<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996 Commission File Number: 0-14618
-----------------------------
VECTRA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Washington 91-1160888
(State of incorporation) (I.R.S. Employer Identification No.)
5000 Executive Parkway, Suite 500
San Ramon, CA 94583
(Address of principal executive offices)
(510) 275-4500
(Registrant's telephone number)
---------------------------------
Indicate by checkmark 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 7,833,527 SHARES OF REGISTRANT'S COMMON STOCK OUTSTANDING AS OF
MAY 1, 1996.
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<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FINANCIAL STATEMENTS TABLE OF CONTENTS
Page
----
Condensed Consolidated Balance Sheets as of March 31, 1996,
and December 31, 1995................................................. 3 & 4
Condensed Consolidated Statements of Operations for the Three Months
Ended March 31, 1996, and April 2, 1995................................ 5
Condensed Consolidated Statements of Cash Flow for the Three Months
Ended March 31, 1996, and April 2, 1995................................ 6
Notes to Condensed Consolidated Financial Statements.................... 7 & 8
2
<PAGE>
VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(unaudited) (audited)
----------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 2,228 $ 2,834
Securities available for sale 1,031 1,274
Accounts receivable, net of
allowance ($785 in 1996 and in 1995) 21,133 21,065
Costs and estimated earnings
in excess of billings on uncompleted contracts 1,521 1,665
Refundable income tax prepayments -- 600
Inventories 1,672 1,176
Prepaid expenses 931 720
-------- --------
Total Current Assets 28,516 29,334
-------- --------
Property, Plant and Equipment, at cost
Land 94 94
Buildings 359 359
Machinery and equipment 8,742 8,707
Construction in progress 10,002 9,011
Furniture and fixtures 2,591 2,587
-------- --------
Total Property, Plant and Equipment 21,788 20,758
Less accumulated depreciation 9,030 8,614
-------- --------
Net Property, Plant and Equipment 12,758 12,144
-------- --------
Costs in excess of net assets of acquired
businesses, net of accumulated amortization 14,780 14,780
Licenses, patents and other intangibles,
at cost, net of accumulated amortization 1,207 1,200
Investments and long-term prepaid costs 3,203 3,305
Other assets 62 66
-------- --------
Total Assets $ 60,526 $ 60,829
-------- --------
-------- --------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(unaudited) (audited)
----------- ------------
<S> <C> <C>
LIABILITIES
Current Liabilities
Note payable to banks $ 12,389 $ --
Accounts payable 9,276 10,762
Accrued payroll and related expenses 7,062 6,011
Other accrued liabilities 6,567 6,742
Billings in excess of costs and
estimated earnings on uncompleted contracts 2,582 2,288
Long-term debt due within one year 4,827 --
---------- ---------
Total Current Liabilities 42,703 25,803
---------- ---------
Long-term debt -- 17,216
Deferred lease incentive 409 424
---------- ---------
Total Liabilities 43,112 43,443
---------- ---------
SHAREHOLDERS' EQUITY
Class A Preferred Stock, 4,100,000 shares
authorized, none issued and outstanding -- --
Common Stock, $0.01 par value, 30,000,000
shares authorized; 7,833,527 shares
issued and outstanding in 1996
7,833,527 shares issued and outstanding
in 1995 44,960 44,960
Accumulated deficit (27,546) (27,574)
---------- ---------
Total Shareholders' Equity 17,414 17,386
---------- ---------
Total Liabilities and Shareholders' Equity $ 60,526 $ 60,829
---------- ---------
---------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, April 2,
1996 1995
------------ ----------
<S> <C> <C>
Revenues $ 24,497 $ 38,651
Operating costs 17,478 27,450
------------ -----------
Gross profit 7,019 11,201
Research and development expenses 17 29
Selling, general and administrative expenses 6,493 10,214
------------ -----------
Operating income 509 958
Interest expense, net 463 755
------------ -----------
Income before income taxes 46 203
Provision for income taxes 6 40
------------ -----------
Net income $ 40 $ 163
------------ -----------
------------ -----------
Net income per share $ 0.01 $ 0.02
------------ -----------
------------ -----------
Number of shares used to calculate net
income per share 7,833,527 7,888,445
------------ -----------
------------ -----------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, April 2,
1996 1995
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $40 $163
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 514 1,589
Increase (decrease) in cash from changes in operating
working capital:
Accounts receivable and billings 970 (6,374)
Inventories and prepaid expenses (707) (480)
Accounts payable and accrued expenses (610) 6,545
--------- --------
Net cash provided by operating activities 207 1,443
--------- --------
Cash flows from investing activities:
(Decrease) increase in securities available for sale 231 (129)
Capital expenditures (1,048) (2,274)
Decrease in other assets 4 6
--------- --------
Net cash used in investing activities (813) (2,397)
--------- --------
Cash flow from financing activities:
Repayment of long-term debt -- (750)
--------- --------
Net cash used in financing activities -- (750)
--------- --------
Net decrease in cash (606) (1,704)
Cash and cash equivalents at beginning of period 2,834 3,427
--------- --------
Cash and cash equivalents at end of period $ 2,228 1,723
--------- --------
--------- --------
Cash paid for interest $ 430 594
Cash paid for income taxes $ -- $ --
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
VECTRA TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of VECTRA Technologies, Inc. ("VECTRA" or the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to 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, consisting of normal recurring adjustments, considered
necessary for a fair presentation of financial position and results of
operations, have been included. Operating results for the three month
period ended March 31, 1996, are not necessarily indicative of the results
that may be expected for the full year. The unaudited consolidated
financial statements should be read in conjunction with the consolidated
financial statements and footnotes thereto included in the Company's 1995
Annual Report on Form 10-K.
2. EARNINGS PER SHARE
Net income 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 per share on a fully diluted basis
was the same as the primary income per share.
3. INDEBTEDNESS TO BANKS
At March 31, 1996, the Company had both a revolving credit facility and
long-term loans with banks. These facilities originally carried an
interest rate equal to the banks' base rate plus 1.0% to 1.5% or the
Eurodollar rate plus 2.0% to 2.5%. The Eurodollar option has been
eliminated for the revolving credit facility effective March 31, 1996.
On April 15, 1996, the Company entered into amendments to its
revolving credit facility and term loan agreements with the Banks. Under
these amendments, all outstanding borrowings under the revolving credit
facilities and the term loan agreements will be due on January 2, 1997.
These amendments also establish new financial covenants for 1996. As a
result of these amendments, the Company incurred additional bank fees of
approximately $1.1 million due January 2, 1997, or upon repayment of the
outstanding borrowings. The Company also agreed to issue warrants to the
Banks to purchase up to 6% of the Company's outstanding common stock on a
fully diluted basis at $0.01 per share, reprice previously earned warrants
to purchase 830,060 shares of common stock from $2.94 to $0.01 per share
and pay fees to the Banks, deferred until January 2, 1997, of up to
$600,000 in the event that the Company does not achieve certain financial
milestones in 1996. The Company may elect to defer a $750,000 principal
payment due September 30, 1996, to January 2, 1997, by incurring a deferred
fee of $150,000. Under the revolving credit facility, the Company may
elect to defer a $600,000 principal payment due on June 30, 1996, to
January 2, 1997, by incurring a deferred fee of $100,000. In addition, the
Company may elect to defer a $625,000 principal payment due on September
15, 1996, to January 2, 1997, by incurring a
7
<PAGE>
3. INDEBTEDNESS TO BANKS (CONTINUED)
deferred fee of $100,000. The amendments also specify that any proceeds
from the sale of operations be used to repay indebtedness to the Banks
(unless modified or waived by the Banks).
As of April 15, 1996, the Company has reserved 1,300,977 shares of common
stock for warrants earned by the Banks, and in the future, the Company may
be obligated to issue to the Banks warrants to purchase up to an additional
8% of the Company's outstanding common stock on a fully diluted basis.
4. CONTINGENCIES
The Company is self-insured for general liability risk for $1 million
per occurrence and $2 million in the aggregate. Coverage above the self-
insured limits is provided for under an umbrella policy with a commercial
insurance company. The Company's general liability risk insurance excludes
professional errors and omissions. Such insurance is purchased on a
contract specific basis as required by the customer. As of March 31, 1996,
the Company has accrued approximately $613,000 for unreported and/or
potential losses. Actual self-insurance losses may differ from such
estimates and such differences could be material to the financial
statements.
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. SUBSEQUENT EVENTS
Effective April 26, 1996, the Company sold all of the outstanding
capital stock of its wholly owned subsidiary, VECTRA Technologies Ltd.
("VECTRA UK"), to Amey, plc. The sale price was approximately $1.9
million. The net proceeds were approximately $1.6 million after expenses
associated with the transaction. The net proceeds were used to reduce
borrowings under, and the maximum amount of, the Company's revolving credit
facility by $1.1 million and the balance was added to working capital. For
the three months ended March 31, 1996, VECTRA UK generated revenues of
approximately $2.5 million and operating income of approximately $0.2
million.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS
This Management's Discussion and Analysis of Financial Conditions and Results of
Operations contains forward-looking statements that involve risks and
uncertainties. VECTRA Technologies, Inc.'s ("VECTRA" or the "Company") actual
results may differ significantly from the results discussed in the forward
looking statements. Factors that might cause such a difference include, but are
not limited to, those discussed in ITEM 1. BUSINESS in the Company's 1995
Annual Report on Form 10-K.
DIVESTITURES
On March 21, 1996, the Company signed a letter of intent that could lead to Duke
Engineering & Services, Inc. ("DE&S") acquiring VECTRA's engineering services.
The proposed sale is contingent on negotiation and execution of a definitive
purchase agreement, government approvals, approval of VECTRA's shareholders and
DE&S's board of directors, and other conditions. If the sale is consummated
under this letter of intent, the Company expects to receive gross proceeds of
approximately $27.5 million in cash subject to adjustment for the actual net
book value of the tangible assets ultimately sold.
Effective April 26, 1996, the Company sold all of the outstanding capital stock
of its wholly owned subsidiary, VECTRA Technologies Ltd. ("VECTRA UK"), to Amey,
plc. The sale price was approximately $1.9 million. The net proceeds were
approximately $1.6 million after expenses associated with the transaction. The
net proceeds were used to reduce the Company's revolving credit facility by $1.1
million and the balance was added to working capital. For the three months
ended March 31, 1996, VECTRA UK generated revenues of approximately $2.5 million
and operating income of approximately $0.2 million.
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED MARCH 31, 1996, COMPARED TO THE THREE MONTHS
ENDED APRIL 2, 1995
REVENUES Total revenues decreased $14.2 million (36.6%) to $24.5 million in the
three month period ended March 31, 1996, from $38.7 million in the comparable
period in 1995. The decrease in revenues for the quarter is attributable to the
sale of the Plant Services operations in June 1995; decreased activity in
nuclear engineering; and lower revenue in the fuel services operations relating
to the completion of a large contract during 1995. Revenues may significantly
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.
GROSS PROFIT Total gross profit percentage remained relatively consistent in
the 1996 and 1995 periods, 28.7% and 29.0% , respectively. Excluding the effect
of the Plant Service operations which were sold in June 1995, gross profit
increased to 28.7% in the first quarter of 1996 from 25.4% in the first quarter
of 1995. Gross profit increased in all areas, but the increase was strongest in
the Company's Waste and Fuel Service operations. Each of the Company's
contracts is negotiated independently and varies as to profitability and, due to
changes in the mix of contracts, the Company's gross profit may vary
significantly from quarter to quarter. The timing and actual performance by the
Company in fulfilling its major contracts also affect the Company's gross
profit.
9
<PAGE>
EXPENSES The Company's selling, general and administrative ("S, G & A")
expenses decreased $3.7 million (36.4%) to $6.5 million in the first
quarter of 1996 from $10.2 million in the first quarter of 1995. The
primary cause of this reduction in overhead expenses was an approximate
$2.6 million decrease in general and administrative expense as a result of
lower staff levels and other cost cutting measures. S, G & A expenses
decreased approximately $0.6 million as a result of the sale of the Plant
Services operations in June 1995. Amortization expense decreased $0.5
million primarily as a result of the Company's write off of intangible
assets in December 1995 based upon negotiations regarding the potential
sale of the Company's engineering operations.
NET INCOME Net income decreased $0.1 million to approximately $40,000 in
the first quarter of 1996 from $163,000 in the first quarter of 1995. This
decrease is primarily due to reductions in revenue offset by curtailed
overhead costs, as indicated above, and to reduced interest expense
reflecting lower levels of bank debt.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities decreased to $0.2 million in the
three months ended March 31, 1996, from $1.4 million in the three months
ended April 2, 1995. This $1.2 million decrease is primarily the result of
decreased net cash provided by operating activities in 1996 as a result of
reduced net income, as detailed above, and lower levels of depreciation and
amortization, non cash items reflected in the calculation of net income,
due to asset sales and write offs in the last three quarters of 1995.
Operating working capital in 1996 reflects an approximate aggregate $0.3
million shortfall of accounts receivable reductions keeping pace with
increased levels of inventory and overall reductions in the level of
accounts payable.
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.
The $0.8 million cash used by investing activities in the first three
months of 1996 was primarily the result of capital expenditures for
equipment acquired to fulfill new contracts won by the Company's waste
services operations.
The Company's loan covenants with Banque Paribas and Banque Nationale de
Paris (the "Banks") restrict capital expenditures to a maximum amount of
$3.3 million during 1996. The majority of the Company's capital
expenditures in 1996 are expected to be incurred for equipment used for
processing radioactive waste volume reduction and dewatering systems in its
waste services operations. Additionally, the Company's fuel services
operations have capital requirements primarily for licenses and high-level
waste transportation equipment and the Company's engineering services
operations have modest capital 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 and make significant investments in capital equipment to
increase its revenue. The Company anticipates that much of its 1996
capital equipment acquisitions will be financed through cash flows from
then new, concurrent customer contracts. The Company had contractual
capital acquisition commitments of approximately $40,000 as of March 31,
1996, and expects to fund these commitments from cash generated through
operations.
10
<PAGE>
In the first quarter of 1996 the Company had no funds used or provided by
financing activities. As detailed below, the Company has negotiated with
its Banks to defer principal payments in the first and second quarter of
1996 under its term loan agreement.
TERM LOAN
The Company borrowed $15.0 million from the Banks on January 6, 1994,
maturing on December 31, 1998 (the "Term Loan"). In connection with this
loan, the Company paid the Banks a $375,000 closing fee and issued warrants
to the Banks to purchase 830,060 shares of the Company's common stock at
$8.17 per share, exercisable through January 7, 1999 (the "Original
Warrants"). The agreement with the Banks specifies certain negative,
affirmative and financial covenants including, without limitation,
covenants with respect to debt/capital ratio, interest coverage, fixed
charge coverage and minimum net worth, and restrictions on dividends and
activities of the Company.
In September 1995, the Company failed to meet certain measures of financial
performance as required by covenants contained in the Term Loan agreement
and received a waiver of the Term Loan's financial covenants and a waiver
of the scheduled September 30 and December 31, 1995 principal payments.
Additionally, the Banks acquired the rights to reprice the Original
Warrants to $0.01 per share if, among other things, all obligations to the
Banks were not repaid in full by March 31, 1996. Also at this time, the
Banks made available to the Company and additional $3.0 million facility
associated with the Term Loan for capital expenditures ("Tranche B").
Tranche B was initially scheduled to mature on March 31, 1996 and provided
for warrants expiring September 20, 2000, equal to a maximum (based on the
Company's usage and repayment of this facility) of 6% of the Company's
outstanding common stock at $0.01 per share. By the end of the fourth
quarter of 1995, the Company had fully used this facility by borrowing $3.0
million and then repaying $1.1 million obtained from the final escrow
payment from the Plant Services sale, resulting in a balance outstanding
under Tranche B of $1.9 million at March 31, 1996. Based on this usage,
the Banks acquired the rights to warrants to purchase 392,431 shares of the
Company's common stock at $0.01 per share.
In December 1995, the Banks made available to the Company an additional
$1.0 million working capital facility associated with the Term Loan which
was scheduled to mature on March 31, 1996 ("Tranche C"). Tranche C had an
associated fee of $125,000, payment of which is deferred, and provided for
warrants expiring December 26, 2000, equal to a maximum (based on the
Company's usage and repayment of this facility) of 2% of the Company's
outstanding common stock at $0.01 per share. The Company did not use this
facility through March 31, 1996. At December 31, 1995, the Banks had
acquired the rights to purchase 78,335 shares of the Company's common stock
at $0.01 per share, and such warrants were valued at $107,000. Another
78,335 shares of common stock at $0.01 are due to the Banks if the loan is
used and not repaid by a specific date.
In March 1996, the Banks extended the due date of the borrowings under
Tranche B and Tranche C through April 15, 1996.
In April 1996, the Banks extended the due date of the borrowings under
Tranche B and Tranche C through January 2, 1997; waived the scheduled March
31 and June 30, 1996 Term Loan principal payments; reset the financial
covenants for the quarters ending December 31, 1995, through the terms of
the loans; and restored the Original Warrants to an exercise price of $2.94
per share. For these actions, the Banks required a fee of $950,000,
payment of which is deferred until January 2, 1997. If, among other
things, the Company's total obligation to the Banks is not repaid in full
before August 31, 1996, this agreement contains maximum penalties of
$600,000 which will also be deferred to January 2, 1997. This will also
trigger the
11
<PAGE>
repricing of the Original Warrants to $0.01 per share and issuing the Banks
rights to purchase approximately 550,000 shares of the Company's common
stock at $0.01 per share. The Company may also elect to defer the $750,000
payment due September 30, 1996, to January 2, 1997, by incurring a fee of
$150,000, payment of which is deferred. The Company anticipates, that the
sales proceeds from the sale of assets from the DE&S letter of intent
will be sufficient to avoid these penalties. However, there can not be any
assurances, expressed or implied, that the sale will be consummated.
REVOLVING CREDIT AGREEMENT
The Company entered into a $25.0 million revolving credit agreement (the
"Credit Agreement") with the Banks on January 6, 1994, which originally
matured on December 31, 1995. Borrowings under the Credit Agreement are
limited by the lesser of a percentage of eligible trade accounts receivable
(the "Borrowing Base") or the maximum amount of the facility. The amount
of funds available is subject to fluctuation of accounts receivable. In
October 1994, the maximum amount of the facility was reduce to $22.5
million.
In June 1995, utilizing a portion of the proceeds from the sale of the
Plant Services operations, the Company repaid $6.6 million of the amount
then outstanding under the Credit Agreement. The maximum amount of the
Credit Agreement was reduced to $12.5 million and the Banks were paid a fee
of $100,000.
In December 1995, the Credit Agreement's maturity was extended to March 31,
1996, in consideration for an amendment fee of $125,000, of which the
payment of $100,000 was deferred.
In March 1996, the Credit Agreement's maturity was extended to April 15,
1996.
In April 1996, the Credit Agreement's maturity was extended to January 2,
1997 and its applicable interest rate was increased by approximately three
percentage points to the bank's prime rate plus 1.5% and the Eurodollar
rate option was eliminated. If the Company does not reduce the outstanding
balance of the Credit Agreement and its maximum amount by a minimum of $1.0
million from the sale of assets by May 31, 1996, this agreement contains a
penalty of $200,000, payment of which is also deferred: The Company
complied with this requirement by remitting $1.0 million of the sale
proceeds of VECTRA UK on April 30, 1996. Additionally, the Company has the
requirement of either reducing the amount outstanding and maximum amount of
the Credit Agreement by $600,000 by June 30, 1996, or incurring a fee of
$100,000, payment of which is also deferred. Similarly, the Company may
elect to defer a $625,000 payment due on September 15, 1996, to January 2,
1997, by incurring a fee of $100,000, payment of which is deferred. For
these actions, the Company incurred a fee of $125,000, payment of which is
deferred until January 2, 1997.
12
<PAGE>
SUMMARY OF INTEREST, FEES (PAID & DEFERRED) AND WARRANTS ISSUED TO THE BANKS
<TABLE>
<CAPTION>
NUMBER OF AMOUNT
ITEM NOTE SHARES ($000)
- ------------------------------------------- ---- --------- ------
<S> <C> <C> <C>
Interest Paid, Inception
to April 15, 1996 na $4,054
Fees Billed, Inception to April 15, 1996 1 na 1,865
Fees Deferred, Inception to
April 15, 1996 2 na 1,450
Warrants exercisable at $2.9375 3 830,060 822
Warrants exercisable at $0.01 3 470,917 1,232
- ------------------------------------------- ---- --------- ------
Total 1,300,977 $9,423
========= ======
</TABLE>
Notes:
1 Includes fees paid to the Banks and the Banks' attorneys and
accountants.
2 Fees deferred until the earlier of the liquidation of all
obligations to the Banks or January 2, 1997.
3 Warrants valued by management using Black Scholes valuation
model with April 9, 1996, market data.
On January 2, 1997, the indebtedness to the Banks under the Term Loan and
revolving Credit Agreement which could amount to as much as $18.2 million
plus deferred fees of up to $2.4 million will become due. All proceeds
from the sale of assets covered under the DE&S letter of intent described
above are to be applied against the outstanding bank borrowings. However,
there can be no assurance, expressed or implied, that this sale will be
completed on terms acceptable to the Company.
The Company believes that cash and cash equivalents at March 31, 1996,
together with cash generated from operations will be adequate to meet its
cash needs through December 31, 1996. Management is committed to
decreasing costs in order to bring the Company to profitable operations and
will continue to make substantial expense reductions in 1996.
13
<PAGE>
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
On March 21, 1996, the Company signed a letter of intent that could lead to
Duke Engineering & Services, Inc. acquiring VECTRA's engineering services
operations (including VECTRA GSI). The proposed sale is contingent on
negotiation and execution of a definite purchase agreement, government
approvals, approval of VECTRA's shareholders and DE&S's board of directors,
and other conditions.
Effective April 26, 1996, the Company sold all of the outstanding capital
stock of its wholly owned subsidiary, VECTRA Technologies Ltd. ("VECTRA
UK"), to Amey, plc. The sale price was approximately $1.9 million. The
net proceeds were approximately $1.6 million after expenses associated with
the transaction. The net proceeds were used to reduce the Company's
revolving credit facility by $1.1 million and the balance was added to
working capital. For the three months ended March 31, 1996, VECTRA UK
generated revenues of approximately $2.5 million and operating income of
approximately $0.2 million.
In April 1996, 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. The Company has requested a
temporary waiver to allow continued inclusion until the current cash
raising activities are concluded. In the future, the Company anticipates,
but can give no assurances, expressed or implied, to meet the NASDAQ
minimum requirements and to continue to be listed in the NASDAQ Stock
Market.
ITEM 6. EXHIBITS
Not Applicable.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VECTRA TECHNOLOGIES, INC.
May 10, 1996 By /s/ RAY A. FORTNEY
-----------------------------------
Ray A. Fortney
President, Chief Executive Officer
May 10, 1996 By /s/ THOMAS B. PFEIL
-----------------------------------
Thomas B. Pfeil
Chief Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q WHICH PRECEDES THIS EXHIBIT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
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0
0
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</TABLE>
