<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934.
For the quarterly period ended January 26, 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 0-25066
OWOSSO CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2756709
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(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
The Triad Building, 2200 Renaissance Boulevard, Suite 150, King of Prussia,
PA 19406
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (610) 275-4500
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Former name, address and former fiscal year, if changed since last report
Indicate by check 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
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OWOSSO CORPORATION
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INDEX
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PAGE NO.
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PART I - Financial Information:
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets 3
January 26, 1997 (unaudited) and
October 27, 1996
Consolidated Statements of Operations 4
Three Months Ended January 26, 1997 and
January 28, 1996 (unaudited)
Consolidated Statements of Cash Flows 5
Three Months Ended January 26, 1997 and
January 28, 1996 (unaudited)
Notes to Consolidated Financial Statements 6
(unaudited)
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operation
Part II - Other Information:
Item 6. Exhibits and Reports on Form 8-K 15
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OWOSSO CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
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January 26, October 27,
1997 1996
(Unaudited)
<S>
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 684,348 $ 839,889
Receivables, net 18,062,239 18,415,245
Inventories, net 20,053,108 19,123,122
Prepaid expenses and other 1,943,552 1,608,169
Advances and interest receivable from affiliate 38,042 36,766
Deferred taxes 1,032,000 1,032,000
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Total current assets 41,813,289 41,055,191
PROPERTY, PLANT AND EQUIPMENT, NET 26,375,664 26,308,809
INTANGIBLES, NET 38,669,821 39,277,112
OTHER ASSETS 1,341,985 1,254,233
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TOTAL ASSETS $ 108,200,759 $ 107,895,345
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Payables - trade $ 6,573,790 $ 6,597,061
Accrued compensation and benefits 3,011,141 3,005,658
Accrued expenses 1,886,833 1,901,892
Accrued interest 519,089 419,565
Current portion of related party debt 3,750,000 5,975,000
Current portion of long-term debt 2,740,257 2,770,934
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Total current liabilities 18,481,110 20,670,110
LONG-TERM DEBT, LESS CURRENT PORTION 48,279,834 45,068,116
POSTRETIREMENT BENEFITS 1,642,088 1,593,950
DEFERRED TAXES 3,543,000 3,543,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Convertible preferred stock Class A, 5% cumulative, $.01 par value; 10,000,000
shares authorized; 1,071,428 shares issued and outstanding (aggregate
liquidation value at January 26, 1997 and October 27, 1996 - $15,000,000) 13,739,849 13,667,814
Common stock, $.01 par value; 15,000,000 authorized; 5,865,000 shares issued
and outstanding 58,650 58,650
Additional paid-in capital 21,611,701 21,611,701
Retained earnings 1,293,811 2,131,288
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Total 36,704,011 37,469,453
Less treasury stock, at cost (56,324 shares at January 26, 1997 and October 27, 1996) (449,284) (449,284)
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Total stockholders' equity 36,254,727 37,020,169
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 108,200,759 $ 107,895,345
============== ==============
</TABLE>
See notes to consolidated financial statements
<PAGE>
OWOSSO CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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Three Months Ended
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January 26, January 28,
1997 1996
<S> <C> <C>
Net Sales $ 30,162,073 $ 27,919,402
Cost of products sold 23,153,257 20,888,716
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Gross Profit 7,008,816 7,030,686
Expenses:
Selling, general and administrative 4,909,384 4,543,523
Corporate 1,263,668 969,246
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Income from operations 835,764 1,517,917
Interest expense 983,152 962,777
Other income 51,395 51,967
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(Loss) income before income tax (benefit) provision (95,993) 607,107
Income tax (benefit) provision (40,832) 239,807
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Net (loss) income (55,161) 367,300
Dividends and accretion on preferred stock (259,535) (254,314)
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Net (loss) income available for common stockholders $ (314,696) $ 112,986
================ =============
Net (loss) income per common share $ (0.05) 0.02
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Weighted average number of common shares outstanding 5,809,000 5,865,000
================ =============
</TABLE>
See notes to consolidated financial statements
<PAGE>
OWOSSO CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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Three Months Ended
----------------------------------
January 26, January 28,
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income $ (55,161) $ 367,300
Adjustments to reconcile net income to net cash provided by operating
activities:
Loss on sale of assets 22,802 16,528
Depreciation 983,339 970,630
Amortization 620,734 609,664
Changes in assets and liabilities which provided (used) cash:
Accounts receivable 353,006 510,182
Inventories (929,986) (1,284,000)
Prepaid expenses and other (336,659) (913,502)
Accounts payable (23,271) (353,183)
Accrued expenses (49,414) (656,486)
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Net cash provided by (used in) operating activities 585,390 (732,867)
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INVESTING ACTIVITIES:
Purchases of property, plant and equipment (1,072,996) (819,354)
Increase in other assets (101,195) (82,225)
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Net cash used in investing activities (1,174,191) (901,579)
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FINANCING ACTIVITIES:
Proceeds from long-term debt 350,000
Borrowings from line of credit 3,200,000 6,450,000
Payments on long-term debt (368,959) (373,256)
Payments on related party debt (2,225,000) (3,175,000)
Dividends paid (522,781) (527,850)
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Net cash provided by financing activities 433,260 2,373,894
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (155,541) 739,448
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 839,889 1,750,236
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 684,348 $ 2,489,684
============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid during the period for interest $ 883,628 $ 804,467
============ ==============
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY -
Accrual of preferred stock dividends $ 187,500 $ 187,500
=============== =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
OWOSSO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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1. THE COMPANY
Business - The consolidated financial statements represent the
consolidated financial position, results of operations and cash flows of
Owosso Corporation and subsidiaries (the "Company"). The subsidiaries
include Motor Products - Owosso Corporation (Motor Products), Motor
Products-Ohio Corporation: (MP - Ohio), Sooner Trailer Manufacturing Co.
(Sooner), Cramer Company (Cramer), DewEze Manufacturing, Inc., including
Parker Industries, Inc.(DewEze), Snowmax Incorporated (Snowmax), The
Landover Company (Dura-Bond), Great Bend Manufacturing, Inc. (Great Bend),
Stature Electric, Inc. (Stature Electric) and Owosso Motor Group, Inc.
(Motor Group). The Company is a diversified manufacturer of products in
narrowly defined niche markets and currently operates in two business
segments, Engineered Component Products and Specialized Equipment. In the
Engineered Component Products segment, the Company's products are sold
primarily to original equipment manufacturers or service providers who use
them in their end product or service. These products are primarily motors,
cam shaft bearings, heat transfer "fin and tube" coils and air
conditioning evaporator units. The products sold in the Specialized
Equipment segment are almost exclusively final products sold through
dealers to their users. These products are primarily all-aluminum horse
trailers and agricultural and turf maintenance equipment. The majority of
the Company's customers are located in North America.
Seasonality - Sales of certain of the Company's specialized equipment tend
to be seasonal with lowest sales during the first fiscal quarter and
higher sales during the fourth fiscal quarter, corresponding with the fall
harvest season for farmers. Sales of the Company's engineered component
products experience less seasonality but generally have higher sales
during the second fiscal quarter while sales of these products are lowest
during the first fiscal quarter.
Cyclicality - The Company's Engineered Component Products segment is
subject to changes in the overall level of domestic economic activity. The
Specialized Equipment segment is subject to changes in certain sectors of
the agricultural economy, which may be influenced by climate changes and
governmental policy. The segment's horse trailer sales which have not
tended to be affected by changes in the agricultural economy, have had a
moderating effect on the results of the entire Specialized Equipment
segment, but may be subject to the overall domestic business cycle.
Pursuant to the rules and regulations of the Securities and Exchange
Commission, the financial statements do not include all of the information
and notes normally included with financial statements prepared in
accordance with generally accepted accounting principles. In the opinion
of management, all adjustments (consisting of a normal recurring nature)
considered necessary for a fair presentation of results for interim
periods have been made. These financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
October 27, 1996.
2. INVENTORIES
Inventories are summarized as follows:
January 26, October 27,
1997 1996
Raw materials and purchased parts $ 8,518,586 $ 8,468,218
Work in process 4,587,979 4,316,588
Finished goods 6,946,543 6,338,316
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Total $ 20,053,108 $ 19,123,122
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<PAGE>
3. LONG-TERM DEBT
Long-term debt consists of the following:
1997 1996
Banks $ 34,669,731 $ 31,507,643
Industrial revenue bonds 9,140,003 9,173,642
Former and current stockholders 6,591,492 6,842,692
Related party debt 3,750,000 5,975,000
Other 618,865 315,073
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Total long-term debt 54,770,091 53,814,050
Less portion due within one year 6,490,257 8,745,934
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Total $ 48,279,834 $ 45,068,116
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The Company has a $55,000,000 unsecured revolving credit agreement with
two banks, which expires on March 31, 2000. Interest is payable, at the
Company's option, at either the bank's prime rate (8.25% at January 26,
1997) or a variable spread (1.75% at January 26, 1997) over the London
Interbank Offered Rate. The agreement includes financial and other
covenants, including leverage, fixed charge, cash flow and net worth
ratios, restrictions on certain asset sales, mergers and other significant
transactions, and a negative pledge on fixed assets. Repayment of the
Industrial Revenue Bonds of certain of the subsidiaries has been
guaranteed by the Company.
The Company entered into two interest rate swap agreements, each with a
$7.5 million notional amount. Beginning in the third quarter of fiscal
1997, the Company will receive floating interest rate payments at the
three month London Interbank Offered Rate in exchange for quarterly fixed
interest rate payments of 7.0675% and 7.09% over the life of the
agreements. The Company enters into these interest rate swap agreements to
change the fixed/variable interest rate mix of the debt portfolio to
reduce the Company's aggregate risk to movements in interest rates. These
agreements are accounted for using settlement accounting.
4. TAXES ON INCOME
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109. The effective income tax rate
differs from the federal statutory tax rate due to adjustments for
amortization of goodwill, officers' life insurance premiums, state income
taxes, and meals and entertainment.
5. CONTINGENCIES
The Company is subject to federal, state and local environmental
regulation with respect to their operations. The Company believes that it
is operating in substantial compliance with applicable environmental
regulations.
<PAGE>
In December 1990, Dura-Bond was issued a nonbinding request for certain
investigative and remediation measures by the California Regional Water
Quality Control Board relating to a facility it formerly operated. Since
the issuance of the request, the State has taken no further action against
Dura-Bond. In the event the State were to seek further remediation,
Dura-Bond may face claims from the State or claims for contribution to its
former lessor. Dura-Bond believes that it has substantial defenses to any
such claim.
The lessor of Cramer's facility is engaged in negotiations with the State
of Connecticut regarding additional investigative or remedial measures at
this facility. Cramer may be required to bear a portion of the costs of
any such investigative or remedial measures, the amount of which cannot
currently be reasonably estimated. Cramer is also engaged in the closure
of waste handling facilities at this location in accordance with State
regulations. Closure is expected to be completed in 1997 at a cost which
is not expected to be significant.
The Company is named as a potentially responsible party with respect to
two hazardous substance disposal sites being cleaned up by the U.S.
Environmental Protection Agency under its "Superfund" program. With
respect to both sites, based on the minimal amount of waste alleged to
have been contributed to the site by the Company, the Company expects to
resolve the matter through the payment of a de minimis amount.
A portion of Sooner's manufacturing facility was used in the past to store
containers of waste oil and solvents, and an aboveground diesel fuel
storage tank is currently located at the facility. The Company intends to
establish a well at the facility for the purpose of monitoring the ground
water for any contamination, and the Company estimates such monitoring
will cost approximately $12,500 per year.
Current historic manufacturing and other operations at the Company's
various facilities may result, and may have resulted, in the discharge and
release of hazardous substances and waste from time to time. The Company
routinely responds to such incidents as deemed appropriate pursuant to
applicable federal, state and local environmental regulations.
Sooner and DewEze have arrangements with a number of financial
institutions to provide floor plan financing for their dealers, which
require them to repurchase repossessed products from the financial
institutions in the event of a default by the financed dealer. Their
obligation is typically to repurchase the equipment at 90% of the purchase
price for the first 180 days, 80% for the next 90 days and 70% for the
next 90 days, after which the obligation expires. Neither subsidiary has
taken possession on any equipment pursuant to the repurchase obligations
in these contracts.
In addition to the matters reported herein, the Company is involved in
litigation dealing with the numerous aspects of its business operations.
The Company believes that settlement of such litigation will not have a
material effect on its financial position or results of operations.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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Three months ended January 26, 1997 compared to three months ended January 28,
1996
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Net sales. Net sales for the Company's fiscal first quarter of fiscal 1997 were
$30.2 million, an increase of 8.0% over net sales of $27.9 million in the first
quarter of fiscal 1996. Increases in net sales in the Company's motor and
agricultural equipment businesses offset declines in net sales of replacement
camshaft bearings and aluminum trailers.
In the Company's Engineered Component Products segment, net sales increased 9.2%
to $17.2 million in the first quarter of fiscal 1997 from $15.8 million in the
fiscal 1996 period. A 16.5% increase in sales at the Company's motor businesses,
primarily due to increased demand by these businesses' existing customers, and a
modest increase in net sales of heat transfer coils, more than offset a decline
of 14.5% at Dura-Bond. The sales decline at Dura-Bond was due to a significant
reduction in sales to that subsidiary's former largest customer, Federal-Mogul
Corporation, which had served as Dura-Bond's largest distribution network.
Federal-Mogul began to manufacture its own replacement camshaft bearings in the
first quarter of fiscal 1996, and sales to Federal-Mogul began to decrease
significantly beginning in the second quarter. Due to strong backlogs at the
subsidiaries in the Engineered Component Products segment at the end of the
first quarter, net sales in this segment are expected to be above prior year
levels in the second quarter of fiscal 1997.
Net sales in the Specialized Equipment segment were $13.0 million in the first
three months of fiscal 1997, a 6.5% increase over net sales of $12.2 million in
the first three months of fiscal 1996. An improved environment for the Company's
agricultural equipment businesses, including favorable weather conditions,
resulted in an increase of 18.9% in net sales at those businesses. Net sales of
aluminum trailers were 4.8% below the prior year's quarter due to reduced demand
by the Company's dealers.
Gross profit. In the first quarter of fiscal 1997 the Company's gross profit was
$7.0 million, or 23.2% of net sales, approximately equal to first quarter fiscal
1996 gross profit of $7.0 million, or 25.2% of net sales.
Gross profit in the Engineered Component Products segment was $4.2 million, or
24.6% of net sales in the first quarter of fiscal 1997, up 8.2% as compared to
$3.9 million, or 24.8% of net sales in the prior fiscal year's first quarter.
The increase in gross profit in this segment was due to the increase in sales.
Gross profit margins remained relatively level for the motor businesses and the
segment as a whole. An increased gross profit margin at Snowmax offset a decline
in gross profit margin at Dura-Bond.
Gross profit in the Specialized Equipment segment was $2.8 million, or 21.4% of
net sales, in the first three months of fiscal 1997, down 11.0% from gross
profit of $3.1 million, or 25.6% of net sales, in the first three months of
fiscal 1996. A significantly reduced gross profit at Sooner Trailer due to its
decline in sales, higher labor costs and production inefficiencies outweighed
increased gross profit at the agricultural equipment businesses in the segment,
the gross profit of which increased due to increased sales.
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $4.9 million, or 16.3% of net sales, in the first
three months of fiscal 1997 as compared to $4.5 million, or 16.3% of net sales,
in the 1996 fiscal period. In the Company's Engineered Component Products
segment, selling, general and administrative expenses increased to $2.6 million
in the first three months of fiscal 1997 as compared to $2.4 million in the
prior fiscal year period. In the Specialized Equipment segment, selling, general
and administrative expenses increased to $2.3 million in the first quarter of
fiscal 1997 from $2.1 million in the prior year period. The increase in both
segments was commensurate with the increase in sales.
Corporate Expenses. Corporate expenses in the first fiscal quarter of 1997 were
$1.3 million, or 4.2% of net sales, as compared to $1.0 million, or 3.5% of net
sales, in the first quarter of fiscal 1996. Corporate expenses increased
primarily due to increases in travel expense, personnel costs, and information
services expenses, including higher depreciation and amortization expenses
related to a computer upgrade.
Income from Operations. Income from operations declined 44.9% to $0.8 million,
or 2.8% of net sales, in the first quarter of fiscal 1997 from $1.5 million, or
5.4% of net sales, in the prior year period, due to the lower gross profit
margins and increased selling, general and administrative expenses and corporate
expenses as discussed above.
Among other measures, the Company evaluates the operating performance of its
business segments and its individual subsidiaries based on business unit income,
which is defined as income from operations before allocation of corporate
expenses. The Company believes this measurement most closely reflects the
subsidiaries' individual contributions. On this basis, business unit income for
the Engineered Component Products segment increased 8.4% to $1.6 million, or
9.5% of net sales, in the fiscal 1997 quarter from $1.5 million, or 9.6% of
sales in fiscal 1996. Increased business unit income in the motor businesses and
Snowmax more than offset reduced business unit income at Dura-Bond.
Business unit income in the Specialized Equipment segment before corporate
expenses was $0.5 million, or 3.6% of sales, as compared to $1.0 million, or
8.2% of sales in the first quarter of fiscal 1996. The Company's DewEze and
Great Bend subsidiaries had a significant increase in business unit income as
compared to the prior year period. These increases were more than offset by a
small business unit loss at Sooner due to the factors mentioned above, compared
to positive business unit income at Sooner in the prior year period.
Interest Expense. Interest expense was $1.0 million, or 3.3% of net sales in the
first quarter of fiscal 1997 and $1.0 million or 3.4% of net sales in the first
quarter of fiscal 1996. Interest expense was slightly higher in the fiscal 1997
period due to a small increase in average debt outstanding.
Net (loss) income. The Company reported a net loss of $0.1 million (0.2% of net
sales) in the first quarter of fiscal 1997 as compared to net income of $0.4
million (1.3% of net sales) in the first quarter of fiscal 1996. The effective
tax rate in the first quarter of 1997 period was 42.5% as compared to 39.5% in
the fiscal 1996 period. The lower results are attributable to the lower income
from operations. The Company expects to report positive net income for the
remainder of fiscal 1997.
Net (loss) income available for common stockholders. In the first quarter of
fiscal 1997, the Company reported a net loss available to common stockholders of
$0.3 million or $0.05 per share, as compared to net income available to common
stockholders of $0.1 million, or $0.02 per share in the first quarter of fiscal
1996. The income or loss for common stockholders is calculated by subtracting
dividends on preferred stock of $187,500 and non-cash accretion in value of
preferred stock of $72,035 ($66,814 in the fiscal 1996 first quarter) from net
income.
<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents decreased to $0.7 million at January 26, 1997 from
$0.8 million at October 27, 1996. In addition to cash and cash equivalents at
January 26, 1997, the Company had $0.4 million of cash that was restricted under
industrial revenue financings. Net cash provided by operating activities was
$0.6 million in the first quarter of fiscal 1997, as compared to net cash used
in operating activities of $0.7 million in the first quarter of fiscal 1996. The
Company historically has seen a seasonal increase in its working capital needs,
particularly in building inventory, in its fiscal first quarter. In the 1997
fiscal first quarter, cash used for working capital needs was $1.0 million as
compared to $2.7 million in the fiscal 1996 period. This lower use of cash for
working capital, combined with the Company's substantial non-cash expenses which
are added back to its net income or loss when calculating net cash from
operations, resulted in the Company generating cash from operations in the 1997
quarter in spite of its net loss.
The Company's primary cash requirements have been for operating expenses,
including raw materials, labor costs and funding of accounts receivable, as well
as capital expenditures, acquisitions and dividends to shareholders. Primary
sources of cash have been from operations and bank borrowings, with industrial
revenue bonds being used for specific capital projects.
Working capital increased to $23.3 million at January 26, 1997 from $20.4
million at October 27, 1996. The increase was primarily due to repayment of
current maturities related party debt issued in connection with the purchase of
Stature using proceeds from the Company's long-term revolving credit agreement,
and a seasonal increase in inventory.
The Company maintains a $55.0 million revolving credit agreement with two banks
with a termination date of March 31, 2000. At January 26, 1997 borrowings of
$33.2 million were outstanding under the revolving credit agreement. Interest is
payable, at the Company's option, at either the agent bank's prime rate or at a
spread over the London Interbank Offered Rate that varies with the Company's
ratio of total debt to EBITDA. The LIBOR spread was 1.75% at January 26, 1997.
The agreement contains customary financial and other covenants, including
leverage, fixed charge, cash flow and net worth ratios, restrictions on certain
asset sales, mergers and other significant transactions and a negative pledge on
assets. During fiscal 1996, the Company entered into interest rate swap
agreements with its two banks with notional amounts totaling $15.0 million. The
agreements call for the Company to make quarterly fixed payments on the notional
amount at rates of 7.0675% and 7.09% for five years beginning in July 1997 in
exchange for receiving payments at the three month London Interbank Offered
Rate.
In the first quarter of fiscal 1997, the Company invested $1.1 million in
capital expenditures as compared to $0.8 million in the first quarter of fiscal
1996. Of the $1.1 million invested in the first three months of fiscal 1997,
$0.8 million were invested in the Engineered Component Products segment and $0.2
million in the Specialized Equipment segment, with the remainder at the
corporate level. The Company expects that capital expenditures for fiscal 1997
should remain at a level consistent with or somewhat higher than that of fiscal
1996, and that capital expenditures will continue to be concentrated primarily
in the Engineered Component Products segment in fiscal 1997.
The Company believes that funds from operations and borrowings from its bank
facilities will be sufficient to fund its activities, including capital
expenditures, for the foreseeable future.
<PAGE>
Seasonality
Sales of certain of the Company's specialty equipment tend to be seasonal, with
lowest sales during the first fiscal quarter and higher sales during the fourth
fiscal quarter, corresponding with the fall harvest season for farmers. Sales of
the Company's engineered component products experience less seasonality but
generally have higher sales during the second fiscal quarter while sales of
these products are lowest during the first fiscal quarter. Accordingly, the
Company's results have historically been lowest in the fiscal first quarter.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
The following information is provided pursuant to the "Safe Harbor" provisions
of the Private Securities Litigation Reform Act of 1995. Certain statements in
Management's Discussion and Analysis of this Form 10-Q are "forward-looking
statements" made pursuant to these provisions.
The Company cautions readers that the following important factors, among others,
have in the past affected and could in the future affect the Company's actual
results of operations and cause the Company's actual results to differ
materially from the results expressed in any forward-looking statements made by
or on behalf of the Company:
The Company's results have been and can be expected to continue to be
affected by the general economic conditions in the United States and
specific economic factors influencing the manufacturing and
agricultural sectors of the economy. Lower demand for the Company's
products can lower revenues as well as cause underutilization of the
Company's plants, leading to reduced gross margins.
Commodity prices can have a material influence on the Company's
results. Grain prices and cattle prices can affect demand for certain
agricultural equipment sold by the businesses in the Company's
Specialized Equipment segment. Metal prices, particularly aluminum,
copper and steel, can affect the Company's costs as well as demand for
the Company's products and the value of inventory held at the end of a
reporting period. Lack of availability of certain commodities could
also disrupt the Company's production.
Weather can affect the success of the grain harvest in the United
States, which can directly affect demand for the Company's grain
handling equipment business.
The start-up of the Company's Ohio plant has affected results of
operations. As sales at that plant increase, manufacturing difficulties
could lead to low gross margins or continuing losses from that
operation.
The Company's Sooner Trailer subsidiary has experienced production
inefficiencies which have caused increased production costs and lower
gross margins. Such inefficiencies could continue to adversely affect
the Company's results of operations.
Changes in demand that change product mix may reduce operating margins
by shifting demand toward less profitable products.
<PAGE>
Loss of a substantial customer may affect results of operations. For
example, the Company's replacement camshaft bearing business sells a
substantially reduced volume of its products through Federal-Mogul
Corporation, which had been that business unit's largest customer.
The Company's results can be affected by engineering difficulties in
designing new products or applications for existing products to meet
the requirements of its customers.
Obsolescence or quality problems leading to returned goods in need of
repair can also affect the value of the Company's inventories and its
profitability.
The Company's results are dependent on the hiring and retention of
qualified executive and local management. There can be no assurance
that the Company will be able to find qualified candidates in the
future.
The Company has a substantial amount of floating rate debt. Increases
in short term interest rates could be expected to increase the
Company's interest expense.
Acquisitions are an important part of the Company's growth strategy.
Acquisitions may have a dilutive effect on the Company's earnings and
could affect the Company's available credit and interest costs.
Conversely, the Company may from time to time divest of product lines
or business units. Any such divestiture may involve costs of
disposition or losses on the disposition that could reduce the
Company's results.
The Company is subject to various Federal and state environmental laws
which could be costly to adhere to if changed materially.
<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit No. Description
- ----------- -----------
10.63 Sixth Amendment to Credit Agreement by
and among Owosso Corporation, its
subsidiaries, NBD Bank, PNC Bank, N.A., and
NBD Bank, as Agent, dated as of December 4,
1996.
27 Financial Data Schedule
(b) Form 8-K.
---------
(1) The Company filed a Current Report
on Form 8-K on November 14, 1996 announcing
expected earnings for the fiscal year ended October
27, 1996.
(2) The Company filed a Current Report
on Form 8-K/A (the "Form 8-K/A") on January 13, 1997
amending the Company's original Form 8-K dated
October 31, 1995, as previously amended by a Form
8-K/A filed on November 24, 1995 relating to the
acquisition of Stature Electric, Inc. The audited
financial statements of Stature as at February 28,
1994 and 1995 and for the fiscal years then ended,
and the unaudited financial statements of Stature as
at August 31, 1994 and 1995 and for the six month
periods then ended, were filed with the Form 8-K/A.
In addition, the unaudited pro forma balance sheet of
Owosso as at July 30, 1995 and unaudited pro forma
financial statements of earnings data of Owosso for
the fiscal year ended October 30, 1994 and the nine
months ended July 30, 1995 were filed with the Form
8-K/A.
<PAGE>
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 hereunto duly authorized.
OWOSSO CORPORATION
By: /s/ George B. Lemmon Jr.
-------------------------
George B. Lemmon, Jr.
Chief Executive Officer
By: /s/ John H. Wert Jr.
---------------------
John H. Wert, Jr.,
Senior Vice President - Finance
and Chief Financial Officer
Date: March 12, 1997
<PAGE>
Index to Exhibits
-----------------
Exhibit Number Description
- -------------- -----------
10.63 Sixth Amendment to Credit Agreement
by and among Owosso Corporation,
its subsidiaries, NBD Bank, PNC Bank,
N.A., and NBD Bank, as Agent, dated
as of December 4, 1996.
27 Financial Data Schedule
EXHIBIT No. 10.63
CREDIT AGREEMENT AMENDMENT
<PAGE>
SIXTH AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT, dated as of December
4, 1996 (this "Amendment"), is by and among OWOSSO CORPORATION, a Pennsylvania
corporation ("Owosso"), AHAB INVESTMENT COMPANY, a Delaware corporation
("Ahab"), CRAMER COMPANY, a Delaware corporation ("Cramer"), DEWEZE
MANUFACTURING, INC., a Pennsylvania corporation ("DewEze"), THE LANDOVER
COMPANY, a Pennsylvania corporation ("Landover"), MOTOR PRODUCTS-OWOSSO
CORPORATION, a Delaware corporation ("Motor Products"), SNOWMAX, INCORPORATED, a
Pennsylvania corporation ("Snowmax"), SOONER TRAILER MANUFACTURING CO., a
Delaware corporation ("Sooner"), MOTOR PRODUCTS-OHIO CORPORATION, a Delaware
corporation ("Motor Products-Ohio"), GREAT BEND MANUFACTURING COMPANY, INC., a
Kansas corporation, STATURE ELECTRIC, INC., a New York corporation ("Stature"
and, together with Owosso, Ahab, Cramer, DewEze, Landover, Motor Products,
Snowmax, Sooner, Motor Products-Ohio and Great Bend, collectively the "Existing
Borrowers" and individually an "Existing Borrower"), OWOSSO MOTOR GROUP, INC., a
Pennsylvania corporation ("Motor Group"), and SNYDER INDUSTRIES, INC., a
Washington corporation ("Snyder" and, together with Motor Group, collectively
the "New Borrowers" and individually a "New Borrower"), NBD BANK, a Michigan
banking corporation formerly known as NBD Bank, N.A. ("NBD"), PNC BANK, NATIONAL
ASSOCIATION, a national banking association ("PNC" and, together with NBD,
collectively the "Banks" and individually a "Bank"), and NBD BANK, as agent (in
such capacity, the "Agent") for the Banks.
INTRODUCTION
------------
A. The Existing Borrowers, the Banks and the Agent are parties
to the Credit Agreement, dated as of October 31, 1994, as amended by the First
Amendment to Credit Agreement, dated as of August 1, 1995, the Second Amendment
to Credit Agreement, dated as of September 1, 1995, the Third Amendment to
Credit Agreement, dated as of October 31, 1995, and the Fourth Amendment to
Credit Agreement, dated as of March 8, 1996, and the Fifth Amendment to Credit
Agreement, dated as of May 31, 1996 (the "Credit Agreement"), pursuant to which
the Banks provide to the Existing Borrowers, on a joint and several liability
basis, a revolving credit facility in the aggregate principal amount of
$55,000,000.
B. The Borrowers now desire that (1) each of the New Borrowers
becomes a party to the Credit Agreement, in the same capacity as each of the
Existing Borrowers, with all rights of the Existing Borrowers thereunder and
joint and several liability for all indebtedness, obligations and liabilities of
each Borrower thereunder, and (2) certain covenants of the Borrowers under the
Credit Agreement be modified, and the Banks and the Agent are willing to so
amend the Credit Agreement on the terms and conditions herein set forth.
<PAGE>
NOW, THEREFORE, in consideration of the mutual agreements
herein and in the Credit Agreement contained, the parties hereto agree as
follows:
ARTICLE I. CREDIT AGREEMENT AMENDMENTS
--------------------------------------
Effective upon the date (the "Amendment Date") that the
condition precedent set forth in Article 2 of this Amendment is satisfied, the
Credit Agreement hereby is amended, retroactive as of October 31, 1996, as
follows:
1.1 In each instance where the word "Borrowers" or "Borrower"
appears in the Credit Agreement, such word shall include, either collectively or
individually, as the case may be, each of the Existing Borrowers and the New
Borrowers, as if each of the New Borrowers were an original party to the Credit
Agreement.
1.2 Section 5.2(a) is amended to read in full as follows:
(a) Net Worth. Permit or suffer the Consolidated Net
Worth of the Borrowers and their Subsidiaries to be less than
(i) at any time during the period prior to the start of the
first fiscal year of the Borrowers beginning after the IPO,
the greater of (A) $20,000,000 and (B) 90% of the Consolidated
Net Worth of the Borrowers and their Subsidiaries immediately
following the completion of the IPO, (ii) at any time after
the start of the first fiscal year of the Borrowers beginning
after the IPO but prior to the end of such fiscal year, 90% of
the Consolidated Net Worth of the Borrowers and their
Subsidiaries immediately prior to the start of such first
fiscal year, and (iii) except as provided below, at the end of
the first fiscal year of the Borrowers following the IPO or at
any time thereafter, the greater of (A) 90% of the highest
previous fiscal year-end Consolidated Net Worth of the
Borrowers and their Subsidiaries and (B) the sum of $2,000,000
plus the Consolidated Net Worth of the Borrowers and their
Subsidiaries as of the last fiscal year-end of the Borrowers;
provided that (1) at the end of the Borrowers' fiscal year
ending on or about October 31, 1996 and at any time thereafter
prior to the end of the Borrowers' fiscal year ending on or
about October 31, 1997, the Borrowers shall not permit or
suffer the Consolidated Net Worth of the Borrowers and their
Subsidiaries to be less than 90% of the highest previous
fiscal year-end Consolidated Net Worth of the Borrowers and
their Subsidiaries and (2) at the end of the Borrowers' fiscal
year ending on or about October 31, 1997 and at any time
thereafter prior to the end of the Borrowers' fiscal year
ending on or about October 31, 1998, the requirement of this
Section 5.2(a) shall be determined as if the figure
<PAGE>
"$2,000,000" in clause (iii)(B) above were "$1,000,000"
instead.
1.3 Section 5.2(b) is amended to read in full as follows:
(b) Total Debt to EBITDA. Permit or suffer the ratio
of Consolidated Total Debt of the Borrowers and their
Subsidiaries to Consolidated EBITDA of the Borrowers and their
Subsidiaries to be greater than (i) 4.50 to 1.00 as of the
last day of either of the Borrowers' fiscal quarters ending on
or about October 31, 1996 or January 31,1997, (ii) 4.25 to
1.00 as of the last day of the Borrowers' fiscal quarter
ending on or about April 30, 1997, or (iii) 4.00 to 1.00 as of
the end of any of the Borrowers' fiscal quarters ending at any
time thereafter. For purposes of determining from time to time
the Borrowers' compliance with this subsection, each Person
that is a Borrower or a Subsidiary of a Borrower at the time
of such determination shall be deemed to have been a Borrower
or a Subsidiary of a Borrower, as the case may be, for the
entire period relevant to such determination (i.e., in each
case, the period of four fiscal quarters of the Borrowers then
ended) and each Person that was a Borrower or Subsidiary of a
Borrower at any time during such relevant period, but is no
longer a Borrower or Subsidiary of a Borrower, as the case may
be, at the time of such determination, shall be deemed not to
have been a Borrower or a Subsidiary of a Borrower, as the
case may be, at any time during such period.
1.4 Section 5.2(c) is amended to read in full as follows:
(c) Fixed Charges Coverage. Permit or suffer the
ratio of Consolidated Fixed Charges Coverage Availability of
the Borrowers and their Subsidiaries to Consolidated Fixed
Charges of the Borrowers and their Subsidiaries to be less
than (i) 1.40 to 1.00 as of the end of either of the
Borrowers' fiscal quarters ending on or about October 31, 1996
or January 31, 1997, (ii) 1.65 to 1.00 as of the end of the
Borrowers' fiscal quarter ending on or about April 30, 1997,
(iii) 1.75 to 1.00 as of the end of the Borrowers' fiscal
quarter ending on or about July 31, 1997, (iv) 2.25 to 1.00 as
of the end of either of the Borrowers' fiscal quarters ending
on or about October 31, 1997 and January 31, 1998, (v) 2.50 to
1.00 as of the end of the Borrowers' fiscal quarter ending on
or about April 30, 1998, (vi) 2.75 to 1.00 as of the end of
the Borrowers' fiscal quarter ending on or about July 31,
1998, or (vii) 3.00 to 1.00 as of the end of any of the
Borrowers' fiscal quarters ending at any time thereafter; such
ratio to be determined as of the last day of each fiscal
quarter of the Borrowers for the period of four fiscal
quarters of the Borrowers
<PAGE>
then ended. For purposes of determining from time to time the
Borrowers' compliance with this subsection, each Person that
is a Borrower or a Subsidiary of a Borrower at the time of
such determination shall be deemed to have been a Borrower or
a Subsidiary of a Borrower, as the case may be, for the entire
period relevant to such determination (i.e., in each case, the
period of four fiscal quarters of the Borrowers then ended)
and each Person that was a Borrower or Subsidiary of a
Borrower at any time during such relevant period, but is no
longer a Borrower or Subsidiary of a Borrower, as the case may
be, at the time of such determination, shall be deemed not to
have been a Borrower or a Subsidiary of a Borrower, as the
case may be, at any time during such period.
1.5 Section 5.2(d) is amended to read in full as follows:
(d) Ratio of Senior Debt to Tangible Capital Funds
with Minimum Tangible Capital Funds and Tangible Net Worth.
Permit or suffer both of either (i) and (ii) below or (i) and
(iii) below to occur at any time:
(i) the ratio of (A) Consolidated Senior
Debt of the Borrowers and their Subsidiaries to (B)
Consolidated Tangible Capital Funds of the Borrowers and their
Subsidiaries to exceed (1) at the end of the Borrowers' fiscal
quarter ending on or about October 31, 1996, 6.00 to 1.00, (2)
at the end of the Borrowers' fiscal quarter ending on or about
January 31, 1997, 7.00 to 1.00, (3) at the end of the
Borrowers' fiscal quarter ending on or about April 30, 1997,
6.25 to 1.00, (4) at the end of the Borrowers' fiscal quarter
ending on or about July 31, 1997, 5.50 to 1.00, (5) at the end
of each of the Borrowers' fiscal quarters ending on or about
October 31, 1997 and January 31, 1998, 4.50 to 1.00, (6) at
the end of the Borrowers' fiscal quarter ending on or about
April 30, 1998, 4.25 to 1.00, (7) at the end of the Borrowers'
fiscal quarter ending on or about July 31, 1998, 3.75 to 1.00,
and (8) at the end of the Borrowers' fiscal quarter ending on
or about October 31, 1998 or at the end of any fiscal quarter
thereafter, 3.00 to 1.00.
(ii) the Consolidated Tangible Capital Funds of the
Borrowers and their Subsidiaries to be less than the sum of
(A) $15,000,000 plus (B) 50% of the Consolidated Cumulative
Net Income of the Borrowers and their Subsidiaries for the
period from the completion of the IPO through the end of the
latest fiscal quarter of the Borrowers prior to the date of
determination.
<PAGE>
(iii) the Consolidated Tangible Net Worth of the
Borrowers and their Subsidiaries to be less than (i) as of the
end of any fiscal year of the Borrowers commencing with the
Borrowers' fiscal year ending in 1994, the sum of (A)
$7,500,000 plus (B) an amount equal to 50% of the Consolidated
Cumulative Net Income of the Borrowers and their Subsidiaries
for each fiscal year of the Borrowers ending in 1996 and
thereafter.
1.6 Exhibit A attached to the Credit Agreement is deleted in
its entirety and Exhibit A attached to this Amendment is substituted in place
thereof. The Borrowers shall execute and deliver to the Banks replacement
Revolving Credit Notes in the face amount of each Bank's Commitment Amount
substantially in the form of Exhibit A attached to this Amendment (together the
"Replacement Revolving Credit Notes" and individually a "Replacement Revolving
Credit Note") to be exchanged for the Revolving Credit Notes previously issued
by the Existing Borrowers to the Banks under the Credit Agreement (together the
"Existing Revolving Credit Notes" and individually an "Existing Revolving Credit
Note"). On the Amendment Date, the principal balance of each Bank's Existing
Revolving Credit Note, as well as all other information which has been endorsed
on the schedule attached to such Existing Revolving Credit Note or elsewhere on
the books and records of such Bank with respect to such Existing Revolving
Credit Note, shall be endorsed on the schedule attached to such Bank's
Replacement Revolving Credit Note or elsewhere on the books and records of such
Bank with respect to such Bank's Replacement Revolving Credit Note. The
execution and delivery by the Borrowers of the Replacement Revolving Credit
Notes shall not in any circumstances be deemed a novation or to have terminated,
extinguished or discharged the indebtedness evidenced by the Existing Revolving
Credit Notes, all of which indebtedness shall continue under and be evidenced
and governed by the Replacement Revolving Credit Notes and the Credit Agreement,
as amended.
1.7 Exhibits B and C attached to the Credit Agreement are
deleted in their entirety, and Exhibits B and C, respectively, attached to this
Amendment are substituted in place thereof.
1.8 Schedule 4.4 attached to the Credit Agreement is deleted
in its entirety and Schedule 4.4 attached to this Amendment is substituted in
place thereof.
ARTICLE 2. CONDITIONS PRECEDENT TO AMENDMENTS
----------------------------------
As conditions precedent to the effectiveness of the amendments
to the Credit Agreement set forth in Article 1 of this Amendment, the Banks
shall receive the following documents and the following matters shall be
completed, all in form and substance satisfactory to the Agent:
<PAGE>
2.1 The Replacement Revolving Credit Notes duly completed and
executed on behalf of each Borrower for the Banks. Upon receipt of its
Replacement Revolving Credit Note, each Bank shall promptly return to the
Borrowers such Bank's Existing Revolving Credit Note.
2.2 Certified copies of such corporate and charter documents
of each Borrower, incumbency certificates, and such documents evidencing
necessary corporate action of each Borrower with respect to this Amendment, the
Replacement Revolving Credit Notes and the transactions contemplated hereby, as
the Agent may reasonably request.
2.3 The favorable written opinion of counsel to the Borrowers
in form and substance satisfactory to the Agent, with respect to such matters as
the Agent may reasonably request.
2.4 The Borrowers shall have paid to the Banks a fee for this
Amendment in the amount of $35,000. Such fee shall be shared between the Banks
as follows: $22,272.25 for NBD and $12,727.75 for PNC.
2.5 Such other documents and agreements reasonably requested
by the Agent.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Banks to enter into this Amendment,
each Borrower represents and warrants that:
3.1 The execution, delivery and performance by the Borrowers
of this Amendment and the Replacement Revolving Credit Notes have been duly
authorized by all necessary corporate action and do not and will not (a) require
any consent or approval of the stockholders of any Borrower, (b) violate any
provisions of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to any
Borrower or of the Articles of Incorporation or By-Laws of any Borrower, or (c)
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which any
Borrower is a party or by which any Borrower or its properties may be bound or
affected.
3.2 No authorization, consent, approval, license, exemption of
or filing, declaration or registration with any governmental authority or any
non-governmental person or entity, including without limitation any creditor or
stockholder of any Borrower, is required on the part of any Borrower in
connection with the execution, delivery and performance of this Amendment, the
Replacement Revolving Credit Notes or the transactions contemplated hereby or as
a condition to the legality, validity or enforceability of this Amendment or the
Replacement Revolving Credit Notes.
3.3 This Amendment is, and the Replacement Revolving Credit
Notes when
<PAGE>
delivered hereunder will be, legal, valid and binding obligations of the
Borrowers enforceable against the Borrowers in accordance with their terms.
3.4 After giving effect to the amendments contained in Article
1 of this Amendment and to Section 4.2 of this Amendment, the representations
and warranties contained in Article IV of the Credit Agreement are true on and
as of the date hereof with the same force and effect as if made on and as of the
date hereof, provided that none of the New Borrowers, Stature, Motor
Products-Ohio or Great Bend shall be deemed a "Borrower" with respect to, but
only with respect to, such representations and warranties regarding historical
matters not involving such Borrower.
ARTICLE 4. MISCELLANEOUS
-------------
4.1 If any Borrower shall fail to perform or observe any term,
covenant or agreement in this Amendment, or any representation or warranty made
by any Borrower in this Amendment shall prove to have been incorrect in any
material respect when made, such occurrence shall be deemed to constitute an
Event of Default.
4.2 All references to the Credit Agreement or the Existing
Revolving Credit Notes in any agreement, certificate or instrument referred to
in the Credit Agreement, or delivered pursuant thereto or in connection
therewith or in any other document, hereafter shall be deemed references to the
Credit Agreement, as amended hereby, and the Replacement Revolving Credit Notes,
respectively.
4.3 All agreements, certificates and instruments executed
pursuant to the Credit Agreement or in connection therewith (other than the
Existing Revolving Credit Notes) and, subject to the amendments herein provided,
the Credit Agreement, shall in all respects continue in full force and effect
and are hereby ratified and confirmed.
4.4 Capitalized terms used but not defined in this Amendment
shall have the respective meanings ascribed thereto in the Credit Agreement.
4.5 This Amendment shall be governed by and construed in
accordance with the laws of the State of Michigan.
4.6 This Amendment may be signed upon any number of
counterparts with the same effect as if the signatures thereto were upon the
same instrument.
4.7 The Borrowers jointly and severally agree to pay the
reasonable fees and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman,
counsel for the Agent, in connection with the negotiation and preparation of
this Amendment and the documents referred to herein and the consummation of the
transactions contemplated hereby, and in connection with advising the Agent as
to its rights and responsibilities with respect thereto.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed and delivered as of the date first above written.
BORROWERS: OWOSSO CORPORATION
By: /s/ John H. Wert Jr.
--------------------
Its: SVP Finance & CFO
-----------------
AHAB INVESTMENT COMPANY
By: /s/ Norman J. Shuman
--------------------
Its: Vice President
--------------
CRAMER COMPANY
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
DEWEZE MANUFACTURING, INC.
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
THE LANDOVER COMPANY
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
<PAGE>
MOTOR PRODUCTS-OWOSSO
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
GREAT BEND MANUFACTURING
COMPANY, INC.
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
SNOWMAX, INCORPORATED
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
SOONER TRAILER MANUFACTURING
CO.
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
MOTOR PRODUCTS-OHIO
CORPORATION
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
<PAGE>
STATURE ELECTRIC, INC.
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
OWOSSO MOTOR GROUP, INC.
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
SNYDER INDUSTRIES, INC.
By: /s/ John H. Wert Jr.
----------------------
Its: Treasurer
---------
Agent and Banks: NBD BANK, as Agent and as a Bank
By: /s/ William C. Goodue
----------------------
Its: Vice President
--------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Charlene Massih
----------------------
Its: Vice President
-----------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-26-1997
<PERIOD-END> JAN-26-1997
<CASH> 684,348
<SECURITIES> 0
<RECEIVABLES> 18,062,239
<ALLOWANCES> 474,559
<INVENTORY> 20,053,108
<CURRENT-ASSETS> 41,813,289
<PP&E> 50,405,033
<DEPRECIATION> 24,029,369
<TOTAL-ASSETS> 108,200,759
<CURRENT-LIABILITIES> 18,481,110
<BONDS> 54,770,091
0
13,739,849
<COMMON> 58,650
<OTHER-SE> 22,456,228
<TOTAL-LIABILITY-AND-EQUITY> 108,200,759
<SALES> 30,162,073
<TOTAL-REVENUES> 30,213,468
<CGS> 23,153,257
<TOTAL-COSTS> 23,153,257
<OTHER-EXPENSES> 6,173,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 983,152
<INCOME-PRETAX> (95,993)
<INCOME-TAX> (40,832)
<INCOME-CONTINUING> (55,161)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,161)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
