<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 June 30, 1997
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission file number 000-24224
---------
APOGEE, INC.
------------
(Exact name of registrant as specified in its charter)
Delaware 13-3605119
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1018 W. Ninth Avenue - Suite 202
King of Prussia, PA 19406
- ----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(610) 992-7670
- ----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of August 8, 1997, Apogee, Inc. had 9,958,359 shares of common stock, $0.01
par value, outstanding.
Page 1 of 17
<PAGE> 2
APOGEE, INC.
FORM 10-Q - QUARTER ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
INDEX
FORM 10-Q FORM 10-Q FORM 10-Q
PART NO: ITEM NO. DESCRIPTION PAGE NO.
- --------- --------- ----------- ---------
<S> <C> <C> <C>
I. FINANCIAL INFORMATION
1. Financial Statements
- Consolidated Statements of
Operations for the Three Months
Ended June 30, 1997 and 1996 3
- Consolidated Statements of
Operations for the Six Months
Ended June 30, 1997 and 1996 4
- Consolidated Balance Sheets
as of June 30, 1997 and
December 31, 1996 5
- Consolidated Statements of
Cash Flows for the Six Months
Ended June 30, 1997 and 1996 6
- Consolidated Statement of
Changes in Stockholders' Equity
for the Six Months Ended
June 30, 1997 7
- Notes to Consolidated Financial
Statements 8
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-13
II. OTHER INFORMATION
4. Submission of Matters to a Vote of Security Holders 14-15
6. Exhibits and Reports on Form 8-K 15
Signatures 16
Index to Exhibits 17
</TABLE>
Page 2 of 17
<PAGE> 3
APOGEE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net revenues $ 17,910 $ 20,393
Cost of revenues 13,927 15,547
----------- -----------
Gross profit 3,983 4,846
Selling and administrative expenses 1,913 2,417
Provision for doubtful accounts 895 995
Amortization of intangible assets and excess
cost over fair value of net assets acquired 525 585
----------- -----------
Income from operations 650 849
Non-operating expenses (income):
Interest expense 367 154
Interest (income) (11) (15)
----------- -----------
Income before income taxes 294 710
Provision for income taxes 30 115
----------- -----------
Net income $ 264 $ 595
=========== ===========
Net income per common share $ 0.03 $ 0.06
=========== ===========
Weighted average number of common shares
outstanding 9,993,309 9,865,173
=========== ===========
</TABLE>
Page 3 of 17
<PAGE> 4
APOGEE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net revenues $ 37,110 $ 40,061
Cost of revenues 29,424 30,538
----------- -----------
Gross profit 7,686 9,523
Selling and administrative expenses 4,226 5,007
Provision for doubtful accounts 1,859 1,978
Amortization of intangible assets and excess
cost over fair value of net assets acquired 1,064 1,161
----------- -----------
Income from operations 537 1,377
Non-operating expenses (income):
Interest expense 670 305
Interest (income) (15) (102)
----------- -----------
(Loss) income before income taxes (118) 1,174
Provision for income taxes 38 231
----------- -----------
Net (loss) income ($ 156) $ 943
=========== ===========
Net (loss) income per common share ($ 0.02) $ 0.10
=========== ===========
Weighted average number of common shares
outstanding 9,954,558 9,873,448
=========== ===========
</TABLE>
Page 4 of 17
<PAGE> 5
APOGEE, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30,
ASSETS 1997 DECEMBER 31,
(Unaudited) 1996
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,268 $ 2,299
Accounts receivable, net of allowance
for doubtful accounts of $8,105 in 1997 and $9,306
in 1996 9,415 11,096
Other accounts receivable 1,040 1,643
Other current assets 1,505 1,407
-------- --------
Total current assets 14,228 16,445
Property and equipment, net 2,790 3,359
Intangible assets and excess cost over fair value
of net assets acquired, net of accumulated
amortization of $5,094 in 1997 and $4,030 in 1996 78,099 77,381
Other assets, net 382 598
-------- --------
$ 95,499 $ 97,783
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 3,371 $ 4,584
Accounts payable 1,330 2,196
Accrued expenses and other current liabilities 13,582 16,767
-------- --------
Total current liabilities 18,283 23,547
Long-term debt 11,208 8,224
Other long-term liabilities 430 485
Deferred income tax liability 346 346
-------- --------
Total liabilities 30,267 32,602
-------- --------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 20,000,000 shares
authorized; issued 9,871,130 in 1997 and
9,822,570 in 1996 99 98
Capital in excess of par value 85,817 85,624
Accumulated deficit (20,645) (20,489)
Deferred compensation (39) (52)
-------- --------
Total stockholders' equity 65,232 65,181
-------- --------
$ 95,499 $ 97,783
======== ========
</TABLE>
Page 5 of 17
<PAGE> 6
APOGEE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1997 1996
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (156) $ 943
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 1,425 1,700
Provision for doubtful accounts 1,859 1,978
Changes in assets and liabilities, net of
effects of businesses acquired:
Increase in accounts receivable (398) (1,310)
Decrease (increase) in other current assets 150 (801)
(Decrease) increase in accounts payable (866) 439
Decrease in accrued expenses and
other current liabilities (1,620) (1,620)
Decrease (increase) in other assets and other liabilities 161 (141)
-------- --------
Net cash provided by operating activities 555 1,188
-------- --------
Cash flows from investing activities:
Acquisition of businesses:
Payments for acquisition of businesses, net of
cash acquired of $0 in 1997 and $35 in 1996 (2,394)
Additional payments for businesses acquired
in prior years (2,038) (5,580)
-------- --------
Net cash outlay for acquisition of businesses (2,038) (7,974)
Disposition of businesses 100
Purchases of property and equipment (334) (753)
-------- --------
Net cash used in investing activities (2,272) (8,727)
-------- --------
Cash flows from financing activities:
Proceeds from borrowings 4,600 1,000
Principal payments on long-term obligations (2,914) (3,345)
-------- --------
Net cash provided by (used in) financing activities 1,686 (2,345)
-------- --------
Net decrease in cash and cash equivalents (31) (9,884)
Cash and cash equivalents at beginning of period 2,299 11,949
-------- --------
Cash and cash equivalents at end of period $ 2,268 $ 2,065
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 784 $ 330
======== ========
Income taxes paid $ 154
======== ========
</TABLE>
Page 6 of 17
<PAGE> 7
APOGEE, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
Common Shares
----------------------
Capital in
excess of Accumulated Deferred
Number Par value par value deficit compensation Total
--------- ----------- ---------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 9,823 $ 98 $ 85,624 ($20,489) ($52) $ 65,181
Common stock issued in connection with
acquisitions 48 1 193 194
Amortization of deferred compensation 13 13
Net loss (156) (156)
-------- -------- -------- -------- ---- --------
Balance at June 30, 1997 (unaudited) 9,871 $ 99 $ 85,817 ($20,645) ($39) $ 65,232
======== ======== ======== ======== ==== ========
</TABLE>
Page 7 of 17
<PAGE> 8
APOGEE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements are unaudited. These
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission and should be read in conjunction with
the Company's consolidated financial statements and notes thereto for the year
ended December 31, 1996 included in its Form 10-K filed with the Securities and
Exchange Commission on March 28, 1997. Certain information and note disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. In the opinion of Company management, the consolidated
financial statements for the unaudited interim periods presented include all
adjustments, consisting only of normal recurring adjustments, necessary to
present a fair statement of the results for such interim periods.
Operating results for the three and six month periods ended June 30,
1997 are not necessarily indicative of the results that may be expected for a
full year or any portion thereof.
NOTE 2 - INCOME TAXES
The provision for income taxes is based on the Company's estimated
effective income tax rate for 1997. At December 31, 1996, the Company had net
operating loss carryforwards for Federal income tax purposes of approximately
$2,000. The Company will only be able to use the net operating loss
carryforwards against future taxable earnings of the Company. In addition, as
specified in the Internal Revenue Code, the Company's ability to use certain of
the net operating loss carryforwards is limited as they were acquired by the
Company in a purchase of the stock of other companies. The carryforwards expire
in varying amounts through 2010. A valuation reserve has been established
against the potential future benefit of the net operating loss carryforwards and
other deferred tax assets.
NOTE 3 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------- -----------
<S> <C> <C>
Furniture, fixtures and equipment.......... $4,341 $5,201
Less: Accumulated depreciation........ $1,551 1,842
------ ------
$2.790 $3,359
------ ------
</TABLE>
Page 8 of 17
<PAGE> 9
APOGEE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
Apogee, Inc. ("Apogee" or the "Company") is one of the largest
multi-disciplinary providers of outpatient behavioral health services in the
United States. The Company provides behavioral health and related services,
principally at free-standing clinics and currently operates 119 behavioral
health clinics located in 13 states and the District of Columbia. The Company
offers full and shared risk arrangements to employers and managed care
organizations to perform behavioral health services on a capitated,
sub-capitated and case rate basis. In addition, Apogee provides an array of
other behavioral health services, including: employee assistance programs; third
party clinical case management and claims adjudication; and management and
staffing for acute and sub-acute inpatient facilities, correctional and other
institutions through contractual agreements.
Apogee's outpatient practices provide a broad range of behavioral
health services, including diagnosis, psychiatric consultation, psychological
assessment and evaluation, medication monitoring, group and individual
psychotherapy, behavioral management, marriage, family and child therapy and
substance abuse and chemical dependency rehabilitation. The Company's
multi-disciplinary practices typically employ some or all of the following
professionals: board certified or board eligible psychiatrists; licensed
clinical psychologists; licensed clinical social workers; registered psychiatric
nurse practitioners; licensed marriage, family and child counselors; and other
allied mental health professionals.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
JUNE 30, 1997 AND 1996
NET REVENUES
For the three months ended June 30, 1997, the Company's net revenues
decreased to $17,910 from $20,393 in the same period of the prior year. This
decrease is a result of the impact of operations which were discontinued or
downsized in conjunction with the Company's restructuring in the fourth quarter
of 1996. After adjusting for the impact of these operations, base business
revenues increased approximately $550, primarily as a result of continued
expansion of the Company's managed care and contract services businesses.
Page 9 of 17
<PAGE> 10
APOGEE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
GROSS PROFIT
Gross profit comprises net revenues less personnel, field management,
facility and other costs and expenses directly associated with the delivery of
services. Gross profit decreased to $3,983 for the three months ended June 30,
1997 from $4,846 for the comparable period last year. This decrease is
primarily a result of the impact of operations which were discontinued or
downsized in conjunction with the Company's restructuring in the fourth quarter
of 1996. After adjusting for the impact of these operations, gross profit from
group practice operations decreased approximately $330 due largely to continued
reimbursement rate pressure from managed care and other third party payors.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses are primarily comprised of
corporate office, regional management and centralized billing expenses. Selling
and administrative expenses decreased to $1,913 for the three months ended June
30, 1997 from $2,417 for the same period in 1996, due to a combination of
reduced administrative costs as a result of discontinued or downsized operations
and the Company's ongoing administrative cost containment initiatives.
PROVISION FOR DOUBTFUL ACCOUNTS
The provision for doubtful accounts decreased to $895 of net revenues
for the three months ended June 30, 1997 from $995 for the same period in 1996.
This decrease resulted primarily from a decrease in net revenues as the
provision for doubtful accounts has remained consistent at 5% of net revenues.
INTEREST INCOME AND EXPENSE
Interest expense increased to $367 for the three months ended June 30,
1997 from $154 for the same period in 1996 due to a higher average outstanding
debt balance.
Interest income is primarily related to the Company's cash and cash
equivalents and portfolio of short-term investments. Interest income for the
three months ended June 30, 1997 was fairly consistent with the comparable
period in 1996.
Page 10 of 17
<PAGE> 11
APOGEE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED
JUNE 30, 1997 AND 1996
NET REVENUES
For the six months ended June 30, 1997, the Company's net revenues
decreased to $37,110 from $40,061 in the same period of the prior year. This
decrease is a result of the impact of operations which were discontinued or
downsized in conjunction with the Company's restructuring in the fourth quarter
of 1996. After adjusting for the impact of these operations, base business
revenues increased approximately $1,075, primarily as a result of continued
expansion of the Company's managed care and contract services businesses.
GROSS PROFIT
Gross profit comprises net revenues less personnel, field management,
facility and other costs and expenses directly associated with the delivery of
services. Gross profit decreased to $7,686 for the six months ended June 30,
1997 from $9,523 for the comparable period last year. This decrease is primarily
a result of the impact of operations which were discontinued or downsized in
conjunction with the Company's restructuring in the fourth quarter of 1996.
After adjusting for the impact of these operations, gross profit from group
practice operations decreased approximately $830 due largely to continued
reimbursement pressure from managed care and other third party payors.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses are primarily comprised of
corporate office, regional management and centralized billing expenses. Selling
and administrative expenses decreased to $4,226 for the six months ended June
30, 1997 from $5,007 for the same period in 1996, due to a combination of
reduced administrative costs as a result of discontinued or downsized operations
and the Company's ongoing administrative cost containment initiatives.
PROVISION FOR DOUBTFUL ACCOUNTS
The provision for doubtful accounts decreased to $1,859 for the six
months ended June 30, 1997 from $1,978 for the same period in 1996. This
decrease resulted primarily from a decrease in net revenues as the provision for
doubtful accounts has remained consistent at 5% of net revenues.
Page 11 of 17
<PAGE> 12
APOGEE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
INTEREST INCOME AND EXPENSE
Interest expense increased to $670 for the six months ended June 30,
1997 from $305 for the same period in 1996 due to a higher average outstanding
debt balance.
Interest income is primarily related to the Company's cash and cash
equivalents and portfolio of short-term investments. Interest income decreased
to $15 for the six months ended June 30, 1997 from $102 for the same period in
1996.
MEDICARE REVIEW
During 1996, certain of the Company's Medicare Part B and related
co-insurance billings previously submitted by one of Apogee's subsidiaries were
selected for review by the Office of the Inspector General of the Department of
Health and Human Services ("OIG") and the Department of Justice ("DOJ"). Apogee
has been informed by the DOJ that the review is a civil matter relating to
billings for services to Medicare patients in long term care facilities in the
State of Florida during the period from approximately January 1994 through March
1996. During the pendency of this review, the Medicare intermediary has
suspended all Medicare payments to this subsidiary. It is the Company's policy
to comply with all federal, state and local laws including those applicable to
the Medicare program and the Company is fully cooperating with the review. Due
to the preliminary nature of the review, the Company cannot predict when the
review will be completed, its ultimate outcome, or its potential impact on
earnings but believes the outcome of the review, including repayments, if any,
should not have a material adverse impact on the Company's financial condition.
LIQUIDITY AND CAPITAL RESOURCES
Net cash generated by operations was approximately $1,800 for the six
months ended June 30, 1997 after excluding the impact of the downsized and
discontinued operations. In total, net cash provided by operations was $555 for
the six months ended June 30, 1997, compared to net cash provided by operations
of $1,188 for the same period in 1996. Cash and cash equivalents remained fairly
consistent at $2,268 at June 30, 1997, compared to $2,299 at December 31, 1996.
At June 30, 1997, the Company's working capital was ($4,055) compared
to ($7,102) at December 31, 1996. The improvement in working capital was
principally a result of a reduction in the accrued reserve for restructuring,
which decreased to $2,140 at June 30, 1997 from $4,003 at December 31, 1996, and
a decrease in the current portion of long-term debt.
Page 12 of 17
<PAGE> 13
APOGEE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
In April, 1996, the Company entered into an agreement with a bank
establishing a two year revolving credit facility ("Credit Facility") for up to
a maximum of $15,000. Borrowings availability under this Credit Facility are
based on the Company's earnings before interest, income taxes, depreciation and
amortization, and the value of selected assets, principally accounts receivable
and property and equipment; subject to various financial and non-financial
covenants; and secured by substantially all of the assets of the Company.
Borrowings under this facility bear interest at the bank's prime rate plus 1.0%
or LIBOR plus 2.85%. The proceeds of this Credit Facility are available for
general corporate purposes, including working capital and future acquisitions.
Borrowings outstanding under the Credit Facility were $10,250 at June
30, 1997. The Credit Facility was amended in 1997 to extend the maturity to
November 30, 1998 and to generally reset various financial covenants to reflect
the Company's restructuring and related non-recurring charges incurred in 1996.
In addition, the bank retains discretion for borrowings in excess of $12,000.
The Company's current ratio, working capital and debt to equity ratio
are set forth below for the dates indicated:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Current Ratio .78:1 .70:1
Working Capital ($4,055) ($7,102)
Debt to equity .22:1 .20:1
</TABLE>
The Company believes that the cash flows generated by the Company's
operations, together with its existing cash and availability of borrowings under
the amended Credit Facility, will be sufficient to meet the Company's cash
requirements in 1997.
CAUTIONARY STATEMENT
Matters discussed above contain forward-looking statements that are based on
management's estimates, assumptions and projections. Major factors which could
cause results to differ materially from those expected by management include the
timing and nature of reimbursement changes, the nature of changes in laws and
regulations that govern various aspects of the Company's business, new criteria
adopted to determine medical necessity for behavioral health service, the
outcome of the Department of Justice review, changes in procedures by third
party payors, pricing of managed care and other third party contracts, retention
and productivity of clinicians, the direction and success of competitors,
management retention and unanticipated market changes. The Company does not
undertake any obligation to update the information contained herein, which
speaks only as of this date.
Page 13 of 17
<PAGE> 14
APOGEE, INC.
FORM 10-Q - QUARTER ENDED JUNE 30, 1997
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 12, 1997, the Company held its 1997 Annual Meeting of
Shareholders. At the Annual Meeting, the following matters were submitted to a
vote of shareholders:
1. The following seven individuals, constituting the
full Board of Directors of the Company, were nominated and elected to serve as
the directors of the Company:
<TABLE>
<S> <C> <C>
John H. Foster FOR: 8,396,763
WITHHOLD
AUTHORITY: 59,915
Lawrence M. Davies FOR: 8,397,073
WITHHOLD
AUTHORITY: 59,605
Harvey V. Fineberg, M.D. FOR: 7,738,389
WITHHOLD
AUTHORITY: 718,289
Timothy E. Foster FOR: 8,396,763
WITHHOLD
AUTHORITY: 59,915
Irwin Lehrhoff, Ph.D. FOR: 8,396,618
WITHHOLD
AUTHORITY: 60,060
R. Bruce Mosbacher FOR: 8,396,618
WITHHOLD
AUTHORITY: 60,060
Shawkat Raslan FOR: 7,738,244
WITHHOLD
AUTHORITY: 718,434
</TABLE>
Page 14 of 17
<PAGE> 15
APOGEE, INC.
FORM 10-Q - QUARTER ENDED JUNE 30, 1997
2. The holders of 8,402,098 shares of common stock voted in
favor of, the holders of 10,650 shares of common stock voted against, and the
holders of 43,930 shares of common stock abstained with respect to the
ratification of the selection of Price Waterhouse LLP, independent certified
public accountants, to serve as independent accountants for the Company.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) The exhibits required to be filed as part of this Quarterly
Report on Form 10-Q are contained in the attached Index to
Exhibits.
b) Current Reports on Form 8-K:
On July 14, 1997, the Company filed a Current Report on Form
8-K in which the Company disclosed information under "Item 5- Other
Events".
Page 15 of 17
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
APOGEE, INC.
--------------------------------------
(registrant)
August 12, 1997 /s/ Mark D. Gibson
(Date) -----------------------------------------
By: Mark D. Gibson
Corporate Controller and Principal
Accounting Officer
Page 16 of 17
<PAGE> 17
APOGEE, INC.
FORM 10-Q - QUARTER ENDED JUNE 30, 1997
INDEX TO EXHIBITS
10(v) Amendment dated August 8, 1997 to credit agreement with PNC Bank,
National Association.
27 Financial Data Schedule, which is submitted electronically to the
Securities and Exchange commission for information only and not filed.
Page 17 of 17
<PAGE> 1
EXHIBIT 10(v)
FOURTH AMENDMENT TO LOAN AGREEMENT
This FOURTH AMENDMENT TO LOAN AGREEMENT ("Amendment") dated August 8,
1997 is made by and among APOGEE, INC. a Delaware corporation ("Apogee") and
each Subsidiary identified on the attached Schedule 6.1(c) (collectively, the
"Borrowing Subsidiaries" and together with Apogee, the "Borrowers" and
individually, a "Borrower") and PNC BANK, NATIONAL ASSOCIATION, a national
banking association (the "Bank").
Reference is made to the Revolving Credit Agreement dated as of April
11, 1996 by and between the Borrowers and the Bank, as amended on June 21, 1996,
November 1, 1996 and March 11, 1997 (the "Agreement") pursuant to which the Bank
made available to the Borrowers a $15,000,000 revolving credit facility. The
obligations under the Agreement and the Loan Documents were evidenced by the
Borrowers' Note payable to the Bank. (Capitalized terms used herein not
otherwise defined shall have the meanings provided for in the Agreement.)
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Amendment to Agreement
(a) The Agreement is hereby amended by amending the definition
of "Expiration Date" by substituting for the date set forth therein the date
"November 30, 1998" and the Loan Documents, involving the Revolving Credit Note"
are likewise amended to reflect such date.
2. Miscellaneous
(a) Recognizing and in consideration of the Bank's agreement
to the amendments herein set forth, the Borrowers hereby waive and release the
Bank and its officers, attorneys, agents, and employees from any liability,
suit, damage, claim, loss or expense of any kind or nature whatsoever and
howsoever arising out of or relating to the Bank's acts or omissions with
respect to the Revolving Credit Loans. The Borrowers further hereby agree to
indemnify and hold the Bank and its officers, attorneys, agents and employees
harmless from any loss, damage, judgment, liability or expense (including
counsel fees) suffered by or rendered against the Bank or any of them on account
of anything arising out of the Revolving Credit Note, the Credit Agreement, this
Agreement, the Loan Documents or any other document delivered pursuant thereto
up to and including the date hereof.
(b) All of the terms, conditions, provisions and covenants in
the Note, the Agreement, the Loan Documents, and all other documents delivered
to the Bank in connection with any of the foregoing documents and obligations
secured thereby shall remain unaltered and in full force and effect except as
modified by this Agreement.
<PAGE> 2
(c) The Borrowers agree to pay all of the Bank's expenses
incurred in connection with the preparation of this Amendment and the
transactions contemplated by this Amendment, including without limitation, the
reasonable fees and expenses of the Bank's counsel.
(d) This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
(e) Each and every one of the terms and provisions of this
Amendment shall be binding upon and shall inure to the benefit of the Borrowers
and the Bank and their respective successors and assigns.
(f) This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same instrument.
(g) Apogee represents and warrants that all of its
subsidiaries are listed on Schedule 6.1(c).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
APOGEE, INC., a Delaware corporation,
and each of the other Borrowers and
Guarantors listed on Schedule 6.1(c)
---------------
By: /s/ Stanley Szczygiel
--------------------------------------
Vice President of Finance of each Borrowers
and Guarantors listed on Section 6.1(c)
-and-
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Marcie D. Knittel
---------------------------------
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 (UNAUDITED) AND THE CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30,
1997 UNAUDITED. FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,268
<SECURITIES> 0
<RECEIVABLES> 17,520
<ALLOWANCES> 8,105
<INVENTORY> 0
<CURRENT-ASSETS> 14,228
<PP&E> 4,341
<DEPRECIATION> 1,551
<TOTAL-ASSETS> 95,499
<CURRENT-LIABILITIES> 18,283
<BONDS> 11,208
0
0
<COMMON> 99
<OTHER-SE> 65,133
<TOTAL-LIABILITY-AND-EQUITY> 95,499
<SALES> 0
<TOTAL-REVENUES> 37,110
<CGS> 0
<TOTAL-COSTS> 29,424
<OTHER-EXPENSES> 1,064
<LOSS-PROVISION> 1,859
<INTEREST-EXPENSE> 670
<INCOME-PRETAX> (118)
<INCOME-TAX> 38
<INCOME-CONTINUING> (156)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (156)
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
