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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-18198
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DeVlieg-Bullard, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 62-1270573
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Gorham Island, Westport, CT 06880
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(Address of principal executive offices) (Zip Code)
203-221-8201
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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
--- ---
The number of shares of common stock outstanding as of March 15, 1994 was
12,250,000.
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<TABLE>
<CAPTION>
DeVlieg - Bullard, Inc.
INDEX
PART I - FINANCIAL INFORMATION Page
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<S> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets--
January 31, 1995 and July 31, 1994 2
Consolidated Statements of Operations--
Three and Six Months Ended January 31, 1995
and January 31, 1994 3
Consolidated Statements of Cash Flows--
Six Months Ended January 31, 1995 and
January 31, 1994 4
Consolidated Statement of Changes in
Stockholders' Equity--
Six Months Ended January 31, 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
PART II - OTHER INFORMATION 15
-----------------
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 17
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DeVlieg-Bullard, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
January 31, July 31,
1995 1994
------------ ----------
(unaudited)
ASSETS
--------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 519 $ 1,654
Accounts receivable, net 11,606 9,559
Other current assets 2,168 2,980
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Total current assets 36,094 33,462
Property, plant and equipment, net 7,318 6,340
Other assets 22,854 11,461
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Total assets $ 66,266 $ 51,263
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit agreement $ 8,970 $ -
Current portion of long-term debt 2,045 1,828
Accounts payable 7,172 5,772
Accrued expenses and other current liabilities 7,694 4,874
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Total current liabilities 25,881 12,474
Long-term debt 13,596 14,577
Postretirement benefit obligation 4,900 4,755
Other noncurrent liabilities 2,247 2,081
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Total liabilities 46,624 33,887
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Stockholders' equity:
Common stock, $0.01 par value; authorized 30,000,000
shares; issued and outstanding 12,250,000 123 123
Additional paid-in capital 32,299 32,299
Excess purchase price over net assets
from the Services Group acquisition (16,358) (18,131)
Retained earnings 3,740 3,270
Cumulative translation adjustment (162) (185)
---------- ---------
Total stockholders' equity 19,642 17,376
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Total liabilities and stockholders' equity $ 66,266 $ 51,263
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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DeVlieg-Bullard, Inc.
Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $ 18,442 $ 16,016 $ 36,972 $ 31,385
Cost of sales 13,494 11,736 27,004 22,679
--------- --------- --------- ---------
Gross profit 4,948 4,280 9,968 8,706
Operating expenses:
Engineering 274 298 549 596
Selling 1,910 1,631 3,628 3,167
General and administrative 1,777 1,865 3,716 3,676
--------- --------- --------- ---------
Total operating expenses 3,961 3,794 7,893 7,439
--------- --------- --------- ---------
Litigation settlement 1,500 - 1,500 -
Other expense (income), net 73 (71) 137 (15)
--------- --------- --------- ---------
(Loss) income before interest expense and
income taxes (586) 557 438 1,282
Interest expense 587 300 1,114 599
--------- --------- --------- ---------
(Loss) income before income taxes (1,173) 257 (676) 683
(Benefit) provision for income taxes (1,308) 100 (1,146) 249
--------- --------- --------- ---------
$ 135 $ 157 $ 470 $ 434
========= ========= ========= =========
Earnings per common share $ 0.01 $ 0.01 $ 0.04 $ 0.04
========== ========= ========= =========
Average common shares and equivalents
outstanding 13,250 12,250 13,250 12,250
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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DeVlieg-Bullard, Inc.
Consolidated Statements of Cash Flows
(unaudited - in thousands)
<TABLE>
<CAPTION>
Six Months Ended
January 31,
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 470 $ 434
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,174 1,191
Provision for losses on accounts receivable 100 107
Change in assets and liabilities, net of effects from acquisitions:
Increase in accounts receivable (1,160) (888)
(Increase)/decrease in inventories (563) 587
Decrease in other current assets 962 211
Increase in accounts payable 1,042 175
Increase/(decrease) in accrued expenses and
other current liabilities 1,292 (707)
Other, net (1,013) (426)
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Net cash provided by operating activities 2,304 684
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Cash flows from investing activities:
Acquisitions (10,452) -
Capital expenditures (523) (411)
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Net cash used for investing activities (10,975) (411)
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Cash flows from financing activities:
Increase in revolving credit agreement 8,970 1,056
Payments on long-term debt (1,457) (1,309)
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Net cash provided by(used for) financing activities 7,513 (253)
---------- ----------
Effect of exchange rate changes on cash 23 (8)
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Net (decrease)/increase in cash and cash equivalents (1,135) 12
Cash and cash equivalents at beginning of period 1,654 295
---------- ----------
Cash and cash equivalents at end of period $ 519 $ 307
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 924 $ 578
Income taxes, net of refunds (440) (981)
</TABLE>
Supplemental statement of noncash investing and financing information:
The decrease in the deferred tax valuation reserve was $2,962 in fiscal
1995; $1,773 of this amount was credited to the balance sheet account
"Excess purchase price over net assets from the Services Group acquisition."
The accompanying notes are an integral part of these financial statements.
4
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DeVlieg-Bullard, Inc.
Consolidated Statement of Changes in Stockholders' Equity
(unaudited - in thousands)
Six Months Ended January 31, 1995
<TABLE>
<CAPTION>
Common
Shares Additional Excess Cumulative
Issued and Common Paid-in Purchase Retained Translation
Outstanding Stock Capital Price Earnings Adjustment Total
----------- ------- ----------- --------- --------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 31, 1994 12,250 $123 $32,299 ($18,131) $3,270 ($185) $17,376
Net income - - - - 470 - 470
Tax benefit realized related
purchase price of Services - - - 1,773 - - 1,773
Foreign currency translation - - - - - 23 23
------ ----- ------- --------- ------ ------ --------
Balance, January 31, 1995 12,250 $123 $32,299 ($16,358) $3,740 ($162) $19,642
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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DeVlieg-Bullard, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: Basis of Presentation
Pursuant to the rules and regulations of the Securities and Exchange Commission
for Form 10-Q, the financial statements, footnote disclosures and other
information normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed. The
financial statements contained in this report are unaudited but in the opinion
of DeVlieg-Bullard, Inc. (the "Company"), reflect all adjustments, consisting
of only normal recurring adjustments, necessary to fairly present the financial
position as of January 31, 1995 and the results of operations, cash flows and
changes in stockholders' equity for the interim periods of the fiscal year
ending July 31, 1995 ("fiscal 1995") and the fiscal year ended July 31, 1994
("fiscal 1994") presented herein. The results of operations for any interim
period are not necessarily indicative of results for the full year. These
financial statements, footnote disclosures and other information should be read
in conjunction with the financial statements and the notes thereto included in
the Company's annual report on Form 10-K for the year ended July 31, 1994.
The financial statements include all accounts of the Company and its wholly
owned subsidiary, H.B. Industries, Inc., after elimination of all significant
intercompany and interdivision transactions and balances. Dollar amounts in
these notes, except per share data, are expressed in thousands.
NOTE 2: Acquisitions
Cushman Industries
On September 9, 1994, the Company acquired specified operating assets of
Cushman Industries, Inc. ("Cushman"), a company in Chapter 11 bankruptcy,
including accounts receivable, inventories, selected machinery and equipment,
trademarks and intellectual property from the Cushman Industries Liquidating
Trust which had been established for the benefit of Cushman creditors. The
purchase price was approximately $3,100 and another $1,900 will be incurred for
the relocation and consolidation of the Cushman operation into the Company's
manufacturing facility in Frankenmuth, Michigan. The acquisition was accounted
for by the purchase method of accounting; accordingly, the purchase price has
been allocated to the fair market value of net assets acquired. The excess
purchase price over net assets acquired of approximately $4,200 has been
recorded as intangible assets (primarily engineering drawings) and is being
amortized over 30 years. Cushman's results of operations are included in the
Company's financial statements from the date of acquisition. Cushman
manufactures a broad line of manual and power chucks for machine tool
workholding applications. The Company conducts this business as part of its
Tooling Systems Group.
H.B. Industries, Inc.
On November 30, 1994, the Company acquired all of the outstanding capital stock
of H.B. Industries, Inc. which conducts its business as Ed Smith Machinery
Sales ("Ed Smith"). Ed Smith sells replacement parts for the Bullard product
line of machine tools. The purchase price was approximately $3,000, of which
$275 was placed into escrow for a period of one year in order to assure the
sellers' indemnification obligations. The acquisition was accounted for by the
purchase
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method of accounting, and accordingly, the purchase price has been allocated to
the fair market value of net assets acquired. The excess purchase price over
net assets acquired of approximately $2,000 was recorded as goodwill and is
being amortized over a 15 year period. Ed Smith's results of operations are
included in the Company's financial statements from the date of acquisition.
The business is operated by the Company's Services Group.
Mideastern
On January 23, 1995, the Company purchased substantially all of the assets and
assumed certain liabilities of Mideastern, Inc. ("Mideastern"). Mideastern
rebuilds and provides repair parts and service for a variety of machine tools
under the New Britain Machine brand name. The purchase price for this
acquisition was approximately $5,000 which consisted of $3,100 cash
consideration to the sellers, issuance of a $600 subordinated earnout note to
the sellers, stock options (see Note 9), Mideastern debt of $359 repaid by the
Company at closing, closing costs incurred, and liabilities assumed. The
acquisition was accounted for by the purchase method of accounting, and
accordingly, the purchase price has been preliminarily allocated to assets
acquired and liabilities assumed based upon the fair market value at the date
of acquisition. The excess purchase price over net assets acquired was
recorded as goodwill and is being amortized on a straight-line basis over 15
years. The results of operations of Mideastern since acquired have been
included in the Company's financial statements with the Services Group.
The Company borrowed the funds from its revolving credit agreement to finance
these acquisitions.
The following unaudited pro forma financial information has been prepared
assuming the acquisitions of Cushman, Ed Smith and Mideastern had occurred as
of August 1, 1993.
Pro forma results of operations:
(unaudited - in thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended January 31,
1995 1994
-------- --------
<S> <C> <C>
Net sales $40,168 $36,068
======= =======
Net income $903 $650
==== ====
Net income per common share $0.07 $0.05
===== =====
Average shares outstanding 13,250 12,250
====== ======
</TABLE>
The pro forma financial information does not purport to be indicative of the
results of operations which would have resulted had the acquisitions occurred
on August 1, 1993.
7
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NOTE 3: Inventories
Inventories consisted of:
<TABLE>
<CAPTION>
January 31, July 31,
1995 1994
----------- ---------
(unaudited)
<S> <C> <C>
Raw materials $ 627 $ 573
Work-in-process 4,904 3,595
Finished goods 16,270 15,101
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$21,801 $19,269
======= =======
NOTE 4: Property, Plant and Equipment
Property, plant and equipment consisted of:
January 31, July 31,
1995 1994
----------- --------
(unaudited)
Real property $ 2,359 $ 1,877
Machinery and equipment 9,516 8,163
Capitalized leased assets 1,539 1,539
Furniture and fixtures 3,091 3,039
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16,505 14,618
Less: accumulated depreciation
and amortization (9,187) (8,278)
------- -------
$ 7,318 $ 6,340
======= =======
</TABLE>
8
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NOTE 5: Other Assets
Other assets consisted of:
<TABLE>
<CAPTION>
January 31, July 31,
1995 1994
-------- --------
(unaudited)
<S> <C> <C>
Intangible assets $12,691 $ 8,533
Deferred taxes, net of
valuation allowance 5,840 2,878
Deferred financing costs 1,420 1,375
Investments carried at equity 137 137
Pension assets 418 418
Goodwill 4,553 -
Other 2,120 2,010
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27,179 15,351
Less: accumulated amortization (4,325) (3,890)
------- -------
$22,854 $11,461
======= =======
</TABLE>
NOTE 6: Litigation Settlement
The Company incurred a $1.5 million charge during its second quarter of fiscal
1995 for the accrual of its agreed settlement, with prejudice, of the
litigation filed by a committee of unsecured creditors of DeVlieg, Inc. and
debtor-in-possession, DeVlieg, Inc. The settlement is subject to final
documentation. The Company, certain of its present and former officers and
directors and several unrelated third parties were included as defendants. The
litigation sought in excess of $10 million in damages and alleged violations of
state fraudulent conveyance statutes in connection with the acquisition by the
Company of certain assets of DeVlieg, Inc. in September 1988 and March 1990.
The settlement is payable on or about May 8, 1995.
NOTE 7: Income Taxes
The Company's income tax benefit for the three and six months ended January 31,
1995 includes the release of valuation allowance previously recorded against
deferred tax assets, recorded in the second quarter. The total valuation
allowance released was $2,962 of which $1,189 was recorded as a tax benefit in
the statements of operations and $1,773 was credited to stockholders' equity
in the account "Excess purchase price over net assets from the Services Group
acquisition."
NOTE 8: Amendment of Credit Facility and Investment Agreement
Effective January 31, 1995, the Company amended its credit facility with its
senior lender and its investment agreement with the holders of its subordinated
debentures, subject to final documentation, by modifying the financial
covenants, including (i) minimum tangible net worth; (ii) maximum debt to worth
ratio; (iii) minimum debt service and capital expenditure coverage; and (iv)
maximum total
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liabilities to cash flow. In addition, the amount the Company may borrow
under its revolving credit agreement shall be reserved $750 if the Company's
ratio of minimum debt service and capital expenditure coverage is less than
1.0, and reserved $1,500 for the payment of the litigation settlement (see
Note 6). The amendment was made to reflect the acquisitions (see Note 2) and
the litigation settlement charge. The Company was in compliance with the
amended covenants at January 31, 1995.
NOTE 9: Stock Options
On December 14, 1994, pursuant to the 1989 Employee Stock Plan ("1989 Plan"),
options to purchase 170,000 shares of common stock were granted to certain
employees at $1.625 per share, the fair market value on the date of grant. Of
these, options to purchase 50,000 shares were granted to William O. Thomas,
President and Chief Executive Officer to the Company, and options to purchase
30,000 shares were granted to Lawrence M. Murray, Vice President, Chief
Financial Officer of the Company. The options vest and become exercisable in
installments of 30% at the end of the first and second years and 40% at the end
of the third year, and they terminate ten years from the date of grant. At
January 31, 1995, of the 1,000,000 shares authorized for issuance pursuant to
awards granted under the 1989 Plan, 928,000 stock options were outstanding.
Stock options are not considered in the computation and presentation of income
per share data due to the immaterial effect of stock options on income per
share.
On January 27, 1995, the Company granted non-qualified options to the
shareholders of Mideastern, Inc. to purchase an aggregate of 100,000 shares at
an exercise price of $1.50 per share. These options are exercisable at any
time and expire on January 27, 2000. If on January 27, 1998, the fair market
value of the shares covered by the options is not at least $3.50 per share, the
optionees may elect to either (i) retain the options or (ii) cause the Company
to redeem the options for an aggregate of $150 in cash.
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DeVlieg-Bullard, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Summarized below is a discussion of the results of operations of the Company,
including its Services, Tooling Systems and Industrial operating groups which
include the acquisitions completed in fiscal 1995 of Cushman, H.B. Industries,
Inc. ("Ed Smith"), and Mideastern (see Note 2). Dollar amounts, except per
share data, are expressed in thousands.
THREE MONTHS ENDED JANUARY 31, 1995 COMPARED TO THREE MONTHS ENDED JANUARY 31,
1994. Net sales for the second quarter of fiscal 1995 were $18,442 compared to
$16,016 for the second quarter of fiscal 1994, an increase of $2,426, or 15.1%,
reflecting increases in all of the Company's operating groups. The increase in
net sales by operating group for the second quarter of fiscal 1995 compared to
the same prior year period consists of $390, or 5.6%, in the Services Group;
$926, or 22.1%, in the Tooling Systems Group; and $1,110, or 23.1%, in the
Industrial Group. These results include the additions from acquired businesses
as follows: Cushman added $770 to the Tooling Systems Group; and Ed Smith and
Mideastern added $419 and $266, respectively, to the Services Group. Excluding
the sales added by acquired businesses, the Services Group decreased $295, or
4.2%, compared to the second quarter of last year, primarily due to a decrease
in remanufacturing services, partially offset by an increase in parts sales.
The Tooling Systems Group's net sales, excluding the addition from Cushman,
increased $156, or 3.7%, due to improved activity from all segments served,
except defense. The Industrial Group has had a favorable impact from new
product introductions and promotional programs.
Gross profit for the second quarter of fiscal 1995 was $4,948 compared to
$4,280 for the second quarter of fiscal 1994, an increase of $668, or 15.6%,
reflecting increases in each operating group and contributions from acquired
businesses. Gross profit as a percentage of net sales was 26.8% and 26.7% in
the second quarter of fiscal 1995 and fiscal 1994, respectively, reflecting
improvements in each operating group, except the Services Group. The Services
Group's gross margin was adversely effected by lower margin remanufacturing
projects resulting from competitive responses.
Operating expenses were $3,961, or 21.5% of net sales, compared to $3,794, or
23.7% of net sales, in the second quarter of fiscal 1995 and fiscal 1994,
respectively. Operating expenses for the second fiscal quarter exceeded prior
year levels by $167 primarily due to the higher sales volume and acquired
businesses. The decrease in operating expenses as a percentage of net sales is
attributable to the Company's continued cost reduction programs.
The Company recorded a $1,500 litigation settlement charge in the second
quarter of fiscal 1995, or $0.11 loss per common share on a pre-tax basis. The
Company has agreed to pay $1,500 in cash, subject to final documentation, on or
about May 8, 1995, to settle a civil suit filed by a committee of unsecured
creditors of DeVlieg, Inc. and debtor-in-possession, DeVlieg, Inc. The
litigation sought in excess of $10 million in damages and alleged violations of
state fraudulent conveyance statutes in connection with the acquisition by the
Company of certain assets of DeVlieg, Inc. in September 1988
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and March 1990. The Company, certain of its present and former officers and
directors and several unrelated third parties were included as defendants in
the suit. While management believes the allegations in the lawsuit were
without merit, the Company agreed to the settlement to avoid significant
continuing litigation costs. See "Legal Proceedings."
Interest expense was $587 in the second quarter of fiscal 1995 compared to $300
in the second quarter of fiscal 1994, an increase of $287. The increase in
interest expense is due to higher average outstanding debt balances, primarily
attributable to acquisitions (see Note 2) and higher effective interest rates,
particularly on the Company's subordinated debentures which were issued in May
1994.
Income tax benefit for the three months ended January 31, 1995 was
$1,308 compared to income tax expense of $100 for the same period of the prior
year. The income tax benefit is primarily due to the Company's release of
$2,962 of its valuation allowance previously recorded against deferred tax
assets. This amount was released based on expectations of continued
profitability for the foreseeable future. Of the released valuation allowance,
$1,189 was included in the benefit for income taxes on the statement of
operations and $1,773 was credited to the balance sheet account "Excess
purchase price over net assets from the Services Group acquisition."
SIX MONTHS ENDED JANUARY 31, 1995 COMPARED TO SIX MONTHS ENDED JANUARY 31,
1994. Net sales for the first half of fiscal 1995 were $36,972 compared to
$31,385 for the first half of fiscal 1994, an increase of $5,587, or 17.8%.
Businesses acquired in fiscal 1995 added $2,103 to net sales with Cushman
contributing $1,418 to the Tooling Systems Group, and Ed Smith and Mideastern
adding $419 and $266, respectively, to the Services Group. Excluding the
addition from acquisitions, net sales for the six months ended January 31, 1995
increased $3,484, or 11.1%, compared to the six months ended January 31, 1994.
Each operating group improved as follows: Services Group increased $968, or
7.0%; Tooling Systems Group increased $476, or 5.7%; and the Industrial Group
increased $2,040, or 22.1%. All operating groups have benefited from
promotional programs and new product introductions commenced in fiscal 1994 and
fiscal 1993.
Gross profit for the six months ended January 31, 1995 was $9,968 compared to
$8,706 for the same prior year period, an increase of $1,262, or 14.5%,
reflecting an improvement in each operating group. Gross profit as a
percentage of net sales was 27.0% for the first half of fiscal 1995 compared to
27.7% for the first half of fiscal 1994. The Services Group's gross margin was
adversely effected by lower margin remanufacturing projects resulting from
competitive pressures which will continue to negatively impact its gross profit
until such projects are completed.
Operating expenses were $7,893, or 21.3% of net sales, and $7,439, or 23.7% of
net sales, for the first half of fiscal 1995 and 1994, respectively, a $454, or
6.1%, increase. The increase is attributable to higher volume and costs added
from acquired businesses.
As discussed above, the Company incurred a $1,500 litigation settlement charge
in fiscal 1995, or $0.11 pre-tax loss per common share equivalent.
Interest expense was $1,114 for the six months ended January 31, 1995 compared
to $599 for the same period last year. The $515 increase in interest expense
is attributable to higher outstanding debt
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<PAGE> 14
balances, primarily due to acquisitions (see Note 2) and higher effective
interest rates, particularly on the Company's subordinated debentures which
were issued in May 1994.
Income tax benefit was $1,146 compared to income tax expense of $249 for the
six months ended January 31, 1995 and 1994, respectively. As discussed above,
the Company released $2,962 of its valuation allowance previously recorded
against deferred tax assets based on expectations of continued profitability
for the foreseeable future.
Effective August 1, 1994, the Company adopted Financial Accounting Standards
Board Statement No. 112 ("SFAS 112"), "Employers' Accounting for Postemployment
Benefits" under which employers must recognize the cost of benefits provided
to former or inactive, but not retired, employees when an event occurs
indicating payment of benefits is probable. If the benefits accumulate or
vest, the cost must be recognized over the service life of the employee. The
impact of adoption was not material to the Company's results of operations or
financial position.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $2,304 for the six months ended
January 31, 1995 compared to $684 for the six months ended January 31, 1994.
Capital expenditures were $523 in the first six months of fiscal 1995 compared
to $411 in the same prior year period. As of January 31, 1995, the Company had
no material commitments for specific capital expenditures.
The Company has agreed to pay $1.5 million in cash, on or a about May 8, 1995
to settle a civil suit filed by a committee of unsecured creditors of DeVlieg,
Inc. and debtor-in-possession, DeVlieg, Inc. See "Legal Proceedings."
Cash was used to acquire specified assets of Cushman Industries, Inc., and its
relocation from Hartford, Connecticut and consolidation into the Company's
Tooling Systems' facility in Frankenmuth, Michigan, for the purchase of H.B.
Industries, Inc. and for the acquisition of substantially all of the assets and
liabilities of Mideastern, Inc.
The balance outstanding under the Company's revolving credit agreement was
$8,970 at January 31, 1995 compared to $0 at July 31, 1994. Long-term debt,
including current maturities, was $15,641 and $16,405 at January 31, 1995 and
July 31, 1994, respectively. The Company's total indebtedness was $24,611 and
$16,405 at January 31, 1995 and July 31, 1994, respectively, an increase of
$8,206. Borrowings under the revolving credit agreement were used primarily to
finance acquisitions.
The Company's revolving credit agreement permits borrowings of up to $15,000
subject to collateral maintenance requirements. The amount the Company may
borrow under the revolving credit agreement is based upon a formula related to
the Company's eligible accounts receivable and inventories, reduced by
outstanding letters of credit and as described in Note 8, a $750 reserve, if
applicable, and a $1,500 reserve for payment of the litigation settlement.
Unused borrowings available at January 31, 1995 were $4,962, less reserves of
$2,250.
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As outlined in Note 8, effective January 31, 1995 the Company amended the
financial covenants with its senior lender and the holders of its subordinated
debentures to reflect the acquisitions made (see Note 2) and the litigation
settlement (see Note 7).
The Company expects to continue to provide liquidity and finance its ongoing
operational needs primarily through internally generated funds. The Company is
actively pursuing an acquisition strategy. Under certain circumstances, certain
acquisitions require the consent of the Company's senior lender and the holders
of the subordinated debentures. In addition, the Company may need to incur
additional indebtedness or issue additional equity securities to make any such
acquisition.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On August 4, 1993, the Company, certain of its present and former officers and
directors and several unrelated third parties were included as defendants in a
civil suit filed in the United States District Court for the Northern District
of Illinois, Western District. The suit was filed by a committee of unsecured
creditors of DeVlieg, Inc., a company in Chapter 11 proceedings in the
Bankruptcy Court for the Northern District of Illinois, and
debtor-in-possession, DeVlieg, Inc. The litigation sought in excess of $10
million in damages and alleged violations of state fraudulent conveyance
statutes in connection with the acquisition by the Company of certain assets of
DeVlieg, Inc. in September 1988 and March 1990. The Company agreed to settle
this suit, subject to final documentation, for $1.5 million in cash. The
settlement is effective as to the Company and each of its present and former
officers and directors party to the suit. The settlement requires that the
$1.5 million payment be made on or about May 8, 1995.
On March 2, 1992, a purported class action suit was filed in the United States
District Court for the District of Connecticut against the Company, Stanwich
Oil & Gas, Inc., the First Boston Corporation and certain of the Company's
officers and directors. The suit alleges violations of the federal securities
laws and state and federal common law in connection with alleged
misrepresentations and omissions made by the Company in connection with its
initial public offering in March 1990 and in certain reports later issued by
the Company. To date, the United States District Court for the District of
Connecticut has not certified the class of plaintiffs in the referenced action.
In addition, no settlement offer has been made by the plaintiffs which includes
a release of the Company from suit. By ruling dated September 7, 1994, the
court granted that portion of the defendants' motion to dismiss certain parties
to the suit based on a claim that any of them were secondarily liable for
having aided and abetted an alleged securities fraud violation based on Rule
10b-5 and Section 10(b) of the Securities Exchange Act of 1934. The court
denied the remainder of the motion to dismiss. While management believes the
allegations are without merit and is defending the litigation vigorously,
management is unable at this time to estimate the effect of any settlement or
adverse judgement on the results of operations and/or financial condition of
the Company. The Company has, therefore, made no accrual for any such
settlement, adverse judgement or costs of adjudication (other than accrual for
certain pre-trial costs). Certain costs estimated to be incurred in defending
the suit have been accrued.
The Company is also involved in litigation and proceedings, including product
liability claims, in the ordinary course of its business. The Company does not
believe that the outcome of such litigation will have a material adverse effect
upon the Company, after taking into account any proceeds of available
insurance.
15
<PAGE> 17
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
Exhibit
Number Description
------ -----------
<S> <C>
10.39 Amendment Agreement made as of January 31, 1995 between DeVlieg-Bullard, Inc. and Shawmut
Bank Connecticut, N.A.
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended January 31, 1995.
16
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DeVlieg-Bullard, Inc.
---------------------
(Registrant)
Date: March 16, 1995 By: /s/Lawrence M. Murray
-------------- ------------------------
Vice President and Chief
Financial Officer
17
<PAGE> 19
DeVlieg-Bullard, Inc.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ------------
<S> <C>
10.39 Amendment Agreement made as of January 31, 1995 between DeVlieg-Bullard, Inc.
and Shawmut Bank Connecticut, N.A.
27 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 1
Exhibit 10.39
AMENDMENT AGREEMENT
AGREEMENT, made as of January 31, 1995, between DeVLIEG-BULLARD, INC.,
a Delaware corporation with its chief executive office located at One Gorham
Island, Westport, Connecticut (the "Borrower"), and SHAWMUT BANK CONNECTICUT,
N.A., a national banking corporation with an office located at 850 Main Street,
Bridgeport, Connecticut (the "Lender").
Background
A. The Lender has previously extended a revolving loan in the
original principal amount of up to $15,000,000 (the "Revolving Loan"), as
evidenced by the Commercial Revolving Promissory Note dated as of May 23, 1994
and executed by the Borrower (the "Revolving Note") and a term loan in the
original principal amount of $3,000,000 (the "Term Loan"), as evidenced by the
Term Promissory Note dated as of May 23, 1994 and executed by the Borrower (the
"Term Note"). The obligations of the Borrower under the Term Note and the
Revolving Note (the "Notes") are governed pursuant to the terms of the
Commercial Revolving Loan, Term Loan and Security Agreement dated as of May 23,
1994, between the Lender and the Borrower (the "Loan Agreement").
B. The Borrower has requested that the Lender amend the Loan
Agreement by modifying the Financial Covenants of the Borrower under Section
7.03 of the Loan Agreement. The Lender has agreed to the Borrower's request
subject to the terms and conditions contained in this Agreement.
Agreement
In consideration of the Background, which is incorporated by this
reference, and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties, intending to be bound
legally, agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined
herein, shall have the meanings assigned to them in the Loan Agreement.
2. Amendments and Modifications. All of the provisions of the
Loan Agreement shall remain in full force and effect except as follows:
(a) Section 7.03 (i) is deleted and the following is substituted
therefor:
(i) Tangible Net Worth. The Borrower shall have a
minimum Tangible Net Worth of not less than the following
amounts on the dates set forth below:
Date Minimum Tangible Net Worth
---- --------------------------
July 31, 1994 $20,990,000
October 31, 1994 the greater of $21,097,000 or the sum of
the actual tangible net worth on July
31, 1994 plus $107,000.
<PAGE> 2
-2-
January 31, 1995 $21,629,000
April 30, 1995 $21,856,000
July 31, 1995 $23,307,000
October 31, 1995 the greater of $23,532,000 or the sum
of the actual tangible net worth on July
31, 1995 plus $225,000
January 31, 1996 the greater of $23,757,000 or the sum of
the actual tangible net worth on July
31, 1995 plus $450,000
April 30, 1996 the greater of $24,095,000 or the sum of
the actual tangible net worth on July
31, 1995 plus $788,000
July 31, 1996 $25,688,000
October 31, 1996 the greater of $25,989,000 or the sum of
the actual tangible net worth on July
31, 1996 plus $301,000
January 31, 1997 the greater of $26,590,000 or the sum of
the actual tangible net worth on July
31, 1996 plus $602,000
(b) Section 7.03 (ii) is deleted and the following is substituted
therefor:
(ii) Total Liabilities Debt Worth Ratio. During the period
within and including the dates set forth below, and measured
as at the end of each Fiscal Quarter, the Borrower shall
maintain a maximum ratio of Total Liabilities to Tangible Net
Worth of not greater than the amount set forth opposite such
dates below:
Date Maximum Ratio
---- -------------
from May 23, 1994 through 1.21:1.0
January 30, 1995
from January 31, 1995 through
July 30, 1995 1.82:1.0
from July 31, 1995 through
October 30, 1995 1.68:1.0
from October 31, 1995 through
January 30, 1996 1.65:1.0
<PAGE> 3
-3-
from January 31, 1996 through 1.60:1.0
April 29, 1996
from April 30, 1996 through 1.55:1.0
July 30, 1996
from July 31, 1996 through 1.5:1.0
October 30, 1996
from October 31, 1996 through 1.45:1.0
January 30, 1997
from January 31, 1997 until the date on 1.40:1.0
which all the Loans are satisfied in full
(c) Section 7.03 (iii) is deleted and the following is substituted
therefor:
(iii) Minimum Debt Service and Capital Expenditure Coverage.
On each of the Fiscal Quarters set forth below, the Borrower
shall have, for such Fiscal Quarter and the three immediately
preceding Fiscal Quarters, a MDSCEC Ratio of not less than the
amount set forth opposite such Fiscal Quarters:
Date Minimum Ratio
---- -------------
July 31, 1994 through October 31, 1994 1.12:1.0
January 31, 1995 .85:1.0
April 30, 1995 .94:1.0
July 31, 1995 through April 30, 1996 1.10:1.0
July 31, 1996 through the date of which
the Loans are satisfied in full 1.47:1.0
However, the Settlement Payment will be excluded from the
calculation of the Borrower's MDSCEC.
(d) Section 7.03 (iv) is deleted and the following substituted
therefor:
(iv) Total Liabilities to Cash Flow. On each of the Fiscal
Quarters set forth below, the Borrower shall have, for such
Fiscal Quarter and the three immediately preceding Fiscal
Quarters, a ratio of Total Liabilities to Cash Flow of not
greater than the amount set forth opposite such dates below:
<PAGE> 4
-4-
Date Maximum Ratio
---- -------------
July 31, 1994 through October 31, 1994 5.39:1.0
January 31, 1995 7.09:1.0
April 30, 1995 6.07:1.0
July 31, 1995 through April 30, 1996 4.95:1.0
July 31, 1996 through the date on which
the Loans are satisfied in full 4.48:1.0
However, the Settlement Payment will be excluded from the
calculation of the Borrower's Total Liabilities to Cash Flow.
(e) Section 3.01 (b) is deleted and the following is substituted
therefor:
(b) Interest Rate. (i) Revolving Loan. Each Revolving Loan
shall bear interest at a rate per annum as the Borrower may elect subject to
the provisions of this Agreement (each, an "Interest Rate Option"). During the
period from the date made through and including the date of payment in full,
each Revolving Loan shall bear interest on the Advances outstanding under the
Revolver, for the applicable Interest Period, at a rate per annum equal to, at
the election of the Borrower:
(1) if the Outstanding Amount Under Revolver
is between $0 and $5,000,000 on the date the
Borrower sends the Election Notice
(X) at a variable rate per annum equal
to the Base Rate less one-quarter
percent (.25%), adjusted daily, or
(Y) at a fixed rate per annum equal to
the LIBOR Rate plus 175 basis
points, or
(Z) at a fixed rate per annum equal to
the Cost of Funds plus 175 basis
points; or
(2) if the Outstanding Amount Under Revolver
is between $5,000,000.01 and $10,000,000 on
the date the Borrower sends the Election
Notice
<PAGE> 5
-5-
(X) at a variable rate per annum equal
to the Base Rate, adjusted daily, or
(Y) at a fixed rate per annum equal to
the LIBOR Rate plus 200 basis
points, or
(Z) at a fixed rate per annum equal to
the Cost of Funds plus 200 basis
points; or
(3) if the Outstanding Amount Under Revolver
is between $10,000,000.01 and $15,000,000 on
the date the Borrower sends the Election
Notice
(X) at a variable rate per annum equal
to the Base Rate plus one quarter
percent (.25%), adjusted daily, or
(Y) at a fixed rate per annum equal to
the LIBOR Rate plus 225 basis
points, or
(Z) at a fixed rate per annum equal to
the Cost of Funds plus 225 basis
points.
The Borrower can elect an interest rate option for each Advance, and can change
the interest rate option for such funds at the expiration of any applicable
Interest Rate Period. The Borrower agrees that it shall not choose any
Interest Rate Option having an Interest Rate Period extending beyond the
Commitment Termination Date.
(f) Section "M." of Schedule "1.01" shall be deleted and the
following substituted therefor:
M. "Borrowing Base" shall mean on any date of determination
thereof, an amount equal to the sum of (A) 85% of the Eligible
Accounts, plus (B) 50% of the lower of cost or fair market
value of the Eligible Inventory (valued on a first in, first
out basis), up to $8,000,000, except that advances against
class III Inventory (Services Division/Parts Operation) shall
be limited to 25%, and shall not exceed $1,500,000, less the
face amount of Standby and Documentary Letters of Credit
issued by the Lender at the request of the Borrower less (C)
the aggregate of the Reserve Amount and the Additional Reserve
Amount.
(g) Schedule "1.01" is amended by inserting the following as Section
"CY":
CY. "Cash Flow" for any accounting period shall mean (i)
earnings before interest and taxes, excluding all deferred
income, plus (ii) depreciation and amortization.
<PAGE> 6
-6-
(h) Schedule "1.01" is amended by inserting the following as Section
"CZ":
CZ. "MDSCEC Ratio" shall mean the ratio of (i) Cash Flow less
capital expenditures to (ii) the sum of interest expense and
current maturities.
(i) Schedule "1.01" is amended by inserting the following as Section
"DA":
DA. "Outstanding Amount Under Revolver" shall mean the sum of
all balances outstanding under the Revolving Note and the face
value of any Letters of Credit issued on behalf of the
Borrower and any of the Borrower's Affiliates.
(j) Schedule "1.01" is amended by inserting the following as Section
"DB":
DB. "Reserve Amount" shall mean (x) $0 if the Borrower has,
for that current Fiscal Quarter, a MDSCEC Ratio of 1.0 or
greater, and shall mean (y) $750,000 if the Borrower has, for
that current Fiscal Quarter, a MDSCEC Ratio of less than 1.0.
(k) Schedule "1.01" is amended by inserting the following as Section
"DC":
DC. "Additional Reserve Amount" shall mean (x) $0 if the
Borrower has made the Settlement Payment and shall mean (y)
$1,500,000 if the Borrower has not made the Settlement
Payment.
(l) Schedule "1.01" is amended by inserting the following as Section
"DD":
DD. "Settlement Payment" shall mean the $1,500,000 payment of
the Borrower, to be made in full settlement of all claims
against the Borrower in any way related to the law suit of
DeVlieg, Inc. et. al. v. Bradley, et al, Case No. 93 C 20208
in the United States Court for the Northern District of
Illinois.
3. Representations, Warranties and Covenants. (a) Reaffirmation.
The Borrower represents that, except as set forth on Schedule A hereof, all of
the representations, warranties and covenants contained in the Loan Agreement
are true and correct on and as of the date hereof, are incorporated herein by
this reference, and are hereby remade by the Borrower.
<PAGE> 7
-7-
(b) Loan Balance. The Borrower represents that as of the
morning of March 14, 1995, the principal balance outstanding under (i) the
Commercial Revolving Promissory Note is $9,723,602.06 and (ii) the Term Note is
$2,642,857.20, plus accrued and unpaid interest. All sums are due and owing
under the Notes without defense, off-set or counterclaim. The Borrower
acknowledges that it is legally, validly and enforceably liable to the Lender
under the Notes for all costs and expenses of collection and attorneys' fees
related to or in any way arising out of this Agreement, the Loan Agreement and
the other Loan Documents and that the Borrower has no claims, demands or rights
of set-off against the Lender in connection with the Notes. The Borrower also
acknowledges that the outstanding balance under the Revolving Note may increase
from time-to-time.
(c) No Default. Except as set forth on Schedule A
hereof, the Borrower is not in default under the Loan Documents and no event
has occurred which would constitute an Event of Default (as defined in the Loan
Documents) but for the giving of notice, passage of time, or both.
(d) Waiver. The Lender waives any Event of Default which
may exist or may have existed as a result of the Borrower's failure to comply
with the Financial Covenants in Section 7.03 of the Loan Agreement as those
Financial Covenants existed prior to the amendment of those Financial Covenants
by this Agreement.
(e) Consent. The Lender gives its consent, pursuant to
Section 2.04 of the Loan Agreement, for the Borrower to make the Settlement
Payment (as defined in the Loan Agreement, as amended hereby).
(f) No Material Change. Except as set forth on Schedule
A hereof, there has been no material adverse change in the business or
financial condition of the Borrower which would materially and adversely impair
the ability of the Borrower to comply with its obligations to the Lender under
the Loan Agreement and the Loan Documents, as amended.
(g) Schedule A. The Borrower acknowledges that the
conditions set forth on Schedule A hereof constitute an Event of Default under
the Loan Documents and that, notwithstanding the Lender's execution of this
Agreement, the Lender does not waive said Event of Default and reserves its
rights to exercise all of its remedies under the Loan Documents with respect
thereto.
(h) Binding Agreements. This Agreement constitutes the
valid and legally binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms.
(i) Controlling Terms. The Borrower hereby agrees that
the terms in the Loan Agreement, as modified by this Agreement or hereafter,
govern and control over any conflicting term in the Revolving Note or the Term
Note.
<PAGE> 8
-8-
4. Governing Law; Consent to Jurisdiction. This Agreement and
all the rights of the parties shall be governed by and construed in accordance
with the laws of the state of Connecticut. The Borrower agrees that any suit,
action or other legal proceeding arising out of this Agreement shall be brought
in the courts of record of the state of Connecticut or the courts of the United
States located in Connecticut. The Borrower expressly submits and consents in
advance to such exclusive jurisdiction in any action or proceeding.
5. Amendment and Restatement. Upon the execution of this
Agreement, the Loan Agreement and the Loan Documents are restated to the extent
that this Agreement restates them and are amended to the extent that this
Agreement amends them.
6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one complete
Agreement.
7. RELEASE. THE BORROWER RELEASES, REMISES AND DISCHARGES THE
LENDER FROM ALL ACTIONS, CAUSES OF ACTION, SUITS, SUMS OF MONEY, CONTROVERSIES,
VACANCIES, TRESPASSES, DAMAGES, JUDGMENTS, EXTENTS, EXECUTIONS, CLAIMS AND
DEMAND IN LAW OR EQUITY, AND BREACHES OF COVENANTS, AGREEMENTS AND PROMISES
WHICH THE BORROWER EVER HAD, NOW HAS OR WHICH IT SHALL HAVE AGAINST THE LENDER,
TO THE EXTENT THE SAME ARE KNOWN BY THE BORROWER AS OF THE DATE OF THIS
AGREEMENT, ARISING OUT OF ANY ACTION OR INACTION OF THE LENDER IN CONNECTION
WITH THE LOAN DOCUMENTS OCCURRING PRIOR TO THE DATE OF THIS AGREEMENT.
8. COMMERCIAL TRANSACTION. THE BORROWER ACKNOWLEDGES THAT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE COMMERCIAL TRANSACTIONS, AND
WAIVES ANY RIGHT TO NOTICE AND HEARING AS MAY BE ALLOWED BY ANY STATE OR
FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER OR ITS
SUCCESSORS OR ASSIGNS MAY DESIRE TO USE. THE BORROWER ACKNOWLEDGES THAT IT
MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER
EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
THE BORROWER FURTHER CONSENTS TO THE ISSUANCE OF ANY SUCH PREJUDGMENT REMEDIES
WITHOUT A BOND AND AGREES NOT TO REQUEST OR FILE MOTIONS SEEKING TO REQUIRE THE
POSTING OF A BOND UNDER PUBLIC ACT 93-431 IN CONNECTION WITH THE LENDER'S
EXERCISE OF ANY PREJUDGMENT REMEDY.
9. JURY TRIAL WAIVER. THE BORROWER WAIVES TRIAL BY JURY IN ANY
COURT AND IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION
WITH OR IN ANY WAY RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS
AGREEMENT IS A PART OR THE ENFORCEMENT OF ANY OF THE LENDER'S RIGHTS AND
REMEDIES. THE BORROWER
<PAGE> 9
-9-
ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH
ITS ATTORNEYS.
Signed in the presence of:
DeVLIEG - BULLARD, INC.
By /s/ L.M. Murray
- ------------------------------- -------------------------------------
Its Vice President
/s/ Ann B. Ruple
- -------------------------------
SHAWMUT BANK CONNECTICUT, N.A.
/s/ Ann B. Ruple By /s/ David S. Blitz
- ------------------------------- -------------------------------------
Its Vice President
- -------------------------------
STATE OF CONNECTICUT)
) ss. Westport
COUNTY OF FAIRFIELD)
Before me, the undersigned, this 14th day of March, 1995, personally
appeared L.M. Murray, known to me to be the Vice President of DeVlieg - Bullard,
Inc., and that he as such officer, signer and sealer of the foregoing
instrument, acknowledged the execution of the same to be his free act and deed
individually and as such officer, and the free act and deed of the corporation.
In Witness Whereof, I hereunto set my
hand.
Sharon E. Hugurt
------------------------------------------
Notary Public
My Commission Expires: 3-31-96
<PAGE> 10
-10-
STATE OF CONNECTICUT)
)ss. WESTPORT
COUNTY OF FAIRFIELD)
Before me, the undersigned, this 14th day of March, 1995, personally
appeared David S. Blitz, known to me to be the Vice President of Shawmut Bank
Connecticut, N.A., and that he as such officer, signer and sealer of the
foregoing instrument, acknowledged the execution of the same to be his free act
and deed individually and as such officer, and the free act and deed of the
corporation.
In Witness Whereof, I hereunto set my hand.
Sharon E. Hugurt
--------------------------------
Notary Public
My Commission Expires: 3-31-96
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DEVLIEG BULLARD, INC. FOR THE YEAR ENDED JANUARY 31,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-START> AUG-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 519
<SECURITIES> 0
<RECEIVABLES> 11,606
<ALLOWANCES> 0
<INVENTORY> 21,801
<CURRENT-ASSETS> 36,094
<PP&E> 7,318
<DEPRECIATION> 0
<TOTAL-ASSETS> 66,266
<CURRENT-LIABILITIES> 25,881
<BONDS> 13,596
<COMMON> 123
0
0
<OTHER-SE> 19,519
<TOTAL-LIABILITY-AND-EQUITY> 66,266
<SALES> 36,972
<TOTAL-REVENUES> 36,972
<CGS> 27,004
<TOTAL-COSTS> 27,004
<OTHER-EXPENSES> 9,530
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,114
<INCOME-PRETAX> (676)
<INCOME-TAX> (1,146)
<INCOME-CONTINUING> 470
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 470
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
