<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------- --------------------
Commission file number 0-18198
DEVLIEG-BULLARD, INC.
---------------------
(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
------------------------------- -----
(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 June 1, 1998 was
12,334,900.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DeVlieg-Bullard, Inc.
Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
April 30, July 31,
1998 1997
--------- ---------
ASSETS (unaudited)
- ------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 396 $ 637
Accounts receivable, net 24,836 25,798
Inventories, net 39,846 38,195
Other current assets 1,869 1,519
--------- ---------
Total current assets 66,947 66,149
Property, plant and equipment, net 12,285 12,657
Engineering drawings 16,792 18,039
Goodwill 11,772 11,948
Other assets 12,208 12,651
--------- ---------
Total assets $ 120,004 $ 121,444
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 13,713 $ 9,751
Accrued expenses and other current liabilities 5,033 11,969
Revolving credit agreement 25,237 22,525
Current portion of long-term debt 2,817 3,631
--------- ---------
Total current liabilities 46,800 47,876
Long-term debt (related party $4,227) 15,878 14,179
Postretirement benefit obligation 21,370 21,999
Other noncurrent liabilities 12,051 11,677
--------- ---------
Total liabilities 96,099 95,731
Stockholders' equity:
Common stock, $0.01 par value; authorized
30,000 shares; issued and outstanding
12,309,900 and 12,275,400 shares 123 123
Additional paid-in capital 34,180 34,096
Excess purchase price over net assets acquired from
related parties (16,242) (16,242)
Retained earnings 5,961 7,844
Cumulative translation adjustment (117) (108)
--------- ---------
Total stockholders' equity 23,905 25,713
--------- ---------
Total liabilities and stockholders' equity $ 120,004 $ 121,444
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
DeVlieg-Bullard, Inc.
Statement of Operations
(unaudited - in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
1998 1997 1998 1997
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 32,240 $33,771 $ 86,731 $ 97,268
Cost of sales 24,239 24,241 65,989 71,495
-------- ------- -------- --------
Gross profit 8,001 9,530 20,742 25,773
Operating expenses:
Engineering 443 491 1,448 1,277
Selling 3,211 2,799 8,882 8,148
General and administrative 2,893 2,962 9,468 8,048
-------- ------- -------- --------
Total E S G & A expenses 6,547 6,252 19,798 17,473
Anticipated loss on disposal -- -- 250 --
Other expense/(income), net (18) -- (36) (23)
-------- ------- -------- --------
Total operating expenses 6,529 6,252 20,012 17,450
-------- ------- -------- --------
Operating income 1,472 3,278 730 8,323
Interest expense (including related party interest
of $176, $171, $527 and $512) 1,339 1,305 3,976 3,796
-------- ------- -------- --------
Income/(loss) before income taxes 133 1,973 (3,246) 4,527
(Benefit)/provision for income taxes 56 803 (1,363) 1,874
-------- ------- -------- --------
Net (loss)/income $ 77 $ 1,170 $ (1,883) $ 2,653
======== ======= ======== ========
Income per common share:
Basic $ 0.01 $ 0.08 $ (0.13) $ 0.19
======== ======= ======== ========
Diluted $ 0.01 $ 0.08 $ (0.13) $ 0.18
======== ======= ======== ========
Average number of shares outstanding:
Basic 14,091 14,043 14,072 14,035
======== ======= ======== ========
Diluted 15,172 15,267 NA 15,128
======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
DeVlieg-Bullard, Inc.
Statements of Cash Flows
(unaudited - in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ (1,883) $ 2,653
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,988 3,606
Provision for losses on accounts receivable 194 14
Loss on disposal of assets held for sale 250 --
Changes in assets and liabilities, net of effects from acquisitions
Decrease/(increase) in accounts receivable 768 (6,227)
(Increase)/decrease in inventories (1,651) 4,592
(Increase)/decrease in other current assets (350) 1,974
Increase in accounts payable 3,962 448
(Decrease) in accrued expenses and
other current liabilities (6,936) (713)
Other, net (255) (937)
-------- --------
Net cash (used for)/provided by operating activities (1,913) 5,410
Cash flows from investing activities:
Purchase of business -- (1,023)
Capital expenditures (735) (912)
-------- --------
Net cash used for investing activities (735) (1,935)
Cash flows from financing activities:
Borrowings under revolving credit agreement 91,754 97,488
Repayments under revolving credit agreement (89,042) (94,328)
Proceeds from issuance of long-term debt 2,514 --
Payments of long-term debt (2,894) (5,831)
Debt issuance costs -- (216)
Proceeds from exercise of stock options 84 47
-------- --------
Net cash provided by (used for) financing activities 2,416 (2,840)
Effect of exchange rate changes on cash (9) 38
-------- --------
Net increase in cash and cash equivalents (241) 673
Cash and cash equivalents at beginning of period 637 768
-------- --------
Cash and cash equivalents at end of period $ 396 $ 1,441
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 3,456 $ 3,073
Income taxes, net of refunds 328 148
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
Supplemental disclosure of cash flow information (continued):
During the nine months ended April 30, 1997, the Company issued debt consisting
of a $2,600 Seller's note and an increase in term debt of $3,500 in connection
with acquisitions.
During the nine months ended April 30, 1998 and 1997, the Company entered into
capital leases for computer equipment totaling $834 and $192, respectively,
which were financed by capital lease obligations.
5
<PAGE> 6
DeVlieg-Bullard, Inc.
Notes to 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 April 30, 1998 and the results of operations and cash flows for
the interim periods of the fiscal year ending July 31, 1998 ("fiscal 1998") and
the fiscal year ended July 31, 1997 ("fiscal 1997") 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, 1997. Certain amounts in the fiscal 1997 financial
statements have been reclassified to conform to the fiscal 1998 presentation.
The financial statements include all accounts of the Company after elimination
of all significant interdivision transactions and balances. Amounts in these
notes, except per share data, are expressed in thousands.
NOTE 2: INVENTORIES
<TABLE>
<CAPTION>
April 30, July 31,
Inventories consisted of: 1998 1997
------- -------
(unaudited)
<S> <C> <C>
Raw materials $ 1,566 $ 1,448
Work-in-process 12,268 11,452
Finished goods 26,012 25,295
------- -------
$39,846 $38,195
======= =======
</TABLE>
Valuation reserves for obsolete, excess and slow-moving inventory aggregated
$10,901 and $10,504 at April 30, 1998 and July 31, 1997, respectively.
Inventories valued using LIFO were $14,189 and $12,819 at April 30, 1998 and
July 31, 1997, respectively. There was no LIFO reserve against those
inventories. The financial accounting basis for the inventories of acquired
companies exceeds the tax basis by $12,224 at April 30, 1998 and July 31, 1997.
NOTE 3: EARNINGS PER SHARE
Effective with the second quarter of fiscal 1998, the Company adopted Statement
of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS 128"). In
accordance with the provisions of SFAS 128, all prior periods have been
restated. The diluted earnings per share under SFAS 128 is not materially
different from the earnings per share the Company previously reported. In
accordance with the provisions of SFAS 128, the number of basic shares includes
the average of shares outstanding and the stock purchase warrants that are not
contingently issuable (the Class A and Class B Warrants). The contingently
issuable stock purchase warrants and stock options are included in the number of
shares to be used in the diluted earnings per share calculation. Loss per share
is computed by dividing net loss by the number of basic shares outstanding
during the period. Stock options and contingently issuable stock purchase
warrants are not included in this calculation, as they would be antidilutive.
6
<PAGE> 7
NOTE 4: LONG-TERM DEBT
On March 11, 1998, the Company amended its credit facility with its senior
lender to increase the term loan by approximately $2,500. The new term loan was
consolidated with the existing term loans for an aggregate term loan of $7,600.
The proceeds from the new term loan will be used to repay a portion of the
outstanding revolving credit agreement. Payments on the term loan are $200
monthly, starting March 31, 1998.
7
<PAGE> 8
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 Machine Tool, Tooling Systems and Industrial operating groups.
Amounts, except per share data, are expressed in thousands.
THREE MONTHS ENDED APRIL 30, 1998 COMPARED TO THREE MONTHS ENDED APRIL 30, 1997.
Although the Company's results improved during the third quarter of fiscal 1998
over the first and second quarters of the year, net sales for the third quarter
of fiscal 1998 at $32,240 were down $1,531 compared to $33,771 for the third
quarter of fiscal 1997. As more fully discussed as part of the Machine Tool
Group business segment below, the decline in sales in the third quarter of
fiscal 1998 resulted from a 9.3% decrease in net sales by the Machine Tool
Group. The Tooling Systems Group and the Industrial Group net sales for the
third quarter were higher than the prior year period by 4.4% and 4.7%,
respectively.
Gross profit for the third quarter of fiscal 1998 was $8,001 compared to $9,530
for the third quarter of fiscal 1997, a decrease of $1,529, or 16.0%. Gross
profit at the Tooling Systems Group was 8.9% higher than the prior year's third
quarter, while gross profit at the Industrial Group was 4.3% lower. The primary
reason for the decline was the Machine Tool Group, which was down by 27.9% from
the prior year's third quarter as a result of the production and shipping
problems discussed below.
E S G & A expenses were $6,547, or 20.3% of net sales, and $6,252, or 18.5% of
net sales, in the third quarter of fiscal 1998 and fiscal 1997, respectively.
The increase in operating expenses resulted primarily from an increase in the
international sales effort, computer costs related to upgrading systems and the
absence in the fiscal 1998 third quarter of certain income items related to a
fiscal year 1993 divestiture. The increase in operating expenses as a percent to
sales is the result of a decline in sales as discussed above, as well as the
increase in expenses.
Interest expense was $1,339 in the third quarter of fiscal 1998 compared to
$1,309 in fiscal 1997's third quarter.
Income tax expense in the third quarter of fiscal 1998 and fiscal 1997 was $56
and $803, respectively, reflecting the reduced income levels in fiscal 1998.
OPERATING RESULTS BY BUSINESS SEGMENT
MACHINE TOOL GROUP. In August 1997, the Machine Tool Group implemented a change
to outsourcing a major portion of National Acme's parts, which had been produced
internally. The outsourced parts are used in the manufacture of new Acme-Gridley
machines and are also sold separately in the aftermarket. As a result of
planning difficulties encountered during the changeover to outsourcing,
including delays in vendor parts deliveries, which resulted in inadequate
inventory levels to support the Company during the transition, the Machine Tool
Group encountered disruptions in production which extended through the third
quarter. Due to this inadequate supply of parts needed for new machine
production and aftermarket sales, fiscal 1998 third quarter sales were $20,178,
or $2,061 lower than the $22,239 reported in the third quarter of fiscal 1997.
Operating income of $1,468 was recorded for the third quarter of fiscal 1998,
compared to operating income of $3,317 in the third quarter of the prior year.
This is the result of the reduction in sales volume, as well as lower
productivity levels due to the difficulties mentioned above.
8
<PAGE> 9
Operating expenses for the third quarter of fiscal 1998 were unchanged from
those of the third quarter of the prior year.
Management believes the operational problems discussed above have been addressed
and aggressive action has been taken to correct the problems, including
replacing senior management of the Machine Tool Group who were responsible for
the initial planning errors, scheduling a portion of the parts production at the
Tooling Systems Group and adding key people to our engineering and purchasing
staff to quickly bring this transition to a close. The steps taken to date have
resulted in improved parts availability, however, the Company has not yet been
able to outsource sufficient parts to expand its sales efforts.
TOOLING SYSTEMS GROUP sales were $5,437 in the third quarter of fiscal 1998
compared to $5,207 in the third quarter of the prior year, an increase of $230,
or 4.4%. Operating income was $483 for the third quarter of fiscal 1998,
compared to $368 for the third quarter of the prior year.
INDUSTRIAL GROUP sales were $6,625 in the third quarter of fiscal 1998, compared
to $6,325 in the third quarter of the prior year, an increase of 4.7%. Operating
income was $273 for the third quarter of fiscal 1998, compared to $453 in the
same period a year ago. The decline in operating income is the result of higher
operating expenses primarily costs related to upgrading computer systems and
making them year 2000 compliant.
NINE MONTHS ENDED APRIL 30, 1998 COMPARED TO SIX MONTHS ENDED APRIL 30, 1997.
Net sales for the first nine months of fiscal 1998 were $86,731 compared to
$97,268 for the first nine months of fiscal 1997, a decrease of $10,537, or
10.8%. The decrease in net sales resulted from an 18.8% decrease in net sales by
the Machine Tool Group. Net sales for the first nine months of fiscal 1998
compared to the prior year were 5.9% higher for the Industrial Group and 1.8%
higher for the Tooling Systems Group.
Gross profit for the first nine months of fiscal 1998 was $20,742 compared to
$25,773 for the first nine months of fiscal 1998, a decrease of $5,031, or
19.5%. Gross profit for the Tooling Systems Group increased 19.9% and the
Industrial Group increased 11.2% over the prior year, while the Machine Tool
Group decreased 36.7% from the prior year as a result of the production and
shipping problems discussed below.
E S G & A expenses were $19,798, or 22.8% of net sales, and $17,473, or 18.0% of
net sales, in the first nine months of fiscal 1998 and fiscal 1997,
respectively. The increase in operating expenses is a result of an increase in
international sales efforts, costs related to upgrading computer systems and the
absence in this year's third quarter of certain income items related to a fiscal
year 1993 divestiture. In addition, fiscal 1998 included $800 in charges from
the write-down of a plant being held for sale and other reserves, plus the
absence in fiscal 1998 of a reversal of a reserve for legal costs that had been
set up in fiscal 1996 and reversed in fiscal 1997. The increase in operating
expenses as a percentage of sales is the result of a decline in sales, as
discussed above, as well as the increase in expenses.
Interest expense was $3,976 in the first nine months of fiscal 1998 compared to
$3,796 in the same period in fiscal 1998. The increase in interest expense is
a result of increased debt.
An income tax benefit of $1,363 was recorded for the first nine months of fiscal
1998 compared to tax expense of $1,874 for the same period last year, reflecting
the loss in fiscal 1998.
9
<PAGE> 10
OPERATING RESULTS BY BUSINESS SEGMENT
MACHINE TOOL GROUP. In August 1997, the Machine Tool Group implemented a change
to outsourcing a major portion of National Acme's parts, which had been produced
internally. The outsourced parts are used in the manufacture of new Acme-Gridley
machines and are also sold separately in the aftermarket. As a result of
planning difficulties encountered during the changeover to outsourcing, which
resulted in inadequate inventory levels to support the Company during the
transition, the Machine Tool Group encountered disruptions in production during
the period. Due to this inadequate supply of parts needed for new machine
production and aftermarket sales, fiscal 1998 first nine months sales were
$51,514, or $11,902 lower than the $63,416 reported in the first nine months of
fiscal 1997. Operating income was $1,233 for the first nine months of fiscal
1998 compared to $8,669 in the first nine months of the prior year. This is the
result of the reduction in sales volume, as well as lower productivity levels
due to the difficulties mentioned above. Operating expenses for the nine months
ended April 30, 1998 were higher than the fiscal 1997 first nine months as a
result of an increase in the computer costs related to upgrading systems, as
well as increases in temporary help related to the transition to outsourcing the
parts production. In addition, in the second quarter of fiscal 1998, the Machine
Tool Group incurred a $250 charge for the write-down of property and plant that
was being held for sale to the current market value.
Management believes these problems have been addressed and aggressive action has
been taken to correct the problems, including replacing senior management of the
Machine Tool Group who were responsible for the initial planning errors,
scheduling a portion of the parts production at the Tooling Systems Group and
adding key people to our engineering and purchasing staff to quickly bring this
transition to a close. The steps taken to date have resulted in improved parts
availability, however, the Company has not been able to outsource sufficient
parts to expand its sales efforts.
TOOLING SYSTEMS GROUP sales were $15,787 in the first nine months of fiscal
1998, compared to $15,504 in the first nine months of the prior year, an
increase of $283, or 1.8%. Operating income for the first nine months of fiscal
1998 was $1,371, compared with $762 in the first nine months of the prior year.
The increase in operating income is due to productivity improvements and
reductions in benefit costs from changes in the postretirement medical program.
INDUSTRIAL GROUP sales were $19,430 in the first nine months of fiscal 1998,
compared to $18,348 in the first nine months of the prior year, an increase of
$1,082, or 5.9%. Operating income was $941 for the first nine months of fiscal
1998, compared to $900 in the same period a year ago. The increase in operating
income is the result of increased volume and improved productivity, offset by
increased operating expenses related to computer systems.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Historically, the Company's continuing operations have been financed by
internally generated funds. Acquisitions have generally been funded with
increases in indebtedness.
Net cash used by operating activities was $1,913 for the nine months ended April
30, 1998, compared to net cash provided by operating activities of $5,410 for
the first nine months of fiscal 1997.
Cash used for capital expenditures was $735 and $912 for the first nine months
of fiscal 1998 and 1997, respectively. The Company currently has no material
commitments for specific capital expenditures. Cash of $1,023 was used for
acquisitions during fiscal 1997. The balance of the purchase price ($6,100) was
financed through an increase in debt.
10
<PAGE> 11
FINANCING AND INVESTING
The balance outstanding under the Company's revolving credit agreement was
$25,237 at April 30, 1998, compared to $22,525 at July 31, 1997. Long-term debt,
including current maturities, at April 30, 1998, was $18,695, compared to
$17,810 at July 31, 1997, an increase of $885. The Company's total indebtedness
was $43,932 and $40,335 at April 30, 1998 and July 31, 1997, respectively, an
increase of $3,597. The increase in debt was used to finance working capital
needs, particularly those of the Machine Tool Group. Cash and equivalents at
April 30, 1998 were $396, a decrease of $241 compared to July 31, 1997. Net cash
provided by financing activities was $2,416 in the first half of fiscal 1998
compared to a use of $2,840 in the first nine months of the prior year.
The senior credit facility is comprised of $7,200 in term loans and a revolving
credit agreement, which provides for borrowings up to $30,000. Interest on the
outstanding borrowings under the revolving credit agreement is payable monthly
in arrears at 1% above the prime rate or, at the Company's option, at
alternative rates based on LIBOR. The effective rate based on LIBOR was 8.66% at
April 30, 1998. 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. Payments
on the term loan are $200 monthly, starting March 31, 1998. Unused borrowings
available at April 30, 1998 were approximately $3,500.
Interest on the term loans is payable monthly at 1.25% above prime rate or, at
the Company's option, at alternative rates based on LIBOR. The effective rate
based on LIBOR was 8.91% at April 30, 1998.
Pursuant to the subordinated debt facility, the Company issued Subordinated
Debentures in May 1994 in the principal amount of $12,000. Of this amount,
$4,000 was replaced by Junior Subordinated Debentures. Interest payments on the
Subordinated Debentures of 11.5% per annum are payable quarterly in arrears
commencing July 1, 1994. The Subordinated Debentures provide for the repayment
of principal of $2,000 in fiscal 1999 and fiscal 2000 and $4,000 in fiscal 2001.
Interest on the Junior Subordinated Debentures accrues at 14.5%, and the cash
interest of 11% per annum is payable quarterly in arrears commencing January 1,
1996. The Junior Subordinated Debentures provide for the repayment of principal
of $4,000 and unpaid interest in June 2001 or thirty days after the payment of
the Subordinated Debentures.
The Company expects to continue to provide liquidity and finance its ongoing
operational needs primarily through internally generated funds.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two digit entries to represent years. These systems and products
will need to be able to accept four digit entries to distinguish years beginning
with 2000 from prior years. As a result, systems and products that do not accept
four digit year entries will need to be upgraded or replaced to comply with such
"Year 2000" requirements. The Company believes that its internal systems are
Year 2000 compliant or will be replaced in connection with previously planned
upgrades to information systems prior to the need to comply with Year 2000
requirements. The Company does not expect the additional cost to have a material
impact on the results of operations or cash flow. The Company believes that,
with modifications to existing software and conversions to new systems, the Year
2000 issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or not
completed timely, the Year 2000 issue could have a material impact on the
operations of the Company. Also, a number of the Company's customers and
suppliers may be affected the Year 2000 issue that require that they expend
significant resources to modify or replace their existing systems; their
11
<PAGE> 12
failure to properly address the Year 2000 issue could have significant impact on
the Company's operations.
NEW ACCOUNTING PRONOUNCEMENTS
During the second quarter of fiscal 1998, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). The
diluted earnings per share calculation under SFAS 128 is not materially
different from the earnings per share the Company had previously reported. In
accordance with SFAS 128, prior periods have been restated.
OUTLOOK
As more fully described above in Operating Results by Business Segment under the
heading Machine Tool Group, difficulties encountered during the changeover to
outsourcing on August 1, 1997, caused fiscal 1998 third quarter and first nine
months net sales and net earnings per share to be significantly lower than in
the comparable periods in fiscal 1997. The difficulties encountered were
primarily the result of inadequate levels of parts inventory needed for new
machine production and aftermarket sales. As discussed above, the Company has
taken steps to address the problems, and expects improved profitability in the
fourth quarter of fiscal 1998, although at levels below those reported in the
fourth quarter of fiscal 1997. Full year fiscal 1998 net sales and earnings will
be significantly below those reported in fiscal 1997.
The Company plans to continue expanding product and service offerings, both
internally and through strategic acquisitions, and to identify and implement
additional cost savings measures.
A number of factors may affect future results, liquidity and capital resources;
actual results may differ materially from those reflected by forward-looking
statements made by the Company. These factors are discussed in the Company's
Annual Report on Form 10-K for the year ended July 31, 1997.
12
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PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Computation of Earnings per Share
27 Financial Data Schedules (SEC use only)
(b) Reports on Form 8-K
During the quarter ended April 30, 1998, the Company did not file any reports on
Form 8-K.
13
<PAGE> 14
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 17, 1997 By: /s/ Thomas V. Gilboy
-------------- --------------------------------------
Thomas V. Gilboy
Vice President and Chief Financial Officer
(Principal Accounting Officer)
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<PAGE> 1
Exhibit 11
DeVlieg-Bullard, Inc.
Computation of Earnings per Share
(unaudited - in thousands, except per share data) (a)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net (loss) income $ 77 $ 1,170 $ (1,883) $ 2,653
======== ======= ======== =======
Shares for basic earnings per share:
Average number of common shares
outstanding 12,308 12,260 12,288 12,253
Dilutive effect of outstanding stock
purchase warrants (b):
Class A 1,495 1,495 1,496 1,494
Class B (c) 288 288 288 288
-------- ------- -------- -------
Total Basic shares outstanding 14,091 14,043 14,072 14,035
======== ======= ======== =======
Basic earnings per share $ 0.01 $ 0.08 $ (0.13) $ 0.19
======== ======= ======== =======
Additional shares for dilution:
Basic shares outstanding 14,091 14,043 14,072 14,035
Dilutive effect of outstanding options (b) 334 477 (e) 346
Dilutive effect of outstanding stock
purchase warrants - Class C (b) (d) 747 747 (e) 747
-------- ------- -------- -------
Total shares used in calculation of
diluted earnings per share 15,172 15,267 14,072 15,128
======== ======= ======== =======
Diluted earnings per share $ (0.16) $ 0.08 $ (0.13) $ 0.18
======== ======= ======== =======
</TABLE>
Notes:
(a) In accordance with the provisions of SFAS 128, "Earnings per Share," the
prior year has been restated.
(b) As determined by application of the treasury stock method.
(c) A total of 289 Class B stock purchase warrants were issuable May 1997 using
a formula based on the average closing stock price for the 90 days prior to
issuance. The Class B warrants became issuable on March 18, 1996, but at
that time, the number of shares was unknown.
(d) In connection with the refinancing of the senior debt facility in October
1995, 750 Class C stock purchase warrants ("Class C Warrants") were issued.
The Company has the opportunity to earn back these warrants based on
earnings as defined in the agreement. For the three and nine months ended
April 30, 1998 and 1997, the Company did not meet the defined earnings
level, therefore all Class C Warrants were considered outstanding.
(e) Not included in calculation as effect would be antidilutive.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DEVLIEG BULLARD, INC. FOR THE THREE MONTHS ENDED APRIL
30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> APR-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 20,534
<ALLOWANCES> 1,040
<INVENTORY> 39,846
<CURRENT-ASSETS> 66,947
<PP&E> 28,490
<DEPRECIATION> 16,205
<TOTAL-ASSETS> 120,004
<CURRENT-LIABILITIES> 46,800
<BONDS> 0
0
0
<COMMON> 123
<OTHER-SE> 23,782
<TOTAL-LIABILITY-AND-EQUITY> 120,004
<SALES> 32,240
<TOTAL-REVENUES> 32,240
<CGS> 24,239
<TOTAL-COSTS> 24,239
<OTHER-EXPENSES> (18)
<LOSS-PROVISION> 60
<INTEREST-EXPENSE> 1,339
<INCOME-PRETAX> 133
<INCOME-TAX> 56
<INCOME-CONTINUING> 77
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77
<EPS-PRIMARY> $0.01
<EPS-DILUTED> $0.01
</TABLE>
