<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO ____________
DOMINION BRIDGE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-10372 23-2577796
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
</TABLE>
500 NOTRE DAME STREET
3RD FLOOR
LACHINE, QUEBEC, CANADA H8S 2B2
(Address of principal executive office)
Registrant's telephone number, including area code: (514) 634-3550
NOT APPLICABLE
(Former name, if changed since last report)
Check whether the Registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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.
(1) Yes X No ______
(2) Yes X No ______
<PAGE> 2
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
Yes X No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the Registrant's sole class of common stock,
as of August 5, 1997, is 29,052,648
<PAGE> 3
DOMINION BRIDGE CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Consolidated Balance Sheets at June 30,
1997 (Unaudited) and September 30, 1996 3
Consolidated Statements of Operations for
the Three and Nine Months ended June 30,
1997 and 1996 (Unaudited) 4
Consolidated Statements of Cash Flows for the
Nine Months ended June 30, 1997 and 1996
(Unaudited) 5
Consolidated Statements of Stockholders' Equity
for the Nine Months ended June 30, 1997
and 1996 (Unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and
Analysis of Financial Condition and Results
of Operation 12
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 18
PART II OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote
of Security Holders 20
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
</TABLE>
2
<PAGE> 4
PART I - FINANCIAL INFORMATION
DOMINION BRIDGE CORPORATION
CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30, 1997 AND SEPTEMBER 30, 1996
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
UNAUDITED AUDITED
JUNE 30 SEPTEMBER 30
1997 1996
- ------------------------------------------------------------------------------------------------------
$ $
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash (Note 3) 10,302 26,231
Short term deposits 3,019
Accounts receivable 100,311 126,911
Inventories 47,478 43,762
Prepaid expenses and other current assets 6,955 5,417
- ------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 168,065 202,321
- ------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 44,245 38,289
Assets of business transferred under contractual
arrangements (preferred shares) 3,847 3,847
Goodwill 11,687 11,958
Pension assets 1,312 1,187
Advances to and investments in unincorporated joint ventures 1,033 2,398
Other assets 11,497 5,247
- ------------------------------------------------------------------------------------------------------
TOTAL ASSETS 241,686 265,247
- ------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank indebtedness(Note 4) 1,716 5,624
Term loan (Note 4) 15,000 30,000
Accounts payable and accrued expenses 104,202 119,839
Customer advances 16,689 16,166
Current portion of obligations under capital leases 2,564 2,979
- ------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 140,171 174,608
- ------------------------------------------------------------------------------------------------------
Deferred income taxes 6,359 5,147
Accrued post-retirement benefits other than pensions 1,603 514
Obligations under capital leases 4,345 2,274
Minority interest 18,235 18,783
Negative goodwill 9,115 12,945
Other long-term liabilities 6,707 2,976
- ------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 25,000,000 shares
authorized, none issued
Common stock, $0.001 par value; 50,000,000 shares authorized;
issued and outstanding: 29,003,648 shares in 1997 and
24,722,188 shares in 1996 29 25
Additional paid-in capital 69,795 60,624
Deficit (11,172) (10,191)
Cumulative translation adjustment (1,677) (634)
- ------------------------------------------------------------------------------------------------------
56,975 49,824
Subscription receivable (1,824) (1,824)
- ------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 55,151 48,000
- ------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 241,686 265,247
======================================================================================================
</TABLE>
Commitments and contingencies (Note 7)
See accompanying notes
3
<PAGE> 5
DOMINION BRIDGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)
UNAUDITED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30 JUNE 30, JUNE 30
1997 1996 1997 1996
$ $ $ $
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES 136,018 132,100 393,554 237,058
- ---------------------------------------------------------------------------------------------------------------------------------
Cost of sales 121,873 118,562 353,953 208,087
Selling, general and administrative
expenses 11,132 11,484 38,400 20,834
- ---------------------------------------------------------------------------------------------------------------------------------
133,005 130,046 392,353 228,921
Income from operations of joint
ventures 373 190 856 922
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations 3,386 2,244 2,057 9,059
Interest (expense) (705) (949) (3,624) (906)
Gain on disposal of subsidiary
shares (Note 6) -- -- 3,000 --
Other income 733 461 2,052 695
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes
and minority interest 3,414 1,756 3,485 8,848
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Income taxes (1,980) (446) (3,129) (3,163)
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before minority
interest 1,434 1,310 356 5,685
Minority interest - dividends on
preferred shares -- (364) -- (569)
Minority interest - common stock (964) (695) (1,337) (706)
- ---------------------------------------------------------------------------------------------------------------------------------
NET (LOSS) INCOME 470 251 (981) 4,410
=================================================================================================================================
Net income (loss) per common
share and common share
equivalents
Primary 0.02 0.02 (0.03) 0.27
Fully diluted 0.02 0.01 (0.03) 0.22
- ---------------------------------------------------------------------------------------------------------------------------------
Weighted average number of
common shares and common
share equivalents outstanding
Primary 29,003,648 16,331,161 28,450,36l 16,374,585
Fully diluted 29,003,648 24,632,450 28,893,818 19,772,748
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
4
<PAGE> 6
DOMINION BRIDGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30
(IN THOUSANDS OF U.S. DOLLARS)
UNAUDITED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1997 1996
- -----------------------------------------------------------------------------------------------
$ $
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net (loss) income (981) 4,410
Adjustments to reconcile net income to the
cash provided by (used for) operating activities/
Minority interest in net income 1,337 770
Gain on disposal of subsidiary common shares (3,000) 0
Depreciation and amortization 7,384 3,439
Common stock issued for services 553 603
Amortization of negative goodwill (3,830) --
Deferred income taxes 1,212 1,668
Deferred pension cost (125) --
Income from operations of joint ventures (856) (922)
Cash distributions from joint ventures 2,221 522
Decrease (Increase) in accounts receivable 26,600 (8,256)
(Increase) Decrease in prepaid expenses
and other assets (1,538) 7007
Decrease (increase) in inventories (3,716) (11,468)
(Decrease) increase in accounts payable (15,637) (3,195)
Increase in customer advances 523 3,729
Other - net (428) --
- -----------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 9,719 (1,693)
- -----------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds on disposal of subsidiary common shares 10,436 --
Decrease (Increase) in short term deposits (3,019) 3,047
Cash consideration paid for acquired businesses -- (37,565)
Cash of acquired businesses -- 35,301
Cash redemption of minority interest -- (8,259)
Repayment by (advance to) a shareholder -- 460
Decrease (increase) of pension asset -- (89)
Proceeds from sale of equipment -- 301
Cash payment for purchase of equipment (13,340) (8,155)
(Increase) in other assets (6,250) (2,049)
- -----------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities (12,173) (17,008)
- -----------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Issuance (Repayment) of term loan (15,000) (1,083)
Proceeds from issuance of common stock -- 4,119
Issue of preferred shares of subsidiary to minority interest -- 22,869
Bank indebtedness (3,908) 13,964
Other long-term liabilities 4,820 (9)
(Payment) Issue of capital lease obligations 1,656 --
- -----------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (12,432) 39,860
- -----------------------------------------------------------------------------------------------
Effect of foreign exchange rate fluctuations on cash (1,043) (608)
- -----------------------------------------------------------------------------------------------
Net change in cash (15,929) 20,551
Cash, at beginning of period 26,231 4,765
- -----------------------------------------------------------------------------------------------
CASH, AT END OF PERIOD (NOTE 3) 10,302 25,316
================================================================================================
</TABLE>
<PAGE> 7
DOMINION BRIDGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
NINE MONTHS ENDED JUNE 30
(IN THOUSANDS OF U.S. DOLLARS)
UNAUDITED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------------------------------
$ $
<S> <C> <C>
NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock on conversion of
minority interest preferred shares 8,533 -
Purchase of minority interest preferred stock
of subsidiaries (8,533) -
- ---------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
5
<PAGE> 8
DOMINION BRIDGE CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
[DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS]
NINE MONTH PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL CUMULATIVE
COMMON PAID-IN TRANSLATION SUBSCRIPTION
SHARES STOCK AMOUNT CAPITAL DEFICIT ADJUSTMENT RECEIVABLE
$ $ $ $ $
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1996 24,722,188 25 60,624 (10,191) (634) (1,824)
Issuance of common stock upon
conversion of Dominion Bridge, Inc.
Class A preferred shares 50,334 -- 104 -- -- --
Issuance of common stock upon
conversion of Cedar Group (TCI)
LLC preferred shares 3,971,126 4 8,533 -- -- --
Share issue costs -- -- (18) -- -- --
Translation adjustments, net of income
taxes of nil -- -- -- -- (1,043) --
Issuance of common stock for services 260,000 -- 552 -- -- --
Net loss for the period -- -- -- (981) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1997 29,003,648 29 69,795 (11,172) (1,677) (1,824)
==============================================================================================================================
</TABLE>
6
<PAGE> 9
DOMINION BRIDGE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. NATURE OF OPERATIONS
Dominion Bridge Corporation, a Delaware corporation with executive offices
in Montreal, Canada, specializes in international engineering,
infrastructure development and project management and ship building and
repair.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). This Report on Form 10-Q should be read in
conjunction with the Company's Annual Report on Form 10-K for the year
ended September 30, 1996. Certain information and footnote disclosures
which are normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to SEC rules and regulations. The
information reflects all normal and recurring adjustments which, in the
opinion of management, are necessary for a fair presentation of the
financial position of the Company and its results of operations for the
interim periods set forth herein. The results for the nine months ended
June 30, 1997 are not necessarily indicative of the results to be
expected for the full year.
These consolidated financial statements have been prepared by management
in accordance with accounting principles generally accepted in the United
States, the most significant of which are outlined below. These principles
require the use of estimates to measure the financial effects of past
transactions or events and the present status of assets and liabilities.
Principles of consolidation
The financial statements include the accounts of the Company and its
subsidiaries. All significant inter-company accounts and transactions have
been eliminated upon consolidation.
During the previous fiscal year, the Company (1) acquired the remaining
minority interests in Dominion Bridge Inc. and Steen Contractors Limited,
(2) acquired approximately 77.4% of the outstanding shares of McConnell
Dowell Corporation Limited and (3) acquired 100% of the outstanding share
capital of Davie Industries Inc. (formerly Groupe MIL Inc.- "Davie" ).
Effective March 21, 1997 the Company sold 6,000,000 ordinary shares of
MDC, reducing its ownership to approximately 65% of MDC's outstanding
shares.
Each of the above acquisitions were accounted for under the purchase
method of accounting. Under the purchase method of accounting, the assets
of the acquired entity are reflected on the balance sheet at their fair
market value on the date of purchase, with the balance of the purchase
price attributed to goodwill. In the case of Davie, since the purchase
price was nominal, the difference between the fair market value of the
assets and the purchase price is treated as negative goodwill. Goodwill is
amortized on a straight-line basis over periods not exceeding forty years.
Negative goodwill is amortized on a straight-line basis over a period of
three years.
Cash
Cash includes short-term deposits with terms less than 90 days. Short-term
deposits with terms longer than 90 days are stated at cost which
approximates fair market value.
7
<PAGE> 10
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Construction contracts
Income on construction contracts is recognized on the
percentage-of-completion basis. Provisions for anticipated losses on
uncompleted contracts are made in the period in which losses are first
determinable.
Inventories
Work in process related to construction contracts is stated at accumulated
costs less amounts charged to income based on the percentage of completion
of individual contracts. Raw materials are stated at the lower of cost
(first in, first out) or replacement cost. Finished goods comprise steel
and steel hardware products held for sale and are stated at the lower of
cost (first in, first out) or net realizable value.
Investment in and advances to unincorporated joint ventures
The Company's investment in and advances to unincorporated joint ventures
is accounted for by the equity method whereby the investment is initially
recorded at cost and the carrying value is adjusted thereafter to include
the Company's pro rata share of earnings less drawings received.
Property, plant and equipment
Property, plant and equipment, including assets that were acquired under
capital leases, are stated at cost. Maintenance and repairs are charged to
expenses as incurred. When assets are sold or otherwise disposed of, the
cost and related accumulated depreciation are removed from their
respective accounts and the resulting gain or loss is reflected in current
operations. Depreciation is computed on the straight-line method over the
estimated useful lives of the assets, generally five to seven years for
machinery and equipment and forty years for buildings.
Pension costs
The Company maintains defined benefit pension plans which cover certain of
its Canadian employees. Pension plan obligations are valued using the
projected benefit actuarial method and best estimate assumptions. Pension
plan assets are valued at market-related values. The Company also
participates in defined contribution plans for its Australian and certain
of its Canadian employees.
Post-retirement benefits other than pensions
The Company accrues for benefits such as health care, life insurance
coverage and long service leave to which retired employees are entitled.
The obligation is adjusted on an annual basis to reflect the expected cost
of providing post-retirement benefits during the years an employee renders
service.
8
<PAGE> 11
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Translation of foreign currencies and foreign exchange contracts
All assets and liabilities of the Company's subsidiaries operating outside
the United States are translated into U.S. dollars using current exchange
rates and income statement items are translated using weighted average
exchange rates for the year. The resulting translation adjustment is
included as a component of stockholders' equity. Other foreign currency
transaction gains and losses are included in determining net income.
Income taxes
The Company accounts for income taxes under the liability method. Deferred
taxes reflect the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting
amounts.
Net income per share
Primary net income per common share is computed by dividing the income
applicable to common shares by the weighted average number of shares of
common stock outstanding and common stock equivalents including the
dilutive effect of options and warrants from the date of grant.
Net income per common share on a fully diluted basis assumes that all
convertible instruments were converted to common stock at the earlier of
the beginning of each year or the date of issuance.
3. CASH
The consolidated cash and short term deposits at June 30, 1997 amounted to
$13,321.
4. FINANCING ARRANGEMENTS
On April 29, 1996, the Company entered into an agreement with BT
Commercial Corporation, an affiliate of Bankers Trust ("BTCC") for a
term loan in the amount of $30,000. The term loan was reduced
to $15,000 during the second and third quarter following
the sale by the Company of shares of MDC. This loan bears interest at
LIBOR and is collateralized by all the assets of the consolidated group.
The weighted average interest rate on the term loan was 9.92% for the nine
month period ended June 30, 1997. The original maturity date for the loan
was April 30, 1997; however, on April 30, 1997 the Company and BTCC
entered into an agreement to extend the maturity date to January 31, 1998.
A subsidiary of the Company has a revolving credit facility of $28,000
which, as of June 30, 1997, had no amount outstanding, and operating
credit facilities totaling $6,200 bearing interest at variable rates.
At June 30, 1997, $938 was outstanding under these latter facilities.
Certain facilities have restrictions on their usage and are limited for
use on specific projects.
5. STOCKHOLDERS' EQUITY
During the three months ended December 31, 1996, the Company issued
3,971,126 shares of its common stock at its fair vallue of $8,533 upon
the conversion of the final 858,826 of Cedar Group (TCI) Inc. LLC.
preferred shares in accordance with the terms of the preferred share
agreement. The fair value of shares issued was determined as the actual
trading price of the shares during the five days prior to the date
of each conversion. The deemed dividend embedded in the Cedar Group
(TCI) Inc. LLC. preferred shares was accrued for as a restatement
of September 30, 1996 deficit. (See Note 9.)
The Company also issued 50,334 shares of its common stock for cash
proceeds of $104.
9
<PAGE> 12
During the three months ended March 31, 1997, the Company issued 260,000
shares for services valued at $552.
6. GAIN ON SALE OF SUBSIDIARY SHARES
Effective March 21, 1997 the Company received net proceeds of $10.6
million from the sale of 6,000,000 ordinary shares of MDC, which
amount represents 13% of the equity of MDC.
7. COMMITMENTS AND CONTINGENCIES
In December 1996, the Company was notified that a purported class action
shareholder complaint had been filed against it and certain executive
officers of the Company. The complaint alleges that the defendants
mislead the investing public as to the quality and status of a number
of contracts obtained by the Company as well as failed to disclose
various inaccurate and misleading accounting practices. Management
intends to vigorously defend this claim and believes the claim is
without merit. As the outcome of this claim is indeterminable, no
provision has been recorded in the consolidated financial statements.
A number of claims and lawsuits seeking unspecified damages and other
relief are pending against the Company. It is impossible at this time for
the Company to predict with any certainty the outcome of such litigation.
However, management is of the opinion, based upon information presently
available, that it is unlikely that any liability, to the extent not
provided for through insurance or otherwise, would be material in relation
to the Company's consolidated financial position.
Certain subsidiaries have given various warranties on asset sales and in
respect of taxation to purchasers of certain of the Company's former
subsidiaries and equity investments. A warranty claim from one purchaser
of a former equity investment is being defended and remains unresolved.
Management is of the opinion that it is unlikely that any liability would
be material to the Company's consolidated financial position.
Certain subsidiaries of the Company are contingently liable for letters of
credit, commitments and performance guarantees arising in the ordinary
course of business.
The purchase offer agreement entered into by the Company and Societe
Generale de Financement du Quebec (SGF) dated April 24, 1996 to acquire
the shares of Davie requires, amongst other things, that the Company,
together with strategic investors and SGF, will invest up to
CDN$60,000 over the five years following the acquisition of Davie.
This investment can be raised by Davie through public offerings,
private placement or debt financings. Furthermore this investment is
subject to market conditions and capital improvement requirements
included in the business plan to restructure the business of Davie.
During the period ended December 31, 1996, the Company entered
an aggregate into a joint venture agreement which was initially
committed to fund an aggregate of US $2.5 million into up to 17 projects
related to energy and power. The Company had the discretion to select the
projects with the highest rate of return and the highest probability of
success. After the joint venture completed its preliminary due diligence,
it was decided to pursue only four of the original projects and,
therefore, the required investment would be substantially reduced.
10
<PAGE> 13
The Company and its subsidiaries are engaged in manufacturing activities
subject to numerous environmental laws, regulations and guidelines adopted
by various governmental authorities in the jurisdictions in which the
Company operates. The Company's policy is to accrue for environmental
costs in the accounting period in which a loss is known or considered
probable and the amount can be estimated.
8. COMPARATIVE FIGURES
Certain comparatives figures have been reclassified to conform with the
presentation adopted in 1996.
9. RESTATEMENT OF SEPTEMBER 30, 1996
Net loss to common shareholders and deficit for the year ended September
30, 1996 has been increased by $4,260 ($0.23 per share) from amounts
previously reported to reflect a deemed dividend on the Company's TCI
subsidiary convertible preferred shares in accordance with recently
published views of the staff of the Securities and Exchange Commission.
Regarding Accounting for preferred stock which is convertible at a
discount to the market. The Company has charged net income and deficit
as at September 30, 1996 for the full $4,260 of the deemed dividend
embedded in the convertible instruments and recorded offsetting increases
of $3,023 in the Company's paid in capital and $1,233 to its minority
interest obligations at that date. The deemed dividend is determined as
the discount to which the Company's TCI subsidiary preferred shares were
convertible into the Company's common stock. As at September 30,
1996, 1,981,383 of the 2,840,209 originally issued TCI preferred shares
had been converted into 7,994,605 common shares of the Company leaving
858,826 still unconverted. The Company has reflected the realized
increase to paid in capital for those shares converted by year end and
the unrealized portion remains in minority interest representing the
discount to be borne on the remaining conversion. The balance of the
TCI preferred shares are converted in the first quarter of fiscal 1997
into common stock, retiring the fully accrued fair value of the minority
interest with no further charges to net income for 1997.
11
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for historical information, the material contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations is forward-looking. For the purposes of the safe harbor provisions
for forward-looking statements of the Private Securities Litigation Reform Act
of 1995, readers are urged to review the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1996 for a list of certain important
factors that may cause actual results to differ materially from those described
below.
RESULTS OF OPERATIONS
GENERAL
The following table provides selected financial information from the
Company's Consolidated Statements of Operations stated as a percentage of
revenues for the three months and nine months ended June 30, 1997 (the "Current
Quarter" and "Current Nine Months," respectively) and the three and nine months
ended June 30, 1996 (the "Comparable Quarter" and "Comparable Nine Months,"
respectively). It will be referred to in the discussions that follow the table.
All companies do not calculate EBITDA in the same fashion and the measure as
presented in this table may not be comparable to similarly titled measures
reported by other companies. Within Dominion Bridge Corporation however, all
subsidiaries calculate EBITDA on a consistent basis.
<TABLE>
<CAPTION>
FISCAL 1997 FISCAL 1996
Q3 9 MOS. Q3 9 MOS.
------ -------- ----- ------
<S> <C> <C> <C> <C>
Sales......................................... 100.0% 100.0% 100.0% 100.0%
Cost of Sales................................. 89.1% 89.0% 88.3% 86.3%
Gross Profit.................................. 10.9% 10.9% 11.7% 13.6%
Selling, General and Administrative Expenses.. 8.1% 9.7% 8.7% 8.9%
Other Income.................................. 0.5% 1.2% 0.3% 0.3%
EBIT.......................................... 2.3% 1.5% 1.2% 3.6%
EBT & Minority Interest....................... 1.8% 0.9% 1.3% 3.7%
Net Income for Common Stock................... 0.3% -0.2% 0.2% 1.8%
EBITDA........................................ 3.5% 2.7% 3.5% 5.5%
</TABLE>
12
<PAGE> 15
The Company may be limited in competing for new business by its limited
working capital and by its bonding capacity.
MDC has a $28 million revolving credit facility which management
believes is adequate for its current level of business. The principal source of
working capital for the Company's North American operations is its cash. A high
priority of management, is to secure adequate working capital facilities for
each of the Company's operating units to facilitate growth. Although there is no
assurance that such a facility will be extended, the Company is currently well
advanced in its application with a major U.S. Bank for an operating
line of credit. See "Liquidity and Capital Resources, below."
The Company's sureties limit the annual amount of new bid and
performance bonds available to the Company. Each year this limit has increased
commensurate with the increase in the growth of the Company's revenues. While
the limitation did not restrict the Company's ability to secure new work in the
Current Quarter, and the Company had substantial unused capacity at the end of
the Current Quarter, there could be circumstances where the limitation might
influence the selection of prospective projects.
THREE MONTHS ENDED JUNE 30, 1997
Sales for the Current Quarter increased 3% to $136 million as compared
to $132 million in the Comparable Quarter. The $4 million total increase in
sales growth in the Current Quarter over the Comparable Quarter is attributable
to the increased sales level of McConnell Dowell Corporation and, among others,
from the initiation of its major pipeline contract in Queensland.
The new business booked in the Current Quarter includes, among
other, a $50 million pipeline contract in Western Canada and over $25 million of
related civil works. As of June 30, 1997, the Company's backlog, representing
the uncompleted portions of construction and engineering contracts, was
approximately $500 million. The dollar amount of backlog is not necessarily
indicative of the future earnings of the Company related to the performance of
such work.
In addition to backlog, the Company has been successful in generating
recurring revenues from existing clients. The estimated current level of
recurring revenue contracts in its North American operations is in excess of $50
million.
The Company's Current Quarter gross profit margin rose to 10.9% from
10.0% in the preceding quarter, in part reflecting the steps that management has
taken to eliminate redundant operations at DBI and Steen. In the Current
Quarter, Steen improved its gross profit margins over the prior year which is
largely attributed to its renewed pipeline activity.
Selling, general and administrative costs dropped from $11.5 million in
the Comparable Quarter to $11.1 million in the Current Quarter, which
represents 8.1% of sales. More importantly, there was a significant reduction
in SG&A from the second quarter to the Current Quarter of 1997 where SG&A costs
dropped by more than $3.8 million while sales went up. Significantly, included
in the SG&A were substantial costs expended in the Current Quarter to pay for
the expenses of the consent solicitation initiated by the Kuhns Committee.
See Part II, Item 4. It is estimated that legal
13
<PAGE> 16
and other expenses related to the consent solicitation during the
Current Quarter amounted to approximately $500,000, or $.02 per share for
the Current Quarter.
Income from the operations of joint ventures represents the Company's
interest, through Steen, in the joint venture that is providing project
construction management service and procurement services to the offshore
drilling platform in the Hibernia oil field off the coast of Newfoundland. The
decrease in the Company's earnings from the joint venture for the Current
Quarter as compared to the Comparable Quarter reflects that the project should
be completed by the end of the Company's second quarter of fiscal 1998. The
termination of the joint venture at the conclusion of the contract is not
expected to result in any expenses to the Company. Although there can be no
assurance of success, management continues to address additional offshore
drilling projects being planned to replace this stream of income.
Each of the Company's operating subsidiaries and divisions are
operating profitably except for the Western Fabrication Division of DBI. While
the economy in Quebec remains weak, the Company has reduced fixed expenses and
overhead in Quebec to achieve a lower breakeven. The Quebec Division of DBI
achieved a modest operating profit in the last two months of the Current
Quarter.
The Company's net interest expense of $705 million in the Current
Quarter is due to the interest cost and amortization of financing fees incurred
in connection with the $15 million credit facility from BTCC, which had been
used to partially finance the acquisition of 77.4% of MDC. This facility is down
from its previous credit level of $30 million.
The Company did not recognize all of the income tax benefits from the
losses incurred in the Current Quarter. This was due to the incurrence of
taxable income and losses in different international tax jurisdictions. This
precluded obtaining the tax benefits of the Company's losses to offset the tax
burden of its profitable subsidiaries.
During the first quarter of 1997, all the remaining preferred shares
were converted by the holders into Company common stock according to a specified
formula. As a result no preferred dividends were payable in the Current Quarter.
The minority interests attributable to common stock of $964, and the increase of
$269 in the Current Quarter is attributable to the 35% of MDC not owned by the
Company. The minority interest attributable to common stock in the Comparable
Quarter was attributable to the 25% of Steen owned by minority shareholders
before their interest was purchased effective March 31, 1996.
NINE MONTHS ENDED JUNE 30, 1997
Sales for the Current Nine Months increased 65% to $393 million as
compared to $237 million in the Comparable Nine Months. The $156 million total
increase in sales growth in the Current Nine Months over the Comparable Nine
Months is principally attributable to the acquisitions of MDC and Davie.
During the Current Nine Months, the Company's sales from continuing
operations remained relatively constant with the exception of the growth in
Steen due to the addition in January 1997 of the Pipeline Division.
14
<PAGE> 17
The Company's Current Nine Months gross profit margin decline from
12.2% to 10.3% reflects a change in its mix of business particularly due to a
significant expansion in lower margin construction and engineering. Management
has taken steps, including a reduction in redundant operations at DBI and
Steen, that have lead to improvement in its gross profit margins beginning in
the second quarter of fiscal 1997. In the Current Nine Months, Steen improved
its gross profit margins over the prior year but due to the nature of its
engineering business, Steen's gross profit margin is typically lower than the
corporate average. The inclusion of MDC and Davie for the Current Nine Months
was positive as both had gross profit margins higher than the corporate average
in the Current Nine Months.
Selling, General & Administrative costs increased from $20 million in
the Comparable Nine Months to $38.4 million in the Current Nine Months, which
represents 9.7% of sales for the current nine months as compared with 9.0% in
the Comparable Nine Months. Significantly included in Selling, General &
Administrative costs were substantial expenses incurred in the Current Nine
Months by DBI in relation to the consent solicitation.
Income from the operations of joint ventures primarily represents the
Company's interest, through Steen, in the joint venture that is providing
project construction management service and procurement services to the offshore
drilling platform in the Hibernia oil field off the coast of Newfoundland. The
decrease in the Company's earnings from the joint venture for the Current Nine
Months as compared to the Comparable Nine Months reflects that the project
should be completed by the end of calendar 1997, the Company's first quarter of
fiscal 1998. The termination of the joint venture at the conclusion of the
contract is not expected to result in any expenses to the Company. Although
there can be no assurance of success, management continues to address additional
offshore drilling projects being planned to replace this stream of income.
The Company's net interest expense of $3,624 million in the Current
Nine Months is due to the interest cost and amortization of financing fees
incurred in connection with the $30 million credit facility from BTCC, which
was used to partially finance the acquisition of MDC. This facility existed for
only three months during the Comparable Nine Months.
The Company did not recognize all of the income tax benefits from the
losses incurred in the Current Nine Months. This was due to the incurrence of
taxable income and losses in different international tax jurisdictions. This
precluded obtaining the tax benefits of the Company's losses to offset the tax
burden of its profitable subsidiaries.
The minority interests attributable to common stock of $1,337 million,
and the increase of $631 in the Current Nine Months is attributable to the 35%
of MDC not owned by the Company, as opposed to the 77.8% owned in the Comparable
Nine Months.
RECENT DEVELOPMENTS
On May 23, 1997 the so-called "Committee to Revitalize Dominion Bridge
Corporation" commenced a consent solicitation to amend the Company's by-laws
and to replace senior management. See Part II, Item 4. Since the commencement
of the consent solicitation the Company has suffered substantial disruptions in
its business, including strained relations with customers, suppliers, employees
and creditors who have been contacted by members of the Committee or may be
affected by uncertainty caused by the consent solicitation. Management believes
that such disruptions adversely affected the results of operation during the
Current Quarter and will affect the fourth quarter of Fiscal 1997 since the
consent solicitation has continued and will continue to August 19, 1997.
to August 19, 1997.
On July 22, 1997, the Board of Directors of the Company accepted the
recommendation of its investment bankers and will pursue a sale of the
Company, or, in the alternative, a strategic investment in the Company. The
investment bankers are in discussions with a number of parties with respect to
a possible transaction with the Company. Although no letters of intent have
been entered into, there is a substantial liklehood that a transaction will
occur which could have a significant impact on the Company's future results of
operations and liquidity and capital resources.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity since the Company's
reorganization have been proceeds from seller financing provided in connection
with the Company's acquisitions and the private placement of equity securities,
bank financing and cash from operations. In addition, in connection with the
Company's acquisition of Davie, the Company received $18.5 million in cash from
Societe Generale de Financement ("SGF"), the industrial finance arm of the
Government
15
<PAGE> 18
of Quebec.
During the fiscal year ended September 30, 1996 ("Fiscal 1996"), the
Company issued $24.2 million of preferred shares of its subsidiary, TCI, by way
of an offshore private placement, and obtained a $30 million credit facility
from BTCC. The proceeds, net of issuance costs of approximately $4.0 million,
were used to fund the $40.2 million acquisition of MDC, approximately $4.7
million to partially retire the outstanding minority interest preferred shares
in DBI, and $5.0 million to repay the BTCC Steen acquisition bridge loan. The
balance of approximately $0.3 million was added to working capital. The TCI
preferred shares paid cash dividends at the rate of 6% per annum. The TCI
Preferred Shares became convertible into the Company's common stock, beginning
May 31, 1996, at a conversion price equal to 12% less than the market price of
the common stock during the five trading days prior to conversion if converted
prior to June 30, 1996, or 15% less than the market price of the common stock
during the five trading days prior to conversion, if converted thereafter. There
was no minimum conversion price. All TCI preferred shares outstanding on the
maturity date of October 31, 1998 were to automatically convert into shares of
common stock of the Company at a price equal to the weighted average price of
the Company's shares traded on NASDAQ during the 20 previous trading days. As of
the end of Fiscal 1996, $7.3 million of the preferred shares remained
outstanding and $16.9 million had converted into 7,994,606 shares of the
Company's common stock. During the first three months of Fiscal 1997, the
remaining outstanding balance of the TCI preferred shares were converted into
3,971,126 shares of the Company's common stock.
The Company has a $30 million Credit Facility (the "Facility"), later
reduced to $15 million, from BTCC, of which $15 million was outstanding as of
June 30, 1997. The Facility provided funding for the Company's acquisition of
MDC. Amounts outstanding under the Facility bear interest at (i) the greater of
1.5% per annum above the prime rate announced from time to time by Banker's
Trust Company or 0.5% above the federal funds rate established from time to
time by the Federal Reserve Bank of New York; or (ii) at a rate equal to 2.5%
above the London Interbank Offered Rate for a period of up to six months, at
the election of the Borrower. The original maturity date for the loan was April
30, 1997; however, on April 29, 1997 the Company and BTCC entered into an
agreement to extend the maturity date to January 31, 1998. The Facility is
secured by the pledge of the shares in the operating subsidiary companies and a
lien on certain of the North American capital and operating assets. The
Facility agreements provide for an acceleration of the maturity date in the
event of an "Event of Default" (as such term is defined in the Facility
agreements). An Event of Default includes failure to pay when due any
installment of interest on or principal of the Facility and any failure to
observe the covenants provided in the Facility agreements, including certain
financial covenants.
During the second quarter of fiscal 1997, the Company sold 6 million
ordinary shares of MDC for net proceeds of $10.6 million, of which $10 million
was paid to BTCC to reduce the principal balance of the Facility.
MDC has a revolving credit facility of $28 million which management
believes is adequate for its current level of operations. The Company's other
subsidiaries in North America rely upon cash on hand, trade payables and
customer advances for working capital. Due to restrictions under the BTCC
Facility, these subsidiaries are precluded from drawing on their
16
<PAGE> 19
normal operating lines of credit. A key priority for the Company in
refinancing the BTCC Facility is obtaining an adequate working capital facility
for the Company's operating facilities. As of the date of this Report, the
Company has not secured a working capital credit facility for its North
American operations. As a result of such inability, the Company has
insufficient working capital for its ordinary business operations. However, the
Company is currently in discussions with a major institutional lender prepared
to provide a working capital facility of $25 million, of which $15 million will
be used to retire the BTCC Facility. Subsequent to securing this facility, the
Company will apply for an additional $15 to $20 million facility for working
capital purposes. Although the Company and the proposed lender have had lengthy
and numerous discussions regarding the facility, a number of condiditons must
be satisfied prior to the execution of any documentation, including the
Committee must not have received enough votes in its solicitation efforts to
control the Company and satisfactory completion of due diligence of the
Company. Although there can be no assurances that the credit facility with the
proposed lender will be secured, the Company's investment bankers have stated
that they believe working capital financing can be secured from other third
party institutional lenders.
During the Current Nine Months, the Company's operations generated cash
in the amount of $9.7 million, while operations used cash of $15.9 million in
the Comparable Nine Months. The net generation of cash from operations was
attributable to the net operating loss but was offset by the net turning of
working capital accounts into cash. In its normal course of business, the
Company may be investing in inventories and have amounts due from its customers
that it cannot finance through customer advances and accounts payable. DBI,
Steen and MDC were each committed to various infrastructure and pipeline
projects which were net users of cash but are scheduled to produce net positive
cash flows from changes in working capital accounts over the remainder of fiscal
1997.
In addition to the reversal of the working capital accounts, the
Company has instituted several significant business initiatives to improve the
operating cash flow. The Company had initiated plant and administrative staff
reductions in its DBI operations to achieve operating cost savings and benefit
from rationalization of operations with those of Steen and these savings are
currently being felt principally through increased margins and significant
reductions in SGA. The Company has initiated its business plan at Davie to focus
on running the operation profitability and excluding negative goodwill. Davie
earned a modest profit for the last two months of the Current Quarter.
The Company is subject to a risk of claims for construction and product
liability. If a liability claim exceeding the Company's insurance coverage or
its own available resources was to be successfully asserted against the Company,
it could have a material adverse effect on the Company's financial condition.
The Company has general liability insurance of approximately $5 million per
occurrence, with a maximum of $5 million of claims payable during any policy
year. There is no assurance that such coverage will be sufficient to fully
insure against claims brought against the Company and its subsidiaries, or that
the Company will be able to maintain such insurance at affordable rates or
obtain additional insurance covering the products.
17
<PAGE> 20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not applicable.
18
<PAGE> 21
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, disagreements with individual employees and
disagreements as to the interpretation, effect or nature of individual
agreements arise in the ordinary course of business and may result in legal
proceedings being commenced against the Company.
Other than as set forth below, the Company is not currently involved in
any litigation or proceeding which is material, either individually or in the
aggregate, and, to the Company's knowledge, no other legal proceeding of a
material nature involving the Company is currently contemplated by any
individuals, entities or governmental authorities. Additionally, other then as
reported in Part I, Item 3 - "Legal Proceedings" of the Company's Annual report
on Form 10-K for the year ended September 30, 1996 and in Part II, Item 1 of the
Company's Quarterly Reports on Form 10-Q for the periods ended December 31, 1996
and March 31, 1997, there have been no material developments to any of the
matters that require reporting under this Item.
On May 23, 1997, the so called "Committee to Revitalize Dominion Bridge
Corporation" (the "Kuhns Group" or the "Committee") commenced a lawsuit against
the Company in Federal District Court in Wilmington, Delaware seeking a
declaration that it should be permitted to solicit written consents from the
Company's stockholders without violating federal securities laws and that the
Company's Second Amended and Restated By-laws, particularly those provisions
relating to the stockholder's right to take action by written consent and
requiring advance notice of stockholders in order to submit a nominee to serve
on the Company's Board of Directors, are invalid. The Committee alleges that the
description of these provisions appearing in certain public filings, including
the Company's 1997 Proxy Statement, render the election of directors at the
Company's 1997 Annual Meeting void. With the exception of its claim that
stockholders have the right to act by written consent, the Company believes that
all claims asserted by the Kuhns Group are entirely without merit and is
vigorously defending this matter. In that regard, on June 4, 1997 the Company
filed its answer affirmatively denying the factual allegations and legal
theories of the Committee along with a nine (9) count counterclaim. The
counterclaim seeks declaratory and injunctive relief against the Committee for
its illegal and improper consent solicitation in contravention of Delaware law
and its violation of federal securities laws by disseminating materially false
and misleading information to stockholders. The Company is also seeking damages
for the Committee's unjustified and tortuous interference with the Company's
contractual and prospective relations and its conspiracy to harm the Company's
business and prospects. At this time, discovery is proceeding on both the
Committee's claim and the Company's counterclaim.
On June 2, 1997, the Company filed a complaint against Kuhns Group
member John M. Dutton in the United States District Court for the District of
Delaware seeking a preliminary and permanent injunction against Mr. Dutton, and
all other persons acting in concert with him, to prevent Mr. Dutton from
continuing to disseminate material non-public information about the Company in
furtherance of his conspiracy to illegally obtain control of the Company. During
his eight month tenure with the Company, Mr. Dutton maintained a position of
trust and was privy to proprietary and confidential non-public information about
the Company, its financial prospects, prospective projects and strategic
business plans. Upon his resignation from the Company on May 12, 1997, Mr.
Dutton took his laptop computer, which contained numerous
19
<PAGE> 22
confidential files, and illegally retained other confidential documents
including financial statements and stockholder lists. The Company believes that
he has been disseminating this confidential non-public information in his
efforts to illegally gain control of the Company and jeopardize the Company's
current and potential contractual relationships. The Company is seeking
injunctive and monetary relief based on Mr. Dutton's breaches of his fiduciary
and common law duties to the Company and his misappropriation and misuse of
confidential information. Although discovery has not been completed, Mr. Dutton
has filed a motion for summary judgment with respect to all of the Company's
claims. This motion has been opposed by the Company and is currently pending
before the Court.
On June 3, 1997, John D. Kuhns ("Kuhns") filed a suit in equity against
the Company in the Court of Chancery of the State of Delaware to compel the
Company to provide Kuhns with a list of the Company's stockholders as of May 23,
1997. Since Kuhns was not a stockholder of record on May 23, under Delaware law,
he had no right to the Company's stockholder list. The Company further objected
to Kuhns' request on equitable grounds inasmuch as Kuhns or those persons acting
in concert with him have illegally obtained and retained various corporate
records of the Company, including portions of its stockholder list, and that he
is seeking the list for the improper purpose of furthering his illegal
solicitation of stockholder consents. Kuhns subsequently filed a request for the
stockholder list as of June 10, 1997, a date on which he was a record holder. On
the basis of is subsequent demand, on June 18, 1997, the Company entered into a
stipulation of settlement with Kuhns pursuant to which the Company agreed to
produce the stockholder list and related materials.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 23, 1997, the Committee commenced a consent solicitation of the
Company's stockholders to amend the Company's By-laws to provide for the direct
election of the Company's officers by the stockholders and seeking to remove
Messrs. Marengere, Matossian and Despres as executive officers of the Company
and replacing them with Messrs. Kuhns, Mariash and Dutton. An initial consent
was filed with the Company on June 23, 1997, thereby establishing the record
date for the solicitation. Under applicable Delaware law, the Committee has
until on or about August 19, 1997 to submit to the Company consents sufficient
to effectuate its proposals. To date, sufficient consents have not been
delivered to the Company and the Company has no definitive knowledge regarding
the exact number of valid consents which have been obtained. The Company has
aggressively solicited revocations of consent in opposition to the Committee's
solicitation and believes that the Committee's solicitation is illegal under
applicable Delaware law. See, "Item 1 - Legal Proceeding." The Company's
solicitation has consisted of, among other things, the following documents all
of which have been filed with the Securities and Exchange Commission and
distributed to the Company's stockholders:
20
<PAGE> 23
1. Letter to stockholders dated June 4, 1997;
2. Definitive Proxy Statement dated June 19, 1997;
3. Letter to stockholders dated June 25, 1997;
4. Letter to stockholders dated July 8, 1997; and
5. Letter to stockholders dated July 14, 1997.
The Record Date of the consent solicitation materials has been
established as June 23, 1997 with an expiration date of August 19, 1997.
Accordingly, the results of such consent solicitation materials are currently
unavailable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K
A report on Form 8-K dated June 2, 1997 was filed
with the Securities and Exchange Commission on June
2, 1997 relating to a Certificate of Correction to
the Company's Certificate of Incorporation.
Amendment No. 1 to the report on Form 8-K dated June
2, 1997 was filed with the Securities and Exchange
Commission on June 13, 1997 relating to three
Certificates of Correction to the Company's Restated
Certificate of Incorporation filed July 25, 1989,
Certificate of Amendment filed January 31, 1992 and
Restated Certificate of Incorporation filed on
September 5, 1996.
21
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Form 10-Q to be signed on its behalf by the
undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
DOMINION BRIDGE CORPORATION
By: /s/ Michel L. Marengere Dated: August 14, 1997
--------------------------------------------------
Michel L. Marengere
Chairman of the Board
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert Chartier Dated: August 14, 1997
--------------------------------------------------
Robert Chartier
Vice President and Interim Chief
Financial Officer
(Principal Financial
and Accounting Officer)
</TABLE>
22
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF JUNE 30, 1997 AND THE CONSOLIDATED STATEMENT OF
INCOME FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 13,321
<SECURITIES> 0
<RECEIVABLES> 100,311
<ALLOWANCES> 0
<INVENTORY> 47,478
<CURRENT-ASSETS> 168,065
<PP&E> 44,245
<DEPRECIATION> 0
<TOTAL-ASSETS> 241,686
<CURRENT-LIABILITIES> 140,171
<BONDS> 46,364
0
0
<COMMON> 69,824
<OTHER-SE> (14,673)
<TOTAL-LIABILITY-AND-EQUITY> 241,686
<SALES> 393,554
<TOTAL-REVENUES> 399,462
<CGS> 353,953
<TOTAL-COSTS> 392,353
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3624
<INCOME-PRETAX> 3485
<INCOME-TAX> 3129
<INCOME-CONTINUING> (981)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (981)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
<FN>
</FN>
</TABLE>
