<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission File Number 0-22371
-------------------
DECRANE AIRCRAFT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 34-1645569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
155 MONTROSE WEST AVENUE, SUITE 210, COPLEY, OH 44321
(Address, including zip code, of principal executive offices)
(330) 668-3061
(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.
[X] Yes [ ] No
The number of shares of Registrant's Common Stock, $.01 par value,
outstanding as of July 31, 1997 was 5,251,690 shares.
<PAGE>
DECRANE AIRCRAFT HOLDINGS, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996........ 3
Consolidated Statements of Operations for the three months and
six months ended June 30, 1997 and 1996.................................... 4
Consolidated Statements of Cash Flows for the six months
ended June 30, 1997 and 1996............................................ 5
Condensed 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
ITEM 5. OTHER INFORMATION...................................................... 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits.................................................................... 15
Reports on Form 8-K......................................................... 15
</TABLE>
-2-
<PAGE>
DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents..................................................... $ 301 $ 320
Accounts receivable, net...................................................... 13,860 13,185
Inventories................................................................... 21,769 19,573
Prepaid expenses and other current assets..................................... 1,703 812
-------- -------
Total current assets........................................................ 37,633 33,890
Property and equipment, net........................................................ 12,657 12,187
Other assets, principally intangibles, net......................................... 20,245 23,189
-------- -------
Total assets............................................................. $ 70,535 $69,266
-------- -------
-------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings........................................................... $ 980 $ 1,974
Current portion of long-term obligations to unaffiliated lenders................ 1,054 3,004
Convertible subordinated notes payable to related parties....................... - 2,922
Accounts payable................................................................ 9,233 7,420
Accrued expenses................................................................ 6,123 7,241
Income taxes payable............................................................ 758 843
-------- -------
Total current liabilities.................................................... 18,148 23,404
-------- -------
Long-term liabilities
Long-term obligations
Unaffiliated lenders......................................................... 12,391 28,323
Related parties.............................................................. - 6,027
Deferred income taxes.......................................................... 3,729 3,312
Minority interest.............................................................. 54 85
-------- -------
Total long-term liabilities.................................................. 16,174 37,747
-------- -------
Commitments and contingencies (Note 10)
Mandatorily redeemable common stock warrants...................................... - 6,879
-------- -------
Stockholders' equity
Cumulative convertible preferred stock, $.01 par value (no par value prior
to February 19, 1997), 8,314,018 shares authorized; 6,847,705 shares
issued and outstanding as of December 31, 1996 (none as of June 30, 1997)...... - 13,850
Undesignated preferred stock, $.01 par value, 10,000,000 shares initially
authorized as of February 19, 1997; none issued and outstanding................ - -
Common stock, no par value, 4,253,550 shares authorized; 85,593
shares issued and outstanding prior to February 19, 1997....................... - 216
Common stock, $.01 par value, 9,924,950 shares authorized as of
February 19, 1997; 5,251,690 shares issued and outstanding as of
June 30, 1997 (none as of December 31, 1996).................................. 53 -
Additional paid-in capital....................................................... 50,332 -
Accumulated deficit.............................................................. (14,006) (12,951)
Foreign currency translation adjustment.......................................... (166) 121
-------- -------
Total stockholders' equity..................................................... 36,213 1,236
-------- -------
Total liabilities and stockholders' equity................................... $70,535 $69,266
-------- -------
-------- -------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-3-
<PAGE>
DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1997 1996 1997 1996
-------- -------- ------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues.................................................... $28,130 $14,009 $54,248 $26,954
Cost of sales............................................... 21,009 11,004 40,721 21,738
------- ------- ------- -------
Gross profit............................................ 7,121 3,005 13,527 5,216
------- ------- ------- -------
Operating expenses
Selling, general and administrative expenses.............. 3,838 2,296 7,222 4,454
Amortization of intangible assets......................... 203 220 410 418
Gain on litigation settlement, net........................ - (157) - (157)
------- ------- ------- -------
Total operating expenses................................ 4,041 2,359 7,632 4,715
------- ------- ------- -------
Income from operations...................................... 3,080 646 5,895 501
Other expenses
Interest expense.......................................... 692 937 2,284 1,848
Other expenses............................................ 39 47 316 2
Minority interests........................................ 24 31 55 143
------- ------- ------- -------
Income (loss) before provision for income taxes and
extraordinary item........................................ 2,325 (369) 3,240 (1,492)
Provision for income taxes.................................. 871 48 1,157 262
------- ------- ------- -------
Income (loss) before extraordinary item..................... 1,454 (417) 2,083 (1,754)
Extraordinary loss from debt refinancing, net
of income tax benefit..................................... (2,078) - (2,078) -
------- ------- ------- -------
Net income (loss)........................................... (624) (417) 5 (1,754)
Adjustment to redemption value of mandatorily
redeemable common stock warrants.......................... (2,203) 555 (2,203) 1,060
Cumulative convertible preferred stock dividends............. (62) (305) (442) (526)
------- ------- ------- -------
Net loss applicable to common stockholders................... $(2,889) $(167) $(2,640) $(1,220)
------- ------- ------- -------
------- ------- ------- -------
Pro forma for the Recapitalization
Income (loss) before extraordinary item................... $.28 $(.18) $.51 $(.77)
Extraordinary loss from debt refinancing.................. (.40) - (.51) -
------- ------- ------- -------
Net income (loss)......................................... $(.12) $(.18) $ - $(.77)
------- ------- ------- -------
------- ------- ------- -------
Weighted average number of common and dilutive
common equivalent shares outstanding...................... 5,161 2,289 4,085 2,289
------- ------- ------- -------
------- ------- ------- -------
Pro forma for the Recapitalization, as adjusted for
acquisitions and the Offering
Income, as adjusted before extraordinary item........... $ 1,568 $ 897 $ 2,983 $ 527
Income per common share................................. $ .28 $ .16 $ .53 $ .10
Weighted average number of shares outstanding,
assuming full dilution................................ 5,660 5,479 5,660 5,479
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-4-
<PAGE>
DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1997 1996
-------- ---------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income (loss) .................................................................. $ 5 $ (1,754)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation and amortization.................................................. 2,522 1,915
Extraordinary loss from debt refinancing....................................... 2,078 -
Amortization of debt discount.................................................. 134 162
Deferred income taxes.......................................................... 439 (9)
Minority interests in earnings of subsidiaries................................. 55 143
Changes in assets and liabilities
Accounts receivable....................................................... (946) 976
Inventories................................................................ (2,265) 704
Prepaid expenses and other assets......................................... 368 139
Accounts payable.......................................................... 1,580 (369)
Accrued expenses........................................................... (940) 55
Income taxes payable...................................................... (62) 238
-------- --------
Net cash provided by operating activities.............................. 2,968 2,200
-------- --------
Cash flows from investing activities
Purchase of minority shareholder's interest........................................... - (5,207)
Capital expenditures.................................................................. (2,253) (462)
Other, net............................................................................ - (85)
-------- --------
Net cash used for investing activities................................... (2,253) (5,754)
-------- --------
Cash flows from financing activities
The Offering and application of the net proceeds
Proceeds from sale of common stock in the Offering, net of $3,180 for
underwriting discounts, commissions and expenses paid in 1997........................ 29,220 -
Borrowings under new credit facility, net of deferred financing costs of $441.......... 12,334 -
Repayment of debt, including $273 in prepayment penalties and expenses................. (42,160) -
Proceeds from issuance of cumulative convertible preferred shares and
mandatorily redeemable common stock warrants, net..................................... - 6,116
Net borrowings (payments) under revolving line of credit agreements..................... 1,879 (1,600)
Promissory note principal payment....................................................... (956) -
Principal payments on capitalized lease and other long-term obligations................. (1,048) (852)
Payment of deferred financing costs..................................................... - (171)
Other, net.............................................................................. 31 (74)
-------- --------
Net cash (used for) provided by financing activities.................... (700) 3,419
-------- --------
Effect of foreign currency translation on cash............................................ (34) (67)
-------- --------
Net decrease in cash and cash equivalents................................................. (19) (202)
Cash and cash equivalents at beginning of period.......................................... 320 305
-------- --------
Cash and cash equivalents at end of period................................................. $ 301 $ 103
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-5-
<PAGE>
DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial information as of June 30, 1997 and for the
three months and six months ended June 30, 1997 and 1996 is unaudited. In the
opinion of the Company, the unaudited financial information is presented on a
basis consistent with the audited financial statements and contains all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results for such interim periods. The results of
operations for interim periods are not necessarily indicative of results of
operations for the full year. The interim financial statements should be read
in conjunction with the audited financial statements and notes thereto
included in the Company's Prospectus dated April 16, 1997 which is a part of
the Company's Form S-1 Registration Statement filed with the Securities and
Exchange Commission on January 17, 1997, as amended.
NOTE 2 - REORGANIZATION AND REVERSE STOCK SPLIT
On February 19, 1997, the Company reorganized as a Delaware corporation.
In conjunction with the reorganization, the Company established a $.01 par
value for its cumulative convertible preferred stock and common stock and
increased the number of common shares and preferred shares authorized to
9,924,950 and 18,314,018 shares (which includes 10,000,000 shares of a newly
designated series of preferred stock), respectively.
Effective March 25, 1997, the Company effected a 3.53-for-1 reverse stock
split. All common share information set forth in the consolidated financial
statements and notes thereto has been restated to reflect the reverse stock
split.
NOTE 3 - RECAPITALIZATION AND CONSUMMATION OF INITIAL PUBLIC OFFERING
In January and March 1997, the holders of certain securities agreed to a
plan for the recapitalization of the Company (the "Recapitalization").
Completion of the Recapitalization was a condition to the consummation of the
Company's initial public offering (the "Offering") and, was effective
concurrent therewith. The Offering was consummated on April 16, 1997.
The Recapitalization provided for: (i) the conversion of all 6,847,705
shares of issued and outstanding cumulative convertible preferred stock
("Preferred Stock") into 1,941,804 shares of common stock; (ii) the cashless
exercise and conversion of all 52,784 and 9,355 issued and outstanding Series
B Preferred Stock warrants and common stock warrants, respectively, into a
total of 16,585 shares of common stock; (iii) the cashless exercise of
508,497 mandatorily redeemable common stock warrants (the "Redeemable
Warrants") into a total of 507,708 shares of common stock; and (iv) the
cancellation of 95,368 Redeemable Warrants.
Redeemable Warrants exercisable into 208,968 common shares remained after
the Recapitalization. Of this amount, 138,075 Redeemable Warrants were cancelled
upon the consummation of the Offering and repayment of the Company's senior
subordinated debt and convertible notes in accordance with the terms of the
respective warrant agreements. Redeemable Warrants exercisable into 70,893
common shares remained after the Recapitalization. Concurrent with the
consummation of the Offering, the mandatory redemption feature of these warrants
was terminated and, as a result, the value ascribed thereto was reclassified to
stockholders' equity as additional paid-in capital.
-6-
<PAGE>
On April 16, 1997, the Company completed the Offering and sold 2,700,000
shares of common stock for $12.00 per share. Proceeds from the Offering of
$30,132,000, net of $2,268,000 for underwriting discounts and commissions,
together with approximately $12,775,000 of proceeds from borrowings under a
new credit facility were used to repay amounts due under the Company's senior
revolving line of credit, senior term notes, senior subordinated notes and
convertible notes. In conjunction with the debt repayment, the Company
incurred an extraordinary charge aggregating $2,078,000, net of a $1,358,000
income tax benefit (Note 7).
The table below summarizes the changes in Redeemable Warrants and
stockholders' equity for the six months ended June 30, 1997 (amounts in
thousands):
<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY
MANDATORILY ----------------------------------------------------------------------------------------
REDEEMABLE CUMULATIVE COMMON COMMON FOREIGN
COMMON CONVERTIBLE STOCK, STOCK, ADDITIONAL CURRENCY
STOCK PREFERRED NO PAR $.01 PAR PAID-IN ACCUMULATED TRANSLATION
WARRANTS STOCK VALUE VALUE CAPITAL DEFICIT ADJUSTMENT TOTAL
--------- ----------- -------- --------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1996............ $6,879 $13,850 $ 216 $ - $ - $(12,951) $121 $1,236
Delaware reorganization and
reverse stock split.......... - - (216) 1 215 - - -
Adjustment to redemption
value of Redeemable
Warrants (A)................. 2,203 - - - - (2,203) - (2,203)
The Recapitalization
Conversion of preferred
stock into common
stock...................... - (13,850) - 19 13,831 - - -
Cashless exercise and
conversion of
warrants (B)............... (6,103) - - 6 6,097 - - 6,103
Cancellation of Redeem-
able Warrants.............. (1,143) - - - - 1,143 - 1,143
The Offering
Proceeds from the
Offering, net (C).......... - - - 27 28,236 - - 28,263
Cancellation of Redeem-
able warrants upon
debt repayment.............. (1,657) - - - 1,657 - - 1,657
Reclassification of
warrants no longer
redeemable ................. (179) - - - 179 - - 179
Net income (D).................... - - - - - 5 - 5
Stock option compensation
expense....................... - - - - 117 - - 117
Translation adjustment............ - - - - - - (287) (287)
-------- --------- -------- ------ ------- -------- ----- -------
Balance,
June 30, 1997................. $ - $ - $ - $ 53 $50,332 $(14,006) $(166) $36,213
-------- --------- -------- ------ ------- -------- ----- -------
-------- --------- -------- ------ ------- -------- ----- -------
</TABLE>
(A) Reflects the increase in Redeemable Warrant redemption value to the $12.00
per share Offering price concurrent with the consummation of the
Recapitalization and the Offering.
(B) Includes Series B cumulative convertible preferred stock warrants, common
stock warrants not subject to redemption and Redeemable Warrants.
(C) Proceeds from the sale of 2,700,000 shares of common stock in the Offering,
net of underwriting discounts and commissions of $2,268,000 and an
estimated $1,569,000 in expenses attributable to the Offering.
(D) Net of extraordinary loss from the debt refinancing (Note 7).
-7-
<PAGE>
NOTE 4 - PRO FORMA INCOME (LOSS) PER COMMON SHARE
The Company's historical capital structure is not indicative of its
structure as of April 16, 1997 due to the Recapitalization, which occurred
concurrent with the closing of the Offering (Note 3). Accordingly, historical
loss per common share is not considered meaningful and has not been presented
herein.
Pro forma net income (loss) per common share for the Recapitalization
reflects the Recapitalization (as if it had occurred January 1, 1996) and the
Offering (as of April 16, 1997) and is computed using the weighted average
number of common shares assumed to have been outstanding during the periods.
For the three months and six months ended June 30, 1997, the dilutive effect
of common equivalent shares has been included in computing net income per
common share. For the three months and six months ended June 30, 1996, the
dilutive effect of common equivalent shares, other than for certain stock
options granted in 1996 and Redeemable Warrants and Preferred Stock sold in
1996, has not been included because their inclusion would have decreased the
net loss per share. Redeemable Warrants and Preferred Stock sold in 1996 at
prices less than the initial public offering price have been included for all
periods presented using the treasury stock method.
Pro forma as adjusted income (loss) per common share reflects the
Recapitalization, as described above, and the Offering as if it had occurred
as of the beginning of each year presented. The income (loss) amount used to
compute 1996 pro forma income (loss) per common share for the Offering is
adjusted to reflect the pro forma operating results for acquisitions
consummated during 1996 (Note 5). The pro forma results exclude an
extraordinary charge incurred in April 1997 as a result of the repayment of
debt with the net offering proceeds.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share
("SFAS 128"). The Company is required to adopt SFAS 128 as of December 31,
1997; earlier application is not permitted. SFAS 128 specifies the
computation, presentation and disclosure requirements for earnings per share.
Post Recapitalization (Note 3), the Company does not believe the adoption of
SFAS 128 will have a material effect on the Company's method of computation,
presentation or disclosure of earnings per share amounts.
NOTE 5 - ACQUISITIONS
During 1996, the Company completed the following acquisitions: (i) on
February 20, 1996, the purchase of the remaining 25% of a subsidiary's stock
it did not already own from the subsidiary's minority shareholder (the
"Minority Interest Acquisition"); (ii) on September 18, 1996, the purchase of
substantially all of the assets, subject to certain liabilities assumed, of
Aerospace Display Systems (the "ADS Acquisition"); and (iii) on December 5,
1996, the purchase of the stock of Elsinore Aerospace Services, Inc. and the
certain assets, subject to certain liabilities, of Elsinore Engineering
(collectively, the "Elsinore Acquisition"). Pro forma consolidated results of
operations for the three months and six months ended June 30, 1996, assuming
the Minority Interest and ADS Acquisitions had been consummated on January 1,
1996, are as follows (amounts in thousands):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
---------------------------- ---------------------------
PRO FORMA PRO FORMA
AS FOR AS FOR
REPORTED ACQUISITIONS REPORTED ACQUISITIONS
--------- ------------ --------- -------------
<S> <C> <C> <C> <C>
Revenues............................................. $14,009 $16,781 $26,954 $32,263
Net loss............................................. (417) (240) (1,754) (1,769)
Net income (loss) applicable to common stockholders.. (167) 10 (1,220) (1,235)
</TABLE>
The above information reflects adjustments for depreciation,
amortization, minority interest and interest expense based on the new cost
basis and debt structure of the Company. The pro forma effect of the Elsinore
Acquisition is not material and, accordingly, is not reflected in the above
information. In addition, pro forma per share information is not considered
meaningful and has not been presented above due to the Recapitalization which
occurred concurrent with the consummation of the Offering (Note 3).
In conjunction with the 1996 Elsinore acquisition, the Company acquired,
among other intangible assets, the ability to issue certain Federal Aviation
Administration (the "FAA") design approvals for modifications to designated
aircraft through Elsinore's FAA-issued Designated Alteration Station ("DAS")
approval status. In July 1997, the FAA notified the Company that its
facilities do not fully comply with certain regulations governing such DAS
status. The FAA granted the Company until September 10, 1997 to bring the
facilities into full compliance and curtailed the operations of the
facilities as a DAS until such time as they achieve full compliance.
The net unamortized balance of goodwill ascribed to all of the
intangible assets acquired in the Elsinore acquisition totals $2,534,000 as
of June 30, 1997. If the Company's DAS approval status were revoked or
curtailed by the FAA, the adverse impact on the Company's future cash flows
would be evaluated to assess the recoverability of the recorded goodwill
amount. The amount, if any, by which goodwill exceeds the present value of
anticipated future cash flows would be charged against operations.
The Company has already taken steps to bring its DAS status into full
compliance with FAA regulations and the Company expects to be in full
compliance within the designated period. Therefore, the Company does not
anticipate the FAA will revoke or further curtail its DAS status. As a
result, management believes the ultimate resolution of the foregoing matter
will not have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows.
-8-
<PAGE>
NOTE 6 - SIGNIFICANT CUSTOMERS
Three customers each accounted for more than 10% of the Company's
consolidated revenues during the periods presented, as follows:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30, YEAR ENDED
------------------------ ------------------- DECEMBER
1997 1996 1997 1996 31, 1996
-------- ------- -------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Customer A.......... 19.8% 13.8% 19.9% 13.1% 15.8%
Customer B.......... 3.1% 7.9% 2.1% 11.7% 7.7%
Customer C.......... 11.9% 9.2% 12.9% 8.9% 7.2%
----- ----- ----- ----- -----
Total........... 34.8% 30.9% 34.9% 33.7% 30.7%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
Complete loss of either Customer A or C could have a significant adverse
impact on the results of operations expected in future periods.
NOTE 7 - CONVERTIBLE NOTES AND LONG-TERM OBLIGATIONS
In April 1997, the Company used the net proceeds from the Offering (Note
3), together with approximately $12,775,000 of proceeds from borrowings under
a new credit facility, to repay the following: (i) senior revolving line of
credit borrowings of $15,356,000; (ii) senior term notes aggregating
$16,531,000; (iii) senior subordinated notes payable to related parties
aggregating $7,000,000; and (iv) convertible subordinated notes payable to
related parties aggregating $3,000,000. In conjunction with the debt
repayment, the Company incurred a $2,078,000 extraordinary charge, net of an
estimated $1,358,000 income tax benefit, which is comprised of: (i) a
$1,943,000 write-off of deferred financing costs; (ii) a $1,149,000 write-off
of unamortized original issued discounts; (iii) a $273,000 charge for a
prepayment penalty and expenses; and (iv) a $71,000 write-off of the
unamortized portion of an interest rate cap agreement.
Prior to completion of the Offering, the Company entered into a new
credit agreement with a group of banks for a $40 million senior revolving
line of credit, expiring in April 2002 (the "Credit Facility"). The interest
rate under the Credit Facility is, at the Company's option, either the Base
Rate, as defined in the credit agreement, plus a defined Base Rate Margin, or
the IBOR Rate, as defined, plus a defined IBOR Rate Margin. The Base Rate is
the higher of the Federal Funds rate plus 0.50% or the prime rate. Initially,
the Base Rate Margin and IBOR Rate Margin are zero and 1.00%, respectively.
The Company is required to pay a commitment fee on the unused portion of the
Credit Facility. The commitment fee initially will be 0.25% per year.
The interest and commitment fee rates is reset quarterly, based upon the
ratio of debt to the Company's earnings before interest, taxes, depreciation
and amortization ("EBITDA"), pro forma for acquisitions for the twelve month
period ending on such date. The maximum interest rate under the Credit
Facility is either 0.75% above the prime rate or 2.00% above the IBOR rate.
The maximum commitment fee rate is 0.375% per year.
The Credit Facility contains certain restrictive covenants which require
the Company to: (i) maintain certain defined financial ratios such as interest
coverage, leverage and working capital, and minimum levels of net worth; and
(ii) limit capital expenditures, including capital lease obligations, and
additional indebtedness which may be incurred. The Credit Facility also
prohibits the Company from paying any dividends on its common stock in cash.
-9-
<PAGE>
NOTE 8 - INCOME TAXES
During the three months and six months ended June 30, 1997, the Company
reduced its deferred tax asset valuation allowance by $114,000 and $256,000,
respectively, to reflect the book benefit of federal and state net operating
loss carryforwards not previously recognized. Approximately $2,800,000 and
$800,000 of the Company's loss carryforwards remained at June 30, 1997 for
federal and state income tax purposes, respectively. No benefit for the
remaining loss carryforwards has been recognized in the consolidated
financial statements.
The amount of loss carryforwards that may be utilized in the future are
subject to limitations due to the occurrence of a change in control of the
Company, as defined in the Internal Revenue Code. A change in control
occurred as a result of certain equity transactions that occurred during 1996
and the Offering. The amount of loss carryforwards that may be utilized is
limited to approximately $800,000 per year for both federal and state income
tax purposes.
NOTE 9 - FORWARD EXCHANGE CONTRACTS
The Company enters into Swiss franc ("CHF") forward foreign exchange
contracts to purchase Swiss francs as a general economic hedge against
foreign inventory procurement and manufacturing costs. In January 1997, the
Company entered into twelve forward foreign exchange contracts to purchase a
total of CHF 7,800,000 for $5,885,000 at rates ranging between 1.3021 and
1.3492 CHF per U.S. dollar. Settlement of the contracts occurs in equal
monthly amounts of CHF 650,000 through December 15, 1997. As of June 30,
1997, six forward foreign exchange contracts to purchase a total of CHF
3,900,000 for $2,971,000 at rates ranging between 1.3021 and 1.3235 CHF per
U.S. dollar remained open.
Gains and losses on forward foreign exchange contracts are recognized
currently in the consolidated statements of operations. During the three
months ended June 30, 1997 and 1996, the Company realized losses of $116,000
and $81,000, respectively, on contracts settled during the periods. During
the six months ended June 30, 1997 and 1996, the Company realized losses of
$201,000 and $81,000, respectively, on contracts settled during the periods.
In addition, the Company recognized market value losses aggregating $302,000
and $154,000 on the remaining open contracts as of June 30, 1997 and 1996,
respectively.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Two stockholders have asserted the claim that they are entitled to more
shares of common stock than they received in connection with the Offering
based upon their interpretation of the anti-dilution provisions contained in
certain Redeemable Warrant agreements. The Redeemable Warrants were exercised
as part of the Recapitalization concurrent with the Offering. The
stockholders claim they are entitled to the additional shares since the
$12.00 Offering price per share is below a threshold amount set in the
Redeemable Warrant agreements. The Company is negotiating with the
shareholders to resolve the dispute and expects that in connection with the
resolution of the matter it will issue to them not more than 50,743 common
shares. The additional shares, if issued, would result in a reclassification
from accumulated deficit to common stock and additional paid-in capital for
an amount equal to the number of shares issued to the stockholders at the
$12.00 per share Offering price.
Management believes the ultimate resolution of the foregoing matter will
not have a material adverse effect on the Company's consolidated financial
position, results of operations or cash flows. The inclusion of the
additional common shares, had they been issued at the date of the Offering,
would not change the pro forma income (loss) per share amounts reported for
the three months and six months ended June 30, 1997 and 1996.
-10-
<PAGE>
DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Condensed Notes to Consolidated Financial Statements beginning on page 6,
and with the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the audited consolidated
financial statements and notes thereto included in the Company's Prospectus.
FORWARD-LOOKING STATEMENTS
Management's discussion and analysis of financial condition and results
of operations which are not historical facts are forward-looking statements.
Such forward-looking statements in this document are made pursuant to the
safe harbor provisions of the Securities Act of 1933 and the Securities
Exchange Act of 1994. Forward-looking statements involve a number of risks
and uncertainties. For a discussion of certain risks and uncertainties which
may affect the actual results of any forward-looking information contained
herein, refer to the sections in the Company's Prospectus entitled "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
REVENUES. Revenues increased $14.1 million, or 100.8%, to $28.1 million
for the three months ended June 30, 1997 from $14.0 million for the three
months ended June 30, 1996. Revenues increased primarily due to the
following: (i) growth in contact sales driven by new aircraft production rate
increases of $1.9 million; (ii) growth in the Company's private labeling
programs of $2.3 million; (iii) an increase of sales to Interactive Flight
Technologies, Inc. of $.9 million relating to a major systems integration
program for Swissair; (iv) the inclusion of $3.6 million of revenues from
Aerospace Display Systems which was acquired on September 18, 1996; (v) an
increase in sales of specialty connectors for cabin management and in-flight
entertainment systems, principally on Boeing's 777 aircraft, of $1.4 million;
(vi) an increase in sales of harness assemblies for in-flight entertainment
systems of $2.0 million; (vii) the inclusion of $.7 million of revenues from
Elsinore which was acquired on December 5, 1996; and (viii) new major systems
integration programs for United Parcel Service and The Network Connection for
$.9 million.
GROSS PROFIT. Gross profit increased $4.1 million, or 137.0%, to $7.1
million for the three months ended June 30, 1997 from $3.0 million for the
three months ended June 30, 1996. Gross profit as a percent of revenues
increased to 25.3% for the three months ended June 30, 1997 from 21.5% for
the three months ended June 30, 1996. This increase was attributable to an
improvement in gross profit as a percent of revenues from increased sales
volume, sustained price increases, favorable mix, and lower material costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses increased $1.5 million, or 67.2%, to $3.8
million for the three months ended June 30, 1997 from $2.3 million for the
three months ended June 30, 1996. SG&A expenses as a percent of revenues
decreased to 13.6% for the three months ended June 30, 1997 from 16.4% for
the three months ended June 30, 1996. SG&A expenses increased primarily due
to the following: (i) the Company added staff to pursue higher sales to
original equipment manufacturers and to develop capabilities for in-flight
entertainment, navigation and satellite communication and safety systems
integration services; and (ii) the inclusion of SG&A expenses from Aerospace
Display Systems which was acquired in 1996.
-11-
<PAGE>
OPERATING INCOME. Operating income increased $2.5 million to $3.1
million for the three months ended June 30, 1997 from $.6 million for the
three months ended June 30, 1996. Operating income as a percent of revenues
increased to 11.0% for the three months ended June 30, 1997 from 4.6% for the
three months ended June 30, 1996. The increase in operating income resulted
from the factors described above.
INTEREST EXPENSE. Interest expense decreased $.2 million, or 26.2%, to
$.7 million for the three months ended June 30, 1997 from $.9 million for the
three months ended June 30, 1996. The decrease resulted from the completion
of the Offering on April 16, 1997 and the repayment of a substantial portion
of the Company's debt with the proceeds.
PROVISION FOR INCOME TAXES. During the three months ended June 30, 1997,
the Company reduced its deferred tax asset valuation allowance by $.1 million
to reflect the book benefit of federal and state net operating loss
carryforwards not previously recognized.
EXTRAORDINARY LOSS FROM DEBT REFINANCING. During the three months ended
June 30, 1997, the Company incurred a $2.1 million extraordinary charge, net
of an estimated $1.4 million income tax benefit, as a result of refinancing
the Company's debt with the proceeds from the Offering. The extraordinary
charge is comprised of: (i) a $1.9 million write-off of deferred financing
costs; (ii) a $1.2 million write-off of unamortized original issued
discounts; (iii) a $.3 million charge for a prepayment penalty and expenses;
and (iv) a $.1 million write-off of the unamortized portion of an interest
rate cap agreement.
NET INCOME (LOSS). The net loss increased $.2 million to $.6 million for
the three months ended June 30, 1997 from a net loss of $.4 million for the
three months ended June 30, 1996. The increase is a result of the factors
described above.
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS. Net loss applicable to
common stockholders increased $2.7 million to $2.9 million for the three
months ended June 30, 1997 from a net loss applicable to common stockholders
of $.2 million for the three months ended June 30, 1996. The increase
resulted from the factors described above and a $2.8 million increase in the
redemption value of mandatorily redeemable common stock warrants between the
two periods. The increase was partially offset by a $.2 million decrease in
cumulative preferred stock dividends attributable to the preferred stock that
was converted into common stock as part of the Recapitalization which
occurred concurrent with the consummation of the Offering.
PRO FORMA INCOME, AS ADJUSTED. Pro forma income, as adjusted before
extraordinary item, increased $.7 million to $1.6 million for the three
months ended June 30, 1997 from $.9 million for the three months ended June
30, 1996 as a result of the factors described above, less the addition of pro
forma income of $.6 million for Aerospace Display Systems for the three
months ended June 30, 1996.
BOOKINGS AND BACKLOG. Bookings increased $11.5 million, or 68.0%, to
$28.3 million for the three months ended June 30, 1997 compared to $16.9
million for the same period in 1996. The increase in bookings for 1997
includes $3.6 million attributable to Aerospace Display Systems, which was
acquired in September 1996.
-12-
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
REVENUES. Revenues increased $27.2 million, or 101.3%, to $54.2 million
for the six months ended June 30, 1997 from $27.0 million for the six months
ended June 30, 1996. Revenues increased primarily due to the following: (i)
growth in contact sales driven by new aircraft production rate increases of
$3.0 million; (ii) growth in the Company's private labeling programs of $4.3
million; (iii) an increase of sales to Interactive Flight Technologies, Inc.
of $2.4 million relating to a major systems integration program for Swissair;
(iv) the inclusion of $6.6 million of revenues from Aerospace Display Systems
which was acquired on September 18, 1996; (v) an increase in sales of
specialty connectors for cabin management and in-flight entertainment
systems, principally on Boeing's 777 aircraft, of $3.6 million; (vi) an
increase in sales of harness assemblies for in-flight entertainment systems
of $4.6 million; (vii) the inclusion of $1.3 million of revenue from Elsinore
which was acquired on December 5, 1996; and (viii) new major systems
integration programs for United Parcel Service and The Network Connection for
$1.2 million. Partially offsetting this increase was a decline in sales to
AT&T Wireless Services, Inc. of $2.0 million, reflecting the completion in
late 1995 and early 1996 of a major systems integration program.
GROSS PROFIT. Gross profit increased $8.3 million, or 159.3%, to $13.5
million for the six months ended June 30, 1997 from $5.2 million for the six
months ended June 30, 1996. Gross profit as a percent of revenues increased
to 24.9% for the six months ended June 30, 1997 from 19.4% for the six months
ended June 30, 1996. This increase was attributable to an improvement in
gross profit as a percent of revenues from increased sales volume, sustained
price increases, favorable mix, and lower material costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses increased $2.7 million, or 62.2%, to $7.2
million for the six months ended June 30, 1997 from $4.5 million for the six
months ended June 30, 1996. SG&A expenses as a percent of revenues decreased
to 13.3% for the six months ended June 30, 1997 from 16.5% for the six months
ended June 30, 1996. SG&A expenses increased primarily due to the following:
(i) the Company added staff to pursue higher sales to original equipment
manufacturers and to develop capabilities for in-flight entertainment,
navigation and satellite communication and safety systems integration
services; and (ii) the inclusion of SG&A expenses from Aerospace Display
Systems which was acquired in 1996.
OPERATING INCOME. Operating income increased $5.4 million to $5.9
million for the six months ended June 30, 1997 from $.5 million for the six
months ended June 30, 1996. Operating income as a percent of revenues
increased to 10.9% for the six months ended June 30, 1997 from 1.9% for the
six months ended June 30, 1996. The increase in operating income resulted
from the factors described above.
INTEREST EXPENSE. Interest expense increased $.5 million, or 23.6%, to
$2.3 million for the six months ended June 30, 1997 from $1.8 million for the
six months ended June 30, 1996. The increase resulted from higher
indebtedness outstanding prior to its repayment with the proceeds from the
Offering in April 1997. The increase in indebtedness was attributable to the
funding of the 1996 acquisitions of Aerospace Display Systems and Elsinore
and the purchase of the AMP Facility.
PROVISION FOR INCOME TAXES. During the six months ended June 30, 1997,
the Company reduced its deferred tax asset valuation allowance by $.3 million
to reflect the book benefit of federal and state net operating loss
carryforwards not previously recognized. Approximately $2.8 million and $.8
million of the Company's loss carryforwards remained at June 30, 1997 for
federal and state income tax purposes, respectively.
EXTRAORDINARY LOSS FROM DEBT REFINANCING. During the six months ended
June 30, 1997, the Company incurred a $2.1 million extraordinary charge, net
of an estimated $1.4 million income tax benefit, as a result of refinancing
the Company's debt with the proceeds from the Offering.
NET INCOME (LOSS). Net income increased $1.8 million to a nominal net
income amount for the six months ended June 30, 1997 from a net loss of $1.8
million for the six months ended June 30, 1996. The increase is a result of
the factors described above.
-13-
<PAGE>
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS. Net loss applicable to common
stockholders increased $1.4 million to a net loss of $2.6 million for the six
months ended June 30, 1997 from a net loss applicable to common stockholders
of $1.2 million for the six months ended June 30, 1996. The increase resulted
from the factors described above and a $3.3 million increase in the
redemption value of mandatorily redeemable common stock warrants between the
two periods. The increase was partially offset by a $.1 million decrease in
cumulative preferred stock dividends attributable to the preferred stock that
was converted into common stock as part of the Recapitalization which
occurred concurrent with the consummation of the Offering.
PRO FORMA INCOME, AS ADJUSTED. Pro forma income, as adjusted before
extraordinary item, increased $2.5 million to $3.0 million for the six months
ended June 30, 1997 from $.5 million for the six months ended June 30, 1996
as a result of the factors described above, less the addition of pro forma
net income of $.8 million for Aerospace Display Systems for the six months
ended June 30, 1996.
BOOKINGS AND BACKLOG. Bookings increased $27.9 million, or 100.2%, to
$55.7 million for the six months ended June 30, 1997 compared to $27.8
million for the same period in 1996. The increase in bookings for 1997
includes $7.9 million attributable to Aerospace Display Systems, which was
acquired in September 1996. As of June 30, 1997, the Company had a sales
order backlog of $44.7 million compared to $44.5 million as of December 31,
1996.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1997, the Company generated cash from
operating activities of $3.0 million. The Company used $2.3 million in cash
for working capital. The Company's accounts receivable consist of trade
receivables and unbilled receivables, which are recognized pursuant to the
percentage of completion method of accounting for long-term contracts.
Accounts receivable increased $.9 million for the six months ended June 30,
1997 due to higher sales offset by lower average days outstanding.
Inventories increased by $2.3 million for the six months ended June 30, 1997
in support of sales growth. Accounts payable increased by $1.6 million for
the six months ended June 30, 1997 as a result of higher purchases in support
of sales and backlog growth.
Capital expenditures of $2.3 million were made during the six months
ended June 30, 1997. The capital expenditures were for projects to: (i)
increase manufacturing capacity in support of revenue growth; (ii) improve
plating controls; and (iii) construct three additional selective plating
machines. The Company anticipates total capital expenditures of approximately
$3.2 million in 1997.
Net cash used for financing activities was $.7 million for the six months
ended June 30, 1997. On April 16, 1997, the Company completed the Offering
and sold 2,700,000 shares of common stock for $12.00 per share. Net proceeds
from the Offering of $29.2 million, together with approximately $12.3 million
of net proceeds from borrowings under a new credit facility were used to
repay amounts due of $42.2 million under the Company's senior revolving line
of credit, senior term notes, senior subordinated notes and convertible
subordinated notes.
Cash was essentially unchanged for the six months ended June 30, 1997 due
to the factors described above. Concurrent with the Offering, the Company
entered into a new $40 million revolving Credit Facility which expires in
2002 (See Note 7 to the consolidated financial statements). Availability
under the Credit Facility was $28.7 million and working capital aggregated
$19.5 million as of June 30, 1997. The Company believes that the current
levels of working capital and amounts available under the Credit Facility
will enable it to meet its foreseeable short-term and long-term liquidity
requirements.
-14-
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
STOCKHOLDER DISPUTE REGARDING ISSUANCE OF ADDITIONAL COMMON SHARES
Two stockholders have asserted the claim that they are entitled to more
shares of common stock than they received in connection with the Offering
based upon their interpretation of the anti-dilution provisions contained in
certain Redeemable Warrant agreements. The Redeemable Warrants were exercised
as part of the Recapitalization concurrent with the Offering. The
stockholders claim they are entitled to the additional shares since the
$12.00 Offering price per share is below a threshold amount set in the
Redeemable Warrant agreements. The Company is negotiating with the
shareholders to resolve the dispute and expects that in connection with the
resolution of the matter it will issue to them not more than 50,743 common
shares. The additional shares, if issued, would result in a reclassification
from accumulated deficit to common stock and additional paid-in capital for
an amount equal to the number of shares issued to the stockholders at the
$12.00 per share Offering price.
Management believes the ultimate resolution of the foregoing matter will
not have a material adverse effect on the Company's consolidated financial
position, results of operations or cash flows. The inclusion of the
additional common shares, had they been issued at the date of the Offering,
would not change the pro forma income (loss) per share amounts reported for
the three months and six months ended June 30, 1997 and 1996.
DESIGNATED ALTERATION STATION APPROVAL STATUS
In conjunction with the 1996 acquisition of the stock of Elsinore
Aerospace Services, Inc. and certain assets of Elsinore Engineering
(collectively "Elsinore"), the Company acquired, among other intangible
assets, the ability to issue certain Federal Aviation Administration (the
"FAA") design approvals for modifications to designated aircraft through
Elsinore's FAA-issued Designated Alteration Station ("DAS") approval status.
In July 1997, the FAA notified the Company that its facilities do not fully
comply with certain regulations governing such DAS status. The FAA granted
the Company until September 10, 1997 to bring the facilities into full
compliance and curtailed the operations of the facilities as a DAS until such
time as they achieve full compliance.
The Company has already taken steps to bring its DAS status into full
compliance with FAA regulations and the Company expects to be in full
compliance within the designated period. Therefore, the Company does not
anticipate the FAA will revoke or further curtail its DAS status. As a
result, management believes the ultimate resolution of the foregoing matter
will not have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
11.1 Statement regarding computation of per share earnings of the
Company
20.1 Filed Final Prospectus of the Company dated April 16, 1997*
-------------------
* Previously filed
b. Reports on Form 8-K
There were no reports filed on Form 8-K for the three months ended June
30, 1997.
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.
DECRANE AIRCRAFT HOLDINGS, INC.
August 13, 1997 By: /s/ R. JACK DECRANE
---------------------------------
Name: R. Jack DeCrane
Title: Chairman of the Board and
Chief Executive Officer
August 13, 1997 By: /s/ ROBERT A. RANKIN
---------------------------------
Name: Robert A. Rankin
Title: Chief Financial Officer and
Secretary
-15-
<PAGE>
EXHIBIT 11.1
DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -------------------
1997 1996 1997 1996
--------- -------- ------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
PRO FORMA NET INCOME (LOSS) USED TO COMPUTE PER SHARE DATA (A)
Income (loss) before extraordinary item.................... $ 1,454 $ (417) $ 2,083 $(1,754)
Extraordinary loss from debt refinancing, net.............. (2,078) - (2,078) -
------- ------ ------- -------
Net income (loss) applicable to primary and fully
diluted earnings (loss) per common share................ $ (624) $ (417) $ 5 $(1,754)
------- ------ ------- -------
------- ------ ------- -------
PRO FORMA FOR THE RECAPITALIZATION
Primary Earnings per Common Share
Weighted average number of common and dilutive
common equivalent shares outstanding (B)................ 5,161 2,289 4,085 2,289
------- ------ ------- -------
------- ------ ------- -------
Primary Earnings (Loss) per Common Share
Income (loss) before extraordinary item................... $ .28 $ (.18) $ .51 $ (.77)
Extraordinary loss from debt refinancing.................. (.40) - (.51) -
------- ------ ------- -------
Net income (loss)......................................... $ (.12) $ (.18) $ - $ (.77)
------- ------ ------- -------
------- ------ ------- -------
Fully Diluted Earnings per Common Share
Weighted average number of common and dilutive
common equivalent shares outstanding (B)................ 5,173 2,289 4,098 2,289
------- ------ ------- -------
------- ------ ------- -------
Fully Diluted Earnings (Loss) per Common Share (C)
Income (loss) before extraordinary item................... $ .28 $ (.18) $ .51 $ (.77)
Extraordinary loss from debt refinancing.................. (.40) - (.51) -
------- ------ ------- -------
Net income (loss)......................................... $ (.12) $ (.18) $ - $ (.77)
------- ------ ------- -------
------- ------ ------- -------
</TABLE>
- ---------------------
(A) The weighted average number of shares assumes that the redeemable
warrants and preferred stock converted into common stock pursuant to the
Recapitalization had been converted and thus outstanding since the dates
of issuance. As a result, pro forma net income (loss) per common share
is computed using the reported net income (loss) of the Company before
deductions for the adjustments in redemption value of redeemable
warrants and preferred stock dividends.
(B) Redeemable warrants and non-compensatory stock options are excluded for
the three months and six months ended June 30, 1996 as they are
anti-dilutive.
(C) The fully dilutive effect of common equivalent shares on the calculation
of fully diluted earnings (loss) per common and dilutive common
equivalent shares for the three months and six months ended June 30,
1997 and 1996 was not material.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 301
<SECURITIES> 0
<RECEIVABLES> 14,227
<ALLOWANCES> 367
<INVENTORY> 21,769
<CURRENT-ASSETS> 37,633
<PP&E> 25,596
<DEPRECIATION> 12,939
<TOTAL-ASSETS> 70,535
<CURRENT-LIABILITIES> 18,148
<BONDS> 0
0
0
<COMMON> 53
<OTHER-SE> 36,160
<TOTAL-LIABILITY-AND-EQUITY> 70,535
<SALES> 54,248
<TOTAL-REVENUES> 54,248
<CGS> 40,721
<TOTAL-COSTS> 40,721
<OTHER-EXPENSES> 410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,284
<INCOME-PRETAX> 3,240
<INCOME-TAX> 1,157
<INCOME-CONTINUING> 2,083
<DISCONTINUED> 0
<EXTRAORDINARY> 2,078<F1>
<CHANGES> 0
<NET-INCOME> 5
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>EXTRAORDINARY LOSS FROM DEBT REFINANCING
</FN>
</TABLE>
