Ended Change in
------------------- First Quarter 1998
April 4, March 29, as Compared to 1997
<S> <C> <C> <C> <C>
------------------- -------------------
1998 1997 $ %
---- ---- ----- ------
(Dollar amounts in millions)
Net sales $392.5 $194.2 $198.3 102.1%
Cost of products sold 294.6 137.0 (157.6) (115.0)
Amortization of acquired
goodwill 2.6 .7 (1.9) (271.4)
Selling, general and
administrative expense 75.6 43.0 (32.6) (75.8)
Operating earnings 19.7 13.5 6.2 45.9
Interest expense (19.5) (7.3) (12.2) (167.1)
Investment income 2.3 1.4 .9 64.3
Earnings from continuing
operations before provision
for income taxes 2.5 7.6 (5.1) (67.1)
Provision for income taxes 1.2 2.9 1.7 58.6
Earnings from continuing
operations 1.3 4.7 (3.4) (72.3)
Loss from discontinued
operations --- (1.0) 1.0 100.0
------- ------ ------- ------
Net earnings $ 1.3 $ 3.7 $ (2.4) (64.9)%
======= ====== ======= ======
</TABLE>
<PAGE> -15-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED APRIL 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
<TABLE>
<CAPTION>
Percentage of Net Sales Change in
First Quarter Ended Percentage
------------------- for the First
April 4, March 29, Quarter 1998
1998 1997 as compared to 1997
---- ---- -------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% ---
Cost of products sold 75.0 70.5 (4.5)
Amortization of acquired
goodwill .7 .4 (.3)
Selling, general and
administrative expense 19.3 22.1 2.8
Operating earnings 5.0 7.0 (2.0)
Interest expense (5.0) (3.8) (1.2)
Investment income .6 .7 (.1)
Earnings from continuing
operations before provision
for income taxes .6 3.9 (3.3)
Provision for income taxes .3 1.5 1.2
Earnings from continuing
operations .3 2.4 (2.1)
Loss from discontinued
operations --- (.5) .5
----- ---- ----
Net earnings .3% 1.9% (1.6)
===== ==== ====
</TABLE>
The following presents the net sales for the Company's principal product
groups for the first quarter ended April 4, 1998 as compared to the first
quarter ended March 29, 1997 and the amount and the percentage change of
such results as compared to the prior comparable period.
<TABLE>
<CAPTION>
First Quarter Ended
-------------------
April 4, March 29, Increase/(Decrease)
l998 1997 $ %
---- ---- ----- -----
<S> <C> <C> <C> <C>
(000's omitted)
Net Sales:
Residential Building
Products $118,949 $103,159 $15,790 15.3%
Air Conditioning and
Heating Products 100,876 91,079 9,797 10.8
Windows, Doors and Siding 99,229 --- 99,229 ---
Specialty Products and
Distribution 73,414 --- 73,414 ---
------- ------- ------ -----
Total $392,468 $194,238 $198,230 102.1%
======= ======= ======= =====
</TABLE>
Certain amounts in the table for the prior period have been reclassified to
conform to the classifications for the first quarter ended April 4, 1998.
<PAGE> -16-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED APRIL 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
Operating Results
- -----------------
Net sales increased approximately $198,300,000 or approximately 102.1%, in
the first quarter of 1998 as compared to the first quarter of 1997 (or
increased approximately $201,400,000 or approximately 103.7% excluding the
effect of foreign exchange). Net sales increased principally as a result of
the acquisition of Ply Gem, which contributed approximately $172,600,000 to
net sales in the first quarter of 1998. Excluding sales from the
acquisition, net sales increased approximately $25,700,000, or 13.2% for the
first quarter of 1998, as compared to the first quarter of 1997 (or
increased approximately $28,800,000, or approximately 14.8% excluding the
effect of foreign exchange). This increase was principally as a result of
higher sales volume in the Residential Building Products Group and the Air
Conditioning and Heating Products Group.
Cost of products sold as a percentage of net sales increased from
approximately 70.5% in the first quarter of 1997 to approximately 75.0% in
the first quarter of 1998. This increase in the percentage is in large part
due to the effect of low sales levels (seasonality) from Ply Gem, but with
fairly constant quarterly levels of fixed costs throughout the year. Ply
Gem's Windows, Doors and Siding Group's net sales levels, with their heavy
concentration in the upper mid-west and northeast regions of the country,
tend to be significantly lower in the first quarter than the other three
quarters of the year, while fixed labor, overhead and depreciation cost and
expense remain constant among the four quarters of each year. Excluding the
Ply Gem businesses, (which have a higher level of cost of sales than the
overall group of businesses owned prior to the acquisition), cost of
products sold as a percentage of net sales decreased from approximately
70.5% in the first quarter of 1997 to approximately 69.2% in the first
quarter of 1998. The decrease in the percentage principally resulted from
increased sales without a proportionate increase in cost, (primarily
overhead) in both the Residential building Products Group and the Air
Conditioning and heating Products Group. Overall, changes in the cost of
products sold as a percentage of net sales for one period as compared to
another period may reflect a number of factors, including changes in the
relative mix of products sold, the effect of changes in sales prices, the
material cost of products sold and changes in productivity levels.
Amortization of acquired goodwill as a percentage of net sales increased
from approximately .4% of net sales in the first quarter of 1997 to
approximately .7% of net sales in the first quarter of 1998, principally as
a result of the acquisition of Ply Gem.
Selling, general and administrative expense as a percentage of net sales
decreased from approximately 22.1% in the first quarter of 1997 to
approximately 19.3% in the first quarter of 1998. This decrease in the
percentage is partially offset by the effect of certain constant fixed
expense levels throughout the year at Ply Gem on relatively low first quarter
<PAGE> -17-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED APRIL 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
sales levels due to the seasonality of the Windows, Doors and Siding
Products Group. Excluding the Ply Gem businesses, (which have a lower level
of selling, general and administrative expense to net sales than the overall
group of businesses owned prior to the acquisition), selling, general and
administrative expense as a percentage of net sales decreased from
approximately 22.1% in 1997 to approximately 21.4% in the first quarter
of 1998. This decrease in the percentage was due principally to higher
sales levels in the Residential Building Products Group and the Air
Conditioning and Heating Products Group without a proportionate increase in
expense.
Segment earnings were approximately $22,800,000 for the first quarter of
1998 as compared to approximately $16,600,000 for the first quarter of 1997.
Segment earnings are operating earnings from continuing operations before
corporate and other expenses that are not directly attributable to the
Company's product groups. The Ply Gem acquisition contributed a loss of
approximately $100,000 to segment earnings in the first quarter of 1998. Ply
Gem's segment earnings, due to the seasonal nature of the Windows, Doors and
Siding Group with their heavy concentration in the upper mid-west and north
east regions of the country are proportionately lower than the results
expected in other quarters. Segment earnings have been reduced by
depreciation and amortization expense of approximately $10,000,000 and
approximately $4,800,000 for 1998 and 1997, respectively. The acquisition of
Ply Gem contributed approximately $4,800,000 of the increase in depreciation
and amortization expense in the first quarter of 1998. The overall increase
in segment earnings was due principally to increased sales volume without a
proportionate increase in expense particularly in the Residential Building
Products Group and the residential and manufactured housing sectors of the
Air Conditioning and Heating Products Group.
Earnings of foreign operations, consisting primarily of the results of
operations of the Company's Canadian and European subsidiaries, which
manufacture built-in ventilating products were approximately 9.8% of segment
earnings in the first quarter of 1998 and 1997. Sales and earnings derived
from the international market are subject to the risks of currency
fluctuations.
Operating earnings in the first quarter of 1998 increased approximately
$6,200,000 or approximately 45.9% as compared to the first quarter of 1997,
primarily due to the factors previously discussed.
Interest expense in the first quarter of 1998 increased approximately
$12,200,000 or approximately 167.1% as compared to the first quarter of
1997, primarily as a result of the sale of the 9 1/4% Notes on March 17,
1997, the sale of the 9 1/8% Notes in August 1997 and indebtedness of Ply
Gem existing at the date of acquisition. This increase was partially offset
by the refinancing of certain outstanding indebtedness of the Company's
subsidiaries in 1997. (See Notes B and C of the Notes to the Unaudited
Financial Statements included elsewhere herein.)
<PAGE> -18-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED April 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
Investment income in the first quarter of 1998 increased approximately
$900,000 or approximately 64.3% as compared to the first quarter 1997,
principally due to higher average invested balances of short-term
investments and marketable securities.
The provision for income taxes was approximately $1,200,000 for the first
quarter of 1998, as compared to approximately $2,900,000 for the first
quarter of 1997. The income tax rates differed from the United States
Federal statutory rate of 35% principally as a result of applying an
estimated annual effective tax rate, which rates include the effects of
state income tax provisions, nondeductible amortization expense (for tax
purposes), changes in tax reserves, the effect of foreign income tax on
foreign source income and the effect of product development tax credits from
foreign operations.
In the fourth quarter of 1997, the Company adopted a plan to discontinue its
Plumbing Products Group and provided a pre-tax reserve of $2,500,000 for
future expenses including interest expense. In the first quarter of 1998,
approximately $475,000 of corporate interest expense was allocated against
this reserve. The loss from discontinued operations related to the Plumbing
Products Group in the first quarter of 1997 was approximately $1,000,000,
net of income tax benefits of approximately $600,000 and reflects an
allocation of corporate interest expense of approximately $475,000. (See
Note F of the Notes to the Unaudited Financial Statements included elsewhere
herein.)
Liquidity and Capital Resources
- -------------------------------
Unrestricted cash and cash equivalents decreased from approximately
$125,842,000 at December 31, 1997 to approximately $81,091,000 at April 4,
1998. The Company's investment in marketable securities at April 4, 1998
consisted primarily of investments in bank issued money market instruments,
commercial paper and United States Treasury securities. At April 4, 1998,
approximately $6,368,000 of the Company's cash and investments were pledged
as collateral for insurance and other requirements and were classified as
restricted in current assets in the Company's accompanying consolidated
balance sheet.
The Company's Board of Directors has authorized a program to purchase up to
500,000 shares of the Company's Common and Special Common Stock in open-
market or negotiated transactions subject to market conditions, cash
availability and provisions of the Company's outstanding debt instruments.
As of May 15, 1998, the Company had purchased approximately 317,250 shares
of its Common and Special Common Stock under this program for approximately
$9,300,000 and accounted for such share purchases as Treasury Stock.
At May 15, 1998, after the sale of Common Stock, approximately $66,492,000
was available for the payment of cash dividends or stock payments under the
terms of the Company's most restrictive Indenture. (See Note J of the
Notes to the Unaudited Financial Statements included elsewhere herein.)
<PAGE> -19-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED April 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
The Company's working capital and current ratio decreased slightly from
approximately $341,821,000 and 2.3:1, respectively, to approximately
$336,278,000 and 2.3:1, respectively, between December 31, 1997 and April 4,
1998, principally as a result of the factors described below.
Accounts receivable increased approximately $24,073,000 or approximately
13.3%, between December 31, 1997 and April 4, 1998, while net sales
decreased approximately $23,248,000 or approximately 5.6% in the first
quarter of 1998 as compared to the fourth quarter of 1997. The rate of
change in accounts receivable in certain periods may be different than the
rate of change in sales in such periods principally due to the timing of net
sales. Increases or decreases in net sales near the end of any period
generally result in significant changes in the amount of accounts receivable
on the date of the balance sheet at the end of such period, as was the
situation on April 4, 1998 as compared to December 31, 1997. The Company has
not experienced any significant changes in credit terms, collection efforts,
credit utilization or delinquency in accounts receivable in 1998.
Inventories increased approximately $10,649,000 or approximately 6.0%,
between December 31, 1997 and April 4, 1998.
Accounts payable increased approximately $24,046,000 or approximately 26.3%,
between December 31, 1997 and April 4, 1998
Unrestricted cash and cash equivalents decreased approximately $44,751,000
from December 31, 1997 to April 4, 1998, principally as a result of the
following:
Condensed
Consolidated
Cash Flows
----------
Operating Activities--
Cash flow from operations, net $12,366,000
Increase in accounts receivable, net (26,311,000)
Increase in inventories (12,624,000)
Increase in prepaids and other current assets (3,198,000)
Increase in net assets of discontinued operations (4,679,000)
Increase in trade accounts payable 24,539,000
Decrease in accrued expenses and taxes (33,601,000)
Investing Activities-
Proceeds from the sale of marketable securities 13,977,000
Capital expenditures (5,982,000)
Financing Activities-
Payment of borrowings, net (492,000)
Purchase of Nortek Common and Special
Common Stock (6,642,000)
Other, net (2,104,000)
-------------
$(44,751,000)
=============
<PAGE> -20-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED APRIL 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
The impact of changes in foreign currency exchange rates on cash was not
material and has been included in other, net.
The Company's debt-to-equity ratio increased from approximately 6.7:1 at
December 31, 1997 to 6.9:1 at April 4, 1998, primarily as a result of the
purchase of the Company's Common and Special Common Stock (see Note D to
Consolidated Financial Statements), partially offset by net earnings for the
three month ended April 4, 1998. (See the Consolidated Statement of
Stockholders' Investment included elsewhere herein.)
At December 31, 1997, the Company had approximately $60,800,000 of net U.S.
federal prepaid income tax assets which are expected to be realized through
future operating earnings.
The Company believes that its growth will be generated largely by internal
growth, augmented by strategic acquisitions. The Company regularly evaluates
potential acquisitions which would increase or expand the market penetration
of, or otherwise complement, its current product lines.
Capital expenditures were approximately $22,500,000 in 1997 and are expected
to be approximately $40,000,000.
On March 9, 1998, the Company through a wholly owned subsidiary, entered
into an agreement to purchase NuTone, Inc., a wholly-owned subsidiary of
Williams plc, for approximately $242,500,000 in cash, subject to adjustment.
The proposed acquisition is subject to the requirements of the Hart-Scott-
Rodino Antitrust Improvements Act. In connection with its review of the
proposed acquisition under the Act, the Federal Trade Commission ("FTC") has
issued a "second request" for certain additional information. The FTC has
taken no position with respect to the proposed acquisition and there can be
no assurance that the proposed acquisition, as proposed, will be
consummated. If the proposed acquisition is not consummated, the Company
expects that it would incur an approximate $3,100,000 net after tax charge
to its earnings as a result of the fees, expenses and other acquisition
related costs. On May 15, 1998, the Company sold 2,000,000 shares of its
Common Stock at $31.50 per share and received net proceeds of approximately
$58,900,000 after deducting underwriting discounts, commissions and
estimated offering expenses. The Company has granted the Underwriters a 30-
day option to purchase up to 300,000 additional shares of Common Stock, to
cover over-allotments, if any. The Company intends to use the net proceeds
from this sale of Common Stock to partially fund the proposed acquisition of
NuTone. In the event the proposed acquisition of NuTone is not consummated,
the Company intends to use the net proceeds for general corporate purposes,
including working capital requirements, capital additions, other
acquisitions and possible reduction of indebtedness. In order to
consummate the proposed acquisition, the Company will need to raise
additional funds through a debt financing. The Company anticipates that
following the acquisition, additional funds required to support its working
<PAGE> -21-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED APRIL 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
capital needs will be obtained from available cash, cash from operations,
additional borrowings and the proceeds from sales of certain of the
Company's existing businesses.
The Company expects to use a combination of approximately $58,900,000 from
the net proceeds from the sale of Common Stock, $60,000,000 of available
cash and $131,100,000 of additional indebtedness to finance the proposed
acquisition and to pay related fees and expenses, including financing fees
and expenses. Therefore, after giving pro forma effect to the sale of Common
Stock and the proposed acquisition, the Company's total unrestricted cash,
cash equivalents and marketable securities would be approximately $44,141,000
as of April 4, 1998. (See Notes H and J of the Notes to the Unaudited
Financial Statements included elsewhere herein.)
After giving pro forma effect to the sale of Common Stock and the proposed
acquisition, the Company's leverage will be reduced, although the Company
will remain highly leveraged and expects to continue to remain highly
leveraged for the foreseeable future. As of April 4, 1998, after giving pro
forma effect to the sale of Common Stock and the proposed acquisition, the
Company would have had total debt of approximately $983,800,000 and its debt
to equity ratio would decrease to 5.4 to 1.
After giving pro forma effect to the sale of Common Stock and the proposed
acquisition, the Company would have had working capital (exclusive of
cash, cash equivalents and marketable securities) of approximately
$246,700,000 at April 4, 1998. Historically, the Company's level of working
capital has been seasonal in nature, with peak levels occurring during the
second and third fiscal quarters.
The proposed acquisition is not expected to have a material effect on the
Company's capital expenditure requirements.
After giving effect to the proposed acquisition, annual net interest expense
is expected to increase to approximately $84,500,000.
Absent the proposed acquisition, the Company believes that cash flow from
subsidiary operations, unrestricted cash and marketable securities, and
borrowings under new credit facilities or arrangements which may be entered
into will provide sufficient liquidity to meet the Company's working capital,
capital expenditure, debt service and other on going business needs through
the next 12 months.
The Company is in the process of updating its computer systems to ensure
that its systems are Year 2000 compliant and to improve the systems. The
Company has and will continue to make investments in its computer systems
and applications to ensure that the Company is Year 2000 compliant. Although
the Company does not believe it will suffer any major effects from the Year
2000 issue, there can be no assurance that the Company, any business
acquired by the Company, including the proposed acquisition, or any of the
Company's customers or vendors will not experience interruptions of
operations because of Year 2000 problems. Year 2000 problems might require
the company to incur unanticipated expenses and such expenses could have a
material adverse effect on the Company's business, financial condition and
results of operations.
<PAGE> -22-
NORTEK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED APRIL 4, 1998
AND THE FIRST QUARTER ENDED MARCH 29, 1997
(Continued)
When used in this discussion and throughout this document, the words
"believes", "anticipates" and "expects" and similar expressions are intended
to identify forward-looking statements. Such statements are subject to
certain risks and uncertainties, over which the Company has no control,
which could cause actual results to differ materially from those presented.
These risks and uncertainties include increases in raw material costs,
(including, among others, steel, copper, packaging material, plastics,
resins, glass, wood and aluminum) and purchased component costs, the level
of domestic and foreign construction and remodeling activity affecting
residential and commercial markets, interest rates, employment, inflation,
consumer spending levels, operating in international economies, the rate
of sales growth, price and product liability claims. Readers are cautioned
not to place undue reliance on these forward-looking statements which speak
only as of the date hereof. The Company undertakes no obligation to
republish revised forward-looking statements to reflect events or
circumstances after the date thereof or to reflect the occurrence of
unanticipated events. Readers are also urged to carefully review and
consider the various disclosures made by the Company, in this report, as
well as the Company's periodic reports on Forms 10-K, 10-Q and 8-K, filed
with the Securities and Exchange Commission.
<PAGE> -23-
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
27 - Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed by
the registrant during the period:
March 12, 1998, Item 5, Other
March 18, 1998, Amendment No. 1 to Form 8-K
filed March 12, 1998, Item 7 Financial
Statements, Pro Forma Financial Information
and Exhibits.
<PAGE> -24-
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.
NORTEK, INC.
(Registrant)
/s/ Almon C. Hall
---------------------------------
Almon C. Hall, Vice President and
Controller and Chief Accounting Officer
May 18, 1998
- -------------
(Date)
<PAGE -25-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> APR-4-1998
<CASH> 81,091
<SECURITIES> 28,578
<RECEIVABLES> 218,214
<ALLOWANCES> 13,727
<INVENTORY> 186,902
<CURRENT-ASSETS> 597,481
<PP&E> 361,414
<DEPRECIATION> 121,282
<TOTAL-ASSETS> 1,282,506
<CURRENT-LIABILITIES> 261,204
<BONDS> 833,459
0
0
<COMMON> 17,078
<OTHER-SE> 106,613
<TOTAL-LIABILITY-AND-EQUITY> 1,282,506
<SALES> 392,468
<TOTAL-REVENUES> 392,468
<CGS> 297,214
<TOTAL-COSTS> 297,214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,458
<INCOME-PRETAX> 2,500
<INCOME-TAX> 1,200
<INCOME-CONTINUING> 1,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,300
<EPS-PRIMARY> .14
<EPS-DILUTED> .13
</TABLE>
