<PAGE> 1
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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 June 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______to_______
Commission File No.: 0-14685
GENICOM CORPORATION
(Exact name of registrant as specified in it charter)
DELAWARE 51-0271821
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
14800 CONFERENCE CENTER DRIVE
SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 802-9200
Indicate by a 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 and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
- -
As of August 4, 1997, there were 11,041,635 shares of Common Stock of
the Registrant outstanding.
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<PAGE> 2
FORM 10-Q INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 29, 1997 and December 29, 1996 3
Consolidated Statements of Income - Three Months and Six Months Ended
June 29, 1997 and June 30, 1996 4
Consolidated Statements of Cash Flows - Three Months and Six Months
Ended June 29, 1997 and June 30, 1996 5
Notes to Consolidated Financial Statements 6 - 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10 - 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15-16
Signatures 17
Index to Exhibits E-1
</TABLE>
<PAGE> 3
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 29, DECEMBER 29,
(In thousands, except share data) 1997 1996
============= =============
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,389 $ 5,866
Accounts receivable, less allowance for
doubtful accounts of $3,829 and $3,270 65,111 65,404
Other receivables 3,017 1,835
Inventories 58,695 46,947
Prepaid expenses and other assets 7,836 5,395
------------- -------------
TOTAL CURRENT ASSETS 139,048 125,447
Property, plant and equipment 26,502 26,562
Goodwill 25,698 27,555
Intangibles and other assets 4,737 6,515
------------- -------------
$ 195,985 $ 186,079
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Debt maturing within one year $ 4,166 $ 4,222
Accounts payable and accrued expenses 64,920 72,040
Deferred income 12,339 13,094
------------- -------------
TOTAL CURRENT LIABILITIES 81,425 89,356
Long-term debt, less current portion 61,390 50,331
Other non-current liabilities 10,343 8,801
------------- -------------
TOTAL LIABILITIES 153,158 148,488
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; 18,000,000 shares
authorized, 11,021,479 and 10,983,439 shares issued 110 110
Additional paid-in capital 26,494 26,440
Retained earnings 17,525 12,162
Foreign currency translation adjustment (1,302) (1,121)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 42,827 37,591
------------- -------------
$ 195,985 $ 186,079
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED, SIX MONTHS ENDED,
JUNE 29, JUNE 30, JUNE 29, JUNE 30,
(In thousands, except per share data) 1997 1996 1997 1996
============= ============== ============== ==============
<S> <C> <C> <C> <C>
REVENUES, NET:
Products $ 69,568 $ 40,706 $ 135,202 $ 83,302
Services 29,079 28,433 59,790 59,390
------------- -------------- -------------- --------------
98,647 69,139 194,992 142,692
------------- -------------- -------------- --------------
OPERATING COSTS AND EXPENSES:
Cost of revenues:
Products 46,959 28,092 91,915 58,638
Services 27,829 25,888 55,253 51,588
Selling, general and administration 15,668 12,756 32,785 25,287
Engineering, research and
product development 2,916 1,966 5,461 3,897
Gain on sale of investment in subsidiary (1,481) (1,481)
Acquisition related costs
------------- -------------- -------------- --------------
93,372 67,221 185,414 137,929
------------- -------------- -------------- --------------
OPERATING INCOME 5,275 1,918 9,578 4,763
Interest expense, net 1,659 1,000 3,032 2,152
Other income (90)
------------- -------------- -------------- --------------
INCOME BEFORE INCOME TAXES 3,616 918 6,546 2,701
Income tax expense 773 229 1,186 591
------------- -------------- -------------- --------------
INCOME BEFORE EXTRAORDINARY ITEM 2,843 689 5,360 2,110
EXTRAORDINARY ITEM - LOSS ON EXTINGUISHMENT
OF DEBT, NET OF $258 TAX (8) (422)
------------- -------------- -------------- --------------
NET INCOME $ 2,843 $ 681 $ 5,360 $ 1,688
============= ============== ============== ==============
Earnings per common share
and common share equivalent
(primary and fully diluted) $ 0.23 $ 0.06 $ 0.43 $ 0.14
============= ============== ============== ==============
Weighted average number of common shares
and common share equivalents outstanding
Primary 12,377 12,270 12,287 12,261
============= ============== ============== ==============
Fully diluted 12,429 12,270 12,414 12,261
============= ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED,
JUNE 29, JUNE 30,
(In thousands) 1997 1996
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,360 $ 1,688
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation 6,642 7,866
Amortization 2,296 1,695
Gain on sale of Genicom de Mexico (1,481)
Changes in assets and liabilities net of effects
from acquisitions:
Accounts receivable (889) 2,892
Inventories (11,748) 13,041
Accounts payable and accrued expenses (7,121) (14,147)
Deferred income (755) 1,143
Other 1,216 (2,097)
------------- -------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (4,999) 10,600
------------- -------------
Cash flows from investing activities:
Sale of Genicom de Mexico 3,950
Additions to property, plant and equipment (7,235) (6,546)
Other (259)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (7,235) (2,855)
------------- -------------
Cash flows from financing activities:
Borrowings from long-term debt 22,567 53,225
Payments on long-term debt (11,564) (59,339)
Financing costs and transactions (165) (1,259)
------------- -------------
NET CASH PROVIDED (USED IN) BY FINANCING ACTIVITIES 10,838 (7,373)
------------- -------------
Effect of exchange rate changes on cash and cash equivalents (81) 8
------------- -------------
Net (decrease) increase in cash and cash equivalents (1,477) 380
Cash and cash equivalents at beginning of period 5,866 4,271
------------- -------------
Cash and cash equivalents at end of period $ 4,389 $ 4,651
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements
5
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying unaudited consolidated
financial statements of GENICOM Corporation and subsidiaries (the
"Company" or "GENICOM") contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the Company's
consolidated financial position as of June 29, 1997, and the results
of operations and cash flows for the periods indicated. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's December 29, 1996 Annual Report. The results of operations
for the six months ended June 29, 1997, are not necessarily indicative
of the operating results to be expected for the full year.
2. Inventories are stated at the lower of cost, determined on the
first-in, first-out method, or market. Inventories consist of, in
thousands:
<TABLE>
<CAPTION>
JUNE 29, DECEMBER 29,
1997 1996
=========== ===========
<S> <C> <C>
Raw materials $ 11,287 $ 9,105
Work in process 3,159 3,383
Finished goods 44,249 34,459
----------- -----------
$ 58,695 $ 46,947
=========== ===========
</TABLE>
3. Earnings per share are based upon the weighted average number of
common shares and dilutive common share equivalents (using the
treasury stock method) outstanding during the period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
========================= ========================
JUNE 29, JUNE 30, JUNE 29, JUNE 30,
1997 1996 1997 1996
========= ========= ========= =========
<S> <C> <C> <C> <C>
Weighted average common share
outstanding 11,016 10,928 11,007 10,893
--------- --------- --------- ---------
Dilutive common stock equivalents:
Options- Primary 1,361 1,342 1,280 1,368
--------- --------- --------- ---------
Shares outstanding - Primary 12,377 12,270 12,287 12,261
========= ========= ========= =========
Dilutive common stock equivalents:
Options - Fully diluted 1,413 1,342 1,407 1,368
--------- --------- --------- ---------
Shares outstanding - Fully diluted 12,429 12,270 12,414 12,261
========= ========= ========= =========
</TABLE>
4. For reporting periods ending after December 15, 1997, the Company will
be required to report earnings per share in accordance with SFAS No.
128 "Earnings per Share". Basic earnings per share would have been
$0.26 and $0.06 for the second quarter of 1997 and 1996, respectively,
and $0.49 and $0.15 for the six months ended June 29, 1997 and June
30, 1996, respectively, if calculated pursuant to SFAS No. 128.
6
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5. Texas Instruments Worldwide Printer Business
On September 30, 1996, the Company acquired certain assets of Texas
Instruments worldwide printer and related supplies business for the
purchase price of approximately $29.5 million. The acquisition was
financed primarily through the Company's credit facility with
NationsBank and a note of $9 million to Texas Instruments with
interest of approximately 8.5% payable over two years. The goodwill
of approximately $10 million associated with the purchase is being
amortized over seven years.
Pro Forma Financial Information
Presented below are the unaudited pro forma statements of operations
as if the acquired operations had been integrated into the Company
effective January 1, 1996. Accounting adjustments have been made in
the pro forma financial information to include estimated costs of the
combinations and to reflect the integration and consolidation of
facilities and personnel. Included in such integration costs are
relocation costs associated with facilities and employee expenses.
This pro forma information has been prepared for comparative purposes
only and does not purport to be indicative of the results that
actually would have been obtained if the acquired operations had been
conducted by the Company during the periods presented, and is not
intended to be a projection of future results. Presentation is in
thousands except for earnings per share amounts.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ --------------------------
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue $ 98,647 $ 93,624 $ 194,992 $ 197,007
Pre-Tax Income 3,616 2,639 6,546 6,518
---------- ---------- ----------- ----------
Net Income 2,843 1,817 5,360 4,207
---------- ---------- ----------- ----------
Earnings per share $ 0.23 $ 0.15 $ 0.43 $ 0.34
---------- ---------- ----------- ----------
Weighted average shares outstanding 12,429 12,270 12,414 12,261
---------- ---------- ----------- ----------
</TABLE>
6. Commitments and Contingencies
Environmental matters:
The Company and the former owner of its Waynesboro, Virginia facility,
General Electric Company ("G.E."), have generated and managed
hazardous wastes at the facility for many years as a result of their
use of certain materials in manufacturing processes. The Company and
the United States Environmental Protection Agency ("EPA") have agreed
to a corrective action consent order (the "Order"), which became
effective on September 14, 1990. The Order requires the Company to
undertake an investigation of solid waste management units at its
Waynesboro, Virginia facility and to conduct a study of any necessary
corrective measures that may be required. The investigative work under
the Order is expected to be completed by December 1997. Although not
required by the Order, the Company has agreed to install and operate
an interim ground water stabilization system, subject to EPA approval
of the system design. In 1996, the Company recorded a reserve for
$0.6 million for pond closure and monitoring for ten years related to
the Waynesboro facility. The interim groundwater stabilization
program may be chosen as the final remedy for the site, or additional
corrective measures may eventually be required. It is not possible to
reliably estimate the costs that any such possible additional
corrective measures would entail. However, if additional corrective
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<PAGE> 8
measures are required, the Company expects that it will enter into
discussion with EPA concerning their scope and a further order for
that purpose.
The Company has been notified by the EPA that it is one of 700
potentially responsible parties ("PRPs") under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, for
necessary corrective action at a hazardous waste disposal site in
Greer, South Carolina. In prior years, the Company arranged for the
transportation of wastes to the site for treatment or disposal.
During 1995, the PRPs entered into an administrative consent order
with EPA under which they will undertake a remedial investigation and
feasibility study which is currently underway.
The Company was named as a defendant in an Original Petition and
Petition for Injunctive Relief filed in August 1995 which alleged that
the Company and certain other defendants were strictly liable for
damages allegedly suffered by the plaintiffs as a result of
contamination of groundwater at the Linn-Faysville Aquifer, in Texas,
due to the disposal of dangerous products and materials at a landfill
which was alleged to be the source of the contamination. This matter
was settled in May 1997 without the Company admitting liability,
curtailing additional legal expenses. The Company was fully reserved
for the amount of the settlement and related legal expenses.
Atlantic Design:
In December 1995, the Company entered into a five year agreement later
extended one year with Atlantic Design Company, a subsidiary of Ogden
Services Corporation, ("ADC") in which ADC took over the Company's
manufacturing operations and employees in McAllen, Texas and Reynosa,
Mexico. The agreement is automatically renewed unless notice is
given. ADC is committed to manufacturing all of the Company's impact
printer products, printed circuit boards, related supplies and spare
parts. The Company will retain design, intellectual and distribution
rights. As part of this agreement, the Company is to be a preferred
provider of impact and page printers and multivendor information
technology services to Ogden Services Corporation.
Ogden Services Corporation is attempting to divest ADC. The Company's
agreement with ADC contains a clause requiring GENICOM's consent to
the sale, which consent cannot be unreasonably witheld. The Company
is currently evaluating this situation and preliminary information
received from ADC concerning a potential customer.
In early August 1997, the Company received notification that ADC was
filing a Demand for Arbitration with the American Arbitration
Association seeking a legal interpretation of the pricing provisions
in the Agreement between ADC and the Company and the recovery of an
amount in dispute said to be approximately $2,000,000. The Company
and ADC have been in discussions concerning certain issues under the
agreement and, to date, have been unable to resolve the open issues.
The Company is considering its response to ADC's filing, including
whether it wishes to raise certain other claims in the arbitration
proceeding relating to ADC's performance under the agreement, the
amount of which claims, the Company believes, exceed those raised by
Atlantic Design. The Company cannot presently predict the outcome of
this matter or how the respective claims will be resolved. Neither
the arbitration proceeding nor the resolution of the open issues
between the Company and ADC is expected to impact the continued supply
of the products ADC is manufacturing for the Company.
Other matters:
In July 1996, the Company reached an agreement with Electronic Data
Systems ("EDS") to outsource its information systems and data
processing activities. Under the agreement, EDS will operate and
service the Company's systems as well as design, install and service
new business systems and global networks. The agreement covers ten
years with an average base cost of $4.3 million per year.
In the ordinary course of business, the Company is party to various
environmental, administrative and legal proceedings. In the opinion
of management, the Company's liability, if any, in all pending
litigation or other legal proceedings, other than those discussed
above, will not have a material effect upon the financial condition,
results of operations or liquidity of the Company.
On August 8, 1997, Genicom signed a multi-year agreement with Digital
Equipment Corporation ("DEC") to provide printer products, sales and
support for DEC branded printers and related supplies and services.
The agreement, which becomes effective August 10, 1997, includes the
Company's
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<PAGE> 9
acquisition of certain assets including certain intellectual property
rights to use the DEC brand for approved printer products.
7. On July 3, 1997, the Company amended it credit agreement with NationsBank
of Texas, N.A., as agent for a group of banks, which increased the
Company's revolving credit line from $35 million to $40 million. Other
terms and conditions of the credit agreement generally remained unchanged.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition:
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
========================================================================================================================
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------- -----------------------------------
2ND QTR. 2ND QTR. 2ND QTR. 2ND QTR.
(in millions) 1997 CHANGE 1996 1997 CHANGE 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues - Enterprising Service Solutions $ 29.1 $ 0.7 $ 28.4 $ 59.8 $ 0.4 $ 59.4
Revenues - Document Solutions 69.5 28.8 40.7 135.2 51.9 83.3
-------- -------- ------- -------- ------- -------
Total Revenue $ 98.6 $ 29.5 $ 69.1 $ 195.0 $ 52.3 $ 142.7
-------- -------- ------- -------- ------- -------
Percentage change 42.7% 36.7%
========================================================================================================================
</TABLE>
Revenue in the second quarter of 1997 increased 42.7% from the second quarter
of 1996 primarily due to the revenue growth in Document Solutions ("DSC") as a
result of the acquisition of Texas Instruments' printer business. DSC revenue,
excluding Relays, was 75.5% higher than the second quarter of 1996 as a result
of the acquisition of the Texas Instruments' printer and related supplies
business. Enterprising Service Solutions ("ESSC") revenue increased 2.3%.
Integrated Network Service ("INS"), which is part of ESSC, revenue increased
14.0% on strong performance of the Canadian subsidiary. Revenue from
Multivendor Services ("MVS"), also part of ESSC, was flat in the second quarter
of 1997 compared to the year ago quarter. MVS is currently transitioning its
depot operations from Bedford, Massachusetts and Waynesboro, Virginia to a
single depot in Louisville, Kentucky. The loss of revenue from the Bedford
depot, which closed early in the second quarter, has not yet been fully
recovered by the Louisville depot which is not yet completely operational.
Some of the legacy revenue from Bedford was not transferred to the Louisville
depot.
For 1997 year to date, revenue increased $52.3 million from 1996. DSC's
revenue, excluding Relays, increased $49.9 million or 65.2% primarily due to
the Texas Instruments acquisition. ESSC's revenue for 1997 increased only $0.4
million compared to 1996 principally from strong performance by Canadian INS
which was partially offset by lower revenue from MVS. The decline in revenue
by MVS was primarily a result of the decline of legacy revenue in the Bedford
depot and the consolidation of the depots mentioned above.
Relay revenues, which are included as part of Document Solutions in the above
table, increased by $0.8 million or 22.9% in the second quarter of 1997 as
compared to the prior year quarter. For 1997 year to date, relay revenues have
increase $2.0 million from 1996.
<TABLE>
<CAPTION>
===================================================================================================
2ND QUARTER 4TH QUARTER 2ND QUARTER
(in millions) 1997 1996 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Order Backlog $ 51.9 $ 56.7 $ 39.6
Change: 2nd Quarter of 1997 compared to
Amount (4.8) 12.3
Percentage -8.5% 31.1%
===================================================================================================
</TABLE>
The increase in order backlog from the second quarter of 1996 primarily
reflects the effect of the Texas Instruments acquisition. The decrease in the
backlog from the fourth quarter of 1996 is principally the result of a decline
of $3.7 million in relays backlog and $2.0 million in ESSC backlog. The
Company's backlog as of any particular date should not be the sole measurement
used in determining sales for any future period.
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<TABLE>
<CAPTION>
============================================================================================================================
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------------- -------------------------------------
2ND QTR. 2ND QTR. 2ND QTR. 2ND QTR.
(in millions) 1997 CHANGE 1996 1997 CHANGE 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross margin - Enterprising Service Solutions $ 1.2 $ (1.3) $ 2.5 $ 4.5 $ (3.3) $ 7.8
Gross margin - Document Solutions 22.6 10.0 12.6 43.3 18.6 24.7
------- --------- ------- -------- -------- --------
Total gross margin $ 23.8 $ 8.7 $ 15.1 $ 47.8 $ 15.3 $ 32.5
------- --------- ------- -------- -------- --------
As a % of revenue 24.2% 24.5%
============================================================================================================================
</TABLE>
Gross margin, as a percent of revenue, increased from 21.9% in the second
quarter of 1996 to 24.2% in the second quarter of 1997. As a percent of
revenue, gross margin for DSC excluding Relays increased to 32.8% for the
quarter ending June 29, 1997 from 31.6% for the quarter ending June 30, 1996.
This increase is primarily the result of the high volume of supplies sales
which carry a larger margin percentage than printers. For ESSC, gross margin
decreased from 8.9% for the second three months of 1996 to 4.3% for 1997
reflecting the costs associated with consolidation of the depots and redundant
costs between depots. Relays gross margin increased from 24.9% to 28.1%
reflecting more efficient operation of this small business unit.
As a percent of revenue, gross margin for the six months ended June 29, 1997
was 24.5% as compared to 22.7% for the six months ended June 30, 1996. The
gross margin percentage for DSC for the first six months of 1997 increased to
32.6% from 31.2% in 1996 due to the large volume of supplies sales. ESSC's
gross margin percentage declined to 7.6% for year to date 1997 from 13.1% for
the same period in 1996. Relay's gross margin increased from 12.0% to 23.9%.
<TABLE>
<CAPTION>
======================================================================================================================
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------------- -----------------------------------
2ND QTR. 2ND QTR. 2ND QTR. 2ND QTR.
(in millions) 1997 CHANGE 1996 1997 CHANGE 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating expenses:
Selling, general and administrative $ 15.7 $ 2.9 $ 12.8 $ 32.8 $ 7.5 $ 25.3
Engineering, research and product
development 2.9 0.9 2.0 5.4 1.5 3.9
------- ------- ------- ------- ------ -------
Total $ 18.6 $ 3.8 $ 14.8 $ 38.2 $ 9.0 $ 29.2
------- ------- ------- ------- ------ -------
As a % of revenue 18.9% 21.4% 19.6% 20.5%
======================================================================================================================
</TABLE>
The increase of $3.8 million in operating expenses from the second quarter of
1996 was primarily a result of elevated levels of spending needed to support
the higher revenue in 1997 including the new products acquired from Texas
Instruments, increased MIS costs as a result of the outsourcing of this
business function in July of 1996, transition costs to the new Louisville depot
and higher compensation and benefit costs. Engineering increased $0.9 million
due to development costs related to the new travel printer business acquired
from Texas Instruments. Operating expenses declined as a percentage of revenue
in the second quarter of 1997 to 18.9% as compared to 21.4% in 1996.
For the first six months of 1997, operating expenses increased $9.0 million
compared to 1996 primarily for the reasons mentioned above.
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<TABLE>
<CAPTION>
====================================================================================================
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------- ---------------------------------
2ND QTR. 2ND QTR. 2ND QTR. 2ND QTR.
(in millions) 1997 CHANGE 1996 1997 CHANGE 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest expense, net $ 1.7 $ 0.7 $ 1.0 $ 3.0 $ 0.8 $ 2.2
Percentage change 70.0% 36.4%
====================================================================================================
</TABLE>
The interest expense increased $0.7 million in the second quarter of 1997 as
compared to the year-ago quarter primarily as a result of higher borrowings in
1997 due to the debt associated with the acquisition of the Texas Instruments'
printer business, increased working capital needs to support the business
expansion being experienced by the Company, the consolidation of the
Massachusetts and Virginia depots and increased capital expenditures for the
Company's new business system. Interest expense for the six months ended June
29, 1997 increased $0.8 million compared to the same period in 1996 for the
above reasons.
<TABLE>
<CAPTION>
============================================================================================
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ --------------------------------
2ND QTR. 2ND QTR. 2ND QTR. 2ND QTR.
(in millions) 1997 CHANGE 1996 1997 CHANGE 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income tax expense $ 0.8 $ 0.6 $ 0.2 $ 1.2 $ 0.6 $ 0.6
Effective tax rate 21.4% 25.0% 18.1% 21.9%
============================================================================================
</TABLE>
During the first six months of 1997, the Company reversed part of its
valuation allowance for its foreign deferred tax assets. The benefit from the
reversal was recorded in the first quarter of 1997 based upon management's
estimate of the value from the utilization of foreign net operating losses as
the foreign subsidiaries become operationally profitable. For the first six
months of 1997, the tax rate was 18.1% compared to 21.9% in 1996. In 1996, the
tax rate was effected by reversal of certain domestic valuation allowances.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
=========================================================================================
SIX MONTHS ENDED
---------------------------------
2ND QUARTER 2ND QUARTER
(in millions) 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash (used in) provided by operations $ (5.0) $ 10.6
Cash used in investing activities (7.2) (2.9)
Cash provided by (used in) financing activities 10.8 (7.4)
=========================================================================================
</TABLE>
12
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<TABLE>
<CAPTION>
========================================================================
2ND QUARTER 4TH QUARTER
(in millions) 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Working capital $ 57.6 $ 36.1
Inventories 58.7 46.9
Debt obligations 65.6 54.5
Debt to equity ratio 1.5 to 1 1.5 to 1
========================================================================
</TABLE>
Cash used by operations changed $15.6 million from the first half of 1996
principally as a result of higher inventory and accounts receivable balances
necessary to support the increased levels of revenue. The Company's working
capital increased $21.5 million as of June 29, 1997 as compared to December 29,
1996 due primarily to a $11.8 million increase in inventory necessary to
support the higher level of sales and a $7.2 million decrease in accounts
payable. Debt increased significantly with the proceeds used to support the
working capital needs of the business, the closing of the depots, the increased
capital expenditures of the new business systems and from the acquisition of
the Texas Instruments printer business. Debt to equity ratio remained
unchanged as a result of increased earnings.
On July 3, 1997, the Company amended its credit agreement with NationsBank of
Texas, N.A., as agent for a group of banks, which increased the Company's
revolving credit line from $35 million to $40 million. Other terms and
conditions of the credit agreement generally remained unchanged. As of June
29, 1997, the Company had $9.7 million available for borrowing under its
revolving credit agreement.
On August 8, 1997, Genicom signed a multi-year agreement with Digital Equipment
Corporation ("DEC") to provide printer products, sales and support for DEC
branded printers and related supplies and services. The agreement, which
becomes effective August 10, 1997, includes the Company's acquisition of
certain assets including certain intellectual property rights to use the DEC
brand for approved printer products.
In early August 1997, the Company received notification that Atlantic Design
Company, a principal supplier of the Company's printer products, was filing a
Demand for Arbitration with the American Arbitration Association seeking a
legal interpretation of the pricing provisions in the services agreement
between ADC and the Company and the recovery of an amount in dispute said to be
approximately $2,000,000. The Company is considering its response to ADC's
filing, including whether it wishes to raise certain other claims in the
arbitration proceeding relating to ADC's performance under the agreement, the
amount of which claims, the Company believes, exceed those raised by Atlantic
Design. The Company cannot presently predict the outcome of this matter or how
the respective claims will be resolved. Neither the arbitration proceeding nor
the resolution of the open issues between the Company and ADC is expected to
impact the continued supply of the products ADC is manufacturing for the
Company.
GENICOM provides an array of services and products addressing different niches
of the information processing industry, competing against a wide range of
companies from large multinationals to small domestic entrepreneurs. Except
for the historical information contained herein, the matters discussed in this
10Q include forward-looking statements that involve a number of risks and
uncertainties. Terms such as "believes", "expects", "plans", "intends",
"estimates", or "anticipates", and variations of such words and similar
expressions are intended to identify such forward looking statements. There
are certain important factors and risks, including the change in hardware and
software technology, economic conditions in the North American and Western
European markets, the anticipation of growth of certain market segments and the
positioning of the Company's products and services in those segments, selective
service customers whose business is declining, seasonality in the buying cycles
of certain of the Company's customers, the timing of product announcements, the
release of new or enhanced products and services, the introduction of
competitive products and services by existing or new competitors, access to and
development of product rights and technologies, the management of growth,
disruption in the ability of Atlantic Design Corporation to maintain its
production commitments to the Company, changes in the costs of production of
the Company's products and services, including any that may arise as a result
of the resolution of claims raised by Atlantic Design Company, Inc. under its
December 18, 1995 Services Agreement with the Company, the integration of
acquisitions, including but not limited to the Company's acquisition of Texas
Instruments printer business as of September 30, 1996 and the Company's
transaction with Digital Equipment Corporation as of August 10, 1997, the
transitioning of the Bedford and Waynesboro depots to Louisville, Kentucky,
GENICOM's ability to retain highly skilled technical, managerial and sales and
marketing personnel, possible litigation related to the Company's operations,
including litigation arising under various environmental laws, and the other
risks detailed from
13
<PAGE> 14
time to time in the Company's SEC reports, including reports on Form 10K, that
could cause results to differ materially from those anticipated by the
statements contained herein.
14
<PAGE> 15
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings:
Not applicable.
Item 2. Changes in Securities:
Not applicable.
Item. 3 Defaults Upon Senior Securities:
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders:
a) The Company's annual meeting of stockholders was held May 21, 1997.
c) At said annual meeting, stockholders reelected the Company's three
directors, adopted the Company's 1997 Stock Option Plan and approved
the appointment of Cooper & Lybrand L.L.P. as the Company's
independent accountants.
Directors
<TABLE>
<CAPTION>
Director Votes for Withheld Broker Non-Votes
-------- --------- -------- ----------------
<S> <C> <C> <C>
Don E. Ackerman 8,379,369 88,541 0
Edward E. Lucente 8,381,469 86,441 0
Paul T. Winn 8,381,032 86,878 0
</TABLE>
Stock Option Plan
<TABLE>
<CAPTION>
Abstentions or
--------------
Votes for Votes against Broker Non-Votes
--------- ------------- ----------------
<S> <C> <C>
7,381,082 862,018 23,786
</TABLE>
Accountants
<TABLE>
<CAPTION>
Abstentions or
--------------
Votes for Votes against Broker Non-Votes
--------- ------------- ----------------
<S> <C> <C>
8,425,214 36,286 6,410
</TABLE>
Item 5. Other Information:
In early August 1997, the Company received notification that Atlantic Design
Company, Inc., a principal supplier of the Company's printer products, was
filing a Demand for Arbitration with the American Arbitration Association
seeking a legal interpretation of the pricing provisions in the December 18,
1995 Services Agreement between Atlantic Design and the Company and the
recovery of an amount in dispute said to be approximately $2,000,000. The
Company and Atlantic Design have been in discussions concerning the Services
Agreement and, to date, have been unable to resolve the open issues by
agreement. The Company is considering its response to Atlantic Design's
filing, including whether it wishes to raise certain other claims in the
arbitration proceeding relating to Atlantic Design's performance under the
Services Agreement, the amount of which claims, the Company believes, exceed
those raised by Atlantic Design. The Company cannot presently predict the
outcome of this matter or how the respective claims will be resolved.
Neither the arbitration proceeding nor the resolution of the open issues
between the Company and Atlantic Design is expected to impact the continued
supply of the products Atlantic Design is manufacturing for the Company.
Item 6. Exhibits and Reports on Form 8-K:
a) Exhibits
15
<PAGE> 16
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
============ ==============================================================================
<S> <C>
10.1 Credit Agreement dated as of July 3, 1997, Fourth Amendment to Credit and
Security Agreement
27.1 Financial Data Schedule
</TABLE>
b) Reports on Form 8-K:
The Company did not file a Form 8-K during the quarter ended June 29,
1997.
16
<PAGE> 17
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.
GENICOM Corporation
--------------------------
Registrant
Date: August 13, 1997
/s/Harold L. McIlroy
--------------------------
Signature
Harold L. McIlroy
Vice President, Quality &
Customer Satisfaction, General
Manager, Operations
(Mr. McIlroy is a Corporate
Vice President and has been duly
authorized to sign on behalf of
the Registrant)
17
<PAGE> 18
GENICOM Corporation and Subsidiaries
INDEX TO EXHIBITS TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 29, 1997
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------ ------------------
<S> <C> <C>
10.1 Credit Agreement dated as of July 3, 1997, Fourth Amendment to E-2 - E-12
Credit and Security Agreement
27.1 Financial Data Schedule Filed only with
EDGAR version
</TABLE>
E-1
<PAGE> 1
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, (this "Amendment"), dated
as of July 3, 1997, is by and among Genicom Corporation (the "Borrower"), the
subsidiaries of the Borrower identified on the signature pages hereto (the
"Guarantors"), the several lenders identified on the signature pages hereto
(each a "Lender" and, collectively, the "Lenders") and NationsBank of Texas,
N.A., as agent for the Lenders (in such capacity, the "Agent"). Capitalized
terms used herein which are not defined herein and which are defined in the
Credit Agreement shall have the same meanings as therein defined.
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent
entered into that certain Credit Agreement dated as of January 12, 1996, as
previously amended (as previously amended, the "Existing Credit Agreement").
WHEREAS, the parties have agreed to amend the Existing Credit
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
PART 1
DEFINITIONS
SUBPART 1.1 Certain Definitions. Unless otherwise defined herein or
the context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
"Amended Credit Agreement" means the Existing Credit
Agreement as amended hereby.
"Amendment No. 4 Effective Date" is defined in Subpart 3.1.
SUBPART 1.2 Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its
preamble and recitals, have the meanings provided in the Amended Credit
Agreement.
PART 2
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 4
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part 2. Except as so
E-2
<PAGE> 2
amended, the Existing Credit Agreement and all other Credit Documents shall
continue in full force and effect.
SUBPART 2.1 Amendments to Section 1.1.
(a) The definition of "Permitted Investments" set forth in
Section 1.1 of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:
"Permitted Investments" means Investments which are
either (i) cash and Cash Equivalents; (ii) accounts
receivable created, acquired or made by the Borrower or any
of its Subsidiaries in the ordinary course of business and
payable or dischargeable in accordance with customary trade
terms; (iii) Investments consisting of stock, obligations,
securities or other property received by the Borrower or any
of its Subsidiaries in settlement of accounts receivable
(created in the ordinary course of business) from bankrupt
obligors; (iv) Investments existing as of the Closing Date
and set forth in Schedule 1.1B, (v) additional Investments in
any Subsidiary of the Borrower which is a Guarantor; (vi)
subject to the terms of Section 7.15(b), additional
Investments in Subsidiaries of the Borrower which are not
Guarantors not to exceed $10,000,000 at any one time
outstanding; (vii) Guaranty Obligations permitted by Section
8.1; (viii) acquisitions permitted by Section 8.4(c); (ix)
transactions permitted by Section 8.8; (x) loans to
directors, officers, employees, agents, customers or
suppliers that do not exceed an aggregate principal amount of
$1,000,000 at any one time outstanding; and (xi) a secured
loan to Corporation C in a principal amount not to exceed
$5,000,000; provided, however, that no such loan shall be
made until such time as the Agent shall have received (A) the
original copy of the Corporation C Note and all collateral
documents executed in connection therewith (which collateral
documents shall be in form and substance satisfactory to the
Agent and the Lenders), endorsed or assigned by the Borrower
to the Agent in a manner reasonably satisfactory to the Agent
and the Lenders, and (B) an original, executed copy of the
subordination agreement(s) executed by the holders of
outstanding senior and subordinated debt of Corporation C in
form and substance satisfactory to the Agent and the Lenders.
(b) The following definitions are hereby added to Section
1.1 of the Existing Credit Agreement in appropriate alphabetical order:
(i) "Corporation C" means a Delaware corporation,
the identity of which has been separately disclosed by the
Borrower to the Lenders and the Agent.
(ii) "Corporation C Note" means that certain
promissory note executed by Corporation C in favor of the
Borrower evidencing all indebtedness owed by Corporation C to
the Borrower in an aggregate amount not to exceed $5,000,000.
2
E-3
<PAGE> 3
SUBPART 2. Amendments to Section 2.1. Subsection (a) of Section 2.1 of
the Existing Credit Agreement is hereby amended in its entirety to read as
follows:
(a) Revolving Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein, each Lender severally agrees to make
available to the Borrower such Lender's Revolving Commitment Percentage
of revolving credit loans in Dollars ("Revolving Loans") from time to
time from the Effective Date until the Termination Date, or such
earlier date as the Revolving Commitments shall have been terminated as
provided herein for the purposes hereinafter set forth; provided,
however, that the sum of the aggregate principal amount of outstanding
Revolving Loans shall not exceed the lesser of (a) FORTY MILLION
DOLLARS ($40,000,000.00) (as such aggregate maximum amount may be
reduced from time to time as provided in Section 3.4(a), the "Revolving
Committed Amount") and (b) the Borrowing Base; provided, further, (i)
with regard to each Lender individually, such Lender's outstanding
Revolving Loans shall not exceed such Lender's Revolving Commitment
Percentage of the Revolving Committed Amount, and (ii) with regard to
the Lenders collectively, the aggregate principal amount of outstanding
Revolving Loans plus the Dollar Amount (as determined as of the most
recent Determination Date) of the aggregate principal amount of
outstanding Foreign Currency Loans plus the aggregate principal amount
of outstanding Swingline Loans plus LOC Obligations outstanding shall
not exceed the lesser of (A) the Revolving Committed Amount and (B) the
Borrowing Base. Revolving Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the
provisions hereof; provided, however, that (x) during the Initial
Interest Rate Period, all Eurodollar Loans shall have an Interest
Period of one (1) month and (y) no more than 10 Eurodollar Loans shall
be outstanding hereunder at any time. For purposes hereof, Eurodollar
Loans with different Interest Periods and/or in different currencies
shall be considered as separate Eurodollar Loans, even if they begin on
the same date, although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period and in the same currency. Revolving Loans
hereunder may be repaid and reborrowed in accordance with the
provisions hereof.
SUBPART 2.2 Replacement of Schedule 2.1(a). Schedule 2.1(a) to the
Existing Credit Agreement is hereby deleted in its entirety and a new schedule
in the form of Schedule 2.1(a) attached hereto is substituted therefor.
PART 3
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 Amendment No. 4 Effective Date. This Amendment
shall be and become effective as of the date hereof (the "Amendment No. 4
Effective Date") when all of the conditions set forth in this Subpart 3.1 shall
have been satisfied, and thereafter this Amendment shall be known, and may be
referred to, as "Amendment No. 4."
3
E-4
<PAGE> 4
SUBPART 3.1.1 Execution of Counterparts of Amendment. The
Agent shall have received counterparts of this Amendment, which
collectively shall have been duly executed on behalf of the Borrower,
each of the Guarantors and each of the Lenders.
SUBPART 3.1.2 Corporate Authority. The Agent shall have
received all documents it may reasonably request relating to the
corporate or other necessary authority for and the validity of this
Amendment, and any other matters relevant thereto, all in form and
substance reasonably satisfactory to the Agent.
SUBPART 3.1.3 Legal Opinions. The Agent shall have received a
legal opinion of McGuire, Woods, Battle & Boothe, counsel for the
Credit Parties in form and substance reasonably satisfactory to the
Agent.
SUBPART 3.1.4 Officer's Certificate. The Agent shall have
received a certificate executed by the chief financial officer of the
Borrower as of the Amendment No. 4 Effective Date stating that,
immediately after giving effect to this Amendment, (i) each of the
Credit Parties is Solvent, (ii) no Default or Event of Default exists
and (iii) the representations and warranties set forth in the Existing
Credit Agreement are true and correct in all material respects.
SUBPART 3.1.5 Amendment Fee. The Agent shall have received,
for the account of each Lender, an amendment fee equal to 7.5 basis
points on the aggregate amount of such Lenders' Commitment.
SUBPART 3.1.6 Confirmation Letter. The Agent shall have
received a letter from the Borrower confirming the identity of
Corporation C.
SUBPART 3.1.7 Other Items. The Agent shall have received such
other documents, agreements or information which may be reasonably
requested by the Agent.
PART 4
MISCELLANEOUS
SUBPART 4.1 Representations and Warranties. The Borrower hereby
represents and warrants to the Agent and the Lenders that, after giving effect
to this Amendment, (a) no Default or Event of Default exists under the Credit
Agreement or any of the other Credit Documents and (b) the representations and
warranties set forth in Section 6 of the Existing Credit Agreement are, subject
to the limitations set forth therein, true and correct in all material respects
as of the date hereof (except for those which expressly relate to an earlier
date).
SUBPART 4.2 Secured Obligations. The Borrower and the Guarantors
hereby acknowledge and agree that the term "Secured Obligations" as defined in
each of the Security Agreement and the Pledge Agreement shall be deemed to
include all amounts owing under the
4
E-5
<PAGE> 5
Amended, Restated and Substituted Revolving Note of even date herewith
executed by the Borrower in favor of NationsBank and all other additional
indebtedness incurred in connection therewith.
SUBPART 4.3 Cross-References. References in this Amendment to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 4.4 Instrument Pursuant to Existing Credit Agreement. This
Amendment is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be
construed, administered and applied in accordance with the terms and provisions
of the Existing Credit Agreement.
SUBPART 4.5 References in Other Credit Documents. At such time as this
Amendment No. 4 shall become effective pursuant to the terms of Subpart 3.1,
all references in the Credit Documents to the "Credit Agreement" shall be
deemed to refer to the Credit Agreement as amended by this Amendment.
SUBPART 4.6 Counterparts. This Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SUBPART 4.7 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE COMMONWEALTH OF
VIRGINIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SUBPART 4.8 Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
[The remainder of this page has been left blank intentionally]
5
E-6
<PAGE> 6
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
duly executed on the date first above written.
BORROWER:
GENICOM CORPORATION
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
GUARANTORS:
GENICOM INTERNATIONAL HOLDINGS
CORPORATION
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
GENICOM INTERNATIONAL SALES
CORPORATION
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
DELMARVA TECHNOLOGIES CORPORATION
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
RASTEK CORPORATION
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
[Signatures Continued]
E-7
<PAGE> 7
ENTERPRISING SERVICE SOLUTIONS
CORPORATION
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
PRINTER SYSTEMS CORPORATION
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
THE PRINTER CONNECTION, INC.
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
PRINTER SYSTEMS INTERNATIONAL, LTD.
By: /s/ James C. Gale
Title: Senior Vice President and Chief Financial
Officer
LENDERS:
NATIONSBANK OF TEXAS, N.A.
By /s/ Brent W. Mellow
Title: Senior Vice President
[Signatures Continued]
E-8
<PAGE> 8
CREDITANSTALT-BANKVEREIN
By /s/Richard P. Buckanavage
Title: Vice President
By /s/ Catherine K MacDonald
Title: Senior Associate
AERIES FINANCE, LTD.
By /s/ Andrew Wignall
Title: Director
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By /s/ Scott H. Page
Title: Vice President
RESTRUCTURED OBLIGATIONS
BACKED BY SENIOR ASSETS, B.V.
By Chancellor LGT Senior Secured Management,
Inc. as Portfolio Advisor
By /s/Christopher A. Bondy
Title: Vice President
UNITED STATES NATIONAL BANK OF
OREGON
By /s/Douglas A. Rich
Title: Vice President
[Signatures Continued]
E-9
<PAGE> 9
CRESTAR BANK
By /s/William F. Lindlaw
Title: Vice President
THE RIGGS NATIONAL BANK OF
WASHINGTON, D.C.
By /s/ Jeffrey P. White
Title: Vice President
AGENT:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By /s/ Brent W. Mellow
Title: Senior Vice President
E-10
<PAGE> 10
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SCHEDULE 2.1(a)
LENDERS, COMMITMENTS AND COMMITMENT PERCENTAGES
- -------------------------------------------------------------------------------------------------------
Foreign
Name Revolving Foreign Currency
and Address Revolving Commitment Currency Commitment
of Lenders Commitment Percentage Commitment Percentage
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NationsBank of Texas, N.A. $12,045,454.54 30.1136363500% $3,818,181.82 76.3636%
901 Main Street, 67th Floor
Dallas, Texas 75202
ATTN: Brent W. Mellow
Facsimile No.: (214) 508-0980
- -------------------------------------------------------------------------------------------------------
Creditanstalt-Bankverein $8,272,727.28 20.6818182000% $1,181,818.18 23.6364%
Two Greenwich Plaza
Greenwich, Connecticut 06830
ATTN: Rich Buckanavage
Facsimile No.: (203) 861-6594
- -------------------------------------------------------------------------------------------------------
United States National Bank of $6,363,636.36 15.9090909000% --- ---
Oregon
555 S.W. Oak Street
Suite 400 - PL-4
Portland, Oregon 97204
ATTN: Doug Rich
Facsimile No.: (503) 275-4267
- -------------------------------------------------------------------------------------------------------
Crestar Bank $7,909,090.91 19.7727272750% --- ---
1445 New York Avenue, N.W.
3rd Floor
Washington, D.C. 20005
ATTN: Bill Lindlaw
Facsimile No.: (202) 879-6432
- -------------------------------------------------------------------------------------------------------
The Riggs National Bank of $5,409,090.91 13.5227272750% --- ---
Washington, D.C.
808 17th Street, N.W.,
10th Floor
Washington, D.C. 20074-0649
ATTN: Jeffrey P. White
Facsimile No.: (202) 835-5977
- -------------------------------------------------------------------------------------------------------
Aeries Finance Ltd. --- --- --- ---
c/o Moore Management Services
Limited
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SCHEDULE 2.1(a)
LENDERS, COMMITMENTS AND COMMITMENT PERCENTAGES
- --------------------------------------------------------------------------------------------------------
Tranche A Tranche B
Name Tranche A Term Loan Tranche B Term Loan
and Address Term Loan Commitment Term Loan Commitment
of Lenders Commitment Percentage Commitment Percentage
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NationsBank of Texas, N.A. $3,994,592.19 27.272727329% --- ---
901 Main Street, 67th Floor
Dallas, Texas 75202
ATTN: Brent W. Mellow
Facsimile No.: (214) 508-0980
- --------------------------------------------------------------------------------------------------------
Creditanstalt-Bankverein $3,727,888.98 23.636363562% --- ---
Two Greenwich Plaza
Greenwich, Connecticut 06830
ATTN: Rich Buckanavage
Facsimile No.: (203) 861-6594
- --------------------------------------------------------------------------------------------------------
United States National Bank of $2,517,606.90 18.18181818% --- ---
Oregon
555 S.W. Oak Street
Suite 400 - PL-4
Portland, Oregon 97204
ATTN: Doug Rich
Facsimile No.: (503) 275-4267
- --------------------------------------------------------------------------------------------------------
Crestar Bank $2,139,965.88 15.45454545% --- ---
1445 New York Avenue, N.W.
3rd Floor
Washington, D.C. 20005
ATTN: Bill Lindlaw
Facsimile No.: (202) 879-6432
- --------------------------------------------------------------------------------------------------------
The Riggs National Bank of $2,139,965.88 15.45454545% --- ---
Washington, D.C.
808 17th Street, N.W.,
10th Floor
Washington, D.C. 20074-0649
ATTN: Jeffrey P. White
Facsimile No.: (202) 835-5977
- --------------------------------------------------------------------------------------------------------
Aeries Finance Ltd. --- --- 4,376,872.75 25.00000000%
c/o Moore Management Services
Limited
- --------------------------------------------------------------------------------------------------------
</TABLE>
E-11
<PAGE> 11
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SCHEDULE 2.1(a)
---------------
LENDERS, COMMITMENTS AND COMMITMENT PERCENTAGES
- -------------------------------------------------------------------------------------------------------
Foreign
Name Revolving Foreign Currency
and Address Revolving Commitment Currency Commitment
of Lenders Commitment Percentage Commitment Percentage
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Elizabeth House, Castle Street
St. Helier, Jersey
Channel Islands, Great Britain
ATTN: Director
Facsimile No.:
011-441-534-616900
with a copy to:
- ---------------
Aeries Finance Ltd.
Chancellor LGT Senior Secured
Management
1166 Avenue of the Americas,
27th Floor
New York, New York 10036
ATTN: Chris Bondy
Facsimile No.: (212) 278-9619
- -------------------------------------------------------------------------------------------------------
Senior Debt Portfolio --- --- --- ---
Eaton Vance Management
24 Federal Street
Boston, Massuchusetts 02110
ATTN: Payson Swaffield
Facsimile No.: (617) 695-9594
- -------------------------------------------------------------------------------------------------------
Restructured Obligations --- --- --- ---
backed by Senior Assets B.V.
Chancellor Senior Secured
Management
1166 Avenue of the Americas,
27th Floor
New York, New York 10036
ATTN: Chris Bondy
Facsimile No.: (212) 278-9619
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SCHEDULE 2.1(a)
---------------
LENDERS, COMMITMENTS AND COMMITMENT PERCENTAGES
- -------------------------------------------------------------------------------------------------------
Tranche A Tranche B
Name Tranche A Term Loan Tranche B Term Loan
and Address Term Loan Commitment Term Loan Commitment
of Lenders Commitment Percentage Commitment Percentage
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Elizabeth House, Castle Street
St. Helier, Jersey
Channel Islands, Great Britain
ATTN: Director
Facsimile No.:
011-441-534-616900
with a copy to:
- ---------------
Aeries Finance Ltd.
Chancellor LGT Senior Secured
Management
1166 Avenue of the Americas,
27th Floor
New York, New York 10036
ATTN: Chris Bondy
Facsimile No.: (212) 278-9619
- -------------------------------------------------------------------------------------------------------
Senior Debt Portfolio --- --- $8,753,745.50 50.00000000%
Eaton Vance Management
24 Federal Street
Boston, Massuchusetts 02110
ATTN: Payson Swaffield
Facsimile No.: (617) 695-9594
- -------------------------------------------------------------------------------------------------------
Restructured Obligations --- --- $4,376,872.25 25.00000000%
backed by Senior Assets B.V.
Chancellor Senior Secured
Management
1166 Avenue of the Americas,
27th Floor
New York, New York 10036
ATTN: Chris Bondy
Facsimile No.: (212) 278-9619
=======================================================================================================
</TABLE>
E-12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> JUN-29-1997
<CASH> 4,389
<SECURITIES> 0
<RECEIVABLES> 65,111
<ALLOWANCES> (3,829)
<INVENTORY> 58,695
<CURRENT-ASSETS> 139,048
<PP&E> 93,962
<DEPRECIATION> (67,460)
<TOTAL-ASSETS> 195,985
<CURRENT-LIABILITIES> 81,425
<BONDS> 0
0
0
<COMMON> 110
<OTHER-SE> 42,717
<TOTAL-LIABILITY-AND-EQUITY> 195,985
<SALES> 135,202
<TOTAL-REVENUES> 194,992
<CGS> 91,915
<TOTAL-COSTS> 147,168
<OTHER-EXPENSES> 38,246
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,032
<INCOME-PRETAX> 6,546
<INCOME-TAX> 1,186
<INCOME-CONTINUING> 5,360
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,360
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
