SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For Quarterly Period Ended August 31, 1996
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: 33-84262
-------------------------
<TABLE>
<S> <C>
MVE HOLDINGS, INC. MVE, INC.
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
Delaware 41-1641718 Delaware 41-1396485
(State or other jurisdiction of (IRS Employer (State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number) incorporation or organization) Identification Number)
</TABLE>
Two Appletree Square, Suite 100
8011 34th Avenue, South
Bloomington, MN 55425
(Address of principal executive offices)
Telephone: (612) 853-9600
(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 and
Exchange Act of 1934 during 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 ninety (90) days.
Yes X No ___
Applicable only to issuers involved in bankruptcy proceedings during
the preceding five years:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes ___ No ___
Applicable Only To Corporate Issuers:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class August 31, 1996
MVE Holdings, Inc. Common Stock 175,502 Shares
MVE, Inc. Common Stock 1,000 Shares
MVE Holdings, Inc. Preferred A Stock 4,700 Shares
MVE Holdings, Inc. Preferred B Stock 833 Shares
<PAGE>
MVE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
August 31, February 29,
1996 1996
------------- ------------
(Unaudited)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,984 $ 1,306
Accounts receivable, net 29,757 30,877
Inventories 29,298 24,428
Prepaid expenses and prepaid income taxes 6,282 5,907
------------- -------------
Total current assets 72,321 62,518
PROPERTY, PLANT AND EQUIPMENT, NET 27,860 22,276
OTHER ASSETS, NET 13,205 9,835
GOODWILL, NET 37,869 39,259
------------- -------------
Total assets $ 151,255 $ 133,888
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current maturities of long-term debt $ 852 $ 2,142
Accounts payable 13,488 18,368
Accrued expenses and other liabilities 14,139 14,205
------------- -------------
Total current liabilities 28,479 34,715
LONG-TERM DEBT, NET OF CURRENT MATURITIES 143,553 131,024
DEFERRED INCOME TAXES 2,470 2,470
MINORITY INTEREST AND OTHER NONCURRENT LIABILITIES 3,486 3,470
SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK 47,000 0
SERIES B CONVERTIBLE PREFERRED STOCK 8,331 0
------------- -------------
Total liabilities 233,319 171,679
------------- -------------
STOCKHOLDERS' DEFICIT:
Common stock $ 2 $ 5
Additional paid-in capital/(deficit) (449) (449)
Common stock warrants 168 770
Accumulated deficit (81,785) (38,117)
------------- -------------
Total stockholders' deficit (82,064) (37,791)
------------- -------------
Total liabilities and stockholders' deficit $ 151,255 $ 133,888
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
( 2 )
<PAGE>
MVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
August 31, February 29,
1996 1996
-------------- -------------
(Unaudited)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,622 $ 1,306
Accounts receivable, net 29,757 30,877
Inventories 29,298 24,428
Prepaid expenses and prepaid income taxes 6,282 5,907
-------------- ------------
Total current assets 66,959 62,518
PROPERTY, PLANT AND EQUIPMENT, NET 27,860 22,276
DUE FROM MVE HOLDINGS, INC. 31,015 31,015
OTHER ASSETS, NET 11,205 9,835
GOODWILL, NET 37,869 39,259
-------------- ------------
Total assets $ 174,908 $ 164,903
============== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current maturities of long-term debt $ 852 $ 2,142
Accounts payable 16,239 18,368
Accrued expenses and other liabilities 14,436 14,205
-------------- ------------
Total current liabilities 31,527 34,715
LONG-TERM DEBT, NET OF CURRENT MATURITIES 143,553 131,024
DEFERRED INCOME TAXES 2,470 2,470
MINORITY INTEREST AND OTHER NONCURRENT LIABILITIES 3,486 3,470
-------------- ------------
Total liabilities 181,036 171,679
-------------- ------------
STOCKHOLDERS' DEFICIT:
Common stock $ 1 $ 1
Additional paid-in capital 10,411 10,411
Accumulated deficit (16,540) (17,188)
-------------- ------------
Total stockholders' deficit (6,128) ( 6,776)
-------------- ------------
Total liabilities and stockholders' deficit $ 174,908 $ 164,903
============== ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
( 3 )
<PAGE>
MVE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
---------------------------- --------------------------------
Three Months Ended August 31 Six Months Ended August 31
---------------------------- --------------------------------
1996 1995 1996 1995
-------- --------- ---------- ----------
<S> <C>
NET SALES $ 47,885 $ 43,271 $ 94,913 $ 86,168
COST OF SALES 34,083 30,535 67,511 59,886
-------- ---------- ---------- ----------
Gross profit 13,802 12,736 27,402 26,282
OPERATING EXPENSES:
Selling and marketing 2,257 2,354 4,484 4,507
General and administrative 6,829 4,032 10,439 7,456
Research and development 760 1,760 1,504 2,805
Amortization 1,346 1,361 2,685 2,723
-------- ---------- ---------- ----------
Total operating expenses 11,192 19,112
-------- ---------- ---------- ----------
Operating income 2,610 3,229 8,290 8,791
INTEREST EXPENSE 4,164 3,962 8,296 7,785
-------- ---------- ---------- ----------
Income (loss) before income taxes (1,554) ( 733) (6) 1,006
INCOME TAX PROVISION (BENEFIT) ( 619) (294) (2) 402
-------- ---------- ---------- ----------
Net income (loss) $ ( 935) $ ( 439) $ (4) $ 604
======== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
( 4 )
<PAGE>
MVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
-------------------------------- --------------------------------
Three Months Ended August 31 Six Months Ended August 31
-------------------------------- --------------------------------
1996 1995 1996 1995
----------- ------------- ---------- ------------
<S> <C>
NET SALES $ 47,885 $ 43,271 $ 94,913 $ 86,168
COST OF SALES 34,083 30,535 67,511 59,886
------------ ------------ ----------- -------------
Gross profit 13,802 12,736 27,402 26,282
OPERATING EXPENSES:
Selling and marketing 2,257 2,354 4,484 4,507
General and administrative 5,743 4,032 9,353 7,456
Research and development 760 1,760 1,504 2,805
Amortization 1,346 1,361 2,685 2,723
------------ ------------ ----------- -------------
Total operating expenses 10,106 18,026 17,491
------------ ------------ ----------- -------------
Operating income 3,696 3,229 9,376 8,791
INTEREST EXPENSE 4,164 3,962 8,296 7,785
------------ ------------ ----------- -------------
Income (loss) before income taxes (468) ( 733) 1,080 1,006
INCOME TAX PROVISION (BENEFIT) (187) ( 294) 432 402
------------ ------------ ----------- -------------
Net income (loss) $ (281) $ ( 439) $ 648 $ 604
============ ============ =========== =============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
( 5 )
<PAGE>
MVE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended
August 31,
-------------------------
1996 1995
----------- ----------
<S> <C>
OPERATING ACTIVITIES:
Net income $ (4) $ 604
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,433 4,420
Deferred income tax benefit - -
Change in operating assets and liabilities:
Loss on disposition of assets 113 -
Accounts receivable 1,169 (4,319)
Inventories (4,604) (12,882)
Prepaid expenses (213) (2,404)
Accounts payable (4,874) 3,964
Accrued expenses and other liabilities (361) (2,749)
--------- ----------
Net cash used in operating activities (4,341) (13,366)
--------- ----------
INVESTING ACTIVITIES:
Proceeds from disposition of assets 8 -
Change in other assets, net (3,894) -
Acquisition, net 239 -
Additions to property, plant, and equipment $ (6,953) $ ( 3,001)
--------- ----------
Net cash used in investing activities (10,600) ( 3,001)
--------- ----------
FINANCING ACTIVITIES:
Borrowings under working capital agreement $ 111,500 $ 14,599
Repayments under working capital agreement (103,507) (1,069)
Proceeds from issuance of long-term debt 2,381 3,479
Repayment of long-term debt (525) (1,778)
Proceeds from preferred stock sale 47,000 -
Purchase of treasury stock (33,300) -
Purchase of common stock warrants (2,638) -
Changes in Other non-current assets (292) -
--------- ----------
Net cash provided by financing activities 20,619 15,231
--------- ----------
Net increase (decrease) in cash and cash equivalents 5,678 ( 1,136)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,306 1,224
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,984 $ 88
========= ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest $ 7,963 $ 7,670
Cash paid during the year for taxes $ 1,722 $ 2,630
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
( 6 )
<PAGE>
MVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended
August 31,
--------------------------
1996 1995
----------- ----------
<S> <C>
OPERATING ACTIVITIES:
Net income $ 648 $ 604
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,433 4,420
Deferred income tax benefit - -
Change in operating assets and liabilities:
Loss on disposition of assets 113 -
Accounts receivable 1,169 (4,319)
Inventories (4,604) (12,882)
Prepaid expenses (213) (2,404)
Accounts payable (2,123) 3,964
Accrued expenses and other liabilities (64) (2,749)
--------- ----------
Net cash used in operating activities (641) (13,366)
--------- ----------
INVESTING ACTIVITIES:
Proceeds from disposition of assets 8 -
Acquisition, net 239 -
Change in other assets, net (1,894) -
Additions to property, plant, and equipment $ (6,953) $ ( 3,001)
--------- ----------
Net cash used in investing activities (8,600) ( 3,001)
--------- ----------
FINANCING ACTIVITIES:
Borrowings under working capital agreement $ 111,500 $ 14,599
Repayments under working capital agreement (103,507) (1,069)
Proceeds from issuance of long-term debt 2,381 3,479
Repayment of long-term debt (525) (1,778)
Changes in other non-current assets (292) -
--------- ----------
Net cash provided by financing activities 9,557 15,231
--------- ----------
Net increase (decrease) in cash and cash equivalents 316 ( 1,136)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,306 1,224
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,622 $ 88
========= ==========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 7,963 $ 7,670
Cash paid during the year for taxes $ 1,722 $ 2,630
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
( 7 )
<PAGE>
MVE HOLDINGS, INC. AND MVE, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996
1. Description of Business and General Information
In the opinion of MVE Holdings, Inc. (Holdings) and MVE, Inc. (the Company), the
accompanying condensed consolidated financial statements include all adjustments
necessary, all of which were of a normal recurring nature, to present fairly the
financial position of Holdings and the Company as of August 31, 1996 and the
results of its operations and its cash flows for the six month periods ended
August 31, 1996 and 1995. The results are not necessarily indicative of the
results to be expected for the full year.
The consolidated financial statements included herein have been prepared by
Holdings and the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission (SEC). The consolidated financial
statements include the accounts of Holdings and the Company and their
subsidiaries. All significant intercompany accounts and transactions have been
eliminated.
In accordance with the rules and regulations of the SEC, the accompanying
interim financial statements have been prepared under the presumption that users
of the interim financial information have either read or have access to the
audited financial statements for the latest fiscal year ended February 29, 1996.
Accordingly, footnote disclosures which would substantially duplicate the
disclosures contained in the February 29, 1996 audited financial statements have
been omitted from these interim financial statements. While management of
Holdings and the Company believes the procedures followed in preparing these
financial statements are reasonable under the circumstances and that all
adjustments necessary for a fair statement of the results of operations have
been made. It is suggested that these interim financial statements be read in
conjunction with the financial statements and the notes thereto included in
Holdings' and the Company's latest annual report on Form 10-K.
2. Inventories
Inventories are stated at the lower of cost of market, utilizing the first in,
first out method for all of the inventories at August 31, 1996 and February 29,
1996, respectively. Inventories consist of the following:
(in thousands)
August 31, 1996 February 29, 1996
---------------- -------------------
Purchased materials and subassemblies $18,045 $13,451
Work in process 5,896 4,404
Finished goods 5,357 6,573
----- -----
$29,298 $24,428
======= =======
3. On August 28, 1996 MVE Investors, LLC, a limited liability company whose
members include ACI Capital I, LLC, American Securities Capital Partners L.P.,
Keystone, Inc. and Cramer Rosenthal McGlynn Inc. purchased 4,700 shares of MVE
Holdings' 12.5% Class A Cumulative Convertible Participating Preferred Stock,
par value $100 per share, for the purchase price of $47 million. Holdings used
the proceeds of this transaction to purchase a substantial portion of certain
shareholders' common stock.
Following this recapitalization, MVE Investors, LLC holds shares of Class A
Preferred Stock which are convertible into 374,633 shares of Holdings' Common
Stock, or approximately 70.2% of the Common Stock outstanding on a fully diluted
basis.
In exchange for 66,406 shares of Common Stock held by certain shareholders,
Holdings issued 833 shares of 10% Class B Preferred Stock, each such share
having a liquidation preference of $10,000 plus accrued and unpaid dividends.
This class of stock is subject to mandatory redemption six years plus one day
after the date of issuance.
Additionally, Holdings purchased for cash 78% of its outstanding Warrants for
$30.10944 per warrant.
( 8 )
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company has three business segments: Industrial Products, Distributed
Products and Medical Products. Industrial Products develops, manufactures and
markets cryogenic storage tanks and transportation equipment and provides
related services to producers, distributors and end users of industrial gases.
Distributed Products consists of three product lines: restaurant products,
biological storage systems and new applications. Restaurant products consists
primarily of vacuum insulated, bulk liquid CO(2) containers used for beverage
carbonization in restaurants, convenience stores and cinemas. Biological storage
systems' products consist of vacuum insulated vessels used to transport and
store beef and dairy cow semen and embryos and human organs, skin tissue samples
and other temperature-sensitive biological matter. New applications develops new
markets and new products using the Company's existing and developing
technology/products include AURA(TM) flat vacuum panels for insulation for
durable consumer appliances and vacuum insulated containers for liquid natural
gas. Holdings conducts business through the Company and its direct and indirect
subsidiaries and has no operations of its own. Medical Products develops,
manufactures, assembles and markets a broad range of medical respiratory
products, including liquid oxygen systems, ambulatory oxygen systems, oxygen
concentrators and nebulizers.
RESULTS OF OPERATIONS
THREE-MONTHS ENDED AUGUST 31, 1996 & 1995
Net Sales
Net sales for the quarter ended August 31, 1996 increased 10.6% to $47.9 million
from $43.3 million in the comparable period in 1995.
Industrial Products: Net sales for the quarter ended August 31, 1996 increased
38.5% to $29.5 million from $21.3 million in the comparable period in 1995. The
increase is primarily attributable to the Japanese market for liquid cylinders,
increased investment in fabrication plants for semiconductors requiring
electronic-grade tanks, and increased environmental regulation that increased
the demand for liquid hydrogen tanks.
Distributed Products: Net sales for the quarter ended August 31, 1996 decreased
1.7% to $11.5 million from $11.7 million in the comparable period in 1995. The
decrease is primarily attributable to significant decreases in AURA panels sales
offset by increased restaurant CO(2) sales. CO(2) sales were up due to increased
sales coverage in two territories and significant increases in shipments to one
major customer.
Medical Products: Net sales for the quarter ended August 31, 1996 decreased
33.0% to $6.9 million from $10.3 million in the comparable period in 1995. This
lower level of sales results from the continued uncertainty in oxygen
reimbursement caused by the review of Medicare/Medicaid expenditures and the
delayed introduction of a new concentrator product.
Gross Margin
Gross margin decreased to 28.8% for the three months ended August 31, 1996 from
29.0% for the three months ended August 31, 1995.
Industrial Products: Gross margin increased to 23.3% for the quarter ended
August 31, 1996 from 23.2% for the quarter ended August 31, 1995.
Distributed Products: Gross margin increased to 40.4% for the quarter ended
August 31, 1996 from 33.3% for the quarter ended August 31, 1995. The increase
is primarily attributable to manufacturing efficiencies as a result of increased
volumes for Restaurant products, improved unit manufacturing costs for
Biological products, and decreased sales of AURA flat vacuum panels.
Medical Products: Gross margin decreased to 32.9% for the quarter ended August
31, 1996 from 36.1% for the quarter ended August 31, 1995. The decrease is
primarily attributable to lower volumes and a less profitable product mix.
( 9 )
<PAGE>
Operating Income
Operating income decreased 19.2% to $2.6 million or 5.4% of net sales for the
three months ended August 31, 1996 from $3.2 million or 7.5% of net sales for
the three months ended August 31, 1995. The decrease is primarily due to the
expenses related to the recapitalization with MVE Investors, LLC in August and
the decline in Medical Products sales. Adjusting for the recapitalization
expenses, operating income would have increased 50% to $4.8 million
Interest Expense
Interest expense was $4.2 million for the quarter ended August 31, 1996 and $4.0
million the quarter ended August 31, 1995. The increase reflects increased
indebtedness due to the Company's expansion efforts.
Income Taxes
The benefit from income taxes was $.6 million for the quarter ended August 31,
1996 as compared to a benefit of $.3 million for the quarter ended August 31,
1995. The decrease is attributable to the decrease in taxable income.
Net Income
As a result of the above, net income decreased to ($.9) million for the quarter
ended August 31, 1996 from ($.4) million in the quarter ended August 31, 1995.
Adjusted EBDAIT
Adjusted EBDAIT (earnings before depreciation, amortization, interest, income
taxes and other non-cash or non-recurring expenses) decreased 14.3% to $4.8
million or 10.0% of sales for the quarter ended August 31, 1996 from $5.6
million or 12.9% of sales in the comparable period of 1995. The decrease in
Adjusted EBDAIT is attributable to the factors noted in "Operating Income"
above.
SIX-MONTHS ENDED AUGUST 31, 1996 & 1995
Net Sales
Net sales for the six months ended August 31, 1996 increased 10.0% to $94.9
million from $86.2 million in the comparable period in 1995.
Industrial Products: Net sales for the six months ended August 31, 1996
increased 34.9% to $59.1 million from $43.8 million in the comparable period in
1995. The increase is primarily attributable to the Japanese market for liquid
cylinders, increased investment in fabrication plants for semiconductors
requiring electronic-grade tanks, and increased environmental regulation that
increased the demand for liquid hydrogen tanks.
Distributed Products: Net sales for the six months ended August 31, 1996
decreased .9% to $21.7 million from $21.9 million in the comparable period in
1995. The decrease is primarily attributable to significant decreases in AURA
panels sales offset by increased restaurant CO(2) sales. CO(2) sales were up due
to increased sales coverage in two territories and significant increases in
shipments to one major customer.
Medical Products: Net sales for the six months ended August 31, 1996 decreased
31.2% to $14.1 million from $20.5 million in the comparable period in 1995. The
decrease results from the continued uncertainty in oxygen reimbursement caused
by the review of Medicare/Medicaid expenditures and the delayed introduction of
a new concentrator product.
Gross Margin
Gross margin decreased to 28.9% for the six months ended August 31, 1996 from
29.7% for the six months ended August 31, 1995.
( 10 )
<PAGE>
Industrial Products: Gross margin decreased to 23.8% for the six months ended
August 31, 1996 from 25.2% for the six months ended August 31, 1995. The
decrease is primarily attributable to labor inefficiencies and an unfavorable
change in product mix.
Distributed Products: Gross margin increased to 40.0% for the six months ended
August 31, 1996 from 33.7% for the six months ended August 31, 1995. The
increase is primarily attributable to manufacturing efficiencies as a result of
increased volumes for Restaurant products, improved unit manufacturing costs for
Biological products, and decreased sales of AURA flat vacuum panels.
Medical Products: Gross margin decreased to 33.0% for the six months ended
August 31, 1996 from 35.0% for the six months ended August 31, 1995. The
increase is primarily attributable to lower volumes and a less profitable
product mix along with lower productivity due to the Company's consolidation
efforts.
Operating Income
Operating income decreased 5.7 % to $8.3 million or 8.7% of net sales for the
six months ended August 31, 1996 from $8.8 million or 10.3% of net sales for the
six months ended August 31, 1995. The decrease is primarily due to the expenses
related to the recapitalization and the decline in Medical product sales.
Adjusting for the recapitalization expenses, operating income would have
increased 19.3% to $10.5 million.
Interest Expense
Interest expense was $8.3 million for the six months ended August 31, 1996 and
$7.8 million the six months ended August 31, 1995. The increase reflects the
increased indebtedness associated with the Company's expansion efforts.
Income Taxes
There was no benefit or provision for income taxes for the six months ended
August 31, 1996 as compared to a $.4 million provision for the six months ended
August 31, 1995. The change is attributable to the decrease in taxable income.
Net Income
As a result of the above, net income decreased to approximately zero for the
year-to-date 1996 from $.6 million in the comparable period of 1995.
Adjusted EBDAIT
Adjusted EBDAIT (earnings before depreciation, amortization, interest, income
taxes and other non-cash or non-recurring expenses) decreased 3.8% to $12.7
million or 13.4% of sales for the six months ended August 31, 1996 from $13.2
million or 15.3% of sales in the comparable period of 1995. The increase in
Adjusted EBDAIT is attributable to the factors noted in "Operating Income" above
offset by higher levels of depreciation and amortization in the current period.
LIQUIDITY AND CAPITAL RESERVES
Cash flow used in operating activities was approximately $4.3 million and $13.4
million for the six months ended August 31, 1996 and 1995, respectively. This
results from better management of net operating assets.
Working capital was $43.6 million and $33.8 million, respectively at August 31,
1996 and 1995.
The Company spent approximately $10.6 million in the six months ended August 31,
1996 on investing activities as compared to $3.0 million in the same period in
1995. This results primarily from the company's expansion efforts in the
Industrial division and the consolidation efforts in the Medical division.
Cash flow received in financing activities was approximately $20.6 million and
$15.2 million in the first two quarters of 1996 and 1995, respectively. This
results primarily from the cash received in the preferred stock sale to MVE
Investors, LLC, less the cash used to redeem common stock by MVE Holdings, Inc.
( 11 )
<PAGE>
PART II. OTHER INFORMATION
Item 2.
Changes in Securities
On August 28, 1996 MVE Investors, LLC, a limited liability company whose members
include ACI Capital I, LLC, American Securities Capital Partners L.P., Keystone,
Inc. and Cramer Rosenthal McGlynn Inc. purchased 4,700 shares of MVE Holdings'
12.5% Class A Cumulative Convertible Participating Preferred Stock, par value
$100 per share, for the purchase price of $47 million. Pursuant to a
shareholders agreement entered into by and among the shareholders of Holdings in
connection with the purchase, MVE Investors, LLC has the right to designate
three directors to serve on the Board of Directors of Holdings. Holdings used
the proceeds of this transaction to redeem a substantial portion of certain
shareholders' common stock.
Following this recapitalization, MVE Investors, LLC will hold shares of Class A
Preferred Stock which are immediately convertible into 374,633 shares of
Holdings' Common Stock, or approximately 70.2% of the Common Stock outstanding
on a fully diluted basis.
In exchange for 66,406 shares of Common Stock held by certain shareholders,
Holdings issued 833 shares of 10% Class B Preferred Stock, each such share
having a liquidation preference of $10,000 plus accrued and unpaid dividends.
This class of stock is subject to mandatory redemption six years plus one day
after the date of issuance.
Additionally, Holdings purchased for cash 78% of its outstanding Warrants for
$30.10944 per warrant.
Item 5 (Item 1 of Form 8-K)
As disclosed above in Item 2, MVE Investors, LLC acquired a controlling interest
in Holdings on August 28, 1996. See Item 2 above for further discussion.
Item 6.
Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K. No 8-K Reports were filed during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
MVE HOLDINGS, INC.
DATE: October 14, 1996 /s/ J. David O'Halloran
--------------------------
J. David O'Halloran
President and Chief Executive Officer
MVE INC.
DATE: October 14, 1996 /s/ J. David O'Halloran
--------------------------
J. David O'Halloran
President and Chief Executive Officer
(12)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Company's
Consolidated Financial Statements for the quarter ended August 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> AUG-31-1996
<CASH> 6,984
<SECURITIES> 0
<RECEIVABLES> 30,680
<ALLOWANCES> (923)
<INVENTORY> 29,298
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47,000
8,331
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</TABLE>
