<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DRAFT 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 March 31, 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 0-24534
MERIDIAN SPORTS INCORPORATED
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 13-3776096
______________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 CHEROKEE COVE DRIVE, VONORE, TENNESSEE 37885
(Address of principal executive offices) (Zip Code)
423-884-6776
______________________________________________________________________________
(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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of
the latest practicable date.
Class Outstanding at May 5, 1997
- ----------------------------- --------------------------
Common Stock, $0.01 par 8,000,000
As of May 5, 1997, 5,200,000 shares of the Registrant's
outstanding common stock were held by an indirect
wholly-owned subsidiary of Mafco Holdings Inc.
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 1. Consolidated Financial Statements:
Consolidated Condensed Statements of Operations
Three Months Ended March 31, 1997 and 1996.....................................3
Consolidated Condensed Balance Sheets
March 31, 1997 and December 31, 1996...........................................4
Consolidated Condensed Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996.....................................5
Notes to Consolidated Financial Statements.....................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................8
PART II - OTHER INFORMATION
Item 5 Other Information..............................................................11
Item 6. Exhibits and Reports on Form 8-K...............................................11
Exhibit Index..................................................................12
Signatures.....................................................................13
</TABLE>
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1997 1996
-------- ----------
<S> <C> <C>
Net sales:
Marine and Equipment $ 22,022 $ 19,481
Businesses sold and personal watercraft 14,150
-------- ---------
22,022 33,631
-------- ---------
Costs and expenses:
Cost of sales:
Marine and Equipment 16,706 15,214
Businesses sold and personal watercraft 13,610
-------- --------
16,706 28,824
-------- ---------
Selling, general and administrative expenses:
Marine and Equipment 4,832 4,878
Businesses sold and personal watercraft 4,111
Headquarters expenses 252 1,086
-------- ----------
5,084 10,075
-------- ----------
Operating income:
Marine and Equipment 484 (611)
Businesses sold and personal watercraft (3,571)
Headquarters expenses (252) (1,086)
-------- ----------
232 (5,268)
-------- ----------
Interest and related amortization expense (498) (781)
Gain on sale of business and unusual item 11,950
-------- ----------
(Loss) income before income taxes and
extraordinary charge (266) 5,901
Provision for income taxes 4,867
-------- ----------
(Loss) income before extraordinary charge (266) 1,034
Extraordinary charge 713
-------- ----------
Net (loss) income ($266) $ 321
======== ==========
Earnings per common share:
(Loss) income before extraordinary charge ($0.03) $0.13
Extraordinary charge (0.09)
-------- ----------
Net (loss) income ($0.03) $0.04
======== ==========
Weighted average shares outstanding (000s) 8,000 8,000
======== ==========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
---------- --------------
<S> <C> <C>
Current assets:
Cash $536 $1,968
Accounts receivable, net 15,485 8,467
Inventories 14,926 15,537
Prepaid expenses and other 917 3,152
---------- -------------
Total current assets 31,864 29,124
Property, plant and equipment, net 12,895 13,243
Other assets 3,662 1,858
--------- -------------
$48,421 $44,225
========= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt $ 13 $ 13
Accounts payable 5,408 6,487
Accrued expenses and other current liabilities 21,873 23,139
--------- ---------
Total current liabilities 27,294 29,639
Long-term debt 25,719 19,282
Other liabilities 2,628 2,258
Commitments and contingencies
Stockholders' deficit:
Preferred stock, par value $0.01 per share
Common stock, par value $0.01 per share 80 80
Additional paid-in capital 131,951 131,951
Accumulated deficit (139,251) (138,985)
-------- --------
Total stockholders' deficit (7,220) (6,954)
-------- --------
$48,421 $44,225
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income ($266) $ 321
Adjustments to reconcile net (loss) income to net cash flows from operating
activities:
Depreciation and amortization 507 1,166
Gain on sale of business, personal watercraft charges
and other, net of income taxes (3,870)
Change in assets and liabilities:
Increase in receivables (7,018) (5,388)
Decrease (increase) in inventories 611 (1,653)
Decrease in accounts payable and accrued expenses (495) (1,761)
Payment of restructuring liabilities (1,850) (4,742)
Other, net 1,131 520
----------- ------------
(7,114) (15,728)
----------- ------------
Net cash flows from operating activities (7,380) (15,407)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of businesses 34,800
Capital expenditures, net (159) (950)
Other, net (20)
----------- ------------
Net cash flows from investing activities (159) 33,830
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net bank borrowings, net of fees 5,432 (22,100)
Net increase in borrowings from affiliates 675 3,025
----------- ------------
Net cash flows from financing activities 6,107 (19,075)
----------- ------------
Net decrease in cash (1,432) (652)
Cash at beginning of period 1,968 1,937
----------- ------------
Cash at end of period $536 $ 1,285
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries after elimination of all material intercompany
accounts and transactions. The consolidated financial statements are
unaudited. In management's opinion, all adjustments (consisting only of normal
recurring accruals and the restructuring charges) considered necessary for a
fair presentation have been included. Operating results for the first three
months of 1997 are not necessarily indicative of the results that may be
expected for a full year. These interim financial statements should be read in
conjunction with the consolidated financial statements and related notes
thereto which are included on pages F-1 through F-22 of the Company's annual
report on Form 10-K for the year ended December 31, 1996. All terms used but
not defined elsewhere herein have the meanings ascribed to them in the
Company's Form 10-K. Certain reclassifications have been made to conform to
the current period's presentation. In 1996, the Company sold its Skeeter and
Boston Whaler businesses to third parties. The results of operations of the
Businesses Sold are included in the consolidated results of operations of the
Company through their respective dates of sale. The Company is an
enthusiast-based sports and active recreation company.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. The
accruals established for the WetJet recall and repair programs are based on
management's estimates of the costs of such programs. The programs are
currently being executed. Should these programs not succeed as expected, the
actual costs may exceed the current estimates. Consequently, the Company may
record additional charges related to WetJet during 1997 as it periodically
assesses the status of the WetJet programs. No charges related to the WetJet
programs were recorded in the 1997 quarter.
2. EARNINGS PER COMMON SHARE
Earnings per common share have been computed based upon 8,000,000
shares for the three months ended March 31, 1997 and 1996.
3. INVENTORIES
Inventories are valued at the lower of cost or market. Inventory
costs are determined principally by the last-in, first-out method ("Lifo").
Inventories consisted of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Raw materials and supplies..................................... $5,311 $6,372
Work-in-process................................................ 1,534 1,378
Finished goods................................................. 9,190 8,896
----- -----
16,035 16,646
Less: Lifo allowance........................................... (1,109) (1,109)
-------- --------
$ 14,926 $ 15,537
======== ========
</TABLE>
6
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
4. CREDIT AGREEMENTS
In March 1997, the Company entered into a credit agreement with an
affiliate (the "M&F Facility") to refinance existing borrowings from
affiliates and to finance the operations, including seasonal working capital
needs and restructuring liabilities, of the Company. The M&F Facility provides
for borrowings on a revolving basis of up to $30,000, bears interest at the
prime rate, as defined, plus 1% and matures at December 1, 1998. Loans under
the M&F Facility are guaranteed by the subsidiaries of the Company (other than
O'Brien) and a pledge of Cherokee Cove. Borrowings outstanding under the M&F
Facility are required to be prepaid with the net cash proceeds of the sales of
any subsidiaries of the Company. The commitment under the M&F Facility shall
be reduced by such required prepayments. The M&F Facility contains a minimum
net worth covenant. The M&F Facility contains typical events of default
including change of control, material adverse change and non-payment of
obligations.
In March 1997, the Company entered into a credit agreement with a
bank (the "O'Brien Credit Agreement"). The O'Brien Credit Agreement provides a
borrowing facility of up to $14,000, including letters of credit, on a
revolving basis, based upon the amount of eligible inventory and eligible
accounts receivable, as such are defined in the O'Brien Credit Agreement. The
initial borrowing of $5,116 under the O'Brien Credit Agreement was used to
repay intercompany indebtedness to Meridian, which used the funds to partially
repay borrowings from affiliates. Loans under the O'Brien
Credit Agreement bear interest at either of the following rates, as selected
by O'Brien from time to time: (i) the lender's base rate (8.5% at April 30,
1997) plus 75 basis points or (ii) the London Interbank Offered Rate (5.6875%
at April 30, 1997) plus 275 basis points. Loans under the O'Brien Credit
Agreement are secured by a security interest in all the assets of O'Brien.
Loans under the O'Brien Credit Agreement are required to be repaid with 100%
of the net proceeds of material asset sales by O'Brien. The O'Brien Credit
Agreement contains certain financial covenants relating to O' Brien ratios of
EBITDA to fixed charges, indebtedness to tangible net worth and minimum net
worth and certain restrictive covenants relating to, among other things,
limitations on capital expenditures by O'Brien, mergers and acquisitions by
O'Brien, asset dispositions, operating leases, restricted payments, other
indebtedness of O'Brien, changes in control of O'Brien and changes in
ownership of the Company.
5. CASH FLOW REPORTING
The Company uses the indirect method to report cash flows from
operating activities. For the three months ended March 31, 1997 and 1996,
interest paid was $487 and $1,051, respectively; income taxes paid were $23
and $48, respectively.
7
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and
results of operations should be read in conjunction with the Company's Form
10-K for the year ended December 31, 1996.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1996
Marine and Equipment sales increased 13% to $22.0 million in 1997
versus $19.5 million in 1996 primarily because of improved inventory
levels and financing availability for the Company's boat dealers and increased
acceptance of Equipment products offerings, particularly wakeboards.
Consolidated net sales in 1996 also included $14.1 million of sales of
Businesses Sold.
Marine and Equipment gross profit increased 25% to $5.3 million in
1997 versus $4.3 million in 1996. The improved performance arose from the
higher sales, as well as higher margins on sales due to higher volume and
enhanced manufacturing cost controls. Consolidated gross profit in 1996 also
included $3.5 million of gross profit from Businesses Sold and was net of
charges of $3.0 million related to the personal watercraft business. No
charges related to the WetJet programs were recorded in the 1997 quarter.
Charges in 1996 related to WetJet reflect a revision of management's estimate
to repair previously manufactured inventory reflecting the cost of additional
warranty parts and labor and lower estimates of realizable value of
inventories. Although the WetJet recall and repair programs are largely behind
the Company, there can be no assurance that such programs will succeed as
planned or that management's estimates of the cost of the programs will not be
exceeded. Consequently, the Company may record additional charges related to
WetJet during 1997 as it periodically assesses the status of the WetJet
programs.
Marine and Equipment SG&A expenses were approximately the same in
both 1997 and 1996, but as a percentage of the related net sales, SG&A
expenses decreased by approximately three percentage points in the 1997 period
as higher variable sales expenses were approximately offset by lower
administrative expenses. Consolidated SG&A expenses in 1996 also included $4.1
million of charges related to the Businesses Sold and the personal watercraft
business.
Headquarters expenses of $0.3 million in 1997 decreased from $1.1
million in 1996 due to lower compensation expense and reduced charges due to
the closure of the headquarters office in the second quarter 1996.
Operating income of the Marine and Equipment businesses, net of
headquarters expenses, of $0.2 million in 1997 improved from a loss of $1.7
million in 1996. Higher sales, higher margins and controlled spending all
contributed to the improvement. Consolidated operating income in 1996 also
included $3.6 million of losses of Businesses Sold and personal watercraft.
Interest and related amortization expense of $0.5 million in 1997 was
approximately $0.3 million below 1996 levels due to the effect of lower
outstanding borrowings partially offset by higher variable interest rates
which took effect in late March 1997.
The Skeeter Sale in 1996 resulted in a pre-tax gain of $13.3 million,
net of a goodwill writeoff of $10.1 million. Also, in 1996, the Company
recorded a valuation adjustment of $1.3 million related to its Equipment
businesses.
In connection with the permanent reduction of outstanding commitments
under the Company Credit Agreement resulting from the Skeeter Sale, the
Company recorded an extraordinary charge of $0.7 million to writeoff deferred
financing costs in 1996.
8
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company recorded a pre-tax loss in 1997. During 1997, the Company
did not provide a tax benefit for losses generated as it is uncertain whether
benefit for such losses will be realized in the future. The income tax
provision in 1996 primarily relates to federal, state and local taxes relating
to the Skeeter sale. The provision in 1996 does not include a benefit for the
operating losses of WetJet. Income before income taxes and extraordinary
charge in 1996 is net of a non-deductible goodwill writeoff of $10.1 million
in connection with the Skeeter Sale.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1997 and 1996, cash (used in)
provided by operating activities was ($7.4) million and ($15.4) million,
respectively. The Company's cash flows from operating activities in 1997 and
1996 reflect the payment of restructuring liabilities in the amounts of $1.9
million and $4.7 million, respectively, operating losses and interest expense.
In 1996, cash used by Businesses Sold was approximately $3.0 million.
The Company's net capital expenditures were $0.2 million and $0.9
million for the three months ended March 31, 1997 and 1996, respectively.
The decline resulted from the elimination of capital expenditures of
Businesses Sold and proceeds from fixed asset sales of the personal watercraft
business, partially offset by a modest increase in tooling expenditures for
new boat models in 1997.
The Company's liquidity needs are generally for seasonal working
capital needs and the funding of restructuring liabilities. In March 1997, the
Company entered into the M&F Facility to refinance existing borrowings from
affiliates and to finance the operations, including seasonal working capital
needs and restructuring liabilities, of the Company. The M&F Facility provides
for borrowings on a revolving basis of up to $30.0 million, bears interest at
the prime rate, as defined, plus 1% and matures at December 1, 1998. Loans
under the M&F Facility are guaranteed by the subsidiaries of the Company
(other than O'Brien) and a pledge of Cherokee Cove. Borrowings outstanding
under the M&F Facility are required to be prepaid with the net cash proceeds
of the sales of any subsidiaries of the Company. The commitment under the M&F
Facility shall be reduced by such required prepayments. The M&F Facility
contains a minimum net worth covenant. The M&F Facility contains typical
events of default including change of control, material adverse change and
non-payment of obligations.
In March 1997, the Company entered into the O'Brien Credit
Agreement. The O'Brien Credit Agreement provides a borrowing facility of up to
$14.0 million, including letters of credit, on a revolving basis, based upon
the amount of eligible inventory and eligible accounts receivable, as such are
defined in the O'Brien Credit Agreement. The initial borrowing of $5.1 million
under the O'Brien Credit Agreement was used to repay intercompany indebtedness
to Meridian, which used the funds to partially repay borrowings from
affiliates. Loans under the O'Brien Credit Agreement bear interest at either
of the following rates, as selected by O'Brien from time to time: (i) the
lender's base rate (8.5% at April 30, 1997) plus 75 basis points or (ii) the
London Interbank Offered Rate (5.6875% at April 30, 1997) plus 275 basis
points. Loans under the O'Brien Credit Agreement are secured by a security
interest in all the assets of O'Brien. Loans under the O'Brien Credit
Agreement are required to be repaid with 100% of the net proceeds of material
asset sales by O'Brien. The O'Brien Credit Agreement contains certain
financial covenants relating to O'Brien ratios of EBITDA to fixed charges,
indebtedness to tangible net worth and minimum net worth and certain
restrictive covenants relating to, among other things, limitations on capital
expenditures by O'Brien, mergers and acquisitions by
9
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
O'Brien, asset dispositions, operating leases, restricted payments, other
indebtedness of O'Brien, changes in control of O'Brien and changes in
ownership of the Company.
At March 31, 1997, the Company's outstanding debt of $25.7 million
was comprised of $19.9 million of borrowings under the M&F Facility, $5.8
million of borrowings under the O'Brien Credit Agreement and capitalized lease
obligations. The increase of $6.4 million from December 31, 1996 resulted from
seasonal increases in working capital, payments of restructuring liabilities
and capital expenditures. At May 2, 1997, the Company had aggregate
outstanding borrowings of $29.2 million under the M&F Facility and the O'Brien
Facility.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. The forward-looking statements
contained in this Form 10-Q are subject to certain risks and uncertainties.
Actual results could differ materially from current expectations. Among the
factors which could affect the Company's actual results and could cause
results to differ from those contained in the forward-looking statements
contained herein are consumer's acceptance of the Company's new model year
products and the success of the WetJet recall and repair programs.
SEASONALITY
The marine and watersports industry is seasonal, with consumer sales
strongest in the summer months. As a result of this seasonality, operating
results obtained in the first three months of the year are not necessarily
indicative of results that may be expected for the full year.
10
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company's shares ceased trading on The NASDAQ Stock Market National
Market System effective the close of business of May 2, 1997. Since then, the
Company's shares have traded on the OTC Bulletin Board.
In connection with the Smith Litigation (see the Company's 1996 Form
10-K), on April 29, 1997, the Court denied MasterCraft and WetJet's motion to
abate the case. The Court has not yet ruled upon the Company's personal
jurisdiction motion.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
See exhibit index on page 12.
b. Reports on Form 8-K
None.
<PAGE>
MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERIDIAN SPORTS INCORPORATED
----------------------------
(Registrant)
May 8, 1997 By: /s/ Irwin Engelman
-------------------------
Irwin Engelman
Chief Financial Officer
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
10 Revolving Credit Agreement between the Company and Revlon
Group Incorporated dated March 28, 1997.
27 Financial Data Schedule.
<PAGE>
$30,000,000
CREDIT AGREEMENT
Between
MERIDIAN SPORTS INCORPORATED
as Borrower
and
REVLON GROUP INCORPORATED
as Lender
Dated as of March 28, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I DEFINITIONS...................................................................... 1
Section 1.1 Certain Defined Terms........................................................ 1
---------------------
Section 1.2 Computation of Time Periods.................................................. 4
---------------------------
Section 1.3 Construction................................................................. 4
------------
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES................................................ 4
Section 2.1 The Credit Facility.......................................................... 4
-------------------
(a) Working Capital Loans.................................................... 4
---------------------
(b) Commitment............................................................... 4
----------
Section 2.2 Making of the Loans.......................................................... 5
-------------------
Section 2.3 Use of Proceeds.............................................................. 5
---------------
Section 2.4 Repayment.................................................................... 5
---------
Section 2.5 Interest..................................................................... 5
--------
Section 2.6 Promissory Note.............................................................. 5
---------------
Section 2.7 Prepayments.................................................................. 6
-----------
(a) Optional Prepayments..................................................... 6
--------------------
(b) Mandatory Prepayments.................................................... 6
---------------------
(c) Application.............................................................. 6
-----------
Section 2.8 Computations................................................................. 6
------------
ARTICLE III CONDITIONS OF LENDING............................................................ 7
Section 3.1 Conditions Precedent to
-----------------------
Borrowings............................................................... 7
----------
ARTICLE IV COVENANTS........................................................................ 7
Section 4.1 Maintenance of Net Worth..................................................... 7
------------------------
ARTICLE V EVENTS OF DEFAULT................................................................ 8
Section 5.1 Event of Default............................................................. 8
----------------
ARTICLE VI MISCELLANEOUS.................................................................... 10
Section 6.1 Amendments, Etc.............................................................. 10
---------------
Section 6.2 Notices, Etc................................................................. 10
------------
Section 6.3 No Waiver; Remedies.......................................................... 10
-------------------
Section 6.4 Costs and Expenses........................................................... 11
------------------
Section 6.5 Binding Effect............................................................... 11
--------------
Section 6.6 Governing Law................................................................ 11
-------------
Section 6.7 Execution in Counterparts.................................................... 11
-------------------------
Section 6.8 Waiver of Jury Trial......................................................... 11
--------------------
EXHIBIT A REVOLVING CREDIT NOTE....................................................A-1
EXHIBIT B NOTICE OF BORROWING......................................................B-1
EXHIBIT C MORTGAGE.................................................................C-1
EXHIBIT D PLEDGE AGREEMENT.........................................................D-1
EXHIBIT E GUARANTY AGREEMENT.......................................................E-1
</TABLE>
i
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of March 28, 1997 (as amended,
supplemented or modified from time to time, this "Agreement"), is entered into
between Meridian Sports Incorporated, a Delaware corporation (the "Borrower"),
and Revlon Group Incorporated, a Delaware corporation (the "Lender").
R E C I T A L S
WHEREAS, the Borrower has requested that the Lender make
available to the Borrower a credit facility which shall be a $30,000,000
revolving credit facility, the proceeds of which will be used to repay
existing indebtedness owing to the Lender and which will be used for working
capital and general corporate purposes, and the Lender has agreed to extend
such credit upon the terms and subject to the conditions set forth in this
Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement,
each of the following terms shall have the meaning ascribed thereto below
(such meaning to be applicable to both the singular and plural forms of the
term defined):
"AGREEMENT" has the meaning specified in the preamble
to this Agreement.
"AVAILABLE AMOUNT" means, at any time in respect of the Working
Capital Commitment, the amount of the Working Capital Commitment less the
amount of all Working Capital Loans made pursuant to Section 2.1 hereof
outstanding as of any date of determination thereof.
"BORROWER" has the meaning specified in the preamble
to this Agreement.
"BORROWER'S ACCOUNT" means demand deposit account number
3750330166 established in the name of the Borrower with NationsBank of Texas,
N.A., or any successor account.
<PAGE>
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in New York City.
"CLOSING DATE" means the date as of which this Agreement has been
executed by the Borrower and the Lender and on which all conditions precedent
to the making of the Loans have been satisfied or waived by the Lender.
"CONSOLIDATED NET WORTH (DEFICIT)" means, as of any date of
determination, total stockholder's equity or stockholder's deficit as set
forth on the consolidated balance sheet of the Borrower in accordance with
generally accepted accounting principles.
"EVENT OF DEFAULT" has the meaning specified in
Section 5.1 hereof.
"GUARANTY AGREEMENT" means the Guaranty Agreement, substantially
in the form of Exhibit E, among each Subsidiary named therein and the Lender,
as the same shall be modified or supplemented and in effect from time to time.
"INTEREST PAYMENT DATE" has the meaning specified in
Section 2.5 hereof.
"LENDER" has the meaning specified in the preamble to
this Agreement.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge or
adverse claim affecting title or resulting in an encumbrance against real or
personal property or a security interest of any kind.
"LOAN" means any of the Working Capital Loans.
"LOAN DOCUMENTS" means this Agreement, the Note, the Pledge
Agreement, the Guaranty Agreement, the Mortgage and other instruments,
agreements, documents and financing statements executed at any time pursuant
hereto or in connection herewith, including all amendments, modifications,
supplements, extensions, renewals, and restatements hereof.
"MANDATORY PREPAYMENT" has the meaning specified in
Section 2.7(b) hereof.
"MATURITY DATE" means December 1, 1998.
"MORTGAGE" means the deed of trust, substantially in the form of
Exhibit C, granted by Master Craft Boat Company to the Lender, as the same
shall be modified or supplemented and in effect from time to time.
2
<PAGE>
"NOTICE OF BORROWING" has the meaning specified in
Section 2.2 hereof.
"OBLIGATIONS" means any and all indebtedness, debts, obligations
and liabilities of the Borrower from time to time outstanding to the Lender
under the Loan Documents to which it is party, whether fixed or contingent,
due or not due, liquidated or unliquidated, determined or undetermined, and
whether for principal, premium, interest, fees, indemnities, costs, expenses
or otherwise, including, without limitation, principal of and interest on and
any other amounts payable in respect of the Working Capital Loans, and
including, further, without limitation, any rights of indemnification,
reimbursement, subrogation or contribution arising under the Loan Documents.
"PERSON" means an individual, partnership, corporation, joint
stock company, trust (including a business trust), unincorporated association,
joint venture or other entity, or a government or any political subdivision or
agency thereof.
"PLEDGE AGREEMENT" means the Pledge Agreement, substantially in
the form of Exhibit D, executed and delivered in favor of the Borrower to the
Lender, as the same shall be modified or supplemented and in effect from time
to time.
"POST-DEFAULT RATE" means, in respect of any principal of any
Loan or any other amount under this Agreement or any other Loan Document that
is not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period from and including the due date
to but excluding the date on which such amount is paid in full equal to the
Prime Rate as in effect from time to time plus 4%.
"PRIME RATE" means the rate of interest per annum established by
The Chase Manhattan Bank as its prime rate from time to time.
"SUBSIDIARY" means each of BW Sale Corp., a Massachusetts
corporation, Master Craft Boat Company, a Tennessee corporation, SoniForm,
Inc., a California corporation, O'Brien International Inc., a Washington
corporation, Mastercraft Acquisition Corp., a Delaware corporation, Tennessee
Acquisition Corp., a Delaware corporation, and any other corporation of which
the capital stock ordinarily having a majority of the voting rights in the
election of directors is now or hereafter owned, directly or indirectly, by
the Borrower.
3
<PAGE>
"WORKING CAPITAL COMMITMENT" has the meaning set
forth in Section 2.1(b).
"WORKING CAPITAL LOAN" has the meaning set forth in
Section 2.1(a).
"WORKING CAPITAL NOTE" means a promissory note made by the
Borrower payable to the Lender evidencing the Working Capital Loans to be made
hereunder, executed and delivered to the Lender as provided in Section 2.6 and
in substan tially the form of Exhibit A.
SECTION 1.2 COMPUTATION OF TIME PERIODS. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding."
SECTION 1.3 CONSTRUCTION. References herein to the plural form
include the singular, and the singular include the plural; the word "including"
is not limiting; and the word "or" is not exclusive. The words "hereof",
"herein", "hereby" and "hereunder" refer to this Agreement as a whole and not
to any particular provision of this Agreement. Article, section, exhibit and
schedule references are to articles and sections of, and exhibits and schedules
to, this Agreement, unless otherwise expressly indicated.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1 THE CREDIT FACILITY.
(a) WORKING CAPITAL LOANS. The Lender agrees, upon
the terms and subject to the conditions hereinafter set forth, to make
advances (each, a "Working Capital Loan") to the Borrower from time to time on
any Business Day during the period from the Closing Date until the Maturity
Date, each Working Capital Loan to be in an amount not in excess of the then
effective Available Amount. Within the limits of the Working Capital
Commitment, the Borrower may borrow under this Section 2.1(a), prepay pursuant
to Section 2.7(a) hereof and reborrow under this Section 2.1(a).
(b) COMMITMENT. The sum of the principal amount at
any time outstanding of all Working Capital Loans made by the Lender pursuant
to this Agreement shall not exceed $30,000,000 (the "Working Capital
Commitment"), as reduced from time to time pursuant to Section 2.7(c).
SECTION 2.2 MAKING OF THE LOANS. Each Loan shall be made on
notice by the Borrower (a "Notice of Borrowing"), in
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<PAGE>
substantially the form of Exhibit B, given not later than 11:00 a.m. (New
York City time) on the Business Day on which such Loan is proposed to be made,
specifying therein the requested date such Loan is to be made and the
principal amount of such Loan. Provided that all conditions precedent
specified in Section 3.1 hereof applicable thereto have been satisfied, the
Lender will make such funds available to the Borrower by deposit to the
Borrower's Account before 12:00 noon on the Business Day specified in the
Notice of Borrowing. Each Notice of Borrowing shall be irrevocable and binding
on the Borrower.
SECTION 2.3 USE OF PROCEEDS. The proceeds of the Loans shall
be used by the Borrower (a) to repay existing advances made by the Lender
to the Borrower, (b) to fund the working capital needs of the Borrower and its
Subsidiaries, and (c) for the general corporate purposes of the Borrower and
its Subsidiaries.
SECTION 2.4 REPAYMENT. The Borrower shall repay to the Lender
the outstanding principal amount of the Loans and all accrued but unpaid
interest thereon on the Maturity Date.
SECTION 2.5 INTEREST. The Borrower shall pay interest on the
unpaid principal amount of each Loan owing to the Lender from the date of
such Loan until such principal amount shall be paid in full, at a rate per
annum equal to the Prime Rate as in effect from time to time, plus 1%, payable
quarterly in arrears on the last Business Day of each March, June, September
and December during such period (each, an "Interest Payment Date").
Notwithstanding the foregoing, the Borrower hereby promises to pay to the
Lender interest at the Post-Default Rate on any principal amount of the Loans
and on any other amount payable by the Borrower hereunder or under the Working
Capital Note which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period from and including the
due date thereof to but excluding the date the same is paid in full. Accrued
interest on the Loans shall be payable on each Interest Payment Date and upon
the payment or prepayment thereof, except that interest payable at the
Post-Default Rate shall be payable from time to time on demand.
SECTION 2.6 PROMISSORY NOTE. Simultaneously with the execution
and delivery of this Agreement, the Borrower shall execute and deliver to the
Lender a Working Capital Note in the original principal amount of $30,000,000.
5
<PAGE>
SECTION 2.7 PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. The Borrower may from time to time
prepay the outstanding principal amount of the Loans in whole or in part,
without payment of any penalty or premium.
(b) MANDATORY PREPAYMENTS. The Loans shall be
repaid without any notice to the Borrower or any action undertaken by the
Lender, each in an amount equal to any or all of the following (each a
"Mandatory Prepayment") effective in each instance as of the date of receipt
thereof from time to time:
(i) the net cash proceeds received by the
Borrower or any Subsidiary (other than O'Brien International, Inc.) from
the sale, lease or other disposition of any assets outside the ordinary
course of business;
(ii) the net cash proceeds received by the Borrower or
any Subsidiary from the public or private issuance of any debt securities
or the borrowing under any loan or credit agreement (other than any
borrowings by O'Brien International, Inc. under the Revolving Credit and
Security Agreement dated as of March 17, 1997, as the same may be amended
or supplemented from time to time, with The Bank of New York Commercial
Corporation);
(iii) the net cash proceeds received by the Borrower
or any Subsidiary from the sale or other disposition of the capital stock
of any Subsidiary; and
(iv) any cash on any Business Day in any account of the
Borrower or any Subsidiary in excess of the cash reasonably required on
such Business Day to meet the operating needs of the Borrower or any such
Subsidiary.
(c) APPLICATION. Prepayments made pursuant to
Section 2.7(b) shall be applied first to any interest accrued on the principal
amounts being prepaid and second to reduce the outstanding principal amount of
the Working Capital Loans. Any prepayment of the Working Capital Loans made
pursuant to clause (i), (ii) or (iii) of Section 2.7(b) shall be accompanied
by a reduction of the Working Capital Commitment in an amount equal to the
amount of such prepayment. Prepayments made pursuant to clause (iv) of Section
2.7(b) shall not be accompanied by any reduction in the Working Capital
Commitment.
SECTION 2.8 COMPUTATIONS. All computations of
interest shall be made by the Lender on the basis of a year of 360 days,
in each case for the actual number of days
6
<PAGE>
(including the first day but excluding the last day) occurring in the period
for which such interest is payable.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.1 CONDITIONS PRECEDENT TO BORROWINGS. The
obligation of the Lender to make each Loan is subject to (a) receipt of a duly
executed Notice of Borrowing in accordance with Section 2.2 hereof, (b) no
Event of Default arising under Section 4.1 (or an event that, with the
lapse of time, would be an Event of Default under Section 4.1) having occurred
and being continuing, (c) receipt of a duly executed Working Capital Note in
accordance with Section 2.6 hereof, (d) receipt of a duly executed Pledge
Agreement, together with the stock certificates identified therein and undated
stock powers executed in blank, (e) receipt of a duly executed Mortgage,
together with a title policy and survey and (f) receipt of a duly executed
Guaranty Agreement.
ARTICLE IV
COVENANTS
So long as any Working Capital Loan shall remain unpaid or the
Lender shall have any Working Capital Commitment, the Borrower shall:
SECTION 4.1 MAINTENANCE OF NET WORTH. Maintain, as of
the end of each fiscal quarter of the Borrower ending on the dates set forth
below, a Consolidated Net Worth (Deficit) in an amount no less than the amount
set forth opposite the applicable date:
Minimum Consolidated
Quarter Ending Net Worth (Deficit)
-------------- --------------------
June 30, 1997 ($7,500,000)
September 30, 1997 ($7,500,000)
December 31, 1997 ($7,500,000)
March 31, 1998 ($7,000,000)
June 30, 1998 ($7,000,000)
September 30, 1998 ($7,000,000)
7
<PAGE>
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.1 EVENT OF DEFAULT. If any of the following events
(each, an "Event of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of,
or interest on, any Loan when the same becomes due and
payable; or
(b) (i) The Borrower shall generally not pay its debts as such
debts become due, or shall make a general assignment for the benefit of
creditors; (ii) any proceeding shall be instituted by the Borrower seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property; or (iii) there shall be
commenced against the Borrower any proceeding referred in clause (ii) which
results in the entry of an order for relief or any such adjudication or
appointment remains undismissed, undischarged or unbonded for a period of 60
days; or
(c) The Borrower shall fail to perform or observe any term,
covenant or agreement on its part to be performed or observed (other than the
obligations specifically referred to elsewhere in this Section 5.1) in this
Agreement or the other Loan Documents;
(d) The Borrower or any of its Subsidiaries shall: (i) fail
to pay any indebtedness, including but not limited to indebtedness for
borrowed money (other than the payment obligations described in (a) above) of
the Borrower or such Subsidiary, as the case may be, or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after any
applicable grace period; or (ii) fail to perform or observe, and such failure
shall continue after any applicable grace period, any term, covenant or
condition on its part to be performed or observed under any agreement or
instrument relating to any such indebtedness when required to be performed or
observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, after the giving of notice or
passage of time, or both, the maturity of such indebtedness; or any such
indebtedness of the Borrower or any Subsidiary shall be declared to be due and
8
<PAGE>
payable, or required to be prepaid other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof;
(e) One or more judgments, decrees or orders for the payment of
money shall be rendered against the Borrower or any Subsidiary of the Borrower
in excess of $50,000 in the aggregate at any one time (not adequately covered
by insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) and such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of 30 consecutive days without being
vacated, discharged, satisfied or stayed or bonded pending appeal; or
(f) Any Lien shall be filed of record against the
Borrower or any Subsidiary by the United States of America
or any agency thereof; or
(g) A material adverse change shall have occurred in the
condition (financial or otherwise), operations, assets, business or prospects
of the Borrower or any Subsidiary; or
(h) Ronald O. Perelman (or in the event of his incompetence or
death, his estate, heirs, executor, administrator, committee or other personal
representative) shall cease to beneficially own at least a majority of the
voting capital stock of the Borrower.
then in any such event (other than an Event of Default specified in Section
5.1(b)(ii) or (iii)) the Lender (i) may by notice to the Borrower, declare the
obligation of the Lender to make Loans to be terminated, whereupon the same
shall forthwith terminate, and (ii) may by notice to the Borrower, declare the
outstanding Loans, all interest thereon and all other amounts payable under
this Agreement to be forthwith due and payable, and thereupon the outstanding
Loans, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower. If an Event of
Default occurs under Section 4.1(b)(ii) or (iii), then the obligation of the
Lender to make Loans shall automatically and immediately terminate and the
unpaid principal amount of and any accrued interest on all of the outstanding
Loans automatically shall become due and payable, without presentment, demand,
protest, notice or other requirements of any kind, all of which are hereby
expressly waived by the Borrower.
9
<PAGE>
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and shall be consented to in one or more writings signed by or consented to by
the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 6.2 NOTICES, ETC. All notices, demands and other
communications provided for hereunder shall be in writing and mailed,
telecopied, or hand delivered:
if to the Borrower, at:
625 Madison Avenue
New York, New York 10022
Attention: Chief Financial Officer
if to the Lender, at:
35 East 62nd Street
New York, New York 10021
Attention: Chief Financial Officer
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other parties. All such notices and
communications shall be effective (a) when received, if mailed or delivered,
or (b) when transmitted by telecopier, confirmed by voice communication.
SECTION 6.3 NO WAIVER; REMEDIES. No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 6.4 COSTS AND EXPENSES. The Borrower agrees to pay
on demand all costs and expenses of the Lender in connection with the
execution and delivery of this Agreement and the other Loan Documents, the
making of the Loans, and enforcement of the Lender's rights hereunder and
under the other Loan Documents, whether in any action, suit or
10
<PAGE>
litigation, any bankruptcy, insolvency or other similar proceeding affecting
creditors' rights generally or otherwise (including, without limitation, the
reasonable fees and expenses of counsel for the Lender with respect thereto).
SECTION 6.5 BINDING EFFECT. This Agreement shall become
effective when it shall have been executed by the Borrower and the Lender
and thereafter shall be binding upon and inure to the benefit of the Borrower
and the Lender and their respective successors and permitted assigns, except
that the Borrower shall not have the right to assign its rights hereunder or
any interest herein.
SECTION 6.6 GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to instruments made and to be performed entirely within such State.
SECTION 6.7 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 6.8 WAIVER OF JURY TRIAL. THE BORROWER AND THE
LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT
11
<PAGE>
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
MERIDIAN SPORTS INCORPORATED, a
Delaware corporation
By:____________________________
Thomas E. Kohut
Vice President and Controller
REVLON GROUP INCORPORATED, a
Delaware corporation
By:____________________________
Glenn P. Dickes
Senior Vice President-Law and
Secretary
12
<PAGE>
EXHIBIT A
PAYMENT OF ALL SUMS DUE UNDER THIS WORKING CAPITAL NOTE IS
SUBJECT TO THAT CERTAIN CREDIT AGREEMENT DATED AS OF MARCH 28, 1997 (THE
"CREDIT AGREEMENT"), BETWEEN MERIDIAN SPORTS INCORPORATED AND REVLON GROUP
INCORPORATED.
WORKING CAPITAL NOTE
$30,000,000 New York, New York
March 28, 1997
FOR VALUE RECEIVED, the undersigned, MERIDIAN SPORTS
INCORPORATED, a Delaware corporation (the "Borrower"), promises to pay to the
order of REVLON GROUP INCORPORATED, a Delaware corporation, (the "Lender"), at
its office at 35 East 62nd Street, New York, New York, or at such other place
as the Lender may designate, in lawful money of the United States of America
and in immediately available funds, the lesser of (i) Thirty Million Dollars
($30,000,000) and (ii) the aggregate unpaid principal amount of the Working
Capital Loans under the Credit Agreement on the dates and in the amounts
specified therein.
Borrower further promises to pay interest on the unpaid principal
amount hereof in accordance with the provisions of the Credit Agreement.
This Working Capital Note is the Working Capital Note described
in, and is subject to the provisions of, the Credit Agreement. Capitalized
terms used in this Working Capital Note but not otherwise defined herein have
the meanings ascribed to them in the Credit Agreement.
The Lender is authorized to endorse on the grid attached hereto
each Working Capital Loan made by the Lender and each payment or prepayment
with respect thereto.
This Working Capital Note shall be construed in accordance with
the laws of the State of New York.
MERIDIAN SPORTS INCORPORATED,
a Delaware corporation
By:____________________________
Thomas E. Kohut
Vice President and Controller
A-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Meridian Sports Incorporated Consolidated Balance Sheet and Statement of
Operations and is qualified in its entirety by reference to such financial
statements.
<CIK> 0000926474
<NAME> MERIDIAN SPORTS INCORPORATED
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<CASH> 536
<SECURITIES> 0
<RECEIVABLES> 15,485
<ALLOWANCES> 0
<INVENTORY> 14,926
<CURRENT-ASSETS> 31,864
<PP&E> 23,720
<DEPRECIATION> (10,825)
<TOTAL-ASSETS> 48,421
<CURRENT-LIABILITIES> 27,294
<BONDS> 0
0
0
<COMMON> 80
<OTHER-SE> (7,300)
<TOTAL-LIABILITY-AND-EQUITY> 48,421
<SALES> 22,022
<TOTAL-REVENUES> 22,022
<CGS> 16,706
<TOTAL-COSTS> 16,706
<OTHER-EXPENSES> 5,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 498
<INCOME-PRETAX> (266)
<INCOME-TAX> 0
<INCOME-CONTINUING> (266)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (266)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
