UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
Commission File Number: 1-373
RHI HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 34-1545939
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Washington Dulles International Airport
300 West Service Road, P.O. Box 10803
Chantilly, Virginia 22021
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(Address of principal executive offices)
(Zip Code)
(703) 478-5800
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class December 31, 1995
- ----- -----------------
Common Stock, $1.00 par value 100,000
Registrant meets the conditions set forth in general instructions H(1)(a) and
(b) of Form 10-Q and is therefore filing this form with reduced disclosure
format.
<PAGE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES*
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of December 31, 1995 (Unaudited)
and June 30, 1995 3
Consolidated Statements of Earnings for
the Three and Six Months Ended December
31, 1995 and January 1, 1995 (Unaudited) 5
Condensed Consolidated Statements of Cash
Flows for the Six Months Ended December 31,
1995 and January 1, 1995 (Unaudited) 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial
Condition 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 6. Exhibits and Reports on Form 8-K 23
*For purposes of Part I of this Form 10-Q, the term "Company" means RHI
Holdings, Inc., and its subsidiaries, unless otherwise indicated. For
purposes of Part II, the term "Company" means RHI Holdings, Inc. unless
otherwise indicated.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
December 31, June 30,
ASSETS 1995 1995
- ------ ------------ ------------
(Unaudited) (*)
<S> <C> <C>
Current Assets:
Cash and cash equivalents, $4,463 and $545
restricted................................. $ 39,514 $ 64,174
Short-term investments....................... 5,981 4,045
Accounts receivable-trade, less allowances
of $3,259 and $3,776....................... 68,272 61,939
Inventories:
Finished goods............................ 42,706 38,117
Work-in-process........................... 17,604 19,950
Raw materials............................. 17,320 19,531
------- -------
77,630 77,598
Prepaid expenses and other current assets.... 15,290 23,621
Net current assets of discontinued operations 34,609 34,626
------- -------
Total Current Assets......................... 241,296 266,003
Property, plant and equipment net of
accumulated depreciation of $95,888 and
$86,373.................................... 128,580 132,170
Net assets held for sale..................... 50,419 49,753
Net noncurrent assets of discontinued
operations................................. 85,577 88,209
Cost in excess of net assets acquired,
(Goodwill) less accumulated amortization of
$27,777 and $25,475........................ 147,150 149,187
Investments and advances, affiliated
companies.................................. 135,951 107,472
Prepaid pension assets....................... 59,191 59,567
Other assets................................. 19,293 17,083
------- -------
Total Assets................................. $867,457 $869,444
======= =======
*Condensed and restated for discontinued operations (see Note 3) from audited
financial statements.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
December 31, June 30,
LIABILITIES AND STOCKHOLDER'S EQUITY 1995 1995
- ------------------------------------ ------------- ------------
(Unaudited) (*)
<S> <C> <C>
Current Liabilities:
Bank notes payable and current maturities
of long-term debt........................... $ 76,048 $ 16,803
Accounts payable............................. 31,206 37,323
Other accrued liabilities.................... 67,752 70,053
------- -------
Total Current Liabilities.................... 175,006 124,179
Long-term debt, less current maturities...... 274,755 336,268
Other long-term liabilities.................. 17,481 18,342
Retiree health care liabilities.............. 44,158 44,710
Noncurrent income taxes...................... 49,775 44,135
Minority interest in subsidiaries............ 24,119 24,117
Redeemable preferred stock of subsidiary..... 16,691 17,722
------- -------
Total Liabilities............................ 601,985 609,473
Stockholder's Equity:
Common Stock................................. 100 100
Preferred Stock.............................. 100 100
Paid-in capital.............................. 229,647 229,533
Retained earnings............................ 36,796 46,102
Cumulative translation adjustment............ 3,151 3,861
Net unrealized holding loss on available-for-
sale securities............................. (4,322) (19,725)
------- -------
Total Stockholder's Equity................... 265,472 259,971
------- -------
Total Liabilities and Stockholder's Equity... $867,457 $869,444
======= =======
* Condensed and restated for discontinued operations (see Note 3) from
audited financial statements.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(In thousands)
<CAPTION>
Three Months Ended Six Months Ended
December 31, January 1, December 31, January 1,
1995 1995 1995 1995
------------ ---------- ------------ ----------
(*) (*)
<S> <C> <C> <C> <C>
Revenue:
Net sales of products.............. $ 76,284 $ 61,441 $156,780 $119,963
Revenues from services............. 26,636 20,408 53,743 40,791
Other income, net.................. 16 1,074 334 1,311
------- ------- ------- -------
102,936 82,923 210,857 162,065
Costs and Expenses:
Cost of goods sold................. 60,051 53,268 122,594 99,112
Cost of services................... 19,239 14,765 39,177 29,723
Selling, general & administrative.. 18,752 16,344 38,130 30,357
Research and development........... 23 288 44 584
Amortization of goodwill........... 1,129 1,106 2,302 2,195
Restructuring...................... 285 -- 285 --
------- ------- ------- -------
99,479 85,771 202,532 161,971
Operating income (loss).............. 3,457 (2,848) 8,325 94
Interest expense..................... 10,874 10,279 22,342 20,715
Interest income...................... (1,151) (1,154) (2,536) (2,180)
------- ------- ------- -------
Net interest expense................. 9,723 9,125 19,806 18,535
Investment income (loss), net........ (83) 2,580 1,912 2,922
Equity in earnings of affiliates..... 8 594 1,923 693
Minority interest.................... (544) (584) (1,085) (1,208)
------- ------- ------- -------
Loss from continuing operations
before taxes....................... (6,885) (9,383) (8,731) (16,034)
Income tax benefit................... (1,386) (2,264) (2,162) (3,606)
------- ------- ------- -------
Loss from continuing operations...... (5,499) (7,119) (6,569) (12,428)
Earnings from discontinued operations,
net................................ 3,420 3,193 7,290 6,190
Loss on disposal of discontinued
operations, net.................... (14) (25) (27) (50)
------- ------- ------- -------
Net earnings (loss).................. $ (2,093) $ (3,951) $ 694 $ (6,288)
======= ======= ======= =======
*Condensed and restated for discontinued operations. (See Note 3).
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<CAPTION>
Six Months Ended
December 31, January 1,
1995 1995
------------ ------------
(*)
<S> <C> <C>
Cash flows provided by (used for)
Operations:
Net earnings (loss)..................... $ 694 $ (6,288)
Depreciation and amortization........... 15,448 13,863
Accretion of discount on long-term
liabilities........................... 1,772 1,614
Minority interest....................... 1,085 1,273
Undistributed earnings of affiliates.... (1,140) (693)
Changes in assets and liabilities....... (16,806) (7,624)
Non-cash charges and working capital
changes of discontinued operations.... 3,524 6,998
------- -------
Net cash provided by operations......... 4,577 9,143
Investments:
Purchase of property, plant and
equipment............................. (6,867) (6,916)
Acquisitions of subsidiaries, net of
cash acquired......................... -- (12,061)
Proceeds received from (used for)
investment securities, net............ (897) 6,217
Investments in affiliates............... (4,000) (14,850)
Changes in net assets held for sale..... (913) (895)
Other, net.............................. 9 31
Investing activities of discontinued
operations............................ (875) (1,233)
------- -------
Net cash used for investments........... (13,543) (29,707)
Financing:
Proceeds from issuance of debt.......... 17,441 2,893
Debt repayments and repurchase of
debentures, net....................... (22,610) (6,767)
Payment of dividends.................... (10,000) (10,000)
------- -------
Net cash used for financing............. (15,169) (13,874)
Effect of exchange rate changes on cash..... (525) (587)
Net decrease in cash........................ (24,660) (35,025)
Cash and cash equivalents, beginning of
period.................................. 64,174 94,220
------- -------
Cash and cash equivalents, end of period.... $ 39,514 $ 59,195
======= =======
*Condensed and restated for discontinued operations. (See Note 3).
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Financial Statements
The consolidated balance sheet as of December 31, 1995 and the
consolidated statements of earnings and cash flows for the six months ended
December 31, 1995 and January 1, 1995 have been prepared by the Company,
without audit. In the opinion of management, all adjustments (consisting of
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at December 31, 1995 and for
all periods presented, have been made. All financial information has been
restated for discontinued operations. The balance sheet at June 30, 1995 was
condensed and restated from audited financial statements as of that date.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's June 30, 1995 Form
10-K. The results of operations for the period ended December 31, 1995 are
not necessarily indicative of the operating results for the full year.
Certain amounts in prior years' quarterly financial statements have been
reclassified to conform to the current presentation.
Note 2 - Merger Agreement
On November 9, 1995, the Company, Fairchild Industries, Inc. ("FII", all
of whose common stock is owned by the Company), and The Fairchild Corporation
("TFC", the Company's parent), entered into an Agreement and Plan of a
Merger with Shared Technologies Inc. ("STI"), pursuant to which STI is to
acquire FII's Fairchild Communications Services Company ("FCSC")
telecommunications systems and services business. The acquisition is to be
effected by a merger of FII into STI (the "Merger"), with STI being the
surviving corporation. Prior to the Merger, FII is to undergo a
restructuring pursuant to which FII will transfer all of its assets to, and
cause all of its liabilities to be assumed by the Company, except for (i) the
assets and liabilities of FCSC, (ii) the outstanding Series A and Series C
Preferred Stock of FII (having a liquidation value of $41,817,000 at December
31, 1995), (iii) the $125,000,000 principal amount outstanding 12 1/4% Senior
Notes due 1999 (the "Senior Notes") of FII, and (iv) an amount of bank and
other indebtedness of approximately $56,683,000 (the "Assumed Indebtedness").
Pursuant to the Merger, the Series A and Series C Preferred Stock of FII will
be cancelled and converted into the right to receive an amount of cash equal
to their liquidation value ($45.00 per share plus accrued and unpaid
dividends), and the Series B Preferred Stock of FII, all of which is owned by
the Company, will be cancelled. Prior to the Merger, FII will make a cash
tender offer to purchase all of the outstanding Senior Notes and seek to
obtain such noteholders' consent to amend the indenture under which the
Senior Notes were issued to remove all covenants which can be amended or
deleted by majority vote (see Note 5). The amount of the Assumed
Indebtedness will be reduced, by (i) the extent the purchase price to be paid
in such offering for the Senior Notes exceeds par, and (ii) the amount of
accrued and unpaid dividends on the Series A and Series C Preferred Stock of
FII on the date of the Merger.
Upon the Merger, STI, as the surviving corporation, is required to (i)
purchase all Senior Notes tendered (and assume FII's obligations with
respect to any Senior Notes not so tendered), (ii) repay the Assumed
Indebtedness in full, and (iii) deposit in escrow the funds necessary to
redeem the Series A and Series C Preferred Stock. As a result of the Merger,
the Company is to receive (i) 6,000,000 shares of Common Stock of STI
(representing approximately 41% of the outstanding shares after giving effect
to such issuance), (ii) shares of 6% Cumulative Convertible Preferred Stock
of STI having an aggregate liquidation preference of $25,000,000 (subject to
upward adjustment) and which are convertible into Common Stock of STI at a
conversion price of $6.375 per share (which, if converted, would represent,
together with the other Common Stock issued to the Company, approximately 41%
of the Common Stock of STI on a fully diluted basis), and (iii) shares of a
Special Preferred Stock having an initial liquidation preference of
$20,000,000 (which could accrue up to a maximum of $30,000,000 over a ten-
year period if not redeemed earlier). In connection with its stock
ownership, TFC and the Company has the right to elect up to four of the
eleven members of the Board of Directors of STI and have agreed, subject to
certain exceptions, not to sell any of STI's shares, other than the Special
Preferred Stock, for a two-year period.
The closing of the Merger is subject to a number of conditions,
including (i) the approval of the Merger by the shareholders of STI, and (ii)
holders of at least 51% of the outstanding principal amount of the Senior
Notes tendering their Senior Notes and consenting to the covenant changes
described above. The Company and STI are scheduled to complete this
transaction in Fiscal 1996. The Company expects a significant gain upon
consummation of this transaction.
Note 3 - Discontinued Operations
During the Fiscal 1996 second quarter, the Company resolved to sell the
D-M-E Company ("DME"), a mold equipment manufacturer, and the Fairchild Data
Corporation ("Data"), a satellite communications company. On January 26,
1996, the Company completed the sale of certain assets, liabilities and the
business of DME to Cincinnati Milacron Inc. ("Cincinnati Milacron") for
approximately $245,000,000 in cash and notes, subject to audit adjustment.
On January 27, 1996, the Company completed the sale of Data to SSE Telecom,
Inc. ("SSE") for book value of approximately $5,250,000 and 100,000 shares of
SSE's common stock valued at $9.0625 per share or $906,000 at January 26,
1996, and warrants to purchase an additional 50,000 shares of SSE's common
stock at $11.09 per share. In addition, the Company has an opportunity to
earn an additional 100,000 shares based on the future performance of SSE
during the twelve months following the date of sale. The sale of DME will
result in a significant gain to the Company in the third quarter ended March
31, 1996.
Accordingly, DME and Data have been accounted for as discontinued
operations and the prior periods' financial statements have been restated to
reflect the discontinuance of these companies. The combined net sales of
DME and Data totaled $45,475,000 and $44,080,000 for the second quarter of
Fiscal 1996 and 1995, respectively, and $91,342,000 and $86,568,000 for the
first six months of Fiscal 1996 and 1995, respectively. The combined net tax
provision recorded on earnings from discontinued operations amounted to
$2,673,000 and $2,471,000 for the second quarter of Fiscal 1996 and 1995,
respectively, and $5,050,000 and $4,829,000 for the first six months of
Fiscal 1996 and 1995, respectively. The components of net assets of
discontinued operations on the consolidated balance sheet are as follows:
<TABLE>
<CAPTION>
(In thousands)
December 31, June 30,
1995 1995
------------ --------
<S> <C> <C>
Accounts receivable................. $ 28,064 $ 28,161
Inventories......................... 26,732 26,645
Prepaid and other current assets.... 1,098 1,365
Accounts payable.................... (9,176) (9,801)
Other current liabilities........... (12,109) (11,744)
------- -------
Net current assets of discontinued
operations........................ $ 34,609 $ 34,626
======= =======
Property plant and equipment, net
of accumulated depreciation....... $ 36,175 $ 37,986
Goodwill, net of accumulated
amortization...................... 54,846 55,664
Other assets........................ 4,202 4,602
Retiree health care liabilities..... (4,756) (4,764)
Minority interest in subsidiaries.. (504) (416)
Cumulative translation adjustment... (4,386) (4,863)
------- -------
Net noncurrent assets of
discontinued operations........... $ 85,577 $ 88,209
======= =======
</TABLE>
Note 4 - Proposed Sale of Division
During the second quarter ended December 31, 1995, the Company entered
into preliminary discussions concerning the exchange of shares of common
stock of a new subsidiary (Harco, Inc.), into which the Company would
transfer substantially all assets of, and cause Harco, Inc. to assume all
liabilities of the Company's Harco Division, for shares of common stock to
Banner Aerospace, Inc. ("Banner").
The Company currently owns approximately 47% of Banner common shares,
and if the exchange is consummated would become the majority shareholder of
Banner. Harco is a distributor of precision fasteners to the aerospace
industry.
Note 5 - Tender Offer
On December 22, 1995, FII commenced an offer (the "Tender Offer") to
purchase for cash, upon terms and subject to conditions set forth in an Offer
to Purchase and Consent Solicitations and related Letter of Transmittal (the
"Offer to Purchase"), all $125,000,000 of its outstanding 12 1/4% Senior
Secured Notes Due 1999 (the "Senior Notes"). The Tender Offer, as amended
and restated, provides a purchase price per $1,000 principal amount of the
Senior Notes of (i) $1,066.60 if the Tender Offer is consummated on or prior
to February 28, 1996, or (ii) $1,063.90 if the Tender Offer is consummated
between February 29, 1996 and March 31, 1996, or (iii) $1,057.50 if the
Tender Offer is consummated after March 31, 1996, and in each case, accrued
and unpaid interest up to, but not including, the payment date. Concurrently
with the Tender Offer, FII solicited (the "Tender Offer Consent
Solicitation") consents of the holders of the Senior Notes to (i) the
adoption of the proposed amendments to the indenture pursuant to which the
Senior Notes were issued (the "Indenture"), and (ii) the release of the
collateral securing FII's obligations under the Senior Notes and the
Indenture, upon terms set forth in the Offer to Purchase.
In addition, independent of the Tender Offer and the Tender Offer
Consent Solicitation, FII also solicited consents to the waiver of any and
all violations of the Indenture arising out of or relating to (i) the
transfer by VSI Corporation ("VSI"), a wholly-owned subsidiary of FII, of the
stock of Harco, Inc. to Banner (see Note 4), and (ii) the sale by VSI of DME
to Cincinnati Milacron (see Note 3).
FII will pay to holders of Senior Notes who validly tender Senior Notes
pursuant to the Tender Offer and Consent Solicitations a consent fee of
$25.00 per $1,000 principal amount of Senior Notes so tendered. The consent
fee will be paid to holders of Senior Notes after, and subject to, the
consummation of the Tender Offer. Additionally, FII will pay an early
consent fee of $5.00 per $1,000 principal amount to holders of Senior Notes
who on or prior to January 19, 1996, validly tender their notes, irrespective
of whether the Tender Offer is consummated. The Tender Offer and the Tender
Offer Consent Solicitations expire February 29, 1996.
FII is to recognize an extraordinary loss, net of any related tax
benefits, in the third quarter of Fiscal 1996, reflecting the contractual
commitment to repurchase the Senior Notes at a premium and pay the consent
fees.
Note 6 - Acquisitions
On September 9, 1994, the Company acquired all of the outstanding Common
Stock of Scandinavian Bellyloading Company AB ("SBC"). SBC is the designer
and manufacturer of patented cargo loading systems, which are installed in
the cargo area of commercial aircraft. Several major airlines are expected
to equip existing fleets with the SBC system over the next three to four
years. The Company reports the results of SBC as part of its Industrial
Products segment.
On November 28, 1994, FCSC completed the acquisition of substantially
all of the telecommunications assets of JWP Telecom, Inc. ("JWP") for
approximately $11,000,000, plus the assumption of approximately $3,000,000 of
liabilities. The Company recorded $5,595,000 in goodwill as a result of this
acquisition. JWP is a telecommunications system integrator, specializing in
the distribution, installation and maintenance of voice and data
communications equipment. In the first quarter of Fiscal 1995, Fairchild
Communications acquired all the shared telecommunications assets of Eaton &
Lauth Co., Inc., for approximately $550,000. Approximately $300,000 of the
acquisition price was recorded as goodwill.
Proforma financial statements are not required for these acquisitions on
an individual basis.
Note 7 - Restructuring Charges
During the second quarter ended December 31, 1995, the Company recorded
$285,000 in restructuring charges relating to the closing of a small
Aerospace Fasteners business located in Japan.
Note 8 - Restricted Cash
The Company had approximately $4,463,000 and $545,000 of restricted cash
on December 31, 1995 and June 30, 1995, respectively, all of which is
maintained as collateral for certain debt facilities.
Note 9 - Summarized Statement of Earnings Information
The following table presents summarized combined statement of earnings
information of Banner and Nacanco Paketleme ("Nacanco"), the Company's
principal investments, which are accounted for using the equity method.
<TABLE>
<CAPTION>
Six Months Ended
(In thousands) ----------------------------
December 31, January 1,
1995 1995
------------ -------------
<S> <C> <C>
Net sales................................. $189,684 $148,632
Gross profit.............................. 55,232 50,344
Earnings from continuing operations....... 7,228 7,168
Net earnings.............................. 7,228 7,168
</TABLE>
The Company owns approximately 47.2% of Banner common stock, which is
included in investments and advances-affiliated companies. The Company
recorded equity earnings of $375,000 and $970,000 for the six months ended
December 31, 1995 and January 1, 1995, respectively, from this investment.
At the close of trading on December 29, 1995, Banner stock was quoted at
$5.75 per share. Based on this price the Company's equity investment in
Banner had an approximate market value of $48,807,000 versus a carrying value
of $54,238,000. The Company does not believe that this decline in market
value is a permanent impairment.
On January 18, 1995, the Company purchased approximately a 26.7%
ownership interest in Nacanco common stock for $13,000,000 from the Company's
parent, The Fairchild Corporation ("TFC"). The Company recorded equity
earnings of $1,684,000 for the six months ended December 31, 1995. Equity
earnings prior to the stock purchase were recorded by TFC.
In connection with the Company's December 23, 1993 sale of its interest
in Rexnord Corporation to BTR Dunlop Holdings, Inc. ("BTR"), the Company has
placed shares of Banner, with a fair market value of $5,000,000, in escrow to
secure the Company's remaining indemnification of BTR against a contingent
liability. Once the contingent liability is resolved the escrow will be
released.
Note 10 - Minority Interest in Consolidated Subsidiaries
The Company includes $23,804,000 of minority interest on its balance
sheet at December 31, 1995 and June 30, 1995, which is represented by the
Series C Preferred Stock of FII. The Series C Preferred Stock has an annual
dividend requirement of $4.25 per share through July 21, 1999 and $7.00 per
share thereafter. There were 553,460 shares authorized, issued and
outstanding at December 31, 1995 and June 30, 1995.
Note 11 - Redeemable Preferred Stock of Subsidiary
The Company has classified the outstanding shares of Series A Preferred
Stock of FII as a long-term liability. The Series A Preferred Stock has a
mandatory redemption value of $45.00 per share and an annual dividend
requirement of $3.60 per share. During the six months ended December 31,
1995, the Company repurchased 22,900 shares of FII's Series A Preferred
Stock. Effectively, there were 370,901 and 393,801 shares authorized, issued
and outstanding at December 31, 1995 and June 30, 1995, respectively.
Note 12 - Dividend Paid to Parent
During the six months ended December 31, 1995 and January 1, 1995, the
Company paid cash dividends of $10,000,000 in each period to TFC.
Note 13 - Commitments and Contingencies
Government Claims
- -----------------
The Corporate Administrative Contracting Officer (the "ACO"), based upon
the advice of the United States Defense Contract Audit Agency, has made a
determination that FII did not comply with Federal Acquisition Regulations
and Cost Accounting Standards, in accounting for (i) the 1985 reversion to
FII of certain assets of terminated defined benefit pension plans, and (ii)
pension costs upon the closing of segments of FII's business. The ACO has
directed FII to prepare a cost impact proposal relating to such plan
terminations and segment closings and, following receipt of such cost impact
proposal, may seek adjustments to contract prices. The ACO alleges that
substantial amounts will be due if such adjustments are made. The Company
believes it has properly accounted for the asset reversions in accordance
with applicable accounting standards. The Company has held discussions with
the government to attempt to resolve these pension accounting issues.
Environmental Matters
- ---------------------
The Company and other aerospace fastener and industrial product
manufacturers are subject to stringent Federal, state and local environmental
laws and regulations concerning, among other things, the discharge of
materials into the environment and the generation, handling, storage,
transportation and disposal of waste and hazardous materials. To date, such
laws and regulations have not had a material effect on the financial
condition, results of operations, or net cash flows of the Company, although
the Company has expended, and can be expected to expend in the future,
significant amounts for investigation of environmental conditions and
installation of environmental control facilities, remediation of
environmental conditions and other similar matters, particularly in the
Aerospace Fasteners segment.
In connection with its plans to dispose of certain real estate, the
Company must investigate environmental conditions and may be required to take
certain corrective action prior or pursuant to any such disposition. In
addition, management has identified several areas of potential contamination
at or from other facilities owned, or previously owned, by the Company, that
may require the Company either to take corrective action or to contribute to
a clean-up. The Company is also a defendant in certain lawsuits and
proceedings seeking to require the Company to pay for investigation or
remediation of environmental matters and has been alleged to be a potentially
responsible party at various "Superfund" sites. Management of the Company
believes that it has recorded adequate reserves in its financial statements
to complete such investigation and take any necessary corrective actions or
make any necessary contributions. No amounts have been recorded as due from
third parties, including insurers, or set off against, any liability of the
Company, unless such parties are contractually obligated to contribute and
are not disputing such liability.
As of December 31, 1995, the consolidated total recorded liabilities of
the Company for environmental matters totalled $12,354,000. As of December
31, 1995, the estimated probable exposures for these matters was $12,185,000.
It is reasonably possible that the Company's total exposure for these matters
could be approximately $21,137,000.
Other Matters
- -------------
The Company is involved in various other claims and lawsuits incidental
to its business, some of which involve substantial amounts. The Company,
either on its own or through its insurance carriers, is contesting these
matters.
In the opinion of management, the ultimate resolution of the legal
proceedings, including those discussed above, will not have a material
adverse effect on the financial condition, or future results of operations or
net cash flows of the Company.
Note 14 - Subsequent Events
As of January 31, 1996, holders of approximately 93.6% of the aggregate
principal amount of Senior Notes have tendered their Senior Notes pursuant to
the Tender Offer, and have consented pursuant to the terms of the Tender
Offer Consent Solicitation. (See Note 5).
In connection with the sale of DME and Data, (see Note 3), the Company
negotiated an amendment to its bank credit agreement, effective January 22,
1996. Among other things, the amendment permits the sale of DME and Data and
amends certain financial covenants accordingly.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- -------------------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
Item 2 of Form 10-Q is omitted in accordance with General Instruction
H(i)(a) and (b), Omission of Information by Certain Wholly-Owned
Subsidiaries. Management's narrative analysis of the results of operations
is furnished in lieu thereof:
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
- ------------------------------------------------------------
RHI Holdings, Inc. (the "Company"), formerly known as Rexnord Holdings
Inc., is essentially a holding company incorporated in the State of Delaware.
It has two operating subsidiaries, Fairchild Industries, Inc. ("FII") and
Fairchild Convac ("Convac"). The Company's operations are conducted through
Convac and VSI Corporation ("VSI"), which is a wholly-owned subsidiary of
FII. The Company is a wholly-owned subsidiary of The Fairchild Corporation
("TFC"). The Company also holds a significant equity interest in Banner
Aerospace, Inc. ("Banner") and Nacanco Paketleme ("Nacanco").
RECENT DEVELOPMENTS
During the Fiscal 1996 second quarter, the Company resolved to sell the
D-M-E Company ("DME"), a mold equipment manufacturer, and the Fairchild Data
Corporation ("Data"), a satellite communications company. On January 26,
1996, the Company completed the sale of certain assets, liabilities and the
business of DME to Cincinnati Milacron Inc. ("Cincinnati Milacron") for
approximately $245.0 million in cash and notes, subject to audit adjustment.
On January 27, 1996, the Company completed the sale of Data to SSE Telecom,
Inc. ("SSE") for book value of approximately $5.3 million and 100,000 shares
of SSE's common stock valued at $9.0625 per share or $.9 million on January
26, 1996, and warrants to purchase an additional 50,000 shares of SSE's
common stock at $11.09 per share. In addition, the Company has an
opportunity to earn an additional 100,000 shares based on the future
performance of SSE during the twelve months following the date of sale. The
sale of DME will result in a significant gain to the Company in the third
quarter ended March 31, 1996.
DME and Data have been accounted for as discontinued operations and the
prior periods' financial statements have been restated to reflect the
discontinuance of these companies. The combined net sales of DME and Data
totaled $45.5 million and $44.1 million for the second quarter of Fiscal 1996
and 1995, respectively, and $91.3 million and $86.6 million for the first six
months of Fiscal 1996 and 1995, respectively.
On November 9, 1995, TFC, FII and the Company entered into an Agreement
and Plan of a Merger with Shared Technologies Inc. ("STI"), pursuant to which
STI is to acquire FII's Fairchild Communications Services Company ("FCSC")
telecommunications systems and services business. The acquisition is to be
effected by a merger of FII into STI (the "Merger"), with STI being the
surviving corporation. Prior to the Merger, FII is to undergo a
restructuring pursuant to which FII will transfer all of its assets to, and
cause all of its liabilities to be assumed by the Company, except for (i) the
assets and liabilities of FCSC, (ii) the outstanding Series A and Series C
Preferred Stock of FII (having a liquidation value of $41.8 million at
December 31, 1995), (iii) the $125.0 million principal amount outstanding 12
1/4% Senior Notes due 1999 (the "Senior Notes") of FII and (iv) an amount of
bank and other indebtedness of approximately $56.7 million (the "Assumed
Indebtedness"). Pursuant to the Merger, the Series A and Series C Preferred
Stock of FII will be cancelled and converted into the right to receive an
amount of cash equal to their liquidation value ($45.00 per share plus
accrued and unpaid dividends). Prior to the Merger, FII will make a cash
tender offer to purchase all of the outstanding Senior Notes and seek to
obtain such noteholders' consent to amend the indenture under which the
Senior Notes were issued to remove all covenants which can be amended or
deleted by majority vote (see Note 5). The amount of the Assumed
Indebtedness will be reduced, by (i) the extent the purchase price to be paid
in such offering for the Senior Notes exceeds par, and (ii) the amount of
accrued and unpaid dividends on the Series A and Series C Preferred Stock of
FII on the date of the Merger.
Upon the Merger, STI, as the surviving corporation, is required to (i)
purchase all Senior Notes tendered (and assume FII's obligations with
respect to any Senior Notes not so tendered), (ii) repay the Assumed
Indebtedness in full, and (iii) deposit in escrow the funds necessary to
redeem the Series A and Series C Preferred Stock. As a result of the Merger,
the Company is to receive (i) 6,000,000 shares of Common Stock of STI
(representing approximately 41% of the outstanding shares after giving effect
to such issuance), (ii) shares of 6% Cumulative Convertible Preferred Stock
of STI having an aggregate liquidation preference of $25.0 million (subject
to upward adjustment) and which are convertible into Common Stock of STI at
a conversion price of $6.375 per share (which, if converted, would represent,
together with the other Common Stock issued to the Company, approximately 41%
of the Common Stock of STI on a fully diluted basis), and (iii) shares of a
Special Preferred Stock having an initial liquidation preference of $20.0
million (which could accrue up to a maximum of $30.0 million over a ten-year
period if not redeemed earlier).
The closing of the Merger is subject to a number of conditions,
including (i) the approval of the Merger by the shareholders of STI, and (ii)
holders of at least 51% of the outstanding principal amount of the Senior
Notes tendering their Senior Notes and consenting to the covenant changes
described above. The Company and STI are scheduled to complete this
transaction in Fiscal 1996. The Company expects a significant gain upon
consummation of this transaction.
During the second quarter ended December 31, 1995, the Company entered
into preliminary discussions concerning the exchange of shares of common
stock of a new subsidiary (Harco, Inc.), into which the Company would
transfer substantially all assets of, and cause Harco, Inc. to assume all
liabilities of the Company's Harco Division, for shares of common stock to
Banner Aerospace, Inc. ("Banner").
The Company currently owns approximately 47% of Banner common shares,
and if the exchange is consummated would become the majority shareholder of
Banner. Harco is a distributor of precision fasteners to the aerospace
industry.
RESULTS OF OPERATIONS
The Company currently operates in three principal business segments:
Aerospace Fasteners, Industrial Products and Communications Services. Set
forth below is a comparison of the results from continuing operations of the
Company for the three and six month periods ended December 31, 1995 and
January 1, 1995.
<PAGE>
<TABLE>
<CAPTION>
(In thousands) Three Months Ended Six Months Ended
December 31, January 1, December 31, January 1,
1995 1995 1995 1995
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Sales by Business Segment:
Aerospace Fasteners...................... $ 55,794 $ 52,328* $107,990 $103,838
Industrial Products...................... 15,095 6,953* 37,505 14,406
Communications Services.................. 32,031 22,568 65,028 42,510
------- ------- ------- -------
Total....................................... $102,920 $ 81,849 $210,523 $160,754
======= ======= ======= =======
Operating Income (Loss) by Business Segment:
Aerospace Fasteners...................... $ 1,382 $ (2,160)* $ 1,692 $ (755)
Industrial Products...................... (89) (2,601)* 2,221 (3,104)
Communications Services.................. 4,862 3,829 9,771 8,251
------- ------- ------- -------
Total....................................... 6,155 (932) 13,684 4,392
Corporate administrative expense......... (2,437) (2,376) (5,156) (4,352)
Other corporate income (expense)......... (261) 460 (203) 54
------- ------- ------- -------
Operating income (loss)..................... 3,457 (2,848) 8,325 94
Net interest expense........................ (9,723) (9,125) (19,806) (18,535)
Investment income (loss), net............... (83) 2,580 1,912 2,922
Equity in earnings of affiliates............ 8 594 1,923 693
Minority interest........................... (544) (584) (1,085) (1,208)
------- ------- ------- -------
Loss from continuing operations before
income taxes.............................. (6,885) (9,383) (8,731) (16,034)
Income tax benefit.......................... (1,386) (2,264) (2,162) (3,606)
------- ------- ------- -------
Loss from continuing operations............. $ (5,499) $ (7,119) $ (6,569) $(12,428)
======= ======= ======= =======
* The Aerospace Fasteners and the Industrial Products segments were restated
for the transfer of the Gas Springs division from the Aerospace Fasteners
segment to the Industrial Products segment. The Industrial Products segment
was also restated for the sale of DME and Data, which are being reported as
discontinued operations.
</TABLE>
General
- -------
Overall sales from continuing operations increased by 25.7% in the
second quarter and 31.0% for the Fiscal 1996 six month period, compared to
sales for the same periods in Fiscal 1995, which reflected stronger sales
performances from all three business segments.
Operating income from continuing operations increased $6.3 million in the
second quarter and $8.2 million in the Fiscal 1996 six months period,
compared to operating income for the same periods in Fiscal 1995. Net
operating income performance improved in all three business segments in both
of the Fiscal 1996 periods. (See discussion below).
Aerospace Fasteners
- -------------------
Sales in the Aerospace Fasteners segment increased $3.5 million or 6.6%
in the second quarter and $4.2 million or 4.0% in the Fiscal 1996 six month
period, compared to the corresponding Fiscal 1995 periods, reflecting
moderate growth in this industry. New orders have been strong in recent
months.
Operating income in the Aerospace Fasteners segment increased $3.5
million in the second quarter and $2.4 million in the Fiscal 1996 six month
period, compared to the Fiscal 1995 periods. The Fiscal 1995 periods
included income from business interruption insurance resulting from the loss
sustained in the January 1994 earthquake. This segment continues to be
affected by soft demand, competitive pricing conditions and higher quality
control costs resulting from customers' requirements. Management will
continue to implement productivity improvements and reduce costs to bring the
breakeven point in line with demand, particularly in its U.S. operations. A
$.3 million restructuring charge was recorded in the Fiscal 1996 quarter for
the close down of a small subsidiary located in Japan.
Industrial Products
- -------------------
Sales in the Industrial Products segment increased $8.1 million or 117.1%
in the second quarter and $23.1 million or 160.3% in the first six months of
Fiscal 1996, compared to the same periods in Fiscal 1995. $21.4 million of
this sales increase is attributable to the performance of Fairchild
Technologies which includes Fairchild Convac, a semiconductor equipment
manufacturer which had a strong first six months performance resulting from
the shipment of orders included in the prior year end backlog. This was
compared to a very slow Fiscal 1995 first six months, which was the first six
month period following the acquisition of Fairchild Convac.
Operating income in the Industrial Products segment increased $2.5
million in the second quarter and $5.3 million in the first six months of
Fiscal 1996, compared to the same periods in Fiscal 1995. $4.3 million of
this net increase was contributed by Fairchild Technologies, primarily the
result of the increase in sales.
Communications Services
- -----------------------
Sales in the Communications Services segment increased 41.9% in the
second quarter and 53.0% in the Fiscal 1996 first six month period, compared
with the same periods in Fiscal 1995. The increase is primarily due to the
inclusion of $12.2 million of sales in the second quarter and $25.3 million
in the first six months of Fiscal 1996 from the JWP Telecom, Inc. ("JWP")
acquisition made during the Fiscal 1995 second quarter, as well as sales to
new customers, the addition of telecommunications franchises in new office
buildings, and growth at existing sites.
Operating income in the Communications Services segment increased 27.0%
in the second quarter and 18.4% during the six months period of Fiscal 1996,
compared to the same period in Fiscal 1995, primarily due to increased sales
resulting from the reasons given above and related economies of scale.
Operating income as a percent of sales was 15.0% in the Fiscal 1996 first six
months compared to 19.4% in the Fiscal 1995 first six months. This lower
return on sales was anticipated as a result of the JWP acquisition, which has
lower, gross margins due to the nature of the business.
Other Expense/Income
- --------------------
Corporate administrative expense - FII's and TFC's staff perform work on
behalf of the Company, which is charged out monthly based on the estimated
level of effort. Corporate administrative expense increased 2.6% in the
current second quarter and 18.5% in the six month period of Fiscal 1996,
compared to the same periods in the prior year. This increase in the current
year periods was primarily due to increased staff involvement on behalf of
the Company and its subsidiaries to negotiate and complete the sales of
operations (DME and Data) and the proposed merger of FII into STI.
Management believes that the corporate administrative expense of the Company
would be higher if it operated as a separate independent entity.
Other corporate income decreased $.7 million in the second quarter and
$.3 million in the first six months of Fiscal 1996, compared to the same
periods in the prior year, primarily due to additional carrying costs
incurred on net assets held for sale in Fiscal 1996.
Net interest expense increased 6.6% in the second quarter and 6.9% in
the Fiscal 1996 first six months, compared to the Fiscal 1995 periods,
primarily the result of higher bank borrowings during the Fiscal 1996 period.
Investment income, net was lower in the second quarter and first six
months of Fiscal 1996, principally as a result of recording large gains
realized on the settlement and liquidation of investments in the Fiscal 1995
periods.
Equity in earnings of affiliates increased $1.2 million in the Fiscal
1996 first six months compared to the prior year period. The Fiscal 1996
first six months includes $1.7 million of equity earnings provided by
Nacanco, shares of which were purchased from TFC in January, 1995 and not
included in the prior period results.
Minority interest expense includes dividend expense on FII's Series C
Preferred Stock.
Income taxes - In the first six months of Fiscal 1996, the Company
recorded a tax benefit of $2.2 million on losses of $8.7 million from
continuing operations. The effective rate was lower than the statutory rate,
largely due to the amortization of goodwill, which is not deductible for tax
purposes.
Earnings from discontinued operations, net include the earnings, net of
tax, from DME and Data for all periods presented.
Net earnings (loss) - The net earnings increased $7.0 million in the
first six months of Fiscal 1996, compared to the first six months of Fiscal
1995, primarily due to the $8.2 million increase in operating income and the
$1.1 million increase in earnings from discontinued operations. Partially
offsetting the increase in net earnings was a $1.6 million increase in
interest expense and $1.4 million increase in taxes from continuing
operations.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1995, was $66.3 million, which was $75.5
million lower than at June 30, 1995. The principal reasons for this decrease
included an increase in current debt of $59.2 million resulting from long
term bank debt, including revolver bank borrowings, becoming current, a $22.7
million net reduction in cash and short-term investments, primarily required
to service debt and meet operating cash requirements during the first six
months, and a decrease in prepaid expenses of $8.3 million, reflecting
current taxes being reclassed to noncurrent. Partially offsetting this
reduction was an increase of $6.3 million in accounts receivable and a net
reduction of $8.4 million in accounts payable and accrued liabilities. The
increase in accounts receivable is partially due to an increase in
Communications Services sales to local and state governments, which have
extended terms. The decrease in accounts payable was primarily at Fairchild
Convac and Communications Services, both of which typically have higher
balances at Fiscal year end.
The Company's principal sources of liquidity are cash generated from
operations and borrowings under its credit agreement. The Company also
expects to generate cash from the sale of discontinued operations, certain
assets and liquidation of investments. Net assets held for sale at December
31, 1995, had a book value of $50.4 million and included two parcels of real
estate in California, an 88 acre parcel of real estate located in
Farmingdale, New York, two landfills in Pennsylvania, a real estate joint
venture in California, and several other parcels elsewhere, which the Company
plans to sell, lease or develop, subject to market conditions or, with
respect to certain of the parcels, the resolution of environmental matters.
The Company's principal cash requirements include debt service, capital
expenditures, acquisitions, payment of other liabilities, and payment of
dividends on preferred stock.
The level of the Company's capital expenditures varies from year to
year, depending upon the timing of capital spending for new production
equipment, periodic plant and facility expansion, acquisition of high growth
companies, as well as cost reduction and labor efficiency programs. For the
three month period ended December 31, 1995, capital expenditures, including
the cost of acquisitions, were $6.9 million for continuing operations and
$1.0 million for discontinued operations. The Company anticipates that for
the fiscal year ending June 30, 1996, total capital expenditures, including
the cost of acquisitions, will be approximately $16.4 million.
Investments and advances in affiliated companies increased $28.5
million, primarily resulting from recording a $22.4 million increase in the
market value of the Company's investment in TFC stock, a purchase of $4.0
million of TFC bonds, and recording $1.7 million of equity earnings from
Nacanco, previously recorded at the TFC level in the Fiscal 1995 first six
months.
Other liabilities that require the use of cash include post-employment
benefits for retirees, environmental investigation and remediation
obligations, litigation settlements and related costs.
The Company expects that cash on hand, cash generated from operations,
borrowings, and asset sales will be adequate to satisfy cash requirements.
Management intends to take appropriate action to refinance portions of its
debt, if necessary to meet cash requirements.
The Company's Credit Agreement, as amended, requires the Company to
comply with certain financial covenants, including achieving cumulative
earnings before interest, taxes, depreciation and amortization ("EBITDA
Covenant"), and maintaining certain coverage ratios. As of December 31,
1995, the Company was in compliance with the Credit Agreement, as amended.
To comply with the minimum EBITDA Covenant requirements, the Company's
subsidiary, VSI, must earn for the cumulative total of the trailing four
quarters, EBITDA as follows: $58.5 million for the third quarter of Fiscal
1996, $62.6 million for the fourth quarter of Fiscal 1996, $84.6 million for
the first quarter of Fiscal 1997, and $86.4 million for the second quarter of
Fiscal 1997. VSI's ability to meet the minimum requirements under the EBITDA
Covenant in Fiscal 1996 is uncertain, and there can be no assurance that the
Company will be able in the future to comply with the minimum requirements
under the EBITDA Covenant and other financial covenants under the Credit
Agreement, as amended. Noncompliance with any of the financial covenants,
without cure or waiver, would constitute an event of default under the Credit
Agreement, as amended. An event of default resulting from a breach of a
financial covenant may result, at the option of lenders holding a majority of
the loans, in acceleration of the principal and interest outstanding, and
termination of the revolving credit line. However, if necessary, management
believes a waiver can be obtained. EBITDA is not a substitute for GAAP
income from operations or GAAP net cash flows from operating activities, and
is not prepared in accordance with generally accepted accounting principles,
even though it is used in a specific covenant of the Credit Agreement.
FII may transfer available cash as dividends to the Company if the
purpose of such dividends is to provide TFC with funds necessary to meet its
debt service requirements under specified notes and debentures. All other
dividends from FII to the Company are subject to certain limitations under
the Credit Agreement. As of December 31, 1995, FII was unable to provide
dividends to the Company. The Credit Agreement also restricts FII from
additional borrowings under the Credit Facilities for the payment of any
dividends.
IMPACT OF FUTURE ACCOUNTING CHANGES
Accounting For The Impairment Of Long-Lived Assets
- --------------------------------------------------
And For Long-Lived Assets To Be Disposed Of
- -------------------------------------------
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".
SFAS 121 establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS 121 is required to be
implemented by the Company on, or before, July 1, 1996. The Company's
present policy is identical to the policy prescribed by SFAS 121; therefore
there will be no effect from implementation.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Note 13 of Notes to Consolidated Financial
Statements.
Item 6. Exhibits and Reports on Form 8-K
On November 14, 1995, the Company filed a Form 8-K to report on Item 1
and Item 2. The Company reported that on November 9, 1995, it had entered
into an Agreement and Plan of Merger with Shared Technologies Inc. ("STI")
pursuant to which STI will acquire the telecommunications systems and
services business operated by Fairchild Communications Services Company.
Additionally, the Company reported that, on November 13, 1995, it had entered
into a letter setting forth the basic terms and conditions of a transaction
with Cincinnati Milacron Inc. ("CM"), pursuant to which CM will acquire the
Company's DME business for $260 million, subject to adjustment based on the
closing date value of DME's net tangible assets. The Company filed the
following exhibits in conjunction with the Form 8-K:
Exhibits
- --------
10 (b)(g) Agreement and Plan of Merger dated as of November 9, 1995 by
and among the Company and STI.
10 (b)(h) Letter Agreement dated November 13, 1995 between the Company
and CM.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
For RHI HOLDINGS, INC.
(Registrant) and as its Chief
Financial Officer:
By: Michael T. Alcox
Vice President and Chief Financial
Officer
Date: February 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 39,514
<SECURITIES> 5,981
<RECEIVABLES> 71,531
<ALLOWANCES> (3,259)
<INVENTORY> 77,630
<CURRENT-ASSETS> 241,296
<PP&E> 224,468
<DEPRECIATION> 95,888
<TOTAL-ASSETS> 867,457
<CURRENT-LIABILITIES> 175,006
<BONDS> 274,755
16,691
100
<COMMON> 100
<OTHER-SE> 265,272
<TOTAL-LIABILITY-AND-EQUITY> 867,457
<SALES> 210,523
<TOTAL-REVENUES> 210,857
<CGS> 161,771
<TOTAL-COSTS> 202,532
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,806
<INCOME-PRETAX> (8,731)
<INCOME-TAX> (2,162)
<INCOME-CONTINUING> (6,569)
<DISCONTINUED> 7,263
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 694
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
