<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
----------------------
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 0-10583
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- --------------------------------------------------------------------------------
FUQUA ENTERPRISES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-1988043
--------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
ONE ATLANTIC CENTER, SUITE 5000
1201 W. PEACHTREE STREET, N.W., ATLANTA, GEORGIA 30309
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(Address of principal executive offices)
Registrant's telephone number, including area code: 404-815-2000
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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 No X
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of October 31, 1996, there
were 4,478,847 shares outstanding of Common Stock, Par Value $2.50 per share.
<PAGE> 2
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
- September 30, 1996 and December 31, 1995
Condensed Consolidated Statements of Income
- for three months and nine months ended September 30, 1996 and September 30, 1995
Condensed Consolidated Statements of Cash Flows
- for nine months ended September 30, 1996 and September 30, 1995
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
(i)
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars In Thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ --------------
ASSETS (Unaudited)
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,076 $ 29,000
Investments available for sale . . . . . . . . . . . . . . . . . . . . . . . . 11,287 12,550
Receivables
Trade accounts, less allowance of $309 (1995, $200) . . . . . . . . . . . . . 32,570 19,102
Note receivable from sale of subsidiary . . . . . . . . . . . . . . . . . . . 11,767 11,352
Lease receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,306 -
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,597 21,695
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . 3,262 910
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,189 3,614
-------------------------
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,054 98,223
-------------------------
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . 46,096 32,303
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (13,489) (10,841)
-------------------------
Net Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . 32,607 21,462
-------------------------
Intangible assets, less accumulated amortization of $277 (1995, $25) . . . . . 13,559 5,013
Lease receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,214 -
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,066 1,066
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,621 95
-------------------------
Total Assets of Continuing Operations . . . . . . . . . . . . . . . . . . . 159,121 125,859
Total Assets of Discontinued Operations . . . . . . . . . . . . . . . . . . 6,248 10,903
-------------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $165,369 $ 136,762
=========================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
1
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CONDENSED CONSOLIDATED BALANCE SHEETS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars In Thousands, Except Share Data)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ --------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 2,064
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . 23,983 18,800
Long-term liabilities due within one year . . . . . . . . . . . . . . . . . . . 12,625 11,668
-------------------------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 36,608 32,532
Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,284 22,041
-------------------------
Total Liabilities of Continuing Operations . . . . . . . . . . . . . . . . 77,892 54,573
Total Liabilities of Discontinued Operations . . . . . . . . . . . . . . . - 301
-------------------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,892 54,874
-------------------------
Stockholders' equity
Preference stock, $1 par value:
authorized 8,000,000 shares; none issued . . . . . . . . . . . . . . . . . - -
Common stock, $2.50 par value:
authorized 20,000,000 shares; issued 4,523,669
shares; (1995, 4,443,169 shares) . . . . . . . . . . . . . . . . . . . . . 11,309 11,108
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 24,847 24,074
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,223 46,698
Unrealized gains (losses) on investments . . . . . . . . . . . . . . . . . . . (55) 28
-------------------------
88,324 81,908
Treasury stock, at cost: 44,822 shares; (1995, 995 shares) . . . . . . . . . . (847) (20)
-------------------------
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . 87,477 81,888
-------------------------
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . $165,369 $ 136,762
=========================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
2
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Unaudited; Amounts In Thousands, Except Per Share Data)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Net Sales . . . . . . . . . . . . . . . . . . . . . . . $ 49,655 $ 27,923 $ 127,053 $ 85,665
Investment income . . . . . . . . . . . . . . . . . . . 572 210 1,839 576
-------------------------------------------------------
Total revenues . . . . . . . . . . . . . . . . . . . . 50,227 28,133 128,892 86,241
-------------------------------------------------------
COSTS AND EXPENSES:
Cost of sales . . . . . . . . . . . . . . . . . . . . . 38,210 23,475 98,584 73,183
Selling, general and administrative expenses . . . . . 7,881 2,431 19,682 7,042
Interest expense . . . . . . . . . . . . . . . . . . . 862 198 1,956 713
-------------------------------------------------------
Total costs and expenses . . . . . . . . . . . . . . . 46,953 26,104 120,222 80,938
-------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . 3,274 2,029 8,670 5,303
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . 1,187 708 3,145 1,971
-------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS . . . . . . . . . . . . 2,087 1,321 5,525 3,332
-------------------------------------------------------
DISCONTINUED OPERATIONS:
Income (loss) from discontinued operations, net . . . . - (651) - 602
-------------------------------------------------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . $ 2,087 $ 670 $ 5,525 $ 3,934
=======================================================
PER SHARE:
Income from Continuing Operations . . . . . . . . . . . $ .46 $ .34 $ 1.21 $ .86
Net Income . . . . . . . . . . . . . . . . . . . . . . $ .46 $ .17 $ 1.21 $ 1.02
Common shares and equivalents . . . . . . . . . . . . . . 4,565 3,870 4,556 3,864
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Unaudited; Dollars In Thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For Nine Months Ended
September 30,
-------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net cash used in continuing operations . . . . . . . . . . . . . . . . . . . $ (6,584) $ (1,107)
Net cash provided by (used in) discontinued operations . . . . . . . . . . . 3,759 (525)
-------------------------
Net Cash Used In All Operations . . . . . . . . . . . . . . . . . . . . . (2,825) (1,632)
-------------------------
INVESTING ACTIVITIES
Purchase of business, net of cash acquired . . . . . . . . . . . . . . . . .
(41,300) -
Sales of available for sale investments . . . . . . . . . . . . . . . . . . . 21,465 2,625
Purchases of available for sale investments . . . . . . . . . . . . . . . . . (20,341) (375)
Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . (2,041) (1,297)
Total from discontinued operations . . . . . . . . . . . . . . . . . . . . . (165) (288)
-------------------------
Net Cash Provided By (Used In) Investing Activities . . . . . . . . . . . (42,382) 665
-------------------------
FINANCING ACTIVITIES
Net increase in notes payable and long-term liabilities . . . . . . . . . . . 20,200 793
Payment of long-term liabilities . . . . . . . . . . . . . . . . . . . . . . (2,064) (449)
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . 974 946
Acquired shares for treasury . . . . . . . . . . . . . . . . . . . . . . . . (827) (25)
-------------------------
Net Cash Provided By Financing Activities . . . . . . . . . . . . . . . 18,283 1,265
-------------------------
Increase (Decrease) in Cash and Cash Equivalents
Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,518) 1,111
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,594 (813)
Cash and Cash Equivalents, Beginning of Period . . . . . . . . . . . . . . . . 29,000 4,231
-------------------------
Cash and Cash Equivalents, End of Period . . . . . . . . . . . . . . . . . . . $ 2,076 $ 4,529
-------------------------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 7
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
1. CORPORATE DEVELOPMENT ACTIVITIES:
Fuqua Enterprises, Inc. ("Fuqua"), formerly Vista Resources, Inc., changed
its name to Fuqua in September 1995. In December 1995, Fuqua sold its
insurance subsidiary, American Southern Insurance Company ("American Southern")
and, in January 1996, made the decision to discontinue the operations of Kroy
Tanning Company, Incorporated ("Kroy").
The results of operations of American Southern and Kroy have been classified
as discontinued operations in the accompanying 1995 three months and nine
months results as follows:
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR NINE MONTHS ENDED
(Dollars in thousands) SEPTEMBER 30, 1995 SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 14,914 $ 43,194
Costs and expenses 14,583 41,475
-------- --------
Income before income taxes 331 1,719
Income taxes (24) 111
-------- --------
Net income $ 355 $ 1,608
======== ========
</TABLE>
In November 1995, Fuqua acquired Basic American Medical Products, Inc.
("Basic"). Basic, through its divisions, Simmons Healthcare, Omni Manufacturing
and SSC Medical, is a manufacturer and distributor of medical equipment and
furnishings for the acute, long-term and home health care markets.
In April 1996, Fuqua, through its wholly-owned subsidiaries, Lumex Medical
Products, Inc. and MUL Acquisition Corp. II, consummated the acquisition of
the medical products operations of Lumex, Inc. (the "Lumex Division") for
approximately $40.7 million in cash, subject to final adjustment as provided in
the asset sale agreement. The final purchase price adjustment has not been
resolved and may ultimately be settled by arbitration which could result in a
change in the purchase price and the allocation thereof to the net assets
acquired. The purchase price consisted of all cash and was financed with
internal funds and $33.0 million of borrowings under Fuqua's Revolving Credit
Facility. The Lumex Division, whose 1995 net sales were $63 million, is
headquartered in Bay Shore, Long Island, New York and develops and markets a
wide range of health care products including, patient aids, specialty seating,
bathroom safety, mobility products, health care beds and therapeutic support
systems.
2. PER SHARE CALCULATIONS:
Per share calculations are based on the average number of shares outstanding
plus common stock equivalents. Common stock equivalents include the effect of
options granted to key employees under Fuqua's Stock Option Plans, using the
treasury stock method. Fully diluted per share calculations are not
significantly different from those reported.
3. INVENTORIES:
Inventories consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(Dollars in thousands) 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 9,213 $ 6,598
Work in progress 11,186 6,738
Raw materials and supplies 15,198 8,359
-------- --------
$ 35,597 $ 21,695
======== ========
</TABLE>
5
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4. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
FOR NINE MONTHS ENDED
SEPTEMBER 30,
(Dollars in thousands) 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest payments $ 2,179 $ 1,491
-------- --------
Income tax payments $ 2,095 $ 2,893
-------- --------
</TABLE>
5. REVOLVING CREDIT FACILITY:
In June 1996, Fuqua amended its Revolving Credit Facility to expand the
maximum borrowing amount from $60 million to $100 million. The Revolving
Credit Facility bears interest based on matrix pricing. At September 30, 1996,
borrowings under the Revolving Credit Facility were $36 million which accrue
interest at the rate of LIBOR plus 70 basis points. The covenants of the
Revolving Credit Facility are substantially the same as those which existed
under Fuqua's previous credit facility and include normal and customary
restrictions regarding funded debt to capital, funded debt to cash flow,
interest coverage and limitations of dividend payments and treasury stock
purchases.
On November 8, 1996, Fuqua entered into a Letter of Credit Agreement with
the agent bank that leads the bank group which funds Fuqua's Revolving Credit
Facility. The Letter of Credit Agreement provides up to $3,000,000 in
outstanding letters of credit for Fuqua to use in connection with its import
and export activities.
6. CAPITAL STOCK:
During the third quarter of 1996, options for 25,000 shares of common stock
were issued at $24.00 per share and no options were exercised in connection
with Fuqua's stock option plans. During the third quarter of 1996, no shares
of common stock were acquired by Fuqua for its treasury.
During the third quarter of 1995, options for 67,000 shares were exercised
at $8.50 per share and Fuqua did not purchase any shares for its treasury.
7. ENVIRONMENTAL CONTINGENCY:
In March 1994, the office of the District Attorney of Suffolk County, Long
Island, New York initiated an investigation to determine whether regulated
substances had been discharged from one of the Lumex Division's Bay Shore
facilities in excess of permitted levels. An environmental consulting firm was
engaged by the Lumex Division to conduct a more comprehensive site
investigation, develop a remediation work plan and provide a remediation cost
estimate. These activities were performed to determine the nature and extent
of contaminantes present on the site and to evaluate their potential off-site
extent.
In connection with Fuqua's April 1996 acquisition of the Lumex Division,
Fuqua assumed the obligations associated with this environmental matter. At
the time of Fuqua's acquisition, the Lumex Division had $1.3 million in
reserves for remediation costs, including additional investigation costs as may
be required. Reserves are established when it is probable that a liability has
been incurred and such costs can be reasonably estimated. The Lumex Division's
estimates of these costs were based upon currently enacted laws and regulations
and the professional judgment of consultants and counsel. Where available
information was sufficient to estimate the amount of liability, that estimate
has been used. Where information was only sufficient to establish a range of
probable liability and no point within the range is more likely than another,
the lower end of the range has been used. The Lumex Division did not assume
any such costs will be recoverable from third parties nor has the Lumex
Division discounted any of its cost estimates although a portion of the
remediation work plan would be performed over a period of years.
The amounts of these liabilities are difficult to estimate due to such
factors as the extent to which remedial actions may be required, laws and
regulations change or the actual costs of remediation differ when the final
work plan is
6
<PAGE> 9
performed. The estimate of the costs, which is not probable but for which
there exists at least a reasonable possibility of occurrence, exceeds the
reserves recorded by the Lumex Division by $2.2 million.
____________________
The unaudited condensed financial statements reflect all adjustments
(consisting of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods. Additionally, interim results are not necessarily indicative of the
results which may be expected for the entire fiscal year. It is suggested that
these unaudited condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto
included in Fuqua's 1995 Annual Report on Form 10-K.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CORPORATE DEVELOPMENT ACTIVITIES:
Acquisitions: In November 1995, Fuqua acquired 100% of the common stock of
Basic American Medical Products, Inc. ("Basic"). Basic, through its
divisions, Simmons Healthcare, Omni Manufacturing and SSC Medical, is a
manufacturer and distributor of medical equipment and furnishings for the
acute, long-term and home health care markets. Basic's results of operations
have been included in the consolidated results of Fuqua for the three months
and nine months ended September 30, 1996.
In April 1996, Fuqua, through its wholly-owned subsidiaries, Lumex Medical
Products, Inc. and MUL Acquisition Corp. II, consummated the acquisition of
the medical products operations of Lumex, Inc. (the "Lumex Division") for
approximately $40.7 million, subject to final adjustment as provided in the
asset sale agreement. The final purchase price adjustment has not been
resolved and may ultimately be settled by arbitration which could result in a
change in the purchase price and the allocation thereof to the net assets
acquired. The purchase price consisted of all cash and was financed with
internal funds and borrowings under Fuqua's Revolving Credit Facility. The
Lumex Division, whose 1995 net sales were $63 million, develops and markets a
wide range of health care products including patient aids, specialty seating,
bathroom safety, mobility products, health care beds and therapeutic support
systems. The Lumex Division is headquartered in Bay Shore, Long Island, New
York and markets the majority of its products to the home health care market
and the remainder to institutional markets, including acute care and extended
care facilities and dialysis clinics. The results of operations of the Lumex
Division have been included in Fuqua's consolidated results for the third
quarter of 1996 and, together with Basic's results, represents Fuqua's Medical
Products Operations. Management believes that Basic and the Lumex Division
will provide a base for Fuqua's further expansion in the medical products
markets.
In April 1996, Fuqua's Leather Operations, through a joint venture, acquired
an interest in a tannery in the People's Republic of China. Through its joint
venture, the Leather Operations produces leather in China and markets the
products throughout China and Southeast Asia. The results of operations of the
joint venture since its acquisition have been included in the consolidated
results of Fuqua.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION:
Medical Products Operations: Net sales in the third quarter of 1996 were
$21,826,000 which produced a net operating profit of $1,339,000 and resulted in
a net profit margin of 6.1%, after selling and administrative costs of
$5,165,000. Net sales for the nine months ended September 30, 1996 were
$49,596,000 which produced a net operating profit of $2,765,000 and resulted in
a net profit margin of 5.6%, after selling and administrative costs of
$11,559,000.
Inventories at September 30, 1996 were $13,877,000 as compared to $5,267,000
at December 31, 1995 and accounts receivable at September 30, 1996 were
$15,423,000 as compared to $5,740,000 at December 31, 1995. The significant
increases at September 30, 1996 reflect the impact of the April 1996
acquisition of the Lumex Division.
7
<PAGE> 10
Capital expenditures for the Medical Products Operations were $459,000 in
the third quarter of 1996 and were $805,000 for the first nine months of 1996.
Capital expenditures are expected to be approximately $1,000,000 for the entire
year of 1996. Depreciation and amortization expense for the third quarter of
1996 was $681,000 and for the first nine months of 1996 was $1,529,000.
Leather Operations: Net sales of the Leather Operations were $27,837,000 in
the third quarter of 1996 which was a decrease of $86,000 (less than 1%)
compared to the third quarter of 1995. The net sales for the first nine months
of 1996 were $77,457,000 which was a decrease of $8,208,000 (9.6%) compared to
the first nine months of 1995. The decrease in the nine month period was
principally the result of decreased volume of leather shipped to producers of
shoes who were adversely affected by soft retail demand. Sales to foreign
customers represented 34.9% of net sales in the third quarter of 1996 as
compared to 25.5% of net sales in the third quarter of 1995.
The gross profit margin increased to 17.8% of sales in the third quarter of
1996 and 18.3% in the first nine months of 1996 from 15.9% and 14.6%,
respectively, in the comparable periods of 1995, primarily due to lower hide
costs in 1996.
Selling and administrative expenses of $1,824,000 in the third quarter of
1996 increased $71,000 (4.0%) compared to the third quarter of 1995. The
selling and administrative expenses in the first nine months of 1996 were
$5,506,000 and increased $253,000 (4.8%) compared to the first nine months of
1995. The increases in selling and administrative expenses in 1996 were due
principally to increased selling expenses associated with higher levels of
foreign sales and the increase in the mix of customers on which higher sales
commissions were required in the third quarter.
Accounts receivable were $17,147,000 at September 30, 1996, as compared to
$13,043,000 at December 31, 1995. During the third quarter of 1996,
inventories increased 32.2%, from $16,428,000 at December 31, 1995 to
$21,720,000 at September 30, 1996. These increases in receivables and
inventories reflect principally seasonal factors.
Capital expenditures for the Leather Operations were $689,000 in the third
quarter of 1996 and $1,296,000 for the first nine months of 1996. Capital
expenditures are expected to be approximately $1,500,000 for the entire year of
1996. Depreciation expense for the Leather Operations in the third quarter of
1996 was $432,000 and $1,324,000 for the first nine months 1996 as compared to
$412,000 and $1,152,000 for the respective periods of 1995.
Corporate Office Operations: Investment income in the third quarter of 1996
was $564,000 and $1,831,000 in the first nine months 1996 as compared to
$210,000 for the third quarter and $576,000 for the first nine months of 1995.
The increase in investment income in 1996 reflects the return on the proceeds
from the sale of Fuqua's insurance subsidiary in December 1995.
Interest expense in the third quarter of 1996 was $862,000 and $1,956,000 in
the first nine months 1996 as compared to $198,000 and $713,000, respectively,
in the comparable periods of 1995. The 1996 amounts reflect the higher
interest and costs associated with the larger amounts of outstanding debt
incurred in connection with acquisitions.
General and Administrative expenses for corporate office activities were
$892,000 in the third quarter of 1996 as compared to $678,000 in the comparable
period of 1995 and were $2,617,000 in the first nine months of 1996 as compared
to $1,789,000 in the first nine months of 1995. The increases in 1996 amounts
resulted mainly from higher costs and expenses associated with higher levels of
corporate development activity.
The provision for income taxes for the first nine months of 1996 represents
an effective tax rate of 36.3% compared to 37.2% for the first nine months of
1995. This decrease reflects the favorable impacts of tax planning in 1996,
and management expectations regarding the income tax provision for Fuqua's
calendar year.
Discontinued Operations: During December 1995, Fuqua sold its insurance
subsidiary, American Southern Insurance Company ("American Southern") for
$34,000,000 to Atlantic American Corporation, an Atlanta, Georgia
8
<PAGE> 11
based publicly-held insurance holding company. The proceeds from the sale
included cash of $22,648,000 and a note receivable from the purchaser of
$11,352,000. The note bore interest at prime, half of which was payable
quarterly and half of which was payable, together with principal, in October
1996. The term and amount of the note receivable is the same as the note
payable which arose in connection with Fuqua's acquisition of American Southern
in 1991. In October 1996, the note payable was repaid from the proceeds of the
note receivable. In September 1996, Fuqua settled the disputed amounts which
the State of Florida claimed should have been paid by American Southern for tax
years up through and including 1991. The company from which Fuqua acquired
American Southern reimbursed Fuqua for the amounts paid to the State of
Florida.
In January 1996, Fuqua made the decision to discontinue the operations of
Kroy Tanning Company, Incorporated, ("Kroy"), which historically had been
unprofitable. Accordingly, Kroy has been treated as a discontinued operation.
In connection with Fuqua's decision to discontinue the operations of Kroy,
$4,800,000, before the benefit of income taxes, was accrued at December 31,
1995 to write down assets to their estimated net realizable values and to pay
for obligations, including environmental clean up costs, in connection with the
wind down of operations and the closing of Kroy's facility in East Wilton,
Maine.
Recent Pronouncements: In March 1995, the Financial Accounting Standards
Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"), which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed. Fuqua adopted SFAS 121 in the first quarter
of 1996 and its adoption did not have a material impact on its results of
operations or financial position.
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation", which encourages companies
to recognize expense for stock-based awards based on their fair market value on
the date of grant. Fuqua has elected to continue to use APB No. 25,
"Accounting for Stock Issued to Employees" for expense recognition purposes,
but will be required by Statement 123 to show pro forma disclosures in Fuqua's
1996 financial statements.
LIQUIDITY AND CAPITAL RESOURCES:
Fuqua, as a result of having the proceeds from the sale of American Southern
and having expanded the Revolving Credit Facility from $60,000,000 to
$100,000,000, had at September 30, 1996, $13,363,000 in cash and investments
and had substantial borrowing capacity. The covenants of the expanded
Revolving Credit Facility are substantially the same as those which existed
under Fuqua's previous credit facility and include normal and customary
restrictions regarding funded debt to capital, funded debt to cash flow,
interest coverage and limitations of dividend payments and treasury stock
purchases. On November 8, 1996, Fuqua entered into a Letter of Credit Agreement
with the agent bank that leads the bank group which funds Fuqua's Revolving
Credit Facility. The Letter of Credit Agreement provides up to $3,000,000 in
outstanding letters of credit for Fuqua to use in connection with its import
and export activities.
In March 1994, the office of the District Attorney of Suffolk County, Long
Island, New York initiated an investigation to determine whether regulated
substances had been discharged from one of the Lumex Division's Bay Shore
facilities in excess of permitted levels. An environmental consulting firm was
engaged by the Lumex Division to conduct a more comprehensive site
investigation, develop a remediation work plan and provide a remediation cost
estimate. These activities were performed to determine the nature and extent
of contaminantes present on the site and to evaluate their potential off-site
extent.
In connection with Fuqua's April 1996 acquisition of the Lumex Division,
Fuqua assumed the obligations associated with this environmental matter. At
the time of Fuqua's acquisition, the Lumex Division had $1.3 million in
reserves for remediation costs, including additional investigation costs as may
be required. Reserves are established when it is probable that a liability has
been incurred and such costs can be reasonably estimated. The Lumex Division's
estimates of these costs were based upon currently enacted laws and regulations
and the
9
<PAGE> 12
professional judgment of consultants and counsel. Where available information
was sufficient to estimate the amount of liability, that estimate has been
used. Where information was only sufficient to establish a range of probable
liability and no point within the range is more likely than another, the lower
end of the range has been used. The Lumex Division did not assume any such
costs will be recoverable from third parties nor has the Lumex Division
discounted any of its cost estimates although a portion of the remediation work
plan would be performed over a period of years.
The amounts of these liabilities are difficult to estimate due to such
factors as the extent to which remedial actions may be required, laws and
regulations change or the actual costs of remediation differ when the final
work plan is performed. The estimate of the costs, which is not probable but
for which there exists at least a reasonable possibility of occurrence, exceeds
the reserves recorded by the Lumex Division by $2.2 million.
In past years, certain of Fuqua's subsidiaries involved in the tanning of
leather ceased operations and were required to conduct environmental clean up
procedures under supervision of state environmental agencies. Additionally,
certain of Fuqua's subsidiaries, which were in businesses no longer conducted
by Fuqua, were named as Potentially Responsible Parties for sites where these
subsidiaries allegedly delivered waste products. The costs attributable to
these matters have not been material to Fuqua's results of operations or
financial position and management does not expect that future amounts to be
incurred will materially exceed amounts already accrued or paid.
Management believes that Fuqua has adequate resources and borrowing capacity
to meet its obligations when due and to pursue an active plan of expansion
through acquisitions.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
There have been no material developments in matters described in reports
filed in fiscal 1996.
The nature of Fuqua's business results in claims or litigation which
management believes to be routine and incidental to Fuqua's business. Fuqua
maintains insurance in such amounts and with such coverages and deductibles as
management believes are reasonable and prudent, although in certain actions,
plaintiffs request damages that may not be covered by insurance. Management
does not believe that the outcome of any such pending claims and litigation
will have an adverse material effect upon Fuqua's results of operations or
financial condition, although no assurance can be given as to the ultimate
outcome of any such claim or litigation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
10(a) Letter of Credit Agreement between SunTrust Bank,
Atlanta and Fuqua dated as of November 8, 1996 (Fuqua
agrees to furnish a copy of any omitted schedule to
the Commission upon request)
11 Statement of Computation of Earnings Per Share
27 Financial Data Schedule (for SEC use only) Article 5
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three
months ended September 30, 1996.
10
<PAGE> 13
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.
FUQUA ENTERPRISES, INC.
Registrant
s/s Brady W. Mullinax, Jr.
-----------------------------------------------
Brady W. Mullinax, Jr., Vice President-Finance,
Treasurer and Chief Financial Officer (Principal
Financial and Accounting Officer and Executive
Officer duly authorized to sign on behalf of the
registrant)
Date: November 14, 1996
11
<PAGE> 1
EXHIBIT 10(a)
LETTER OF CREDIT AGREEMENT
November 8, 1996
Fuqua Enterprises, Inc.
One Atlantic Center
1201 West Peachtree Street, N.W.
Suite 5000
Atlanta, GA 30309
Attention: Mr. Brady W. Mullinax, Jr.
Vice President-Finance
Treasurer and Chief Financial Officer
Ladies and Gentlemen:
SunTrust Bank, Atlanta, a Georgia banking corporation (the "Issuer"),
subject to and upon the terms and conditions set forth in this Letter of Credit
Agreement (this "Agreement") and the Applications (as hereinafter defined),
hereby establishes up to but not including June 28, 1999 (the "Maturity
Date"), a commitment in favor of Fuqua Enterprises, Inc. (the "Applicant") for
the issuance of stand-by and trade letters of credit (collectively, the
"Letters of Credit") in an aggregate face amount, together with all
unreimbursed draws upon such Letters of Credit, not to exceed THREE MILLION
DOLLARS ($3,000,000.00) at any one time outstanding (the "Commitment"). The
Applicant and the Issuer hereby agree that the letters of credit described on
Exhibit "A" attached hereto and incorporated herein by this reference shall be
deemed to have been issued pursuant to the Commitment and shall constitute
"Letters of Credit" for all purposes hereunder. Within the limits of the
Commitment, the Issuer agrees, upon the terms set forth herein, to issue
Letters of Credit from time to time upon the request of the Applicant and
receipt of a duly executed Application (as hereinafter defined) with respect
thereto, provided that:
(1) the Applicant shall not request that any Letter of
Credit be issued if, after giving effect thereto, the sum of the face amount of
all Letters of Credit outstanding plus the amount of the unreimbursed draws
under Letters of Credit issued hereunder (collectively, the "Letter of Credit
Obligations") would exceed the amount of the Commitment;
(2) in no event shall any Letter of Credit have an expiration
date later than the Maturity Date; and
(3) the Applicant shall not be entitled to request that the
Issuer issue any Letter of Credit if a default or Event of Default exists or
would exist as a result thereof.
All Letters of Credit shall be denominated in United States Dollars.
The Applicant agrees that the Issuer may refuse to issue any Letter of Credit
requested hereunder if the Issuer reasonably determines that such issuance
would be illegal or impractical.
<PAGE> 2
Procedure for Issuance:
Whenever the Applicant desires the issuance of a Letter of Credit, it
shall deliver to the Issuer written notice in the form of the Issuer's standard
Application and Agreement for Irrevocable Stand-by Letters of Credit
substantially in the form of Exhibit "B" attached hereto, in the case of
stand-by Letters of Credit or Issuer's standard Application and Security
Agreement for Commercial Letters of Credit substantially in the form of Exhibit
"C" attached hereto, in the case of trade letters of credit (in either case,
an "Application" and collectively, the "Applications"), duly executed by
authorized officers of the Applicant, no later than 11:00 A.M. on the third
Business Day prior to the proposed date of the issuance of the Letter of
Credit. The Application shall specify (i) the proposed date of issuance of the
proposed Letter of Credit (which shall be a Business Day), (ii) the face amount
of the proposed Letter of Credit, (iii) the expiration date of the proposed
Letter of Credit and (iv) the name and address of the beneficiary of the
proposed Letter of Credit. The Application shall also specify a precise
description of any documents and the verbatim text of any certificate to be
presented by the beneficiary of such Letter of Credit in connection with a draw
thereupon. By the Applicant's execution below, the Applicant acknowledges that
the Issuer is issuing each Letter of Credit hereunder in express reliance on
the terms hereof which are in addition to, and not in lieu of, the terms of the
Application executed in connection therewith. Issuer acknowledges that it is
not requiring the Applicant to grant to the Issuer any security interest, lien
or other encumbrance as security for any of the Letter of Credit Obligations.
Accordingly, the Issuer agrees, with respect to each Letter of Credit issued
hereunder, to delete by striking through, the following provisions in the form
of Application relating to such Letter of Credit:
Application and Agreement for Irrevocable Standby Letter of Credit (Exhibit B)
Section 5, Section 6 (excluding the last sentence thereof), and
Section 9.
Application and Security Agreement for Commercial Letter of Credit (Exhibit C)
Section 4, Section 6, and Section 7(a)(ii).
The Issuer and the Applicant agree that the Application relating to the Letter
of Credit described on Exhibit A hereto is hereby amended by deleting therefrom
the provisions set forth above applicable to the type of Application for such
Letter of Credit.
L/C Fee:
The Applicant shall pay to the Issuer a letter of credit fee equal to
the "Applicable Margin" then in effect pursuant to the Credit Agreement
referenced below, calculated on the average daily amount of the Letter of
Credit Obligations, payable quarterly in arrears, on the last day of each
calendar quarter, calculated upon an actual/360 day basis. In the event that
the Credit Agreement is terminated, repaid or the Issuer is no longer a party
thereto, the Applicant and Issuer agree to negotiate a new letter of credit fee
in good faith and prior thereto, the letter
2
<PAGE> 3
of credit fee shall continue to accrue and be payable at the rate calculated
pursuant to the terms of the Credit Agreement as in effect on the date that the
Credit Agreement was terminated.
In addition, the Applicant shall pay to the Issuer such other
issuance, amendment and assignment fees with respect to the Letters of Credit
as the Applicant and the Issuer shall agree to from time to time.
Reimbursement Obligation:
The reimbursement obligation of the Applicant with respect to each
Letter of Credit shall be governed by the terms of the Application executed in
connection therewith.
Documentation:
As a condition precedent to Issuer's obligation to issue the initial
Letter of Credit hereunder, the Applicant shall deliver the following documents
to the Issuer prior to such issuance, duly executed by the parties thereto:
(1) This Agreement; and
(2) Secretary's Certificate of the Applicant as to its Certificate
of Incorporation, By-laws, Resolutions and Incumbency, in form
acceptable to Issuer.
Covenants:
As long as any Letter of Credit Obligations shall remain outstanding
or the Applicant shall have any obligation to the Issuer under the Applications
or this Agreement, the Applicant shall comply with each of the covenants set
forth in Articles VI and VII of that certain Amended and Restated Credit
Agreement, dated as of June 28, 1996, by and among Applicant, SunTrust Bank,
Atlanta, as Agent and as lender, and each of the other financial institutions
party thereto (the "Credit Agreement") which covenants are, for the benefit of
the Issuer, incorporated by reference herein (including the definitions of the
terms used therein which appear in other provisions of the Credit Agreement),
irrespective of any termination, modification, amendment or consent or waiver
relating to such covenants or termination of the Credit Agreement; provided
that, (i) any reference to any "Lender" or the "Agent" or the "Required
Lenders" shall be deemed to mean the Issuer, (ii) the terms "Default" and
"Event of Default" shall be deemed to have the meanings given such terms
herein, (iii) all reference to this "Agreement", any "Note", any "Loan", any
"Borrowing" or the "Credit Documents" shall be deemed to mean this Agreement
and the Applications and other documents executed in connection herewith.
Effect of Amendment of Credit Agreement:
Notwithstanding the foregoing paragraph, any modification, amendment
or consent or waiver relating to the covenants or other provisions incorporated
herein from the Credit
3
<PAGE> 4
Agreement entered into while the Issuer is a party to the Credit Agreement
shall be automatically incorporated into or honored for purposes of this
Agreement with the same force and effect.
Termination or Withdrawal of Issuer from Credit Agreement:
In the event that indebtedness outstanding pursuant to the Credit
Agreement is paid in full or the Credit Agreement is otherwise terminated or
the Issuer is no longer a party thereto, the Applicant and the Issuer agree to
negotiate in good faith replacement covenants for this Agreement. Until such
time as appropriate amendments or modifications to this Agreement are executed
by the parties, however, the terms of the Credit Agreement incorporated herein
shall remain in full force and effect.
Events of Default:
In addition to the Events of Default set forth in any Application, the
Applicant and the Issuer expressly agree that the following events shall also
constitute "Events of Default" pursuant to the Applications and this Agreement:
(a) the occurrence of an "Event of Default" pursuant to the terms
of the Credit Agreement (as such term is defined therein); and
(b) the failure of the Applicant to comply with the terms and
conditions of this Agreement which failure continues for ten
(10) days or longer after the earlier of (i) discovery by
Applicant of such non-compliance, or (ii) notice from the
Issuer of such non-compliance.
Remedies:
Upon the occurrence and during the continuance of an Event of Default
under any Application, as supplemented by this Letter Agreement, in addition to
the rights and remedies afforded pursuant to the Applications, at law or in any
other document related hereto, the parties expressly agree that every Letter
of Credit issued hereunder shall be deemed to have been drawn in full, and the
Applicant shall immediately reimburse to the Issuer the full amount of such
deemed drawing, together with any other amounts owing hereunder or pursuant to
the Applications in U.S. Dollars, which amount shall be held by the Issuer as
cash collateral for Applicant's obligations pursuant to the Applications and
this Agreement. In the event that any Letter of Credit expires or terminates
without draw, such amount shall be immediately returned to the Applicant,
together with the interest thereon, unless an Event of Default has occurred and
is continuing in which case all interest shall be retain by the Issuer for
application to the obligations of the Applicant hereunder.
Increased Costs:
4
<PAGE> 5
If, after the date hereof, by reason of (x) the introduction of or any
change (including, without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation, or (y) the compliance with any guideline or request from any
central bank or other governmental authority or quasi-governmental authority
exercising control over banks or financial institutions generally (whether or
not having the force of law):
(i) Issuer shall be subject to any tax, duty or other
charge with respect to the Letter of Credit Obligations, or its
obligation to issue Letters of Credit, or the basis of taxation of
payments to Issuer of the principal of or interest on Letter of Credit
Obligations or its obligation to issue Letters of Credit shall have
changed (except for changes in the tax on the overall net income of
Issuer, or franchise taxes applicable thereto, in each case, as
imposed by the jurisdiction in which Issuer's principal executive
office is located); or
(ii) any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve System),
special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, Issuer's applicable
lending office shall be imposed or deemed applicable or any other
condition affecting Letter of Credit Obligations or its obligation to
issue Letters of Credit shall be imposed on Issuer or its applicable
lending office;
and as a result thereof there shall be any increase in the cost to Issuer of
agreeing to make or making, funding or maintaining Letter of Credit Obligations
or its obligation to issue Letters of Credit or there shall be a reduction in
the amount received or receivable by Issuer or its applicable lending office,
then Applicant shall from time to time, upon written notice from and demand by
Issuer on Applicant, pay to the Issuer for the account of Issuer within five
Business Days after the date of such notice and demand, additional amounts
sufficient to indemnify Issuer against such increased cost. A certificate as
to the amount of such increased cost, submitted to Applicant by Issuer in good
faith and accompanied by a statement prepared by the Issuer describing in
reasonable detail the basis for and calculation of such increased cost, shall
constitute prima facie evidence of the matters contained therein. This
paragraph shall survive the termination of this Agreement and the repayment of
the Letter of Credit Obligations provided that, in the event that the Issuer
fails to make written demand for indemnification or compensation pursuant to
this paragraph hereof within one year after the date that the Issuer receives
actual notice or obtains actual knowledge of the promulgation of a law, rule,
order or interpretation or occurrence of another event giving rise to a claim
pursuant to this paragraph, the Applicant shall not have any obligation to pay
any amount with respect to claims accruing prior to the date which is one year
preceding such written demand.
Capital Adequacy:
Without limiting any other provision of this Agreement, in the event
that the Issuer shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation,
5
<PAGE> 6
guideline or order regarding capital adequacy not currently in effect or fully
applicable as of the date hereof, or any change therein or in the
interpretation or application thereof after the date hereof, or compliance by
the Issuer with any request or directive regarding capital adequacy not
currently in effect or fully applicable as of the date hereof (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) from a central bank or governmental authority or body having
jurisdiction, does or shall have the effect of reducing the rate of return on
the Issuer's capital as a consequence of its obligations hereunder to a level
below that which the Issuer could have achieved but for such law, treaty, rule,
regulation, guideline or order, or such change or compliance (taking into
consideration the Issuer's policies with respect to capital adequacy) by an
amount deemed by the Issuer to be material, then within ten (10) Business Days
after written notice and demand by the Issuer), Applicant shall from time to
time pay to the Issuer additional amounts sufficient to compensate the Issuer
for such reduction. Each certificate as to the amount payable under this
paragraph (which certificate shall set forth the basis for requesting such
amounts in reasonable detail), submitted to Applicant by the Issuer in good
faith, shall constitute prima facie evidence of the matters contained therein.
This paragraph shall survive the termination of this Agreement and the
repayment of the Letter of Credit Obligations provided that, in the event that
the Issuer fails to make written demand for indemnification or compensation
pursuant to this paragraph within one year after the date that the Issuer
receives actual notice or obtains actual knowledge of the promulgation of a
law, rule, order or interpretation or occurrence of another event giving rise
to a claim pursuant to this paragraph, the Applicant shall not have any
obligation to pay any amount with respect to claims accruing prior to the date
which is one year preceding such written demand.
Miscellaneous:
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.
(b) This Agreement is expressly incorporated into each
Application and expressly made a part thereof. All terms used
herein without definition shall have the meanings set forth in
the Application.
(c) All portions to the Credit Agreement referenced herein
(including without limitation, the Events of Default set forth
therein) are expressly incorporated into this Agreement by
such reference and shall survive the termination and/or
repayment of the Credit Agreement.
(d) This Agreement may only be amended or modified by a writing
signed by both parties.
(e) This Agreement shall be binding upon the successors and
assigns of the Applicant and inure to the benefit of the
successors and assigns of the Issuer.
6
<PAGE> 7
If these terms and conditions are acceptable to you, please indicate
your acceptance by executing a copy of this Agreement in the space below, and
return a copy to the undersigned officer of the Issuer.
Sincerely,
SUNTRUST BANK, ATLANTA
By: /s/ J. CHRISTOPHER DEISLEY
--------------------------------
Title: First Vice President
----------------------------
By: /s/ JOHN G. TAYLOR
---------------------------------
Title: VICE PRESIDENT
------------------------------
ACCEPTED AND AGREED TO
BY:
FUQUA ENTERPRISES, INC.
By: /s/ Brady W. Mullinax, Jr.
----------------------------------
Its: Vice President-Finance & Treasurer
----------------------------------
Date: November 8, 1996
----------------------------------
Attest: /s/ Mildred H. Hutcheson
------------------------------
Its: Corporate Secretary
----------------------------------
Date: November 8, 1996
----------------------------------
7
<PAGE> 8
EXHIBIT "A"
EXISTING LETTERS OF CREDIT
Letter of Credit No. F501347 in the amount of $228,300.
8
<PAGE> 1
EXHIBIT 11
FUQUA ENTERPRISES, INC.
STATEMENT OF COMPUTATON OF EARNINGS PER SHARE
SEPTEMBER 30, 1996
PRIMARY EARNINGS PER SHARE:
TREASURY STOCK METHOD:
<TABLE>
<CAPTION>
NUMBER OF
TRADING TOTAL TOTAL
MONTH DAYS HIGH LOW
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
July 22 $ 594.500 $ 590.000
August 22 523.125 520.500
September 20 474.750 473.500
-- ----------- -----------
64 $ 1,592.375 $ 1,584.000 $3,176.375
== =========== =========== ==========
AVERAGE: $3,176.375 divided by 64 divided by 2 = $24.815
===========================================================================================================
<CAPTION>
OPTIONS OPTION
OUTSTANDING SHARES PRICE EXTENSION
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5,000 $ 9.500 $ 47,500
121,000 20.250 2,450,250
25,000 20.375 509,375
5,000 21.000 105,000
15,000 20.625 309,375
4,000 18.625 74,500
150,000 20.500 3,075,000
100,000 18.375 1,837,500
25,000 24.000 600,000
------- -----------
Total 450,000 $ 9,008,500
======= ===========
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Average Price (above) $ 24,815
---------
Total Option Extension Divided by Average Price 363,020
Options Outstanding 450,000
---------
Common Stock Equivalents 86,980
Average Shares Outstanding (see page 2) 4,478,847
---------
Use for Primary Earnings Per Share 3rd Quarter 4,565,827
---------
Use for Primary Earnings Per Share 2nd Quarter 4,603,552
---------
Use for Primary Earnings Per Share 1st Quarter 4,499,711
---------
Use for 1st nine months of 1996 (Average) 4,556,363
---------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
-continued-
1
<PAGE> 2
FULLY DILUTED EARNINGS PER SHARE:
AVERAGE NUMBER OF SHARES OUTSTANDING:
<TABLE>
<CAPTION>
BEGINNING ENDING NUMBER SHARES
DATE DATE OF DAYS OUTSTANDING EXTENSION
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7-01-96 7-31-96 31 4,478,847 138,844,257
8-01-96 8-31-96 31 4,478,847 138,844,257
9-01-96 9-30-96 30 4,478,847 134,365,410
-- -----------
92 412,053,924
== ===========
Average Number of Shares Outstanding:
Third Quarter (Extension Divided by Number of Days) 4,478,847
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FIRST
QUARTER
-------
<S> <C>
Closing Price - 9-30-96 $ 23.625
---------
Total Option Extension (from page 1) Divided by Closing Price 381,312
Options Outstanding 450,000
---------
Common Stock Equivalents 68,688
Average Shares Outstanding (from above) 4,478,847
---------
Fully Diluted Shares 4,547,535
Less Primary Shares (from page 1) 4,565,827
---------
Additional Shares (18,292)
---------
(Note: Anti-dilutive; no fully diluted presentation required.)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1996 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,076
<SECURITIES> 11,287
<RECEIVABLES> 46,952
<ALLOWANCES> 309
<INVENTORY> 35,597
<CURRENT-ASSETS> 103,054
<PP&E> 46,096
<DEPRECIATION> (13,489)
<TOTAL-ASSETS> 165,369
<CURRENT-LIABILITIES> 36,608
<BONDS> 41,284
0
0
<COMMON> 11,309
<OTHER-SE> 76,168
<TOTAL-LIABILITY-AND-EQUITY> 165,369
<SALES> 127,053
<TOTAL-REVENUES> 128,892
<CGS> 98,584
<TOTAL-COSTS> 118,266
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 185
<INTEREST-EXPENSE> 1,956
<INCOME-PRETAX> 8,670
<INCOME-TAX> 3,145
<INCOME-CONTINUING> 5,525
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,525
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 0
</TABLE>
