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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
___X___ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 2, 1995
OR
______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number ______0-14618______
VECTRA TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Washington 91-1160888
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1010 S. 336th Street, Suite 220, Federal Way, WA 98003
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(Address of principal executive offices)
(206) 874-2235
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No _____
There were 7,848,627 shares of common stock outstanding as of April 30, 1995.
Page 1 of 19
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ITEM 1. FINANCIAL STATEMENTS
VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
April 2, 1995 and January 1, 1995
(In thousands)
<TABLE>
<CAPTION>
ASSETS
------
APRIL 2 JANUARY 1
----------- ---------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,723 $ 3,427
Securities available for sale 1,060 919
Accounts receivable, net 27,787 26,211
Costs and estimated earnings in excess of
billings on uncompleted contracts 6,997 3,076
Inventories 1,676 1,426
Prepaid expenses and other 1,161 931
-------- --------
Total current assets 40,404 35,990
Property and equipment, at cost, less accumulated
depreciation of 15,546 at April 2 and 15,027
at January 1 12,731 11,304
Costs in excess of net assets acquired, net of
accumulated amortization 28,328 28,638
Licenses, patents and other intangibles at cost,
net of accumulated amortization 5,050 5,270
Investments and long-term prepaid costs 2,495 2,647
Other assets 312 316
-------- --------
$ 89,320 $ 84,165
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Note payable to bank $ 15,200 $ 15,200
Accounts payable 7,701 5,060
Accrued payroll and related expenses 7,441 7,014
Other accrued liabilities 9,630 6,153
Billings in excess of costs and estimated
earnings on uncompleted contracts 8,245 9,122
Long-term debt due within one year 2,731 2,712
------- -------
Total current liabilities 50,948 45,261
Long-term debt 7,736 8,617
Deferred lease incentive 471 487
Shareholders' equity:
Class A preferred stock, 4,100,000 authorized
Common stock, 30,000,000 authorized,
7,848,627 issued and outstanding (7,848,627
in 1994) 45,402 45,212
Accumulated deficit (15,237) (15,412)
-------- --------
Total shareholders' equity 30,165 29,800
-------- --------
$89,320 $84,165
-------- --------
-------- --------
</TABLE>
See accompanying notes. 2
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VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
APRIL 2, 1995 APRIL 3, 1994
------------------ ------------------
<S> <C> <C>
Revenues $38,651 $37,145
Operating costs 27,450 24,559
------- -------
Gross profit 11,201 12,586
Research and development expenses 29 307
Selling, general and administrative
expenses 10,214 11,681
------- -------
Operating income 958 598
Interest expense, net 755 603
------- -------
Income (loss) before taxes 203 (5)
Income taxes 40 55
------- -------
Net income (loss) $ 163 $ (60)
------- -------
------- -------
Net income (loss) per share $ .02 $ (.01)
------- -------
------- -------
Average shares outstanding 7,888 7,633
------- -------
------- -------
</TABLE>
See accompanying notes. 3
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VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
APRIL 2, 1995 APRIL 3, 1994
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 163 $ (60)
Adjustments to reconcile net income
(loss) to net cash provided from
operations:
Depreciation and amortization 1,589 1,581
Increase/(decrease) in cash from changes
in operating working capital:
Accounts receivable and billings (6,374) (1,710)
Inventories and prepaid expenses (480) (967)
Accounts payable and accrued expenses 6,545 412
------- --------
Net cash provided by (used in)
operating activities 1,443 (744)
------- --------
Cash flows from investing activities:
Payments related to Impell acquisition -- (22,479)
Capital expenditures (2,274) (863)
Increases in short-term investments (129) (132)
Other 6 (376)
------- --------
Net cash used in investing activities (2,397) (23,850)
------- --------
Cash flows from financing activities:
Net borrowing under short-term loans -- 11,671
Proceeds from long-term debt -- 13,962
Payments on long-term loans (750) (3,163)
Proceeds from issuance of common stock -- 1,999
------- --------
Net cash provided by (used in) financing
activities (750) 24,469
------- --------
Net decrease in cash (1,704) (125)
Cash at beginning of period 3,427 572
------- --------
Cash at end of period $ 1,723 $ 447
------- --------
------- --------
Cash paid for interest $ 594 $ 180
Cash paid for income taxes $ 0 $ 86
</TABLE>
See accompanying notes. 4
<PAGE>
VECTRA TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for
the three months ended April 2, 1995 are not necessarily indicative of the
results that may be expected for the full year. The unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's fiscal 1994 Annual Report on Form 10-K.
2. EARNINGS PER SHARE
Net income (loss) per share is based upon the weighted average number of common
shares outstanding during each period plus the dilutive effect of stock
options and warrants. Net income (loss) per share on a fully diluted basis was
the same as the primary income per share.
3. NOTE PAYABLE AND LONG-TERM DEBT
In March, 1995, the banks required the Company to reprice the common stock
warrants issued in connection with the bank debt at $2.9375 per share. In
addition, if the Company fails to raise $10 million cash by June 30, 1995, the
warrant price will be further reduced to $.01 per share. The effect of such
repricing would be that, upon exercise of these warrants by the banks, the
equity and voting power of existing shareholders would be diluted by up to 11%
at the $.01 per share purchase price. Based on the new price, the warrant
related discount increased by $191,000 which will be recognized as interest
expense over the term of the loan.
4. CONTINGENCIES
The Company is self-insured for general liability risk for $1 million per
occurrence and $2 million in the aggregate. As of April 2, 1995, the Company
has accrued approximately $550,000 for unreported and/or potential losses.
Coverage above the self-insured limits is provided for under an umbrella
policy with a commercial insurance company.
The radioactive materials handled by the Company are the legal responsibility
of the Company's utility customers. The Company does not take title to such
materials. In the event of an accident or incident involving such material,
the Company is covered under insurance carried by and provided to operators of
nuclear plants or transporters of nuclear materials.
5. RECLASSIFICATIONS
Certain reclassifications have been made to the 1994 financial statements to
conform to the current year presentation.
5
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ITEM 1. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
ACQUISITION
On January 6, 1994 the Company's shareholders approved the purchase of all of
the stock of ABB Impell Corporation, ABB Government Services Inc. and ABB
Impell Ltd. (the "Impell Companies") from affiliates of ABB Asea Brown Boveri
Ltd. of Zurich, Switzerland (the "Seller"). The acquisition, effective as of
midnight December 31, 1993, was completed on January 7, 1994 and was accounted
for as a purchase in 1994. The Company also changed its name from Pacific
Nuclear Systems, Inc. to VECTRA Technologies, Inc. ("VECTRA" or "the
Company"). The purchase price of $31.9 million together with the direct costs
of the acquisition were allocated to the fair value of the assets acquired and
liabilities assumed. The seller received $14 million in common stock
(1,714,503 shares) and the remainder of the purchase price in cash. The
purchase price of $31.9 million reflects a reduction of $480,000 for ABB
Impell Corporation and ABB Government Services, Inc. that was paid in cash by
the Seller in April, 1995 pursuant to an arbitration proceeding. The final
purchase price for ABB Impell Ltd. is subject to an immaterial adjustment.
RESULTS OF OPERATIONS
REVENUES
Revenues increased by 4% to $38.7 million for the three months ended April 2,
1995 from $37.1 million during the comparable period in 1994. The increase in
revenues is primarily due to the successful completion of an important phase of
a full system decontamination contract and increased services for
transportation and storage facilities for high level nuclear waste. This
increase in revenue was offset by decreases in domestic commercial nuclear
engineering services and decreases in activities relating to low level nuclear
waste processing due to the completion of a large contract with a client in
Korea during 1994.
Most of the Company's contracts are awarded by a competitive bidding process in
which a number of firms submit proposals in response to a request for
proposals to provide specific products or services. The Company operates in a
very competitive industry and, consequently, management is unable to comment
on the outlook for future contracts. The Company's ongoing marketing
activities include identifying prospective bid requests and requests for
proposals. In its target market areas, the Company aggressively pursues such
requests.
The Company was informed in April, 1995 that the DOE has awarded a single
contract to design a Multi-Purpose Canister (MPC) for the storage and
transportation of spent nuclear fuel to a competing team. The Company has
protested this award and is currently assessing the short term and long term
impact of the loss of this award. The Company continues to aggressively pursue
all opportunities in both the commercial and government spent fuel storage
markets for its NUHOMS-Registration Trademark- spent fuel dry storage system.
GROSS PROFITS
Each of the Company's contracts is negotiated independently and varies as to
profitability. The timing and actual performance by the Company on its major
contracts also affect the Company's gross profit margin.
Gross profit decreased by 11% or $1.2 million for the first three months of
1995 compared to the first three months of 1994. Gross profit as a percent of
revenues decreased to 29% from 34% for the first quarter of 1995 compared to
1994. Gross profit was affected by both reduced revenues and lower margins in
domestic commercial engineering services. Reduced revenues in engineering
services are a reflection of the lower demand for outside engineering services
by domestic nuclear utilities. Gross margins in engineering
6
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services have been impacted by competitive pressures in pricing. Gross margins
have also been impacted by the increased services for transportation and
storage facilities for high level nuclear waste which are typically lower
margin contracts. The decrease was partially offset by increased gross profit
and higher margins for decontamination services.
EXPENSES
Research and development expenses decreased for the three month period ending
April 2, 1995 compared to the same period in 1994. The majority of the 1994
expense was related to development of the Company's vitrification process
Enviroglass-Registered Trademark-, which features thermal treatment and volume
reduction of low level radioactive waste into an environmentally stable glass
form. In 1994 the Company has moved from R & D activity to the fabrication of
vitrification equipment to support client contracts.
Selling, general and administrative expenses, as a percentage of revenues,
decreased to 26% for the first three months of 1995 from 31% in the first
three months of 1994. Actual selling, general, and administrative expenses
decreased $1.5 million during the first quarter of 1995 compared with the
first quarter of the prior year. The decrease in primarily attributable to
lower levels of overhead expense in the engineering services business
resulting from the reductions in staff during 1994.
Net interest expense in the first quarter of 1995 increased compared to the
first quarter of 1994 due to higher interest rates. Interest expense includes
interest on the term loan and the revolving credit facility as well as
amortization of bank fees and warrant-related debt discount.
The effective income tax rate is lower than the statutory tax rate for the
three months ended April 2, 1995 due to the use of net operating loss
carryforwards. The effective income tax rate is higher than the statutory tax
rate for the three months ended April 3, 1994 due to provisions for state
income taxes.
NET INCOME (LOSS)
Net income increased to $163,000 in the first three months of 1995 from a net
loss of $60,000 in the first three months of 1994. The increase in income is
due primarily to increased decontamination services, good performance in
services for transportation and storage facilities for high level nuclear
waste, and lower levels of overhead expense in the engineering services
business.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $1.4 million in the three months
ended April 2, 1995 compared to net cash used by operations of $.7 million in
the three months ended April 3, 1994. Cash provided by operating activities in
the first quarter of 1995 increased compared to the first quarter of 1994
mainly due to increases in accounts payable and other accrued liabilities
offset by increases in costs and estimated earnings in excess of billings on
uncompleted contracts.
Accounts receivable and billings balances differ from period to period as a
result of varying contractual terms that relate to the timing and amount of
progress payments for some of the Company's multi-year, multi-million dollar
contracts. This variability is expected to continue in future periods.
Capital expenditures were $2.3 million in the first three months of 1995
compared to $.9 in the first three months of 1994. The Company's agreement
with its banks allows a maximum of $5.8 million in capital expenditures during
1995. The majority of the Company's capital expenditures are for processing
equipment for radioactive waste volume reduction, dewatering, and vitrification
systems in waste services and decontamination equipment in plant services.
Fuel services has capital requirements primarily for licenses and high level
waste transportation equipment. Engineering services has modest capital
7
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requirements mainly for computer equipment. The Company anticipates that it
will need to devote significant capital resources to technology development in
the future in order to remain competitive. The Company had contractual
commitments of $2.9 million as of quarter end for capital acquisitions to be
made during the remainder of 1995. Depending on the capital resources
available to the Company, it may make additional capital expenditures during
1995.
The Company has financed its operations, development, and growth from the sale
of stock and from bank debt, currently in the form of a revolving credit line
of up to $22.5 million secured by receivables and a long term loan. The term
loan matures in January, 1999 and the revolving credit facility matures in
January, 1996. The interest rate for both loans is the bank's base rate plus
1.0% to 1.5% or the Eurodollar rate plus from 2.0% to 2.5%. The Company also
issued warrants to the banks in conjunction with the debt to purchase 830,060
shares of common stock at $8.17 per share which are exercisable through January
1999. In March, 1995, the banks required the Company to reprice the common
stock warrants issued in connection with the bank debt at $2.9375 per share.
In addition, if the Company fails to raise $10 million cash by June 30, 1995,
the warrant price will be further reduced to $.01 per share. The effect of such
repricing would be that, upon exercise of these warrants by the banks, the
equity and voting power of existing shareholders would be diluted by up to 11%
at the $.01 per share purchase price. The Company has evaluated the warrant
related discount based on the new price and has adjusted the value accordingly.
The agreements with the banks specify certain negative, affirmative and
financial covenants, including without limitation, covenants with respect to
leverage, interest coverage, fixed charge coverage and minimum net worth, and
restrictions on dividends and activities of the Company. The Company
renegotiated the requirements with the banks in March, 1995 and established new
ratios for the quarter ended April 2, 1995 with which it complied.
Borrowings under the revolving credit facility are limited by eligible
receivables in the accounts receivable borrowing base. At the end of the
quarter, the Company had an unused revolving credit facility of $7.3 million of
which $.8 million was available based on the accounts receivable borrowing
base. The amount of availability is subject to fluctuation.
Lower than projected cash flows and lower borrowing availability under the
revolving credit facility have restricted the Company's ability to fund
expenditures and develop its technology. Operations in 1995 are not likely to
generate sufficient cash to continue operations and concurrently invest in
necessary expenditures for technology development including certain amounts
which are contractually committed. As previously disclosed, the Company
recognizes its need for additional cash. Management is pursuing plans to raise
cash through a sale of certain operating assets. Prior to consummation of such
sale, however, the Company may encounter a cash shortfall due to the reasons
described above and variations in timing of receipts of cash from operations,
resulting in insufficient cash to cover obligations. If the company reaches an
agreement to sell the assets, the Company plans to negotiate for additional
borrowing until the closing of such sale. If the cash raising activities do not
materialize or are delayed, the Company will encounter a cash shortfall around
mid-year unless planned capital expenditures and other operating costs can be
reduced significantly. The Company is currently developing plans for such
circumstances. Management believes that, if the sale of the assets occurs, cash
provided by such sale, together with cash generated from operations, will
provide sufficient funds to enable to Company to continue operations through
December 31, 1995 and beyond.
8
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS Not applicable.
ITEM 2. CHANGES IN SECURITIES Not applicable.
ITEM 3. DEFAULT UPON SENIOR SECURITIES Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable.
ITEM 5. OTHER INFORMATION
In April, 1995 the Company was notified by the Nasdaq Stock Market, Inc. that
the Company may no longer meet the minimum requirements for continued
inclusion in The Nasdaq Stock Market-SM-. The Company has applied for a
temporary exception to allow continued inclusion until the current cash
raising activities are concluded. The Company expects to exceed the Nasdaq
minimum requirements and to continue to be listed in The Nasdaq Stock
Market-SM-.
The Company has decided to close its corporate office in Federal Way,
Washington and to consolidate its corporate and administrative functions into
its office in San Ramon, California. John R. Holding, Vice President and Chief
Financial Officer, has elected not to relocate with the Company. A transition
plan is currently being developed.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Third Amendment to the Term Loan Agreement among VECTRA
Technologies, Inc., the banks named herein and Banque Paribas as
Agent and Banque Nationale de Paris as Managing Agent.
9
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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.
VECTRA TECHNOLOGIES, INC.
Dated _______16, 1995 By ________/s/ RAY A. FORTNEY_______
Ray A. Fortney
President
Chief Executive Officer
Dated _______16, 1995 By ________/s/ JOHN R. HOLDING______
John R. Holding
Vice President, Finance
Chief Financial Officer
10
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EXHIBIT 10.1
THIRD AMENDMENT
(TERM LOAN AGREEMENT)
This THIRD AMENDMENT ("AMENDMENT") dated as of March 10, 1995 is entered
into among, VECTRA TECHNOLOGIES, INC. (the "BORROWER"), BANQUE PARIBAS, as a
Bank (as defined below) and as the Agent (as defined below), and BANQUE
NATIONALE DE PARIS, as a Bank and as the Managing Agent (as defined below).
RECITALS
The Borrower has entered into that certain Term Loan Agreement dated as of
January 6, 1994, as amended by the First Amendment and Waiver to Term Loan
Agreement dated as of March 29, 1994 and the Amendment and Limited Waiver dated
as of August __, 1994 (as so amended and as the same and may from time to time
be further amended, modified, supplemented or restated, the "TERM AGREEMENT"),
among the Borrower, the Banks party thereto, Banque Paribas, acting in its
separate capacity as agent for the Banks (the "AGENT"), and Banque Nationale de
Paris, acting in its separate capacity as Managing Agent (as defined therein)
(the "MANAGING AGENT").
The parties to the Term Agreement desire to further amend the Term
Agreement on and in accordance with the terms, subject to the conditions and
in reliance on the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
DEFINITIONS. Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Term Agreement.
AMENDMENTS TO TERM AGREEMENT.
A new definition of "Net Issuance Proceeds" is added to Section 1.1
of the Term Agreement to read as follows:
"Net Issuance Proceeds" means, in respect of any issuance of debt or
equity, cash proceeds and non-cash proceeds received or receivable in
connection therewith, net of reasonable out-of-pocket costs and expenses
paid or incurred in connection therewith in favor of any Person not an
Affiliate of the Borrower, except as are paid or payable to any such
Affiliate upon fair and reasonable terms that are duly approved by the
disinterested members of the Borrower's board of directors, fully
disclosed to the Agent and no less favorable to the Borrower than would
obtain in a comparable arm's length transaction with a Person not an
Affiliate of the Borrower, such costs and expenses to be consistent with
standard investment bank practices for similar issuances.
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A new Section 2.18 (Mandatory Prepayments) is added to the Term
Agreement to read as follows:
2.18 MANDATORY PREPAYMENTS. If the Borrower shall issue, raise or
receive any new equity and debt, the Borrower shall promptly notify the
Agent of the estimated Net Issuance Proceeds of such equity issuance or
contribution. The Borrower shall then prepay principal amounts
outstanding under the Loans in an amount equal to the Net Issuance
Proceeds of such equity issuance or contribution, which amounts shall be
prepaid within two (2) Business Days of receipt thereof by the Borrower
and applied in inverse order to the scheduled installments for repayment
of the Loans.
A new subsection (r) (Monthly Reports) is added to Section 5.1
(Information Covenants) of the Term Agreement to read as follows:
(r) MONTHLY REPORTS. As soon as practicable and in any event
within 15 (as to clauses (i), (ii) and (iii), below) or 30 (as to clauses
(iv) and (v), below) days, as applicable, after the end of each month, a
monthly Borrower-prepared report, including (i) as to the current backlog
under contracts with customers of the Borrower and its Subsidiaries as of
the last day of the immediately preceding month, (ii) a list of bids for
new customer contracts won, lost and currently outstanding made by the
Borrower and its Subsidiaries during the immediately preceding month,
(iii) a list of material contracts anticipated to be bid on by the
Borrower or any of its Subsidiaries within the next 6 months, including a
description of each, (iv) a monthly borrowing base projection for the
current month for each working capital line of credit available to the
Borrower or any of its Subsidiaries and (v) a comparison of the actual
accounts receivables and available borrowing bases under working capital
lines of credit as of the last day of the immediately preceding month
against the accounts receivables and available borrowing bases under
working capital lines of credit projected for such date in the monthly
report delivered with respect to the prior month, in each case of the
Borrower and its Subsidiaries, with an explanation for any material
variance.
2.3 A new subsection (s) (Weekly Reports) is added to Section 5.1
(Information Covenants) of the Term Agreement to read as follows:
(s) WEEKLY REPORTS. As soon as practicable and in any event by
Wednesday of each week, a weekly Borrower-prepared report, including (i) a
utilization report as to the hours charged by the Borrower and its
Subsidiaries for engineering services provided to customers during the
immediately preceding 4 week period, (ii) as to the Borrower's cash
position, in the form of a daily comparison of cash receipts against cash
disbursements, including cash balance, borrowings by the Borrower under
the Receivables Facility and the availability for additional borrowings
under the Receivables Facility, for the immediately preceding 2 week
period, and (iii) as to the Borrower's projected cash position, in the
form of a daily comparison of cash receipts against cash disbursements,
including cash balance, borrowings by the Borrower under the Receivables
Facility and the availability for additional borrowings under the
Receivables Facility, for the current and next succeeding week.
Subsection (a) (Leverage Ratio) of Section 6.1 (Financial Covenants)
of the Term Agreement is amended (i) to delete the entire proviso
following the words "opposite such period," in line 8 of Subsection (a),
(ii) to add in place of such proviso the following new proviso:
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PROVIDED, HOWEVER, that calculations of the Leverage Ratio shall
specifically exclude the effect of any one time charges, write-offs
or adjustments relating to severance and restructuring costs incurred
during the Borrower's fiscal year ended January 2, 1995 up to an
aggregate amount not to exceed $3,427,000:
and (iii) to amend and restate the table appearing at the end of
Subsection (a) to read as follows:
PERIOD RATIO
10/3/94 - 4/2/95 4.00 : 1.0
4/3/95 - 7/2/95 3.75 : 1.0
7/3/95 - 10/1/95 3.00 : 1.0
10/2/95 - 12/31/95 2.40 : 1.0
1/1/96 - Maturity Date 1.50 : 1.0
Subsection (b) (Interest Coverage Ratio) of Section 6.1 (Financial
Covenants) of the Term Agreement is amended (i) to delete the entire
proviso following the words "opposite such period," in line 6 of Subsection
(b), (ii) to add in place of such proviso the following new proviso:
PROVIDED, HOWEVER, calculations of the Interest Coverage Ratio shall
specifically exclude the effect of any one time charges, write-offs or
adjustments relating to severance and restructuring costs incurred
during the Borrower's fiscal year ended January 2, 1995 up to an
aggregate amount not to exceed $3,427,000:
and (iii) to amend and restate the table appearing at the end of Subsection
(b) to read as follows:
PERIOD RATIO
10/3/94 - 1/1/95 4.00 : 1.0
1/2/95 - 4/2/95 3.40 : 1.0
4/3/95 - 7/2/95 3.65 : 1.0
7/3/95 - 10/1/95 4.45 : 1.0
10/2/95 - Maturity Date 5.00 : 1.0
Subsection (c) (Fixed Charge Coverage Ratio) of Section 6.1 (Financial
Covenants) of the Term Agreement is amended (i) to delete the entire
proviso following the words "opposite such period," in line 7 of Subsection
(c), (ii) to add in place of such proviso the following new proviso:
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PROVIDED, HOWEVER, calculations of the Fixed Charge Coverage Ratio
shall specifically exclude the effect of any one time charges,
write-offs or adjustments relating to severance and restructuring costs
incurred during the Borrower's fiscal year ended January 2, 1995 up to
an aggregate amount not to exceed $3,427,000:
and (iii) to amend and restate the table appearing at the end of Subsection
(c) to read in its entirety as follows:
PERIOD RATIO
10/3/94 - 4/2/95 1.00 : 1.0
4/3/95 - 7/2/95 1.05 : 1.0
7/3/95 - 10/1/95 1.10 : 1.0
10/2/95 - 12/31/95 1.20 : 1.0
1/1/96 - 3/31/96 1.30 : 1.0
4/1/96 - 6/30/96 1.35 : 1.0
7/1/96 - 9/29/96 1.40 : 1.0
9/30/96 - 12/29/96 1.45 : 1.0
12/30/96 - Maturity Date 1.50 : 1.0
Subsection (d) (Minimum Consolidated Net Worth) of Section 6.1
(Financial Covenants) of the Term Agreement is amended to add after the
words "Closing Date" at the end of Subsection (d) the following proviso:
PROVIDED, HOWEVER, calculations of the Consolidated New Worth shall
specifically exclude the effect of any one time charges, write-offs
or adjustments relating to severance and restructuring costs incurred
during the Borrower's fiscal year ended January 2, 1995 up to an
aggregate amount not to exceed $3,427,000:
Subsection (e) (Capital Expenditures) of Section 6.1 (Financial
Covenants) of the Term Agreement is deleted in its entirety and replaced
with the following
(e) CAPITAL EXPENDITURES. The Borrower shall not make or incur (or
commit to make or incur) and shall not permit any of its Subsidiaries to
make or incur (or commit to make or incur) any Capital Expenditures, except
Capital Expenditures of the Borrower and its Subsidiaries during any of the
periods set forth below not to exceed in the aggregate the amount set forth
opposite such period:
14
<PAGE>
PERIOD MAXIMUM AMOUNT
Fiscal year ended on 1/1/95 $6,000,000
1/2/95 - 4/2/95 $2,100,000
4/3/95 - 7/2/95 $2,500,000
7/3/95 - 10/1/95 $ 800,000
10/2/95 - 12/31/95 $ 400,000
1/1/96 - 12/29/96 $5,000,000
12/30/96 - 12/28/97 $5,000,000
12/29/97 - 1/3/99 $5,000,000
Amounts permitted for Capital Expenditures during any of the Borrower's
fiscal quarters ending April 2, July 2 or October 1, 1995 but not utilized
during such quarter may be rolled over and used in the next succeeding
fiscal quarter; PROVIDED that no such unutilized amounts may be rolled over
and utilized beyond December 31, 1995.
Section 6.3 (Liens) of the Term Agreement is amended by (i) deleting
the word "and" after the words "Receivables Facility Documents" at the end
of subsection (i), (ii) deleting the "." at the end of subsection (j) and
inserting in its place the words "; and", and (iii) inserting the following
subsection (k):
(k) Liens granted to AFCO in the unearned premiums and dividends
which may become payable under the insurance policies financed by AFCO and
loss payments under such policies which reduce the unearned premiums,
provided such Lien in the loss payments is expressly subject to the
interest of any mortgagee or loss payee under such policies.
Section 6.5 (Sale of Assets) of the Term Agreement is amended by (i)
inserting after the words "and be continuing" and the end of clause
(iii)(C), the following PROVISO:
; PROVIDED, HOWEVER, that notwithstanding anything to the contrary set
forth in clauses (iii)(A) and (B), above, in no event shall the asset sales
and dispositions permitted under this clause (iii) exceed $500,000 in the
aggregate as measured on a cumulative basis since the Closing Date
and (ii) deleting clause (iv) in its entirety and inserting in its place
the following:
(iv) sales of long-term assets in excess of the limitations set forth
in clauses (i), (ii) and (iii), above, to the extent that the net proceeds
of such sales are used solely to prepay principal amounts outstanding under
the Loans, which amounts shall be prepaid within two (2) Business Days of
receipt thereof by the Borrower and applied in inverse order to the
scheduled installments for repayment of the Loans.
15
<PAGE>
LIMITATION OF AMENDMENT.
The amendments set forth in SECTION 2, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (i) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document or (ii) otherwise prejudice any
right or remedy which the Banks, the Agent or the Managing Agent may now have or
may have in the future under or in connection with any Loan Document.
This Amendment shall be construed in connection with and as part of the
Loan Documents and all terms, conditions, representations, warranties, covenants
and agreements set forth in the Loan Documents, except as herein waived or
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
REPRESENTATIONS AND WARRANTIES. In order to induce the Banks, the Agent
and the Managing Agent to enter into this Amendment, the Borrower represents and
warrants to each Bank, the Agent and the Managing Agent that (a) the
representations and warranties contained in the Loan Documents (other than those
which expressly speak as of a different date) are true and correct in all
material respects as of the date hereof and (b) no Default or Event of Default
(as each such term is defined in the Term Agreement) has occurred and is
continuing.
REAFFIRMATION. The Borrower hereby reaffirms its obligations under each
Loan Document to which it is a party.
COUNTERPARTS AND EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This Amendment shall be
deemed to be effective as of January 1, 1995.
GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
VECTRA TECHNOLOGIES, INC.
By: _________________________________
Its: _________________________________
BANQUE PARIBAS, as a Bank and as Agent
By: _________________________________
Its: _________________________________
By: _________________________________
Its: _________________________________
BANQUE NATIONALE DE PARIS, as a Bank
and as Managing Agent
By: _________________________________
Its: _________________________________
17
<PAGE>
ACKNOWLEDGEMENT OF AMENDMENT
AND REAFFIRMATION OF GUARANTY
Each of the undersigned Guarantors hereby acknowledges and confirms that it has
reviewed and approved the terms and conditions of this Amendment.
Each Guarantor hereby consents to this Amendment and agrees that its respective
Guaranty of the Obligations of the Borrower under the Term Agreement shall
continue in full force and effect, shall be valid and enforceable and shall not
be impaired or otherwise affected by the execution of this Amendment or any
other document or instrument delivered in connection herewith.
Each Guarantor severally represents and warrants that, after giving effect to
this Amendment, all representations and warranties contained in its respective
are true, accurate and complete as if made the date hereof.
GUARANTORS PACIFIC NUCLEAR STORAGE SYSTEMS, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
NUCLEAR PACKAGING, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
VECTRA SERVICES, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
CTL INTERNATIONAL, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
VECTRA GOVERNMENT SERVICES, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> APR-02-1995
<CASH> 1,723
<SECURITIES> 1,060
<RECEIVABLES> 27,787
<ALLOWANCES> 0
<INVENTORY> 1,676
<CURRENT-ASSETS> 40,404
<PP&E> 28,277
<DEPRECIATION> 15,546
<TOTAL-ASSETS> 89,320
<CURRENT-LIABILITIES> 50,948
<BONDS> 0
<COMMON> 45,402
0
0
<OTHER-SE> (15,237)
<TOTAL-LIABILITY-AND-EQUITY> 89,320
<SALES> 5,264
<TOTAL-REVENUES> 38,651
<CGS> 4,574
<TOTAL-COSTS> 27,450
<OTHER-EXPENSES> 10,243
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 755
<INCOME-PRETAX> 203
<INCOME-TAX> 40
<INCOME-CONTINUING> 163
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
