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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from ______ to ______
-------------------------------------------------
Commission file number 0-22580
------------------------------
JPE, Inc.
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of
incorporation or organization)
38-2958730
(I.R.S. Employer Identification No.)
775 Technology Drive, Suite 200, Ann Arbor, Michigan, 48108
(Address of principal executive offices) (Zip Code)
(313) 662-2323
(Registrant's telephone number, including area code)
900 Victors Way, Suite 140, Ann Arbor, Michigan 48108
(Former name, former address and former fiscal year,
if changed, since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
As of September 30, 1997, there were 4,602,180 shares of the registrant's common
stock outstanding.
This Quarterly Report on Form 10-Q contains 16 pages, of which this is page 1.
<PAGE>
JPE, INC.
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets .............................. 3
- At September 30, 1997 and 1996 (unaudited)
and December 31, 1996
Consolidated Statements of Income ........................ 4
- For the Three and Nine Months Ended
September 30, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows .................... 5
- For the Nine Months Ended September 30,
1997 and 1996 (unaudited)
Notes to Unaudited Consolidated
Financial Statements ................................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .......... 10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K ......................... 15
Signature ......................................................... 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JPE, INC.
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Share Data)
<CAPTION>
At September 30, At Dec. 31,
1997 1996 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............. $ 508 $ 681 $ 1,316
Accounts receivable, net .............. 43,350 28,792 26,829
Inventory ............................. 44,394 33,003 37,963
Other current assets .................. 11,916 5,447 8,688
-------- -------- --------
Total current assets ................ 100,168 67,923 74,796
Property, plant and equipment, net ...... 71,665 51,220 69,281
Goodwill, net ........................... 31,632 27,351 27,068
Other assets, net ....................... 2,600 1,814 3,580
-------- -------- --------
Total assets ........................ $206,065 $148,308 $174,725
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ..... $ 1,603 $ 107 $ 323
Short-term debt ....................... 10,545 -- 8,120
Accounts payable ...................... 29,114 19,158 17,643
Accrued liabilities ................... 6,299 4,947 6,190
Income taxes payable .................. 189 -- 382
-------- -------- --------
Total current liabilities ........... 47,750 24,212 32,658
Accrued liabilities ..................... 1,914 1,147 1,547
Deferred income taxes ................... 3,725 2,251 3,184
Long-term debt, non-current ............. 117,729 84,443 101,558
-------- -------- --------
Total liabilities ................... 171,118 112,053 138,947
-------- -------- --------
Shareholders' equity:
Preferred stock, 3,000,000
authorized, no shares issued
and outstanding ...................... -- -- --
Common stock, no par value,
15,000,000 authorized,
4,602,180 and 4,582,480
issued and outstanding at
September 30, 1997 and
December 31, 1996,
respectively, and 4,582,480
shares issued and outstanding
at September 30, 1996 ................ 28,026 27,921 27,921
Retained earnings ..................... 6,932 8,334 7,857
Foreign currency translation
adjustment ........................... (11) -- --
-------- -------- --------
Total shareholders' equity .......... 34,947 36,255 35,778
-------- -------- --------
Total liabilities and
shareholders' equity ............... $206,065 $148,308 $174,725
======== ======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
JPE, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1997 and 1996
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales ................... $70,298 $50,142 $215,330 $153,732
Cost of goods sold .......... 59,801 43,163 184,418 126,589
------- ------- -------- --------
Gross profit .............. 10,497 6,979 30,912 27,143
Charge for impairment
of goodwill (Note D) ....... -- 4,300 -- 4,300
Discontinuance of stamping
operations (Note E) ........ -- -- 2,250 --
Selling, general and
administrative expenses .... 7,293 6,686 21,936 18,667
------- ------- -------- --------
Operating profit (loss) ... 3,204 (4,007) 6,726 4,176
Other expense ............... 8 -- 194 --
Interest expense, net ....... 2,730 1,718 7,346 5,252
------- ------- -------- --------
Income (loss) before
taxes .................. 466 (5,725) (814) (1,076)
Provision for (benefit
from) income taxes ......... 275 (1,819) 111 36
------- ------- -------- --------
Net income (loss) ......... $ 191 $(3,906) $ (925) $ (1,112)
======= ======= ======= ========
Earnings (loss) per share ... $ 0.04 $ (0.85) $ (0.20) $ (0.24)
======= ======= ======= ========
Weighted average shares
outstanding ................ 4,604 4,590 4,602 4,585
======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
JPE, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1997 and 1996
(Amounts in Thousands)
(Unaudited)
<CAPTION>
Nine Months
Ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ........................................... $ (925) $ (1,112)
Adjustments to reconcile net loss to
net cash provided by (used for)
operating activities:
Depreciation and amortization ................... 7,426 5,531
Loss on impairment of goodwill .................. -- 4,300
Discontinuance of stamping operations ........... 2,250 --
Disposal of property and equipment .............. 33 405
Changes in operating assets and
liabilities:
Accounts receivable ........................... (14,610) (5,382)
Inventory ..................................... (4,760) 1,392
Other current assets .......................... (1,690) 359
Accounts payable .............................. 8,596 4,002
Accrued liabilities ........................... (1,767) (756)
Income taxes .................................. (193) (174)
Deferred income taxes ......................... 541 (1,078)
------- --------
Net cash provided by (used for)
operating activities ....................... (5,099) 7,487
------- --------
Cash flows from investing activities:
Purchase of property and equipment ................. (10,687) (8,889)
Cash proceeds from sale of property
and equipment ..................................... 1,200 --
Acquisition of BATCO ............................... (5,518) --
------- --------
Net cash used for investing
activities ................................. (15,005) (8,889)
------- --------
Cash flows from financing activities:
Net borrowings under revolving loan ................ 15,621 11,275
Repayments of note payable ......................... (1,540) (10,100)
Net borrowings under Canadian credit
facility .......................................... 3,501 --
Net borrowings under capital lease
arrangements ...................................... 1,571 --
Sale of common stock ............................... 77 410
Tax benefit from exercised stock
options ........................................... 28 210
------- --------
Net cash provided by financing
activities ................................. 19,258 1,795
------- --------
Currency translation effect on cash ................ 38 --
------- --------
Cash and cash equivalents:
Net increase (decrease) in cash .................... (808) 393
Cash and cash equivalents,
beginning of period ............................... 1,316 288
------- --------
Cash and cash equivalents,
end of period ..................................... $ 508 $ 681
======= ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
<PAGE>
JPE, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Per Share Data)
A. BASIS OF PRESENTATION:
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, the financial statements do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included and such adjustments are of a normal
recurring nature or are described in the footnotes herein. The consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto contained in the JPE, Inc. Annual Report on
Form 10-K for the year ended December 31, 1996 and the Form 10-Q for the
quarters ended March 31, 1997 and June 30, 1997.
December 31, 1996 disclosures within the financial statements and footnotes
have been derived from the audited financial statements included in the
aforementioned Form 10-K; information at September 30, 1997 and 1996 and
for the periods then ended is unaudited.
B. INVENTORY:
Inventories by component are as follows:
<TABLE>
<CAPTION>
Sept. 30, 1997 Sept. 30, 1996 Dec. 31, 1996
-------------- -------------- -------------
<S> <C> <C> <C>
Finished goods ........ $19,030 $15,953 $15,457
Work in process ....... 4,337 4,219 4,811
Raw material .......... 18,394 10,142 15,116
Tooling ............... 2,633 2,689 2,579
------- ------- -------
$44,394 $33,003 $37,963
======= ======= =======
</TABLE>
<PAGE>
JPE, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Per Share Data)
C. NEW FINANCIAL ACCOUNTING STANDARDS:
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share."
This standard requires a change in method for computing and presenting
earnings per share effective for the period ending after December 15, 1997.
The Company has reviewed this statement and believes that there will be no
material change in its reported earnings per share amounts.
Beginning in 1998, the Company is required to adopt SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 130 will
require the Company to report comprehensive income as part of the
consolidated financial statements. The Company expects that foreign
currency translation adjustments will be the principal additional item
required to be presented as comprehensive income. SFAS No. 131 will require
the Company to report certain information about operating segments in the
consolidated financial statements. The Company is currently evaluating the
provisions of this statement to determine its impact upon current segment
disclosures.
D. GOODWILL IMPAIRMENT:
During the third quarter of 1996, management identified that a significant
change had occurred in the product mix of Industrial & Automotive
Fasteners, Inc. ("IAF") since it was acquired in March 1995. In accordance
with SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of," management recorded a $4,300
impairment writedown of the goodwill associated with the acquisition of
IAF. The goodwill was originally valued at $6,820 when IAF was acquired
and, subsequent to the adjustment, had a net unamortized carrying value of
approximately $2,140 as of September 30, 1996, based on the then estimated
current fair market value of the IAF business which was acquired.
E. DISCONTINUANCE OF STAMPING OPERATIONS:
On May 15, 1997, the Company announced a plan to discontinue its stamping
operations at its East Tawas, Michigan facility of Starboard Industries,
Inc. ("Starboard" or "SBI"), a wholly-owned subsidiary of the Company. The
plan included resourcing stamped parts to other OEM suppliers, the sale of
stamping assets and a reduction in the Starboard workforce. As a result of
this plan, the Company recorded a charge of $2.25 million comprised of the
following:
<PAGE>
JPE, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Per Share Data)
E. DISCONTINUANCE OF STAMPING OPERATIONS (CONTINUED):
Loss on sale of fixed assets ............................... $1,348
Severance expenses ......................................... 365
Adjustment to net realizable value of inventory ............ 407
Other ...................................................... 130
------
Total ...................................................... $2,250
======
F. BATCO ACQUISITION:
On April 16, 1997, Dayton Parts, Inc., a wholly-owned subsidiary of JPE,
Inc., acquired all of the capital stock of Brake, Axle and Tandem Company
("BATCO") for $5,518 in cash. In addition to the cash paid, the purchase
agreement also includes an "earn-out" provision which will increase the
purchase price by up to $4,000 if certain sales levels are achieved over
the next five years. The value of assets acquired and liabilities assumed
for the purchase was the following:
Accounts receivable and other current assets ............... $ 1,975
Inventory .................................................. 2,078
Property, plant and equipment .............................. 379
Goodwill ................................................... 5,551
Deferred tax asset ......................................... 657
-------
Total assets .......................................... 10,640
Accounts payable ........................................... 2,875
Accrued expenses ........................................... 1,573
Debt ....................................................... 674
-------
Total liabilities ...................................... 5,122
-------
Total, net ................................................. $ 5,518
=======
<PAGE>
JPE, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Per Share Data)
F. BATCO ACQUISITION (CONTINUED):
The following unaudited pro forma summary information for the nine months
ended September 30, 1997 and 1996 assumes that the acquisitions of JPE
Canada and BATCO had occurred on January 1, 1996. The significant
adjustments relate to the inclusion of amortization of goodwill, an
increase in interest expense based on an increase in long-term obligations,
a decrease in commission expense at JPE Canada, reduced depreciation on the
revaluation of property, plant and equipment and the related income tax
effects:
Nine Months Ended September 30,
1997 1996
---- ----
Revenues ............................... $220,840 $223,516
Operating profit ....................... 6,455 5,900
Loss before income taxes ............... (1,246) (1,245)
Net loss ............................... (1,175) (1,224)
Loss per common share .................. $ (0.26) $ (0.27)
<PAGE>
JPE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K to assist in understanding the Company's results of operations, and
its financial position, cash flows, capital structure and other relevant
financial information.
FORWARD LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains, and from time to time the Company
expects to make, certain forward-looking statements regarding its business,
financial condition and results of operations. In connection with the "Safe
Harbor" provisions of the Private Securities Reform Act of 1995 (the "Reform
Act"), the Company intends to caution readers that there are several important
factors that could cause the Company's actual results to differ materially from
those projected in its forward-looking statements, whether written or oral, made
herein or that may be made from time to time by or on behalf of the Company.
Readers are cautioned that such forward-looking statements are only predictions
and that actual events or results may differ materially. The Company undertakes
no obligation to publicly release the results of any revisions to the
forward-looking statements to reflect events or circumstances or to reflect the
occurrence of unanticipated events.
The Company wishes to ensure that any forward-looking statements are accompanied
by meaningful cautionary statements in order to comply with the terms of the
safe harbor provided by the Reform Act. Accordingly, the Company has set forth a
list of important factors that could cause the Company's actual results to
differ materially from those expressed in forward-looking statements or
predictions made herein and from time to time by the Company. Specifically, the
Company's business, financial condition and results of operations could be
materially different from such forward-looking statements and predictions as a
result of (i) customer pressures that could impact sales levels and product mix,
including customer sourcing decisions, customer evaluation of market pricing on
products produced by the Company and customer cost-cutting programs; (ii) the
impact on the Company's operations and cash flows caused by labor strikes or
work stoppages at the Company's OEM customers; (iii) operational difficulties
encountered during the launch of major new OEM programs; (iv) the ability of the
Company to integrate acquisitions into its existing operations and achieve
expected cost savings; (v) the ability of the Aftermarket Group to balance the
cyclical nature of the OEM industry; and (vi) the availability of funds to the
Company for strategic acquisitions and capital investments to enhance existing
production and distribution capabilities.
<PAGE>
RESULTS OF OPERATIONS
THIRD QUARTER ENDED SEPTEMBER 30, 1997 COMPARED
TO THIRD QUARTER ENDED SEPTEMBER 30, 1996
Net sales for the third quarter of 1997 were $70.3 million compared to $50.1
million for the same quarter last year. The net sales increase of 40% is
primarily attributable to the acquisitions of JPE Canada Inc. ("JPE Canada") and
Brake, Axle and Tandem Company ("BATCO") in December 1996 and April 1997,
respectively. JPE Canada is a Canadian supplier of injection-molded plastic
exterior trim to original equipment manufacturers ("OEMs") and BATCO is a
supplier of brake hardware, wheel attaching and suspension parts for the heavy
duty truck and trailer aftermarket. In addition to these acquisitions, the
Company experienced slightly higher sales in all three of its operating groups
due to new product line offerings in the aftermarket and launches of new
programs for OEM customers during 1997. For the quarter ended September 30,
1997, net sales for the Company were approximately 65% to OEM customers and 35%
to aftermarket customers
Gross profit increased 50% to $10.5 million in the third quarter of 1997
compared with $7.0 million for the third quarter ended September 30, 1996. The
gross margin percentages were 14.9% and 13.9% for the third quarters of 1997 and
1996, respectively. During the third quarter of 1996, the Company recorded $1.4
million of inventory adjustments relating to slow-moving/obsolete inventory and
physical inventory adjustments. Adjusting for this one time write-down of
inventory, gross profit percentage for the third quarter of 1996 was 16.7%. The
decrease from adjusted gross profit percentage is a result of operating results
at the Company's JPE Canada and Starboard subsidiaries which are lower than the
other JPE companies. The lower gross profit percentage at JPE Canada is a result
of JPE Canada being purchased out of bankruptcy in December 1996. Starboard's
lower gross profit percentage is a result of the stamping production, a
manufacturing process which is being discontinued.
The Company has on-going turn-around plans to improve both JPE Canada and
Starboard. The plan related to JPE Canada is focused on improving JPE Canada's
profitability through reducing scrap, premium freight, and overtime while
improving productivity. Management believes that JPE Canada will continue to
show improvement in its gross profit percentage with the continued execution of
this turn-around plan. The Starboard turn-around plan details actions necessary
to exit the stamping operation at Starboard's East Tawas, Michigan facility.
This plan involved resourcing stamped parts to other third party suppliers,
reducing its workforce and selling the stamping assets. All of these actions
were completed by the end of the third quarter 1997. Management believes that
these actions, along with a relayout of the manufacturing facility will return
Starboard's operations to profitability.
The decrease in gross profit percentage discussed above is partially offset by
significant improvements in gross margin at the Company's Industrial &
Automotive Fasteners, Inc. ("IAF") subsidiary. The improvement at IAF is a
result of the continued execution of a turn-around plan which includes a major
plant relayout, upgrading of existing equipment and stronger production
controls.
<PAGE>
During the third quarter of 1996, management identified that a significant
change had occurred in the product mix of IAF since it was acquired in March
1995. In accordance with SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," management recorded a $4.3
million impairment writedown of the goodwill associated with the acquisition of
IAF. The goodwill was originally valued at $6.8 million when IAF was acquired
and, subsequent to the adjustment, had a net unamortized carrying value of
approximately $2.1 million as of September 30, 1996, based on the current fair
market value of the IAF business which was acquired. This adjustment reduced
goodwill amortization by $172,000 on an annual basis.
Selling, general and administrative expenses increased 9.1% to $7.3 million in
the third quarter of 1997 over $6.7 million for the third quarter of 1996.
Selling, general and administrative expense for the third quarters of 1997 and
1996 was 10.4% and 13.3% of net sales, respectively. Selling, general and
administrative expense for the three months ending September 30, 1996 includes a
$850,000 charge related to the write-down of an equity investment related to the
SBI business and severance costs for changes in senior management at IAF and
SBI. Adjusting for this one time event, the selling, general and administrative
expense percentage for the third quarter of 1996 was 11.6%. The decrease in
adjusted selling, general and administrative expense percentage is a result of
the acquisition of JPE Canada which has a lower administrative overhead
structure than the other JPE businesses and the acquisition of BATCO, which
increased Dayton Parts, Inc.'s ("Dayton Parts") sales without a proportionate
increase in its selling, general and administrative expense.
Net interest expense increased to $2.7 million for the three months ended
September 30, 1997 as compared to $1.7 million for the three months ended
September 30, 1996. The higher interest cost is attributable to the funds
borrowed to finance the JPE Canada and BATCO acquisitions; a higher average debt
level as a result of capital investments made in the Company's businesses; and
increased customer tooling balances related to several new 1997 and 1998 program
launches in the OEM trim group.
Income tax expense for the quarter ending September 30, 1997 was $275,000 as
compared to income tax benefit of $1.8 million recorded during the same period
in 1996. The change is a result of pre-tax earnings in the third quarter of 1997
versus a pre-tax loss in the same period in 1996. As a result of the loss in the
third quarter 1996, the Company recorded a federal income tax benefit, partially
offset by state and foreign income taxes. The effective tax rate for the third
quarter 1997 is 59%, which is a result of higher pre-tax income from JPE
companies which reside in states with income based taxes.
Net income for the three months ended September 30, 1997 was $191,000 as
compared to net loss of $3.9 million for the quarter ended September 30, 1996.
The change is attributable to the matters summarized above. Earnings per share
during the third quarter were $0.04 as compared to a loss per share of $0.85
during the third quarter of 1996. The improvement is due to the factors
mentioned above. The weighted average shares outstanding for the third quarter
of 1997 were 4,604,000 as compared to 4,590,000 for the third quarter of 1996.
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED
TO NINE MONTHS ENDED SEPTEMBER 30, 1996
Net sales for the nine months ended September 30, 1997 increased to $215.3
million from $153.7 million for the nine months ended September 30, 1996, an
increase of 40%. The increase in net sales is attributable to the acquisitions
of JPE Canada and BATCO as mentioned in the quarterly discussion above. In
addition to these acquisitions, the Company experienced slightly higher sales in
all three of its operating groups due to new product line offerings in the
aftermarket and launches of new programs for OEM customers during 1997. For the
nine months ended September 30, 1997, net sales for the Company were
approximately 68% to OEM customers and 32% to Aftermarket customers.
Gross profit increased 14% to $30.9 million for the nine months ended September
30, 1997 as compared with $27.1 million for the comparable period of the prior
year. The increase is related to the acquisitions of JPE Canada and BATCO, as
well as higher sales volumes. Gross profit percentages were 14.4% and 17.7% for
1997 and 1996, respectively. This decline in gross margin percentage is due
primarily to the acquisition of JPE Canada which was purchased out of bankruptcy
in 1996 and lower operating performance at the Company's Starboard subsidiary,
partially offset by factors mentioned in the quarterly discussion above. The
decline in Starboard's performance is a result of production difficulties,
higher scrap and pricing issues in its stamping operations.
During the second quarter of 1997, management implemented a plan to improve the
operating results of its Starboard business. The plan resulted in Starboard
discontinuing its stamping operations on September 30, 1997. Management made
this decision based on the negative impact the stamping business had on the
operating results of Starboard and the OEM Trim Group, as a whole. As a result
of this discontinuance of stamping operations, the Company recorded a charge of
$2.25 million relating to the loss on disposal of assets, employee severance and
other costs directly related to the stamping business. Through the end of the
third quarter 1997, Starboard had resourced its stamped parts to other OEM
suppliers, sold its stamping assets and reduced its workforce in accordance with
the plan. The final stage of the plan involves a major relayout of Starboard's
East Tawas, Michigan production facility which will be completed by the second
quarter of 1998.
See the quarterly discussion for an explanation of the $4.3 million charge for
impairment of goodwill.
Selling, general and administrative expenses increased 17.5% to $21.9 million
for the nine months ended September 30, 1997 over $18.7 million for the nine
months ended September 30, 1996. The increase is a result of the acquisitions of
JPE Canada and BATCO as discussed above. The percentage of selling, general and
administrative expenses to net sales was 10.2% for the nine months ending
September 30, 1997 as compared to 12.1% for the same period in 1996. The decline
in this percentage is attributable to the acquisition of JPE Canada which has a
lower overhead structure than the other JPE businesses, partially offset by the
one-time charge recorded in the third quarter of 1996 mentioned in the quarterly
discussion above.
<PAGE>
See quarterly discussion for explanation of increase in operating profit
percentage.
Net interest expense increased to $7.3 million for the nine months ended
September 30, 1997 as compared to $5.3 million for the nine months ended
September 30, 1996. The higher interest cost is attributable to the factors
mentioned in the quarterly discussion above.
As a result of the year to date pre-tax loss, the Company has reduced its
federal income tax expense for the nine months ending September 30, 1997 and
1996. The provision for income taxes for the first nine months of both 1997 and
1996 represents state income taxes, partially offset by the federal income tax
benefit.
Net loss for the nine months ended September 30, 1997 was $925,000 as compared
to $1.1 million for the nine months ended September 30, 1996. The decrease in
net loss is a result of factors mentioned above. Loss per share for the nine
months ending September 30, 1997 was $0.20 as compared to $0.24 during the first
nine months of 1996. The decrease in net loss is due to the factors mentioned
above and an increase in the weighted average shares outstanding. The weighted
average shares outstanding for the first nine months of 1997 were 4,602,000 as
compared to 4,585,000 for the same period in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are to fund business acquisitions,
working capital needs and capital additions to enhance existing production
technologies and capabilities. Historically, the Company has used cash flows
generated by operations, borrowings under its credit agreements and equity
financing to meet these needs.
The Company's principal source of liquidity for the U.S. operations is the Third
Amended and Restated Credit Agreement dated December 31, 1996 providing for an
aggregate of $120 million in credit lines. At September 30, 1997, the amount
outstanding under this agreement was $107.8 million. This Credit Agreement
matures on October 27, 1998. Management is currently evaluating various options
to refinance, restructure or extend this facility and believes it will be
successful in completing these activities prior to the maturity date.
The Company's JPE Canada subsidiary has a credit agreement with a Canadian bank
to fund its operating requirements and capital expenditures. At September 30,
1997, the borrowings under this facility total approximately $19.8 million.
Repayment terms of borrowings under this facility vary based on the nature of
the advance. Currently, $10.5 million is classified as short-term debt because
the portion of the credit agreement for operating requirements is payable on
<PAGE>
demand or on December 31, 1997. The total commitment for operating needs is
approximately $10.6 million through December 31, 1997, reducing to $8.5 million
in 1998 (Cdn $14 million and $12 million, respectively). The Company is
currently reviewing its capital needs with the Canadian bank to continue to
provide adequate financing for JPE Canada's operations. The term portion of this
agreement aggregates approximately $8.4 million with monthly principal payments
beginning in October 1997 of approximately $72,000 (Cdn $100,000). It is
anticipated that the cash flow from the Canadian operations will fund these
future payments.
Working capital at September 30, 1997 increased to $52.4 million as compared to
$42.1 million at December 31, 1996. The increase in working capital is due
primarily to increased customer tooling balances as a result of several new
programs related to 1997 and 1998 launches for the Company's OEM trim group;
additional inventories related to new product line offerings in the aftermarket;
and the impact on inventory from the BATCO acquisition. Management is
anticipating collection of approximately $3 million of tooling costs in the
fourth quarter of 1997 and the remainder of the balance in 1998. Customer
tooling costs are normally incurred prior to the production of parts and, upon
approval by the customer, these tooling costs are reimbursed by the customer.
The delay between the expenditure of funds for tooling and reimbursement by the
customer can be several months to over a year depending on the program and the
customer. The BATCO acquisition resulted in increased inventories in order to
achieve acceptable customer order fill rates. In addition to these factors, at
December 31, 1996, receivables and inventories were low due to the holiday shut
down by our OEM customers. Cash used by operations was $5.1 million for the
reasons mentioned above. Capital investment spending for the nine months ending
September 30, 1997 totaled $10.7 million. These funds were provided through the
various credit agreements. The Company expects that it will satisfy its debt
service, working capital and capital expenditure requirements through cash flows
generated by operations and, to the extent necessary, through borrowings under
the credit agreements.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
10.1 Amendment No. 2 dated as of June 30, 1997 to Third
Amended and Restated Credit Agreement
b. Reports on Form 8-K:
None.
<PAGE>
JPE, INC.
SIGNATURE
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.
JPE, Inc.
By: /s/ James J. Fahrner
--------------------------
James J. Fahrner
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Date: November 12, 1997
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
- ------- -----------
10.1 Amendment No. 2 dated as of June 30, 1997
to Third Amended and Restated Credit Agreement
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
AMENDMENT NO. 2
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT dated as of June 30, 1997 by and among JPE, Inc., a Michigan
corporation ("Company"), the Banks signatory hereto ("Banks") and Comerica Bank,
as agent for the Banks (in such capacity, "Agent").
R E C I T A L S:
A. Company, Banks and Agent entered into that certain Third Amended and
Restated Credit Agreement dated as of December 31, 1996, as previously amended
on April 16, 1997 ("Agreement").
B. Company, Banks and Agent further desire to amend the Agreement as set
forth below.
NOW, THEREFORE, the parties agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement.
2. Section 1.17 of the Agreement is amended to read as follows:
"1.17 "Company Collateral Documents" shall mean the Company Security
Agreement, the Stock Pledges, the Mortgages and all other security
documents executed and delivered by Company to the Agent, in accordance
with the terms and conditions of this Agreement, as the same may be
amended, restated, supplemented or replaced from time to time."
3. Section 1.26 of the Agreement is amended to read as follows:
"1.26 "EBIT" shall mean with respect to any period, net earnings (or
loss) of Company and its Consolidated Subsidiaries before interest expense
and taxes and before reflecting extraordinary gains (or losses), including
without limitation, the $5,000,000 write-off of charges recognized at
September 30, 1996 relating to acquisitions permitted under Section 9.7
hereof, plus a $2,250,000 write-off of charges recognized at June 30, 1997
relating to Starboard Industries, Inc.; provided, however, that for
purposes of determining EBIT for any period, the net earnings (or loss) of
JPE Canada shall be included only if as of the date of determination JPE
Canada is not prohibited under any contract or agreement from paying
dividends on or making distributions to Company with respect to Company's
shares of capital stock or other equity interest in JPE Canada and further
provided, that in such case the net earnings (or loss) of JPE Canada so
included in determining EBIT shall not exceed an amount equal to the lesser
of (i) the amount obtained by multiplying the Capitalization Percentage by
JPE Canada's net earnings (or loss) for such period and (ii) the amount of
dividends or distributions JPE Canada may pay to Company as of such date of
determination) and gains (or losses) from discontinued operations for such
period, as determined in accordance with GAAP."
4. Section 1.27 of the Agreement is amended to read as follows:
"1.27 "EBITDA" shall mean with respect to any period, net earnings (or
loss) of Company and its Consolidated Subsidiaries before interest expense,
taxes, depreciation and amortization expense and before reflecting
extraordinary gains (or losses), including without limitation, a $5,000,000
write-off of charges recognized at September 30, 1996 relating to
acquisitions permitted under Section 9.7, hereof, plus a $2,250,000
write-off of charges recognized at June 30, 1997 relating to Starboard
Industries, Inc.; provided, however, that for purposes of determining
EBITDA for any period, the net earnings (or loss) of JPE Canada shall be
included only if as of the date of determination JPE Canada is not
prohibited under any contract or agreement from paying dividends on or
making distribution to Company with respect to Company's shares of capital
stock or other equity interest in JPE Canada and further provided, that in
such case the net earnings (or loss) of JPE Canada so included in
determining EBITDA shall not exceed an amount equal to the lessor of (i)
the amount obtained by multiplying the Capitalization Percentage by JPE
Canada's net earnings (or loss) for such period and (ii) the amount of
dividends or distribution JPE Canada may pay to Company as of such date of
determination and gains (or losses) from discontinued operations for such
period, as determined in accordance with GAAP."
5. Section 1.40 of the Agreement is amended to read as follows:
"1.40 "Funded Debt" as of any date of determination shall mean all
interest bearing Debt (other than Subordinated Debt and Debt evidenced by
instrument(s) issued in connection with the Debt Placement) whether current
or long term, as determined in accordance with GAAP."
6. Section 1.45 of the Agreement is amended to read as follows:
"1.45 `Guarantor(s)' shall mean as of the date hereof, each Subsidiary
of the Company (excluding Foreign Subsidiaries), and subsequent to the date
hereof, each Person otherwise becoming a Subsidiary of the Company
(excluding Foreign Subsidiaries), or otherwise entering into the guaranty
(by joinder agreement or otherwise), from time to time and shall, as of the
date of this Agreement, consist of the Subsidiaries listed on Schedule 1.42
annexed hereto."
7. Section 1.46 of the Agreement is amended to read as follows:
"1.46 "Guarantor Collateral Documents" shall mean the Guaranty, the
Guarantor Security Agreements, the Mortgages and all other security
documents executed by the Guarantors and delivered to Agent at any time on,
before or after the date hereof, pursuant to or in accordance with this
Agreement or the Collateral Documents, and with respect to each Person
which becomes a Guarantor after the date hereof, on the effective date it
becomes a Guarantor, in each case in connection with such guaranties,
security agreements or mortgages, this Agreement and any of the other Loan
Documents, as such Collateral Documents may be amended, restated or
replaced from time to time."
8. Section 1.72 of the Agreement is amended to read as follows:
"1.72 "Margin" shall mean, as of any date of determination thereof,
the applicable interest rate margin component of the Eurodollar-based rate,
which is (i) prior to the effective date of the closing of the Debt
Placement, three and one quarter (3-1/4) percentage points and (ii) on and
after the effective date of the closing of the Debt Offering, the
applicable percentage points determined in accordance with the provisions
of Section 5.1 hereof (based on the ratio of Funded Debt to EBITDA and the
Fixed Charge Coverage Ratio) by reference to the appropriate columns in the
pricing matrix attached to this Agreement as Schedule 1.9."
9. Subparagraph (vii) of the definition of `Permitted Acquisition' set
forth in Section 1.78 of the Agreement is amended to read as follows:
"(vii) on the date of any such acquisition, Company shall have caused
to be furnished, executed and delivered to Agent as security for all
Indebtedness of Company, in form and substance satisfactory to Agent
and the Banks and supported by appropriate resolutions in certified
form authorizing same, (A) the Guarantor Collateral Documents of the
Subsidiary(ies) (excluding Foreign Subsidiaries) so acquired and (B) a
Stock Pledge by Company or a Subsidiary, as the case may be, with
respect to (1) all of its Stock in the Subsidiary(ies) (excluding
Foreign Subsidiaries) so acquired and (2) sixty five percent (65%) of
its Stock in the Foreign Subsidiaries so acquired; and if required or
advisable under applicable law to perfect the liens granted thereby,
documents covering such Collateral executed and delivered by the
appropriate parties, including without limitation, original
certificates evidencing any shares of Stock pledged to Agent, under
the Guarantor Collateral Documents or Stock Pledge delivered pursuant
to this subparagraph (vii)."
10. Section 1.101 of the Agreement is amended to read as follows:
"1.101 `Subordinated Debt' shall mean Debt of Company and/or its
Subsidiaries permitted under Section 9.5(f) or Section 9.5(i) hereof, which
is subordinated in right of payment and distribution upon liquidation to
the Indebtedness on terms and conditions acceptable to the Agent; (ii) has
a final maturity extending beyond the Revolving Credit Maturity Date; (iii)
does not require any payment of principal thereunder prior to the Revolving
Credit Maturity Date; (iv) has no financial covenants more restrictive than
those set forth in Sections 8.4 and 8.5 hereof or any other financial
covenants in effect under this Agreement at the time such Debt is issued
(except as otherwise agreed to by Agent in their sole discretion); and (v)
has other subordination provisions otherwise satisfactory to Agent."
11. Sections 1.115, 1.116, and 1.117 are added to the Agreement as follows:
"1.115 "Debt Placement" shall have the meaning set forth in Section
8.21 hereof."
"1.116 "Foreign Subsidiary(ies)" shall mean as of any date of
determination any Subsidiary of Company which is not incorporated under the
laws of the United States of America or any state thereof."
"1.117 "Mortgages" shall mean the real estate mortgages encumbering
all of Company's or any Subsidiary's (excluding Foreign Subsidiaries) real
property interests, now owned or hereafter acquired, executed and delivered
by Company to the Agent any time on or after the date hereof as the same
may be amended, restated, supplemented or replaced from time to time."
12. Section 8.3(h) is added to the Agreement as follows:
"(h) as soon as available, and in any event within forty-five (45)
days after the last day of each fiscal quarter of Company (including the
last quarter of each fiscal year) financial projections in form
satisfactory to Agent but including without limitation balance sheets,
income statements and statements of cash flows for Company and its
Consolidated Subsidiaries for the period commencing on the first day of the
then current fiscal quarter and ending on December 31, 1998, certified by a
responsible financial officer of Company as being prepared in good faith in
a manner consistent with Company's accounting policies and practices in
effect on the date hereof."
13. Section 8.4 of the Agreement is amended to read as follows:
"Section 8.4 Maintain Funded Debt to EBITDA Ratio. Maintain at all
times a Funded Debt to EBITDA Ratio of not more than the Maximum Funded
Debt to EBITDA Ratio. "Maximum Funded Debt to EBITDA Ratio" shall mean the
following during the period set forth below:
from March 31, 1997 through June 30, 1997.......................6.75 to 1
from July 1, 1997 through September 30, 1997....................6.00 to 1
from October 1, 1997 through December 31, 1997..................5.50 to 1
from January 1, 1998 and thereafter.............................4.75 to 1."
14. Section 8.5 of the Agreement is amended to read as follows:
"Section 8.5 Maintain Fixed Charge Coverage Ratio. On a Consolidated
Basis, maintain at all times a Fixed Charge Coverage Ratio of not less than
the following, during the periods set forth below:
From March 31, 1997 through June 30, 1997.......................1.0 to 1
From July 1, 1997 through September 30, 1997....................1.25 to 1
From October 1, 1997 and thereafter.............................1.35 to 1."
15. Section 8.13 of the Agreement is amended to read a follows:
"8.13 Insurance. Maintain insurance coverage on its physical assets
and against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature, and in the
event of acquisition of additional property, real or personal, or of
occurrence of additional risks of any nature, increase such insurance
coverage in such manner and to such extent as prudent business judgment and
then current practice would dictate; and in the case of all policies
covering property subject to the Collateral Documents, or property in which
the Banks shall have a security interest of any kind whatsoever, other than
those policies protecting against casualty liabilities to strangers, all
such insurance policies shall conform to the requirements set forth in the
applicable collateral documents and shall provide that the loss payable
thereunder shall be payable to Company or Guarantor, as applicable, and to
the Agent; and with all said policies or copies thereof, including all
endorsements thereon and those required hereunder, to be deposited with the
Agent, at the request of the Agent.
16. Section 8.21 of the Agreement is amended to read as follows:
"Section 8.21 Additional Capital. On or before August 14, 1997 furnish
Agent, with copies for each Bank, with a mandate letter executed by Company
and an investment banker satisfactory to Agent pursuant to which Company
commits (subject to standard conditions) to raise not less than $25,000,000
in capital through a public offering or private placement of unsecured Debt
on terms satisfactory to Agent ("Debt Placement"). The proceeds of the Debt
Placement shall be used by Company as follows:
(i) the first $25,000,000 in proceeds shall be applied first to repay
the Indebtedness outstanding under the Line of Credit Notes, pro
rata, based on each Bank's respective Percentage of the Line of
Credit Aggregate Commitment and then to repay the Indebtedness
outstanding under the Revolving Credit Notes, pro rata, based on
each Bank's respective Percentage of the Revolving Credit
Aggregate Commitment (and concurrently with any such repayment
pursuant to this clause (i), the Line of Credit Aggregate
Commitment shall be permanently terminated);
(ii) next, at Company's option, to make a loan or advance to JPE
Canada not to exceed the principal indebtedness of JPE Canada to
Bank of Nova Scotia then outstanding, (and Company shall cause
JPE Canada to use the proceeds thereof solely to repay (and
permanently reduce) such indebtedness of JPE Canada to Bank of
Nova Scotia); and
(iii) next, to repay the Indebtedness outstanding under the Revolving
Notes, pro rata, based on each Bank's respective Percentage of
the Revolving Credit Aggregate Commitment.
Repayments of the Notes under this Section 8.21 shall be made in accordance
with the terms and conditions of Sections 2.8 and 2.A.6 of this Agreement,
respectively, and, if any such repayment requires the prepayment of a
Eurodollar-based Advance or Quoted Rate Advance on a day other than the
last day of the Interest Period applicable thereto, such repayment shall be
subject to the prepayment penalty provisions of Section 12.1 hereof."
17. Section 8.22 is added to the Agreement as follows:
"8.22 Mortgages. Company shall furnish, execute and deliver to the
Agent, or cause to be furnished, executed and delivered to Agent, in form
satisfactory to Agent, for the benefit of the Banks, (i) first priority
Mortgages of all real property now owned or hereafter acquired by Company
or any of its Subsidiaries (excluding Foreign Subsidiaries), subject only
to liens and encumbrances acceptable to Agent, (ii) a policy of mortgage
title insurance (or a marked commitment to issue such policy in form
satisfactory to Agent) in standard A.L.T.A. loan policy form issued by a
title company satisfactory to Agent without standard exceptions and with
zoning and comprehensive endorsements and such other endorsements as Agent
may reasonably request, in an amount not less than the appraised value of
such real property insuring that each such Mortgage constitutes a first
lien on the such real property subject only to liens and encumbrances
acceptable to Agent, (iii) a minimum detail A.L.T.A. survey of such real
property certified to the Agent and the title company referred to above
showing nothing objectionable to Agent and such title company, (iv) copies
of the insurance policies required under Section 8.13 hereof, (v)
environmental assessments of such real property as may be reasonably
requested by Agent in accordance with its standard environmental policies
in form satisfactory to Agent and (vi) such other documents or certificates
as may be requested by Agent and in connection therewith and/or as are
required under the terms of the Mortgages. The documents, instruments and
other items required under this Section 8.22 with respect to real property
acquired after the date hereof shall be furnished to Bank prior to or
simultaneously with the acquisition thereof."
18. Section 9.5(g) of the Agreement is amended to read as follows:
"(g) the Debt of JPE Canada to Bank of Nova Scotia incurred in
connection with the Pebra Acquisition, not to exceed the sum of Thirty Five
Million Canadian Dollars (CDN $35,000,000) in the aggregate at any time
outstanding less the aggregate principal amount loaned or advanced by
Company to JPE Canada pursuant to Section 8.21(ii) hereof;"
19. Section 9.5(i) and (j) are added to the Agreement as follows:
"(i) unsecured Debt of Company evidenced by instruments issued in
connection with the Debt Placement; and
"(j) indebtedness of JPE Canada to Company permitted under Section
8.21(ii) hereof."
20. Subsection (j) is added to Section 9.9 of the Agreement as follows:
"(j) in addition to the Investments permitted under Subsection (i) of
this Section 9.9, a loan or advance by Company to JPE Canada which is
permitted under Section 8.21(ii) hereof."
21. Section 10.1(c) of the Agreement is amended to read as follows:
"(c) default in the observance or performance of any of the
conditions, covenants or agreements of the Company set forth in Sections
2.7, 2.A.5, 3.6, 8.1, 8.3 through 8.6, 8.8, 8.11, 8.13, 8.15 through 8.19,
8.21, 8.22, Article 9 (in its entirety), Section 13.7 or Section 14.25
hereof;"
22. Section 10.1(n) of the Agreement is amended to read as follows:
"(n) the failure of Company to close the Debt Placement on or before
December 31, 1997.
23. Company hereby represents and warrants that, after giving effect to the
amendments contained herein, (a) execution, delivery and performance of this
Amendment and any other documents and instruments required under this Amendment
or the Agreement are within Company's corporate powers, have been duly
authorized, are not in contravention of law or the terms of Company's Articles
of Incorporation or Bylaws, and do not require the consent or approval of any
governmental body, agency, or authority; and this Amendment and any other
documents and instruments required under this Amendment or the Agreement, will
be valid and binding in accordance with their terms; (b) the continuing
representations and warranties of Company set forth in Sections 7.1 through 7.22
and 7.24 of the Agreement are true and correct on and as of the date hereof with
the same force and effect as if made on and as of the date hereof; (c) the
continuing representations and warranties of Company set forth in Section 7.23
of the Agreement are true and correct as of the date hereof with respect to the
most recent financial statements furnished to Agent by Company in accordance
with Section 8.3 of the Agreement; and (d) no Event of Default, or condition or
event which, with the giving of notice or the running of time, or both, would
constitute an Event of Default under the Agreement, has occurred and is
continuing as of the date hereof.
24. The amendments set forth above shall be effective as of June 30, 1997
upon (i) delivery to Agent of each of the documents set forth on the attached
closing agenda in form satisfactory to Agent and the Banks, and (ii) payment by
Company of a nonrefundable amendment fee of $60,000 to Agent for distribution to
the Banks, pro rata, based on their respective Percentages of the Revolving
Credit Aggregate Commitment.
25. Notwithstanding anything to the contrary set forth herein, with respect
to the real property identified on Schedule 1 annexed hereto, Company shall not
be required to furnish Agent with the Mortgages, environmental assessments,
title policies and surveys required under Section 8.22 of the Agreement until
the earlier of (i) October 15, 1997 and (ii) the closing of the Debt Placement.
26. This Amendment may be executed in counterparts.
IN WITNESS WHEREOF, the parties execute this Amendment as of the date set
forth above.
COMPANY: JPE, INC.
By: /s/ James J. Fahrner
-----------------------------
Its: Sr. Vice President - CFO
AGENT: COMERICA BANK
By: /s/ Jatinder Kalis
-----------------------------
Its: Corporate Finance Officer
REVOLVING CREDIT BANKS COMERICA BANK
and
LINE OF CREDIT BANKS:
By: /s/ Lana L. Anderson
-----------------------------
Its: Vice President
NBD BANK
By: /s/ Erik Bakker
-----------------------------
Its: First Vice President
NATIONAL BANK OF CANADA
By: /s/ Jeffrey C. Angell
-----------------------------
Its: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /s/ Jeffrey C. Nicholson
-----------------------------
Its: Vice President
BANK ONE, DAYTON, N.A.
By: /s/ Joey D. Williams
-----------------------------
Its: Vice President
SWING LINE BANK: COMERICA BANK
By: /s/ Lana L. Anderson
-----------------------------
Its: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 508
<SECURITIES> 0
<RECEIVABLES> 43,350
<ALLOWANCES> 0
<INVENTORY> 44,394
<CURRENT-ASSETS> 100,168
<PP&E> 90,039
<DEPRECIATION> 18,374
<TOTAL-ASSETS> 206,065
<CURRENT-LIABILITIES> 47,750
<BONDS> 117,729
0
0
<COMMON> 34,947
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 206,065
<SALES> 215,330
<TOTAL-REVENUES> 215,330
<CGS> 184,418
<TOTAL-COSTS> 206,354
<OTHER-EXPENSES> 2,444
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,346
<INCOME-PRETAX> (814)
<INCOME-TAX> 111
<INCOME-CONTINUING> (925)
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> (925)
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</TABLE>
