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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ___________ to __________
Commission file number 001-14215
SHOWPOWER, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 95-4678707
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18420 S. Santa Fe Avenue, Rancho Dominguez, California 90221
------------------------------------------------------------
(Address of principal executive offices)
(310) 604-9676
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [_]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 3,421,842 shares of common
stock as of April 30, 1998
Transitional Small Business Disclosure Format Yes [ ] No [x]
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SHOWPOWER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share Data)
(Unaudited)
Three Months
Ended March 31,
---------------------------
1999 1998
----------- -----------
REVENUES $ 2,905 $ 4,273
COST OF SALES 2,101 2,452
----------- -----------
GROSS PROFIT 804 1,821
----------- -----------
OPERATING EXPENSES:
General and administrative 1,878 1,566
Depreciation and amortization 79 61
Stock compensation expense 36 36
----------- -----------
Total operating expenses 1,993 1,663
----------- -----------
(LOSS) INCOME FROM OPERATIONS (1,189) 158
----------- -----------
OTHER INCOME AND (EXPENSE), NET 58 (115)
----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST (1,131) 43
Income tax benefit (375) (42)
Minority interest (8) -
----------- -----------
NET (LOSS) INCOME (748) 85
OTHER COMPREHENSIVE LOSS -
Foreign currency translation adjustment (136) (9)
----------- -----------
COMPREHENSIVE (LOSS) INCOME $ (884) $ 76
=========== ===========
NET (LOSS) INCOME PER SHARE:
Basic $ (0.23) $ 0.04
Diluted $ (0.23) $ 0.04
PRO FORMA AMOUNTS:
Income before income taxes, as reported $ 43
Pro forma income tax provision 63
-----------
Pro forma net loss $ (20)
===========
PRO FORMA NET LOSS PER SHARE:
Basic $ (0.01)
Diluted $ (0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 3,293,075 1,913,080
Diluted 3,293,075 2,018,128
See accompanying notes to consolidated financial statements.
<PAGE>
SHOWPOWER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,633 $ 2,937
Accounts receivable, net 1,131 1,387
Other receivables 972 134
Deferred income taxes 239 225
Prepaid expenses and other current assets 333 341
-------- --------
4,308 5,024
-------- --------
PROPERTY AND EQUIPMENT 21,057 21,526
less: accumulated depreciation and amortization (5,767) (5,524)
-------- --------
15,290 16,002
-------- --------
OTHER ASSETS, NET 1,452 1,514
-------- --------
$ 21,050 $ 22,540
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank line of credit $ 231 $ 176
Current portion of long-term debt and capital lease obligations 787 718
Accounts payable and accrued expenses 1,731 2,637
-------- --------
2,749 3,531
-------- --------
LONG TERM LIABILITIES:
Long-term debt and capital lease obligations, net of current portion 2,190 1,616
Deferred income taxes 605 987
Other long-term liabilties 49 70
-------- --------
2,844 2,673
-------- --------
MINORITY INTEREST 23 46
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock; $0.01 par value; authorized, 1,000,000 shares; none issued
or outstanding
Common stock; $0.01 par value; authorized, 6,500,000 shares;
issued and outstanding, 3,421,842 shares 34 34
Additional paid-in capital 19,681 19,645
Notes receivable from stockholders (521) (513)
Cumulative foreign currency translation adjustment (127) 9
Accumulated deficit (3,633) (2,885)
-------- --------
15,434 16,290
-------- --------
$ 21,050 $ 22,540
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SHOWPOWER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1999 1998
------- -------
<S> <C> <C>
Net (loss) income $ (748) $ 85
Adjustments to reconcile net (loss) income to cash used in operating
activities:
Depreciation and amortization 584 386
Stock compensation expense 36 36
(Gain) loss on disposal of property and equipment (92) 24
Deferred income taxes (418) 19
Minority interest (22) -
Changes in operating assets and liabilities:
Accounts receivable 187 62
Prepaid expenses and other current assets 9 (266)
Other assets 33 (322)
Accounts payable and accrued expenses (77) (527)
------- -------
Net cash used in operating activities (508) (503)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business - (100)
Purchases of property and equipment (642) (150)
------- -------
Net cash used in investing activities (642) (250)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term obligations 90 333
Net borrowings under bank lines of credit 54 475
Principal payments on long-term debt and capital leases (206) (264)
------- -------
Net cash (used in) provided by financing activities (62) 544
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (92) -
------- -------
NET DECREASE IN CASH AND EQUIVALENTS (1,304) (209)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,937 486
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,633 $ 277
======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Acquisition of business through note payable financing $ - $ 141
Purchases of assets through capital lease and note payable financing $ - $ 2,405
Issuance of long-term debt to extinguish trade payables $ 759 $ -
Property and equipment acquired in exchange $ 1,328 $ -
Net book value of property and equipment disposed of in exchange $ 1,974 $ -
Sale of property and equipment in exchange for other receivable $ 797 $ -
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SHOWPOWER, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(In Thousands, Except Share Data)
March 31, 1999
Basis of Presentation
The accompanying unaudited consolidated financial statements include
the accounts of Showpower, Inc. and its consolidated subsidiaries (collectively,
the "Company"). The Company provides temporary power generation and temperature
control rental equipment and support services on a worldwide basis for
entertainment, corporate and special events.
The consolidated financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). In management's opinion, these financial statements include
all adjustments (consisting of normal recurring charges) necessary for a fair
presentation of the results of operations for the interim periods presented.
Pursuant to SEC rules and regulations, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
from these statements. For this reason, the accompanying consolidated financial
statements and notes thereto should be read in conjunction with the financial
statements and notes thereto filed as part of the Company's 1998 Annual Report
on Form 10-KSB (File No. 1-14215).
The results for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the entire year.
The Company completed its initial public offering (the "Offering") of
1,200,000 shares of Common Stock for $11.00 per share on June 16, 1998. The
Company received net proceeds of $11,082 after deduction of underwriting
discounts, commissions and Offering-related expenses. On July 2, 1998 the
Company sold an additional 180,000 shares of Common Stock at $11.00 to the
underwriters of the Offering pursuant to the exercise of their over-allotment
option. The Company received additional net proceeds of $1,777.
S Corporation Conversion
The Offering resulted in termination of the Company's S Corporation
status. As a result, after June 16, 1998, the Company became subject to U.S.
state and federal income taxes at the corporate level. The pro forma income tax
provision in the consolidated statement of operations for the three months ended
March 31, 1998 is based upon an assumed 40% federal and state income tax rate
for the Company's U.S. operations.
New Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is effective for the Company's fiscal
year ending December 31, 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. Under the provisions of
SFAS No. 133, an entity is required to recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. The Company is currently evaluating the impact SFAS
No. 133 will have on its financial statements, if any.
Sale and Exchange of Property and Equipment
In March 1999 the Company sold property and equipment with a net book
value of $1,974 for cash of $797 (which was included in other receivables at
March 31, 1999) and property and equipment with a value of $1,328. The Company
recognized a gain of $100 on the sale and deferred $51, which will be recognized
as income through December 31, 1999, the period the Company agreed to lease back
certain of the equipment.
<PAGE>
Segment Information
The Company's operations are organized around geographic areas. All of
the Company's segments provide similar temporary power generation and
temperature control rental equipment and support services. Information about the
Company's business segments is as follows:
<TABLE>
<CAPTION>
Adjustments
United United and
States Kingdom Brazil Eliminations Consolidated
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE THREE MONTHS ENDED MARCH 31, 1999
Revenues $ 2,201 $ 566 $ 305 $ (167) $ 2,905
Operating loss $ (709) $ (344) $ (116) $ (20) $ (1,189)
Other income and (expense) 58
--------
Loss before income taxes
and minority interest $ (1,131)
========
FOR THE THREE MONTHS ENDED MARCH 31, 1998
Revenues $ 4,015 $ 350 $ - $ (92) $ 4,273
Operating income (loss) $ 503 $ (215) $ (112) $ (18) $ 158
Other income and (expense) (115)
--------
Loss before income taxes $ 43
========
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(In Thousands, Except Share Data)
Overview
The following discussion should be read in conjunction with the
unaudited consolidated financial statements and notes thereto appearing
elsewhere herein. Certain statements made in this report relating to trends in
the Company's operations or financial results, as well as other statements,
including words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend," and other similar expressions, constitute forward-looking statements
under the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to known and unknown risks, uncertainties
and other factors which would cause actual results to be materially different
from those contemplated by the forward-looking statements, including the
following risks and uncertainties: the unpredictable nature of the Company's
business; the Company's dependence on entertainment and related industries; the
risks of the Company's growth strategy through acquisitions and opening new
branch offices in the U.S. and elsewhere; the Company's dependence on suppliers
of power generation equipment; the Company's dependence on key management
personnel; risks of foreign operations; and risks of competition.
The Company provides temporary power generation and temperature control
rental equipment and support services on a worldwide basis for entertainment,
corporate and special events. The Company's customers include corporations,
event producers, television networks, motion picture studios, facility operators
and performers that need electric power and/or temperature control services to
support events at locations where these services are inadequate or unavailable.
In addition to rental equipment, the Company provides fully integrated,
value-added services, including planning, technical advice, customized
installations, on-site operations and support personnel. The Company's power
equipment consists of transportable, diesel-powered electricity generators
contained in acoustic enclosures and related power distribution equipment.
Temperature control equipment consists of transportable, electrically-driven
HVAC units.
The Company experiences quarterly, seasonal and annual variations in
revenue and net income (which can be material) as a result of several factors,
including the timing and scale of concert tours, broadcast events and special
events, delays in or cancellations of customers' tours and events, the presence
or absence of triennial, quadrennial and large-scale special events, as well as
changes in the Company's revenue mix and related profitability among its various
rental services offered. Accordingly, operating results in any quarter should
not be considered indicative of results for the year or any future periods. Most
of the events serviced by the Company are held outdoors in the northern
hemisphere and typically occur during the second and third quarters of the year.
Approximately 77% of Showpower's revenues for 1998 was denominated in
U.S. dollars, 19%, was denominated in British pounds sterling and four percent
was denominated in the Brazilian real (the "real"). Fluctuations in currency
exchange rates result in fluctuations in reported results of operations and
financial position of the Company for business conducted in currencies other
than the U.S. dollar. For transactions denominated in currencies other than the
U.S. dollar, the Company's results of operations are converted at average rates
of exchange during the reporting period and balance sheet amounts are translated
at exchange rates at the balance sheet date. The results from such conversion
and changing exchange rates are recorded as a separate component of
stockholders' equity, which increased stockholders' equity by $9 at December 31,
1998, and decreased stockholders' equity by $127 at March 31, 1999. The Company
anticipates that foreign currency denominated revenues will become a more
significant part of the Company's total revenues as it opens additional branch
offices outside of the United States.
In January 1999 the Central Bank of Brazil altered its foreign exchange
policy, resulting in a devaluation of the real. The value of the real was 1.72
reals to the U.S. dollar at March 31, 1999 and 1.21 reals to the U.S. dollar at
December 31, 1998. The effects of the devaluation and related changes in
economic conditions on the Brazilian operations cannot be predicted with any
certainty and may have a material adverse effect on the Company's future
operating results.
<PAGE>
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
REVENUE. Revenues decreased to $2,905 for the first quarter of 1999
from $4,273 for the same period in 1998, a decrease of $1,368, or 32%, due
primarily to a decrease in special events and concert touring in 1999. The first
quarter of 1998 included concert tours with the Rolling Stones and U2, the
Winter Olympics in Nagano, Japan and a special touring event in Asia. These
special events did not take place and no comparable events were serviced by the
Company in the first quarter of 1999, resulting in a decrease in first quarter
1999 revenue of more than $1.8 million as compared to the first quarter of 1998.
This decrease was partially offset by increased revenue from smaller projects in
Brazil and the U.K. of approximately $445.
COST OF SALES. Cost of Sales decreased to $2,101 for the first quarter
of 1999 from $2,452 for the same period in 1998, a decrease of $351, or 14%, due
to the decrease in revenues. Cost of sales as a percentage of revenues increased
to 72% for the first quarter of 1999 from 57% for the same period in 1998, due
principally to a slight increase in personnel and travel costs. Personnel and
travel costs increased $80 to $922 (32% of revenues) for the first quarter of
1999 from $842 (20% of revenues) for the same period in 1998. The Company
maintained personnel and other expenses at levels in excess of those required by
prevailing business conditions in part to ensure the availability of resources
the Company expects will be necessary during the traditional summer peak season
and for other anticipated projects.
GROSS PROFIT. Gross profit decreased to $804 for the first quarter of
1999 from $1,821 for the same period in 1998, a decrease of $1,017, or 56%.
Gross profit as a percentage of revenue was 28% of revenue in the first quarter
of 1999 and 43% of revenue in the first quarter of 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. General and
administrative expense increased to $1,878 for the first quarter of 1999 from
$1,566 for the same period in 1998, an increase of $312, or 20%. Operations of
Showpower Brasil, S.A., which was formed in the third quarter of 1998, accounted
for $130 of the total first quarter 1999 increase in general and administrative
expense. The remaining increase in general and administrative expense is due
primarily to additional allowance for doubtful accounts, professional fees
resulting primarily from public ownership, financing-related costs, increased
costs of insurance and facilities, as well as costs associated with a planned
acquisition of a generator rental company in Australia, which the Company
elected not to consummate.
STOCK COMPENSATION EXPENSE. In March 1997, the Company made restricted
stock awards of an aggregate of 128,767 shares of common stock to certain
executive officers of the Company. The shares of common stock are restricted and
subject to forfeiture upon termination of employment. Stock compensation expense
is being recognized over the three-year vesting period based on the value of the
shares at the date of grant.
LOSS (INCOME) FROM OPERATIONS. As a result of the above factors, the
loss from operations was $1,189 for the first quarter of 1999, compared to
income from operations of $158 for the same period in 1998, a decrease in
earnings of $1,347.
OTHER INCOME AND (EXPENSE), NET. Other income was $58 for the first
quarter of 1999 compared to other net expense of $115 for the same period in
1998, an increase in other income of $173. The increase in other income was due
primarily to the first quarter 1999 gain on sale of property and equipment of
$100, as well as from lower interest expense in the first quarter of 1999 as
compared to the first quarter of 1998.
(LOSS) INCOME BEFORE INCOME TAXES AND MINORITY INTEREST. As a result of
the above factors, the loss before income taxes and minority interest was $1,131
for the first quarter of 1999 compared to income before income taxes and
minority interest of $43 for the same period in 1998, a decrease in earnings of
$1,174.
INCOME TAX BENEFIT. The income tax benefit increased to $375 for the
first quarter of 1999 from $42 for the same period in 1998, an increase of $333.
The income tax benefit reflects the tax benefit of losses related to foreign
subsidiaries and the U.S. federal and state income tax benefit of losses since
the date of the Offering. The Company was not subject to income taxes on its
U.S. operations prior to becoming a C Corporation in June 1998.
<PAGE>
MINORITY INTEREST. Minority interest represents the 10% minority
shareholder interest in earnings or loss of the Company's subsidiary, Showpower
Brazil, S.A.
NET (LOSS) INCOME. Net loss for the first quarter of 1999 was $748, as
compared to net income of $85 for the same period in 1998, a decrease in net
earnings of $833. Net loss for the first quarter of 1999 increased from pro
forma net loss of $20 for the same period in 1998, a decrease in net pro forma
earnings of $728. Pro forma net loss reflects provisions for federal and state
income taxes as if the Company's U.S. operations had been subject to federal and
state income taxation as a C Corporation at an assumed 40% combined federal and
state income tax rate during the periods presented.
Liquidity and Capital Resources
Working capital increased to $1,559 at March 31, 1999 from $1,493 at
December 31, 1998, an increase of $66.
The Company has a $2,000 line of credit facility (the "Facility") from
a bank. Interest under the Facility is payable monthly at the lender's prime
rate plus .875%, or, at the Company's option, LIBOR plus 3%. The Facility has a
term through April 2000. The Facility includes customary negative covenants,
such as restrictions on the Company's ability to incur debt, make acquisitions,
pay dividends, make investments or sell assets, as well as financial covenants
regarding the Company's tangible net worth, ratio of cash and accounts
receivable to current liabilities, ratio of liabilities to tangible net worth
and cash flow to current portion of long term debt obligations. The Company is
also required to maintain a specified level of cash and cash equivalents under
the terms of the Facility. At March 31, 1999 there were no borrowings
outstanding under the Facility. At March 31, 1999 the Company's U.K. subsidiary,
Templine, had maximum available borrowings under a separate bank line of credit
in the amount $231, bearing interest based on the bank's reference rate plus
2.5%, with a term through December 20, 1999.
The January 1999 currency devaluation in Brazil, along with other
factors that are likely to negatively impact economic conditions in Brazil, such
as high interest rates, import restrictions and tax increases, may lead to
inflation and a decrease in demand for the Company's services in Brazil. While
the Company is reducing operating costs and rental assets allocated to
operations in Brazil, there can be no assurance that the Company's operations in
Brazil will be profitable or generate significant cash flow from operations in
the near term.
Capital expenditures (including assets acquired through exchange,
capital leases and long-term debt) were $1,970 and $2,554 for the three months
ended March 31, 1999 and 1998, respectively, consisting primarily of power
generation, distribution and temperature control equipment. The Company has
commitments to acquire property and equipment of approximately $1.4 million
throughout the remainder of 1999. In March 1999 the Company sold property and
equipment with a net book value of $1,974 for cash of $797 (which was included
in other receivables at March 31, 1999) and property and equipment with a value
of $1,328. The Company recognized a gain of $100 on the sale and deferred $51,
which will be recognized as income through December 31, 1999, the period the
Company agreed to lease back certain of the equipment.
Cash used in operating activities for the first three months of 1999
and 1998 totaled $508 and $503, respectively. Cash used in operations for the
first quarter of 1998 reflected deferred costs related to the World Cup project
and Offering costs. The absence of similar cash requirements in 1999 resulted in
approximately the same cash used in operations for the first quarter of 1999 and
1998, despite lower earnings for the first quarter of 1999.
Cash used in investing activities for the first three months of 1999
and 1998 totaled $642 and $250, respectively. The increase of $392 resulted
primarily from an increase in 1999 capital expenditures acquired for cash as
compared to 1998. The Company reduced capital expenditures financed through
capital leases and long-term debt in the first quarter of 1999 as compared to
the same period in 1998.
Cash (used in) provided by financing activities for the first three
months of 1999 and 1998 totaled ($62) and $544, respectively. The decrease in
cash provided by financing activities of $606 reflects
<PAGE>
reduced borrowing in the first quarter of 1999 as compared to the corresponding
period in 1998.
The Company believes that cash flows from operations and available
credit facilities are sufficient to meet operating needs and capital spending
requirements and reasonably foreseeable expansion for at least the next 12
months.
Year 2000 Compliance
THE YEAR 2000 PROBLEM. Many information technology ("IT") hardware and
software systems ("IT Systems") and non-IT systems containing embedded
technology, such as microcontrollers and microchip processors ("Non-IT
Systems"), can only process dates with six digits (e.g., 06/26/98), instead of
eight digits (e.g., 06/26/1998). This limitation may cause IT Systems and Non-IT
Systems to experience problems processing information with dates after December
31, 1999 (e.g., 01/01/00 could be processed as 01/01/2000 or 01/01/1900) or with
other dates, such as September 9, 1999, which was traditionally used as a
default date by computer programmers. These problems may cause IT Systems and
Non-IT Systems to suffer miscalculations, malfunctions, or disruption. These
problems are commonly referred to as "Year 2000" or "Y2K" problems. While the
Company has no present assurance that all of its IT Systems, Non-IT Systems,
vendors and service providers are Year 2000 compliant, management believes the
potential risk and any associated cost resulting from the Year 2000 problem will
not be material to the Company's results of operations or financial condition.
THE COMPANY'S STATE OF READINESS. Based on representations of third
parties, the Company believes computer software applications on which the
Company relies for accounting, management and operating information are recent
releases of, or can be readily upgraded to, Year 2000 compliant, commercially
available applications. The Company is in the process of determining which, if
any, of those applications are not Year 2000 compliant.
The Company is continuing its Year 2000 assessment as it relates to
Non-IT Systems and third parties with whom it has a material relationship. The
Company has initiated the process of surveying key vendors to insure they are
Year 2000 compliant, which to date has consisted of requests of vendors to
describe their state of readiness. The Company is unaware of any key vendors who
are not compliant; however, such survey is not yet complete. The Company is
unable to ascertain when this process will be complete, as it has no control
over the responsiveness of such third parties. Third parties with whom the
Company has a material relationship consist of accounting and office software
vendors, banks, a transfer agent, and payroll service and telephone systems
providers, among others. The Company is not aware of any such third party for
which alternate sources of supply are unavailable. The Company plans to complete
its assessment by the third quarter of 1999 and replace or upgrade any
applications or Non-IT Systems that are not Year 2000 compliant by the fourth
quarter of 1999.
The Company does not separately identify costs that are specifically
attributable to resolving the Year 2000 issue. Such costs to date consist
primarily of internal resources devoted to assessing the Company's state of
readiness and are not significant. Based on the Company's assessment to date,
the Company does not expect the future costs related to the resolution of this
matter to exceed $100.
To date, the Company has not identified any information technology
assets under the control of the Company that represent a material risk of not
being Year 2000 ready or for which a suitable alternative cannot be implemented.
Accordingly, the Company does not have a contingency plan with respect to the
Year 2000 issue if the information systems assessment and upgrades are not
completed or are delayed beyond the end of 1999.
<PAGE>
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is involved from time to time in various routine legal
proceedings incidental to its business. The Company is not engaged in any legal
proceeding that is expected to have a material adverse effect on the results of
operations, financial position or cash flows of the Company.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHOWPOWER, INC.
/s/ JOHN J. CAMPION
Dated: May 14, 1999 ----------------------------------------
John J. Campion, Chief Executive Officer
/s/ MICHAEL W. CRABBE
Dated: May 14, 1999 ----------------------------------------
Michael W. Crabbe, Vice President -
Chief Financial Officer
EXHIBIT 11
SHOWPOWER, INC. AND SUBSIDIARIES
COMPUTATION OF INCOME PER COMMON SHARE
(In Thousands, Except Share Data)
Three Months
Ended March 31,
------------------------------
1999 1998
----------- -----------
Net (loss) income $ (748) $ 85
Weighted average
shares outstanding 3,293,075 1,913,080
Dilutive effect after application
of treasury stock method
Restricted shares - 105,048
Employee stock options - -
Shares used in calculating
diluted income per share 3,293,075 2,018,128
Basic net (loss) income per share $ (0.23) $ 0.04
Diluted net (loss) income per share $ (0.23) $ 0.04
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Showpower, Inc. for the three months ended March 31,
1999, and is qualified in its entirely by reference to such financial
information.
</LEGEND>
<CIK> 0000828360
<NAME> Showpower, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
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0
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