SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 Date of Report (Date of earliest event reported).
October 4, 1996
Plymouth Rubber Company, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 1-5197 04-1733970
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
104 Revere Street, Canton, Massachusetts 02021
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (617) 828-0220
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On October 4, 1996, LB Acquisition Corp., a wholly owned subsidiary
of the company, acquired certain assets of Brite-Line Industries,
Inc. out of foreclosure from Brite-Line's senior secured creditors
for a cost of $150,000, paid with funds borrowed under the Company's
existing line of credit. Pursuant to the asset purchase agreement,
the Company will guarantee $2,100,000 of Brite-Line Industries'
accounts receivable valued at $2,600,000. LB Acquisition Corp., to
be re-named Brite-Line Technologies, Inc., intends to produce and
market rubber-based highway marking tapes from the Denver, Colorado,
facility formerly occupied by Brite-Line Industries, Inc.
Included in the purchased assets are inventories, machinery and
equipment, and intangibles including patents, trademarks, trade
names, and state and municipal product approvals. The purchase will
be accounted for as a purchase recorded on the acquiring company's
balance sheet as inventory valued at $150,000 plus acquisition costs
currently estimated at $150,000.
<PAGE> 3
Item 7. Financial Statements, Proforma Financial Information and
Exhibits
(a) Financial Statements of business acquired:
The financial statements listed below of Brite-Line
Industries, Inc. are incorporated herein by reference.
Fiscal year:
Report of Independent Accountants
Consolidated Balance sheets as of March 31, 1996 and
1995.
Consolidated Statements of Operations for the years
ended March 31, 1996 and 1995.
Consolidated Statements of Changes in Common
Stockholders' Deficit for the years ended March 31, 1996
and 1995.
Consolidated Statements of Cash Flows for the years
ended March 31, 1996 and 1995.
Notes to Consolidated Financial Statements
Interim:
Unaudited Consolidated Balance Sheet as of July 31,
1996.
Unaudited Consolidated Statements of Operations for the
four months ended July 31, 1996 and 1995.
Unaudited Consolidated Statements of Cash Flows for the
four months ended July 31, 1996 and 1995.
Notes to Consolidated Financial Statements.
(b) Pro Forma Financial Information
The unaudited pro forma condensed combined statement of
income of Plymouth Rubber Company, Inc. (the Company)
and Brite-Line Industries, Inc. (Brite-Line) for the
nine month period ended August 30, 1996 and for the most
recent fiscal year ended December 1, 1995, reflect
adjustments as if the transaction had occurred on
December 1, 1994. The unaudited pro forma condensed
combined balance sheet is presented as if the
transaction had been consummated on August 30, 1996, the
end of the Company's third fiscal quarter. The
acquisition is being accounted for using the purchase
method.
The historical results of operations of Brite-Line for
the four month period ended February 29, 1996 have been
included in both the pro forma condensed statement of
income for the nine months ended August 30, 1996, and
for the fiscal year ended December 1, 1995.
The unaudited pro forma condensed combined financial
statements reflect the Company's allocation of the
purchase price, including transaction costs, of
approximately $300,000 to the assets and liabilities of
Brite-Line based upon the Company's current estimates of
the relative values of the assets acquired and
liabilities assumed. The final allocation of the
purchase price may vary as additional information is
obtained, and accordingly, the ultimate allocation may
differ from those used in the unaudited pro forma
condensed consolidated financial statements.
<PAGE> 4
The unaudited pro forma condensed combined financial
statements should be read in conjunction with the
separate historical financial statements of Brite-Line
appearing in answer to Item 7(a) of this current report
on Form 8-K and the historical financial statements,
related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" of
the Company for the year ended December 1, 1995 and the
nine month period ended August 30, 1996, previously
filed with the Securities and Exchange Commission. The
pro forma information is not necessarily indicative of
the results that would have been reported if the
acquisition had actually occurred on the dates
specified, nor is it necessarily indicative of the
future results of the combined companies.
(c) Exhibits:
Exhibits required as part of this report are listed in
the Index to Exhibits appearing on Page 5.
<PAGE> 5
SIGNATURES
Pursuant to the provisions of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PLYMOUTH RUBBER COMPANY, INC.
(Registrant)
Date: December 18, 1996 By Duane E. Wheeler
Duane E. Wheeler
Vice President-Finance and Treasurer
<PAGE> 6
INDEX TO EXHIBITS
Exhibit No. Description
(1) Not Applicable
(2) Asset Purchase Agreement - Incorporated by
reference to the Report on Form 8-K with
cover page dated October 4, 1996.
(4) Not Applicable
(16) Not Applicable
(17) Not Applicable
(20) Not Applicable
(23) Not Applicable
(24) Not Applicable
(27) Not Applicable
(99.1) Brite-Line Industries, Inc. and
Subsidiaries Consolidated financial statements
for the years ended March 31, 1996
and 1995, and the unaudited consolidated
financial statements as of July 31, 1996,
and for the four months ended July 31,
1996 and 1995.
(99.2) Pro Forma Condensed Combined Balance Sheet
as of August 30, 1996 (Unaudited). Pro
Forma Condensed Combined Statement of
Operations for the Year Ended December 1,
1995 (Unaudited). Pro Forma Condensed
Combined Statement of Operations for the
Nine Months Ended August 30, 1996
(Unaudited).
Exhibit 99.1
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Brite-Line Industries, Inc. and Subsidiaries
Denver, Colorado
We have audited the accompanying consolidated balance sheets of
Brite-Line Industries, Inc. and Subsidiaries as of March 31, 1996
and 1995 and the related consolidated statements of operations,
changes in common stockholders' deficit and cash flows for the years
then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Brite-Line Industries, Inc. and Subsidiaries as of March
31, 1996 and 1995, and the results of their operations and their
cash flows for the years then ended, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern.
As discussed in Note 2 to the financial statements, the Company has
incurred significant losses from operations since inception and has
a working capital deficit which raises substantial doubt about its
ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Hein + Associates llp
Denver, Colorado
June 25, 1996
<PAGE>
BRITE-LINE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
[CAPTION]
<TABLE>
March 31, July 31,
1995 1996 1996
(Unaudited)
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and equivalents $ 30,000 $ 10,000 $ 55,000
Trade accounts receivable, less
allowance for doubtful accounts and
returns of $50,000, $232,000, and
$1,671,000, respectively 591,000 2,306,000 1,485,000
Inventories 799,000 946,000 1,410,000
Prepaid expenses and other 59,000 23,000 28,000
Total current assets 1,479,000 3,285,000 2,978,000
Property and Equipment, net 772,000 647,000 674,000
Other Assets 40,000 66,000 65,000
$ 2,291,000 $ 3,998,000 $ 3,717,000
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current maturities of long-term debt $ 15,000 $ 20,000 $ 20,000
Notes payable 1,466,000 1,491,000 1,491,000
Notes payable to stockholders 3,400,000 119,000 669,000
Payable to factor - 1,419,000 2,026,000
Accounts payable 576,000 905,000 837,000
Accrued expenses 726,000 1,001,000 1,487,000
Accrued warranty 181,000 168,000 140,000
Total current liabilities 6,364,000 5,123,000 6,670,000
Long-Term Debt, less current maturities:
Stockholder - 1,700,000 1,700,000
Others 51,000 1,048,000 1,039,000
Total liabilities 6,415,000 7,871,000 9,409,000
Commitments and Contingencies (Notes 2 and 7)
Redeemable Preferred Stock:
Redeemable convertible preferred
Series A stock, $.01 par value;
authorized 1,708,150 shares; 464,305
shares issued and outstanding in 1996
(1,277,250 shares in 1995)
(redemption and liquidation
preference of $3,459,000 at March 31,
1996) 6,757,000 2,456,000 2,456,000
Redeemable convertible preferred Series
B stock, $.01 par value; authorized
1,100,000 shares; 1,000,000 shares
issued and outstanding (redemption
and liquidation preference of
$2,318,000 at March 31, 1996) - 2,208,000 2,208,000
Common Stockholders' Deficit:
Common stock, $.10 par value; authorized
3,000,000 shares, and 696,280,
793,480, and 793,480 shares issued
and outstanding, respectively 69,000 79,000 79,000
Additional paid-in capital 1,174,000 5,310,000 5,310,000
Accumulated deficit (11,878,000) (13,680,000) (15,499,000)
Less 28,889 shares of common stock held
in treasury, at cost (246,000) (246,000) (246,000)
Total common stockholders' deficit (10,881,000) (8,537,000) (10,356,000)
Total Liabilities and Stockholders'
Deficit $ 2,291,000 $ 3,998,000 $ 3,717,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BRITE-LINE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
[CAPTION]
<TABLE>
For the Four
For the Years Ended Months Ended
March 31, July 31,
1995 1996 1995 1996
(Unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 6,102,000 $ 8,160,000 $ 3,692,000 $ 252,000
Cost of sales (5,701,000) (5,747,000) (2,568,000) (596,000)
Gross Profit 401,000 2,413,000 1,124,000 (344,000)
Operating Expenses:
Selling and Marketing
Expenses (1,789,000) (1,690,000) (549,000) (402,000)
General and Administrative (1,433,000) (1,290,000) (288,000) (472,000)
Research and Development (123,000) (225,000) (78,000) (123,000)
Loss from Operations (2,944,000) (792,000) 209,000 (1,341,000)
Interest expense (469,000) (1,010,000) (278,000) (478,000)
Loss Before Extraordinary
Item (3,413,000) (1,802,000) (69,000) (1,819,000)
Extraordinary gain -
extinguishment of debt 397,000 - - -
Net Loss $ (3,016,000) $ (1,802,000) $ (69,000) $ (1,819,000)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BRITE-LINE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED MARCH 31, 1996 AND 1995 AND
THE FOUR MONTHS ENDED JULY 31, 1996 (UNAUDITED)
[CAPTION]
<TABLE>
Additional
Common Stock Paid-in Accumulated Treasury Stock
Shares Amount Capital Deficit Shares Amount Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, April 1, 1994 696,280 $ 69,000 $ 1,174,000 $ (8,862,000) 28,889 $ (246,000) $ (7,865,000)
Net loss - - - (3,016,000) - - (3,016,000)
Balances, March 31, 1995 696,280 69,000 1,174,000 (11,878,000) 28,889 (246,000) (10,881,000)
Debt converted to common
stock 97,200 10,000 10,000 - - - 20,000
Series A preferred stock
surrendered - - 4,126,000 - - - 4,126,000
Net loss - - - (1,802,000) - - (1,802,000)
Balances, March 31, 1996 793,480 79,000 5,310,000 (13,680,000) 28,889 (246,000) (8,537,000)
Net loss (unaudited) - - - (1,819,000) - - (1,819,000)
Balances, July 31, 1996
(Unaudited) 793,480 $ 79,000 $ 5,310,000 $(15,499,000) 28,889 $ (246,000) $(10,356,000)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BRITE-LINE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
[CAPTION]
<TABLE>
For the Four
For the Years Ended Months Ended
March 31, July 31,
1995 1996 1995 1996
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (3,016,000) $ (1,802,000) $ (69,000) $ (1,819,000)
Adjustments to reconcile net loss to
net cash used in operating activities:
Extraordinary gain - extinguishment
of debt (397,000) - - -
Accrued interest converted to
preferred stock 32,000 - - -
Accrued interest added to note payable - 49,000 16,000 -
Depreciation 364,000 204,000 52,000 69,000
Amortization 1,000 1,000 - 2,000
Loss on disposal of property and
equipment 49,000 - - -
Provision for doubtful accounts (294,000) 84,000 5,000 105,000
Provision for sales returns - 86,000 - 447,000
Inventory reserves (8,000) (154,000) (26,000) 73,000
Warranty reserve - 202,000 9,000 19,000
Changes in operating assets and
liabilities:
Decrease (increase) in:
Trade accounts receivable 698,000 (1,886,000) (1,411,000) 264,000
Inventories 460,000 (196,000) 105,000 (556,000)
Prepaid expenses and other 32,000 36,000 (37,000) (5,000)
Other assets - (26,000) (16,000) 1,000
Increase (decrease) in:
Accounts payable (628,000) 348,000 136,000 (68,000)
Accrued expenses 134,000 509,000 215,000 486,000
Accrued warranty 6,000 (13,000) 10,000 (28,000)
Net cash used in operating activities (2,567,000) (2,558,000) (1,011,000) (1,010,000)
Cash Flows from Investing Activities:
Purchase of property and equipment (367,000) (79,000) (21,000) (96,000)
Collection of notes receivable 81,000 - - -
Net cash used in investing activities (286,000) (79,000) (21,000) (96,000)
Cash Flows from Financing Activities:
Note proceeds received from stockholders 3,000,000 1,219,000 1,100,000 550,000
Principal payments on notes payable
and capital leases (445,000) (21,000) (8,000) (6,000)
Proceeds from sale of preferred stock 10,000 - - -
Net proceeds from factoring of accounts
receivable - 1,419,000 - 607,000
Net cash provided by financing
activities 2,565,000 2,617,000 1,092,000 1,151,000
Net Change in Cash and equivalents (288,000) (20,000) 60,000 45,000
Cash and Equivalents, beginning of year 318,000 30,000 30,000 10,000
Cash and Equivalents, end of year $ 30,000 $ 10,000 $ 90,000 $ 55,000
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest $ 174,000 $ 470,000 $ 12,000 $ 28,000
Non-cash investing and financing
activities:
Conversion of notes payable and
accrued interest to preferred
stock $ 2,400,000 $ 2,208,000 $ - $ -
Surrendered of 812,945 shares of
Series A preferred stock $ - $ 4,126,000 $ - $ -
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
1. Nature of Business and Summary of Significant Accounting Policies:
Nature of Business - Brite-Line Industries, Inc. (the Company)
was incorporated in October 1989 under the laws of the State of
Delaware. The Company has several subsidiaries which are
incorporated in foreign countries and which had minimal
operations through March 31, 1996. The Company presently
developed, manufactured, and sold highway pavement marking tapes
principally throughout the United States, and in 1995 commenced
selling highway pavement markings. In September 1996, the
company effectively ceased operations through foreclosure on its
assets by its secured creditors (see Note 2).
Principles of Consolidation - The consolidated financial
statements include the accounts of the Company and its
subsidiaries which are all wholly-owned. All significant
intercompany transactions and account balances have been
eliminated in consolidation.
Cash Equivalents - The Company considers all highly liquid debt
instruments purchased with an original maturity of three months
or less to be cash equivalents.
Revenue Recognition - Revenue is recognized when products are
shipped or, if sold upon consignment, when the products are
used. An allowance for potential sales return is estimated and
included with the allowance for doubtful accounts.
Inventories - Inventories consist principally of raw materials
and finished goods and are valued at the lower of cost or
market. The cost of inventory is determined on the first-in,
first-out (FIFO) basis.
Property and Equipment - Property and equipment is stated at
cost. Depreciation is computed principally using the straight-line
method over the following estimated useful lives:
Machinery and equipment 3-5 years
Leasehold improvements 7 years
Furniture and fixtures 5 years
Major improvements are capitalized, while maintenance and
repairs are charged to expense as incurred. Upon retirement or
other disposition of fixed assets the cost of the assets
disposed of and the related depreciation are removed from the
accounts and any resulting gain or loss is reflected in
earnings.
Impairment of Assets - On April 1, 1996, the Company adopted
SFAS 121, Impairment of Long-Term Assets (SFAS 121). In the
event that facts and circumstances indicate that the cost of
assets or other assets may be impaired, an evaluation of
recoverability would be performed. If an evaluation is
required, the estimated future undiscounted cash flows
associated with the asset would be compared to the asset's
carrying amount to determine if a write-down to market value or
discounted cash flow value is required. The Company did not
write down its long-term assets under SFAS 121 at July 31, 1996,
based on management's belief that on a "going concern"
evaluation such assets were properly stated. The Company,
however, subsequently liquidated its business, whereby
effectively no value will be attributed to long-term assets by
the acquiring entity (see Note 2).
Income Taxes - Income taxes are provided for in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." SFAS No. 109 requires an asset and liability
approach in the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of
the Company's assets and liabilities.
Warranty - The Company offers a warranty of generally one to two
years to its customers. At the time of sale, the Company
includes a provision for future references under warranty.
In conjunction with the acquisition of the assets by Plymouth
(see Note 2), Plymouth did not assume any liabilities, including
warranty.
Use of Estimates - The preparation of the Company's consolidated
financial statements in conformity with generally accepted
accounting principles requires the Company's management to make
estimates and assumptions that affect the amounts reported in
these financial statements and accompanying notes. Actual
results could differ from those estimates.
The Company's financial statements are based upon certain
significant estimates, including the allowance for doubtful
accounts and sales returns, realizability of inventory, warranty
reserve, recoverability of the net carrying value of property
and equipment, and the valuation allowance for deferred tax
assets. Due to the uncertainties inherent in the estimation
process, it is at least reasonably possible that these estimates
could materially change within the next year. During the four
months ended July 31, 1996, the Company changed its estimate for
sales returns as a result of opportunities to resale inventory
to others (as the Company did not have the working capital to
produce additional inventory) and in conjunction with the
acquisition of the Company's assets by new management (see
Note 2). At July 31, 1996, sales returned are estimated to
total $1,250,000 with a related cost of $800,000. Sales and
cost of sales, for the four months ended July 31, 1996, have
been adjusted to reflect the period sales and cost of sales, net
of the future returns.
Stock-Based Compensation - On April 1, 1996, the Company adopted
SFAS 123, which encourages, but does not require, companies to
recognize compensation expense for grants of stock, stock
options, and other equity instruments to employees based on fair
value. Companies that do not adopt the fair value accounting
rules must disclose the impact of adopting the new method in the
notes to the financial statements. Transactions in equity
instruments with non-employees for goods or services must be
accounted for on the fair value method. The Company currently
did not adopt the fair value accounting prescribed by SFAS 123
for employees, and will be subject only to the disclosure
requirements prescribed by SFAS 123.
Financial Instruments - Statement of Financial Accounting
Standards No. 107 requires all entities to disclose the fair
value of certain financial instruments in their financial
statements. Accordingly, at March 31, 1996, management's best
estimate is that the carrying amount of cash and equivalents,
receivables, payable to factor, accounts payable, and accrued
expenses approximates fair value due to the short maturity of
these instruments (see Note 2).
Management believes it is not practicable to estimate the fair
value of notes payable to stockholders and for debt which is
guaranteed by stockholders since these are not arms length
dealings. Additionally, it is not practicable to estimate the
fair value of notes payable to vendors since the terms were
negotiated as part of a debt restructuring.
Unaudited Information - The balance sheet as of July 31, 1996
and the statements of operations and cash flows for the four
months ended July 31, 1995 and 1996 are unaudited. However, in
the opinion of management of Brite-Line Technologies, Inc. (see
Note 2), such information includes all adjustments, which are
considered recurring in nature, except for the adjustment for
estimated sales returns to present fairly the financial position
as of July 31, 1996 and the results of operations for the four
months ended July 31, 1995 and 1996. Such interim information
should not necessarily be considered indicative of results of
operations expected for the year.
2. Continuing Operations:
Since inception, the Company has incurred cumulative losses of
approximately $15,499,000 and as of July 31, 1996, the Company
has a working capital deficit of approximately ($3,692,000) and
a common stockholders' deficit of approximately ($10,356,000).
The Company's past operations have been funded through debt and
equity infusions from its shareholders. These factors raise
substantial doubt about the Company's ability to continue as a
going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
On September 6, 1996, the Company's major secured creditors
foreclosed on the Company's assets. These assets were
subsequently acquired by Plymouth Rubber Company (Plymouth) for
$150,000 and a guarantee of a net residual payment to the
Company's Factor. Plymouth was a vendor and creditor to the
Company.
Presented below is an unaudited pro forma statement of net assets in
liquidation as if such liquidation had occurred at July 31, 1996.
Actual amounts will differ from the pro forma amounts due to changes
in estimates and changes which occurred between July 31, 1996 and the
date of liquidation.
Pro Forma Statement of Net Assets in Liquidation
July 31, 1996
(Unaudited)
Assets:
Cash $ 55,000
Receivables, net 1,485,000
Inventory 1,410,000
2,950,000
Liabilities:
Taxes 125,000
Payable to factor 2,026,000
Payable to stockholder 25,000
2,176,000
Net Assets in Liquidation $ 774,000
Plymouth contributed the assets acquired to a new wholly owned
subsidiary (Brite-Line Technologies, Inc.). In conjunction with the
change in ownership of the assets, production and overhead costs have
been curtailed significantly.
3. Inventories:
Inventories consist of the following at March 31, 1995, 1996, and July
31, 1996:
March 31, July 31,
1995 1996 1996
Raw materials $ 360,000 $ 423,000 $ 479,000
Work in process 39,000 95,000 35,000
Finished goods, net of reserve
for obsolence 400,000 428,000 96,000
Finished goods, subsequently
returned - - 800,000
Net inventory $ 799,000 $ 946,000 $1,410,000
4. Property and Equipment:
Property and equipment consists of the following at March 31, 1995,
1996, and July 31, 1996:
March 31, July 31,
1995 1996 1996
Machinery and equipment $ 1,993,000 $ 2,044,000 $ 2,144,000
Leasehold improvements 143,000 143,000 143,000
Furniture and fixtures 126,000 154,000 150,000
Total property and equipment 2,262,000 2,341,000 2,437,000
Less accumulated depreciation
and amortization (1,490,000) (1,694,000) (1,763,000)
Net property and equipment $ 772,000 $ 647,000 $ 674,000
5. Notes Payable and Long-Term Debt:
Notes Payable - The Company had notes payable to unrelated parties at
March 31, 1995, 1996, and July 31, 1996, as follows:
March 31, July 31,
1995 1996 1996
Bank line-of-credit, due March 1997,
interest at floating rate based on
LIBOR (6.65% at March 31, 1996). The
agreement permits borrowings up to
$1,000,000. The debt is guaranteed
by the Company's majority stockholder.
It is assumed this amount was paid by
the Company's major shareholder as
part of the Company's liquidation. $1,000,000 $1,000,000 $1,000,000
Note payable - Plymouth, interest at
14%, due July 1999. 350,000 398,000 398,000
Various promissory notes, currently
delinquent, interest rates ranging
from 11% to 13%. 116,000 93,000 93,000
Total $1,466,000 $1,491,000 $1,491,000
During 1994, the Company converted an outstanding payable balance with
Plymouth to a promissory note with extended payment terms. In connec-
tion with this conversion, the Company also entered into a purchase
and debt reduction agreement with Plymouth, which allowed the Company
to purchase inventory and obtain debt reduction. At March 31, 1996 and
July 31, 1996, the principal balance payable under this note amounted
to $398,000. Plymouth had previously fully reserved its receivable from
the Company.
Long-term Debt - At March 31, 1995, 1996, and July 31, 1996, the
Company's long-term debt consists of the following:
July 31,
1995 1996 1996
Two notes payable, simple interest at
10%, principal and interest are due
on June 1, 2000. The notes are
collateralized by substantially all
assets of the Company. $ - $1,000,000 $1,000,000
Notes payable to vendors, no stated
interest, payable in semi-annual
installments of $5,120 through
December 1999, unsecured. 51,000 50,000 44,000
Other 15,000 18,000 15,000
Total 66,000 1,068,000 1,059,000
Less current maturities (15,000) (20,000) (20,000)
Long-term debt, less current
maturities $ 51,000 $1,048,000 $1,039,000
6. Notes Payable to Stockholders:
Notes payable to stockholders and affiliates amount to $3,400,000,
$1,819,000 and $2,369,000 as of March 31, 1995 and 1996 and July 31,
1996, respectively. These loans provide for interest at 14% and are
collateralized by substantially all assets of the Company. At March 31,
1996 and July 31, 1996, loans totaling $119,000 and $669,000,
respectively, are due on demand and loans totaling $1,700,000 to an
affiliate of a stockholder are due on June 1, 2000. The Company
incurred total interest expense related to all shareholder loans of
approximately $341,000 and $404,000 for the years ended March 31, 1995
and 1996, respectively, and $192,000 and $101,000 for the four months
ended July 31, 1995 and 1996. Accrued interest on notes payable to the
majority shareholder was approximately $420,000 and $521,000 at March
31, 1996 and July 31, 1996, respectively. In September 1996, the major
shareholder foreclosed on its note and sold the underlying assets
(which were comprised principally of fixed assets as the other assets
collateralized the outstanding factored note) (see Note 7) to Plymouth
for $150,000. This amount has been escrowed and will only be paid after
deducting payments of certain other liabilities to taxing authorities.
During the year ended March 31, 1996, two of the Series A shareholders
exchanged all of their Series A stock, $750,000 in short-term debt, and
accrued interest of approximately $93,000 for a $1,000,000 note
payable. This note payable is included in long-term debt on the March
31, 1996 and July 31, 1996 balance sheets.
Also during the year ended March 31, 1996, the majority shareholder
converted a note payable totaling $2,050,000, plus accrued interest on
that note of $158,000, for 1,000,000 shares of Series B preferred
stock. Additionally, the Company converted a payable of $19,444 into
97,200 shares of common stock.
The above items were non-cash investing and financing activities for
the year ended March 31, 1996.
7. Commitments and Contingencies:
Distribution and Marketing Arrangements - Prior to the formation of the
Company, a predecessor of the Company and certain foreign corporations
entered into agreements which provided exclusive distribution and
marketing rights for the Company's products in Japan, China, Australia,
New Zealand, and other locations in Asia and Indonesia. One of the
foreign corporations also invested $500,000 to purchase common stock of
the predecessor. In conjunction with the formation of the Company in
December 1989, the parties agreed to an assignment of these agreements
to the Company.
In March 1994, the foreign corporations asserted a legal claim in ex-
cess of $2.1 million due to the alleged misrepresentations and alleged
violation of certain terms of the agreements. During the year ended
March 31, 1996, the foreign corporations agreed to suspend action on
their claims and the Company agreed to extend to statute of limitations
for filing a claim until December 31, 1996. In fiscal 1996, the Company
agreed to make monthly advance commission payments of $5,000 commencing
in March 1996 until product sales in the exclusive territory are
considered substantial and thereafter the payments will increase to
$20,000 per month. While the agreements do not define "substantial"
sales, management believes that annual sales in excess of $1 million
for the territory would meet the mutual understanding of the parties.
The parties also discussed a royalty provision and that a portion of
the $20,000 monthly commission payments would be applied against the
royalty; however, the agreements do not specify a means to calculate
the royalty amount and indicate that such a determination will be made
after product sales commence. The commission agreements may be term-
inated by the Company by providing one year's notice.
The Company is accounting for the payments under the commission
agreements as an expense in the period in which each payment is re-
required. Management believes the Company has complied with the terms
of all agreements with the foreign corporations and seeks and expects a
satisfactory resolution of all potential disputes which will ultimately
result in the withdrawal of all claims against the Company.
A liability was not recorded in connection with the revised understand-
ing as it was estimated by management that significant future payments
were not probable. Only $20,000 was paid prior to the Company's
liquidation.
Operating Leases - The Company has a number of operating and capital
lease agreements primarily involving machinery, computer equipment, and
facility rental. These leases are noncancelable and expire on various
dates through fiscal 2001.
Future minimum payments under leases with initial or remaining terms of
one year or more consist of the following at March 31, 1996:
Year Ending
March 31,
1997 $ 204,000
1998 204,000
1999 197,000
2000 202,000
2001 119,000
$ 926,000
Rent expense under all operating leases amounted to approximately
$213,000 and $199,000 for the years ended March 31, 1995 and 1996,
respectively, and $62,000 for the four months ended July 31, 1995 and
1996.
Royalties - In January 1993, Prismo Limited, Inc. entered into a
technology transfer and distribution agreement with the Company for the
Vibraline product. The Company is required to pay royalties to Prismo
Limited on product sales with a minimum payment of approximately
$48,000 per year through January 1998. The Company has committed to pay
royalties equal to 5% of the Company's sales of Vibraline to the extent
it exceeds the minimum royalty payments. Royalty expense under this
agreement amounted to approximately $48,000 for the years ended March
31, 1995 and 1996 and $18,000 for the four months ended July 31, 1995
and 1996.
Plymouth has renegotiated this royalty arrangement whereby it was
reduced to 5% from 10% with no minimum payments.
The Company has entered into an agreement with a shareholder of the
Company which provides for minimum annual royalties of $25,000 through
December 2008. The Company is required to pay royalties equal to 1% of
net sales for products subject to the agreement to the extent that such
amounts exceed the minimum royalty. Royalty expense pursuant to the
agreement amounted to $25,000 for the years ended March 31, 1995 and
1996 and $8,000 for the four months ended July 31, 1995 and 1996.
Factored Receivables - As of March 31, 1996 and July 31, 1996, the
Company had $1,774,000 and $2,532,000, respectively, of its trade
accounts receivable factored. The Company owed the factoring company
(Factor) $1,419,000 and $2,026,000 as of March 31, 1996 and July 31,
1996, respectively, for receivables sold with recourse against the
Company. For financial presentation purposes, the related receivable
and outstanding factored liability have been included as an asset and
liability on the balance sheet.
In September 1996, the Factor foreclosed on its note. The Factor
subsequently exchanged the underlying collateral for a guarantee from
Plymouth as to payment of a net balance, which included finance charges
to the Factor until the guarantee can be called in February 1997.
8. Income Taxes:
The Company has net operating loss carryforwards for income tax pur
poses of approximately $12,900,000, which expire beginning in 2005.
Utilization of this net operating loss carryforward may be subject to
limitations under Section 382 of the Internal Revenue Code, which would
restrict the annual usage of the loss carryforward. The Company has net
current and long-term deferred tax assets of approximately $200,000 and
$4,800,000 which have been fully provided for by a valuation allowance
due to the Company's history of operating losses. The deferred tax
assets relate to net operating losses, certain reserves and deprecia-
tion differences.
9. Options, Warrants and Redeemable Preferred Stock:
Options and Warrants - The Company maintains an incentive and a
performance stock option plan. Under the terms of the Incentive Stock
Option Plan, the Company may grant options to officers, employees,
directors, and consultants to purchase up to 346,650 shares of common
stock under incentive stock option, nonqualified options, and awards.
The exercise price shall be determined by the Board of Directors;
however, the exercise price for Incentive Stock Options shall not be
less than the fair market value as determined by the Board of Directors
at the time of grant and the nonqualified options shall not be less
than the minimum legal consideration required under the laws of
Delaware. Options vest as specified by the Board of Directors.
Under the terms of the Performance Stock Option Plan, the Company may
grant to officers and employees nonqualified options to purchase up to
294,357 shares of common stock. The exercise price will be determined
by the Board at the time of grant; however, it shall not be less than
the minimum legal consideration required under the laws of Delaware.
These options vest as certain financial targets are met.
Information for the years ended March 31, 1995 and 1996 and the four
months ended July 31, 1996 with respect to the Plans is as follows:
Option
Shares Price
Outstanding, April 1, 1994 365,675 $ 2.50-3.00
Granted - -
Canceled (252,820) 2.50-3.00
Outstanding, March 31, 1995 112,855 2.50-3.00
Granted - -
Canceled - -
Outstanding, March 31, 1996
and July , 1996 112,855 $ 2.50-3.00
The above options expire in 2002. The Company has also issued warrants
to purchase 20,000 shares of common stock at an exercise price of
$4.00 per share. These warrants expire in March 2000. An incentive
stock option plan is currently under review.
Preferred Stock - The Company has two classes of capital stock, common
and preferred. The preferred has two series authorized, Series A
cumulative redeemable convertible preferred (Series A) and Series B
cumulative redeemable convertible preferred (Series B).
The preferred stockholders are entitled to one vote for each share of
common stock into which their shares can be converted and vote together
with the common stockholders as a single class. Dividends on Series A
and Series B are at an annual rate of $.529 and $.221 per share,
respectively and are cumulative from the date of issuance. Dividends
are payable to the preferred stockholders before any dividends on
common stock. The Company has never declared a dividend and at March
31, 1996, the accumulated dividend on Series A and Series B preferred
stock was approximately $1,000,000 and $110,000, respectively.
Shares of preferred stock are convertible into common stock at any time
at the option of the holder. The conversion rate is subject to
adjustment in certain circumstances. One share of Series A is
convertible into 1.33 shares of common stock and one share of Series B
is convertible into approximately 10.3 shares of common stock. Under
certain circumstances a conversion is automatic.
In the event of a liquidation, dissolution, or winding up of the Com-
pany, the preferred stockholders are entitled to receive a liquidation
preference. The liquidation preference comprises a liquidation price
per share together with any unpaid dividends. The Series A and Series B
liquidation price was $7.45 and $2.32 per share, respectively, on
March 31, 1996. After full settlement of the Series A and Series B
liquidation preferences, any remaining proceeds will be split on a pro
rata basis with all stockholders on an as-converted basis. Upon
liquidation of the Company, no amounts will be paid the preferred
shareholders.
The Company shall redeem the Series A if holders of a majority of the
then outstanding Series A have elected in favor of redemption. The
Series A and Series B is redeemable at $5.29 and $2.21 per share plus
any unpaid dividends according to the following schedule:
Date of Redemption Maximum Percentage
to be Redeemed
From and after March 1, 1997 33%
From and after March 1, 1998 66%
From and after March 1, 1999 100%
10. Concentrations of Credit Risk and Major Customers:
Most of the Company's customers are contractors who contract with
governmental entities which may impact the Company's overall credit
risk either positively or negatively, since these entities may be
similarly affected by changes in economic or other conditions. In
determining whether or not to require collateral from a customer, the
Company analyzes the customer's net worth, cash flows, earnings, and
credit ratings. Receivables are generally not collateralized.
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of demand deposits
and trade receivables. At March 31, 1996, substantially all of the
Company's demand deposits were with one bank, and were approximately
$50,000 in excess of Federally insured limits. Approximately 65% and
70% of net trade receivables were due from five customers at March 31,
1996 and July 31, 1996, respectively.
During the year ended March 31, 1996, the Company had sales to the
following customers which were in excess of 10% of net sales:
Customer Percent of
Net Sales
A 17%
B 12%
11. Profit Sharing Plan:
During the year ended March 31, 1996, the Company adopted a 401(k) plan
(the "Plan"). The Plan covers all employees who have met the eligi-
bility requirements. The Plan allows the Company to make discretionary
contributions. The Company's Board of Directors elected to make no
contribution to the Plan for the Plan's year ended December 31, 1995
and 1996.
12. Extraordinary Item:
During the year ended March 31, 1995, the Company offered a debt
restructuring plan to certain noteholders and vendors. The restructur-
ing proposal provided for a choice between a partial extinguishment of
debt in exchange for an immediate cash payment or extended payment
terms over five years for the entire balance. Most of the creditors
elected to receive an immediate cash payment whereby an aggregate of
$397,542 of debt was forgiven by the creditors during the year ended
March 31, 1995. Accordingly, this amount is reflected as an extra-
ordinary gain in the accompanying statement of operations for the year
ended March 31, 1995.
Exhibit 99.2
Pro Forma Condensed Combined Financial Statements (Unaudited)
Basis of Presentation:
The pro forma condensed combined statements of operations assume the
acquisition of certain assets of Brite-Line Industries, Inc.
("Brite-Line") as if it had occurred at the beginning of the periods
presented.
The accompanying unaudited pro forma condensed consolidated balance
sheet at August 30, 1996, combines the August 30, 1996 historical
balance sheet of the Company and July 31, 1996 historical balance
sheet of Brite-Line (latest balance sheet prior to the acquisition)
as if the asset acquisition had occurred on August 30, 1996 and
assumes that the asset acquisition was funded with borrowings under
the Company's line of credit.
The pro forma condensed combined financial statements do not purport
to represent what the Company's results of operations would have
been had the asset acquisition occurred on the dates indicated or
for any future period or date. The pro forma adjustments give effect
to available information and assumptions that management believes
are reasonable. The condensed combined financial statements should
be read in conjunction with the Company's historical financial
statements and the historical financial statements of Brite-Line and
notes thereto included herein.
<PAGE>
PLYMOUTH RUBBER COMPANY, INC. AND
SUBSIDIARY PRO FORMA CONDENSED COMBINED
BALANCE SHEET
(In Thousands Except Share and Per Share Amounts)
(UNAUDITED)
Plymouth Brite-Line
Historical Historical
Aug. 30, July 31, Pro Forma Combined
1995 1996 Adjustments 1 Pro Forma
ASSETS
Current Assets:
Accounts receivable, net $ 7,118 $ 1,485 $ (1,485) $ 7,118
Inventories 11,067 1,410 (1,110) 11,367
Other current assets 2,981 83 (83) 2,981
Total current assets 21,166 2,978 (2,678) 21,466
Plant assets, net 9,146 674 (674) 9,146
Other assets 3,066 65 (65) 3,066
TOTAL ASSETS $ 33,378 $ 3,717 $ (3,417) $ 33,678
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Debt $ 5,001 $ 4,186 $ (3,886) $ 5,301
Accounts payable 4,104 837 (837) 4,104
Accrued expenses 3,597 1,487 (1,487) 3,597
Other current
liabilities 1,669 160 (160) 1,669
Total current
liabilities 14,371 6,670 (6,370) 14,671
Borrowings 5,045 2,739 (2,739) 5,045
Pension obligations 4,615 - - 4,615
Other liabilities 2,767 - - 2,767
Total long-term
liabilites 12,427 2,739 (2,739) 12,427
Stockholders' Equity
Redeemable convertible
perferred stock - 4,664 (4,664) -
Common stock 2,002 79 (79) 2,002
Additional paid in capital 9,086 5,310 (5,310) 9,098
Retained earnings (deficit)(3,592) (15,499) 15,499 (3,592)
Other stockholders' equity (916) (246) 246 (916)
Total stockholders'
equity 6,580 (5,692) (5,692) 6,580
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 33,378 $ 3,717 $ (3,417) $ 33,678
The accompanying notes are an integral part of these pro forma
condensed combined financial statements.
PLYMOUTH RUBBER COMPANY, INC. AND
SUBSIDIARY PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
(In Thousands Except Share and Per Share Amounts)
(Unaudited)
Year Ended
Plymouth Brite-Line
Historical Historical
Dec. 1, Feb. 29, Pro Forma Combined
1995 1996 Adjustments Pro Forma
Net sales $ 53,293 $ 7,467 $ (1,377)3(a) $ 59,383
Cost and Expenses
Cost of products sold 40,621 5,629 (1,586)3(a)(b) 44,664
Selling, general and
administrative 9,395 2,910 (850)3(b)(c) 11,455
50,016 8,539 (2,436) 56,119
Operating income (loss) 3,277 (1,072) 1,059 3,264
Interest expense (1,401) (1,044) 836 3(d) (1,609)
Other income (expense),
net 1,289 (49) 19 3(c) 1,259
Income before taxes 3,165 (2,165) 1,914 2,914
(Provision) benefit for
income taxes (42) -0- 100 3(e) 58
Net income $ 3,123 $ (2,165) $ 2,014 $ 2,972
Per Share Data:
Net income $ 1.41 $ 1.34
Weighted average number
of shares outstanding 2,219,147 2,219,147
The accompanying notes are an integral part of these pro forma
condensed combined financial statements.
<PAGE>
PLYMOUTH RUBBER COMPANY, INC. AND
SUBSIDIARY PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
(In Thousands Except Share and Per Share Amounts)
(Unaudited)
Nine Months Ended
Plymouth Brite-Line
Historical Historical
Aug. 30, July 31, Pro Forma Combined
1996 1996 Adjustments Pro Forma
Net sales $ 41,881 $ 2,438 $ (627)4(a) $ 43,692
Cost and Expenses
Cost of products sold 33,069 2,557 (891)4(a)(b) 34,735
Selling, general and
administrative 7,665 2,154 (660)4(b)(c) 9,159
40,734 4,711 (1,551) 43,894
Operating income (loss) 1,147 (2,273) 924 (202)
Interest expense (962) (912) 784 4(d) (1,090)
Other income (expense),
net 19 (53) 0 (34)
Income before taxes 204 (3,238) 1,708 (1,326)
(Provision) benefit for
income taxes 1,624 -0- 612 4(e) 2,236
Net income $ 1,828 $ (3,238) $ 2,320 $ 910
Per Share Data:
Net income $ 0.82 $ 0.41
Weighted average number
of shares outstanding 2,231,414 2,231,414
The accompanying notes are an integral part of these pro forma
condensed combined financial statements.
<PAGE>
Notes to Pro Forma Condensed Combined Financial Statements
Note 1 - Pro Forma adjustments to the condensed combined balance
sheet
Reflects the elimination of historical Brite-Line accounts and the
allocation of $300,000 of purchase price solely to inventories
acquired from Brite-Line. No Brite-Line liabilities were assumed.
The total purchase price was funded through the Company's revolving
line of credit. Since the total purchase price was less than the
fair value of Brite-Line's plant and intangible assets acquired by
the Company, such non-current assets were reduced to zero in
accordance with the purchase method of accounting.
Note 2 - Plymouth and Brite-Line fiscal years ended December 1, 1995
and
the nine months ended August 30, 1996
The unaudited pro forma condensed combined statements of operations
reflect the transactions as though the Brite-Line assets had been
acquired at the beginning of the period presented. The Company
operates on a fiscal year which ended December 1, 1995. Brite-Line
operated on a March 31 fiscal year end. The results of operations
for the Company for the year ending December 1,1995 were combined
with the results of operations of Brite-Line for the twelve months
ended February 29, 1996, to determine the pro forma results of
operations for the year ended December 1, 1995. The results of
operations for the Company for the nine months ending August 30,1996
were combined with the results of operations of Brite-Line for the
nine months ending July 31, 1996, to determine the pro forma results
of operations for the nine months ended August 30, 1996. The
unaudited revenues and net loss of Brite-Line during the four-month
over-lapping period ended February 29, 1996 were $1,254,000 and
$(1,241,000), respectively.
The accompanying pro forma condensed combined balance sheet as of
August 30, 1996, has been prepared as if the Brite-Line asset
acquisition had occurred on August 30, 1996, utilizing the Company's
August 30, 1996 historical balance sheet and Brite-Line's historical
July 31, 1996 balance sheet (the last balance sheet prepared by
Brite-Line prior to the acquisition of certain assets of Brite-Line
by the Company).
The accompanying pro forma condensed combined statement of
operations for the year ended December 1, 1995 has been prepared as
if the Brite-Line asset acquisition had occurred on December 3,
1994. The accompanying pro forma condensed combined statement of
operations for the nine months ended August 30, 1996 , has been
prepared as if the Brite-Line asset acquisition had occurred on
December 2, 1995.
Note 3 - Pro Forma adjustments to fiscal year ended December 1,
1995:
a. Net sales and cost of products sold were reduced to eliminate
(1) a thermo plastic product line sold by Brite-Line
Industries, Inc. that has been discontinued by Brite-Line
Technologies management in the amounts of $885,000 and
$733,000, respectively, and (2) pro forma inter-company sales
and cost of sales made by Plymouth Rubber Company, Inc. to
Brite-Line Industries, Inc.($492,000). In addition, cost of
products sold has been reduced by $169,000 for the
compensation and associated fringe benefits pertaining to
staff reductions which occurred in conjunction with Plymouth's
acquisition of Brite-Line.
Notes to Pro Forma Condensed Combined Financial Statements
(Continued)
b. Cost of products sold and general and administrative expenses
have been reduced by $192,000 and $22,000, respectively,
pertaining to Brite-Line Industries' depreciation on fixed
assets as no allocation of purchase price to fixed assets is
made in the opening balance sheet of Brite-Line Technologies,
Inc.
c. Selling, general and administrative expenses have been reduced
to reflect the decrease of salaries, wages, fringe benefits,
travel and entertainment expenses associated with managerial
and support staff reductions which occurred in conjunction
with Plymouth's acquisition of Brite-Line. In addition,
royalty and consulting expenses have been significantly
reduced by the renegotiation and/or elimination of the
service.
d. Interest expense has been reduced to reflect both lower rates
(using Plymouth's borrowing rate of 8.5% as compared to 36.5%
paid by Brite-Line to a factor), and lower volume required to
finance the working capital of Brite-Line Technologies, Inc.
as compared to Brite-Line Industries, Inc.
e. Income taxes reflect the net effect of the pro forma
adjustments to Brite-Line's historical results calculated at
applicable federal and statutory tax rates (40%).
Note 4 - Pro Forma adjustments to the period ended August 30, 1996
a. Net sales and cost of products sold were reduced to eliminate
(1) a thermo plastic product line sold by Brite-Line
Industries, Inc. that has been discontinued by Brite-Line
Technologies management in the amounts of $154,000 and
$133,000, respectively, and (2) pro forma inter-company sales
and cost of sales made by Plymouth Rubber Company, Inc. to
Brite-Line Industries, Inc.($473,000). In addition, cost of
products sold has been reduced by $141,000 for the
compensation and associated fringe benefits pertaining to
staff reductions which occurred in conjunction with
Plymouth's acquisition of Brite-Line.
b. Cost of products sold and general and administrative expenses
have been reduced by $144,000 and $27,000, respectively,
pertaining to Brite-Line Industries' depreciation on fixed
assets as no allocation of purchase price to fixed assets is
made in the opening balance sheet of Brite-Line Technologies,
Inc.
c. Selling, general and administrative expenses have been reduced
to reflect the decrease of salaries, wages, fringe benefits,
travel and entertainment expenses associated with managerial
and support staff reductions which occurred in conjunction
with Plymouth's acquisition of Brite-Line. In addition,
royalty and consulting expenses have been significantly
reduced by the renegotiation and/or elimination of the
service.
d. Interest expense has been reduced to reflect both lower rates
(using Plymouth's borrowing rate of 8.5% as compared to 36.5%
paid by Brite-Line to a factor), and lower volume required to
finance the working capital of Brite-Line Technologies, Inc.
as compared to Brite-Line Industries, Inc.
e. Income taxes reflect the net effect of the pro forma
adjustments to Brite-Line's historical results calculated at
applicable federal and statutory tax rates (40%).
