UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 28, 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 000-25l02
BRIDGEPORT MACHINES, INC.
- - --------------------------------------------------------------------------------
(exact name of registrant as specified in its charter)
Delaware 06-ll69678
- - --------------------------------------------------------------------------------
(State of Incorporation) (IRS Employer Identification No.)
500 Lindley Street, Bridgeport, CT 06606
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:
- - --------------------------------------------------------------------------------
(203) 367-365l
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X[ No [ ]
The number of shares of Issuer's Common Stock, $.0l par value, outstanding on
September 28, l996 was 5,679,361 shares.
<PAGE>
BRIDGEPORT MACHINES, INC.
AND SUBSIDIARIES
INDEX
Part I - FINANCIAL INFORMATION
Item l. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of
September 28, 1996 and March 30, 1996
Consolidated Income Statements for
the three month and six month periods
ended September 28, 1996 and
September 30, 1995
Consolidated Statements of Stockholders'
Equity for the six month periods ended
September 28, 1996 and September 30, 1995
Consolidated Statements of Cash Flows
for the six month periods ended
September 28, 1996 and September 30, 1995
Notes to Consolidated Financial Statements
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Part II - OTHER INFORMATION
Item l-5. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Signatures
<PAGE>
<TABLE>
<CAPTION>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
September 28, March 30,
1996 1996
--------- ---------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash ..................................... $ 6,442 $ 4,960
Trade accounts receivable,
less allowance of $1,416
and $1,182, respectively ............... 42,914 41,321
Inventories .............................. 63,313 56,364
Deferred income taxes .................... 2,680 2,680
Prepaid expenses and other current
assets ................................... 2,572 1,275
--------- ---------
Total current assets ................. 117,921 106,600
PROPERTY, PLANT AND EQUIPMENT
Land ..................................... 339 334
Buildings, improvements and
leasehold improvements ................... 3,230 3,284
Machinery and equipment .................. 18,823 18,087
Furniture and fixtures ................... 4,620 4,174
--------- ---------
27,012 25,879
Less: Accumulated depreciation .................. (6,464) (4,903)
--------- ---------
Property, plant and equipment,
net ................................. 20,548 20,976
--------- ---------
INVESTMENTS IN AFFILIATED COMPANIES .............. 1,292 1,088
OTHER ASSETS, net of accumulated
amortization of $1,415
and $1,353 respectively .................. 457 492
--------- ---------
Total assets ........................ $ 140,218 $ 129,156
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
September 28, March 30,
l996 l996
--------- ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdrafts .......................... $ 1,562 $ 1,974
Working capital revolver ................. 27,833 27,917
Accounts payable ......................... 21,114 20,707
Accrued expenses ......................... 12,384 11,618
Income taxes payable ..................... 5,478 3,548
Current portion of long-term debt
obligations ............................ 2,656 1,688
--------- ---------
Total current liabilities ........... 71,027 67,452
LONG-TERM DEBT OBLIGATIONS ....................... 7,480 4,475
OTHER LONG-TERM LIABILITIES ...................... 120 120
--------- ---------
Total liabilities ................... 78,627 72,047
STOCKHOLDERS' EQUITY
Preferred stock, $.0l par value,
2,000,000 shares authorized,
no shares issued ....................... -- --
Common stock, $.0l par value,
13,000,000 shares authorized;
5,679,361 shares issued and
outstanding at September 28, 1996
and 5,676,697 shares issued and
outstanding at March 30, 1996 .......... 57 57
Capital in excess of par value ........... 38,285 38,259
Retained earnings--subsequent to
reclassification of $6,750
deficit as part of the quasi-
reorganization as of January 3,
l993 ................................... 23,409 19,075
Cumulative translation adjustment ........ (160) (282)
--------- ---------
Total stockholders' equity .......... 61,591 57,109
--------- ---------
Total liabilities and stock-
holders' equity ..................... $ 140,218 $ 129,156
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTH AND SIX MONTH PERIODS
ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995
(In Thousands, Except Per Share Amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales .................................. $ 51,478 $ 47,305 $ 113,692 $ 94,578
Cost of sales .............................. 39,629 36,191 87,896 72,037
--------- --------- --------- ---------
Gross profit ............................. 11,849 11,114 25,796 22,541
Selling, general and
administrative expenses .................. 8,407 7,285 17,157 14,764
--------- --------- --------- ---------
Operating income ......................... 3,442 3,829 8,639 7,777
Interest expense ........................... (723) (693) (1,426) (1,104)
Other income
(expense), net ........................... (257) (12) (311) (246)
--------- --------- --------- ---------
Income before provision
for income taxes ......................... 2,462 3,124 6,902 6,427
Provision for
income taxes ............................. 853 1,360 2,568 2,713
--------- --------- --------- ---------
Net income ............................. $ 1,609 $ 1,764 $ 4,334 $ 3,714
========= ========= ========= =========
Primary earnings
per share ................................ $ 0.28 $ 0.31 $ 0.75 $ 0.65
========= ========= ========= =========
Weighted average
number of shares
outstanding ............................... 5,738 5,727 5,743 5,747
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIODS ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995
(In Thousands)
CAPITAL IN CUMULATIVE
COMMON EXCESS OF RETAINED TRANSLATION
STOCK PAR VALUE EARNINGS ADJUSTMENT
----- --------- -------- ----------
<S> <C> <C> <C> <C>
BALANCE, April 1, l995 ................................ $ 57 $38,106 $10,651 $ 1,395
Translation adjustment
for the six months
ended September 30, 1995 ............................ -- -- -- (899)
Net income for the six
months ended September
30, 1995 ............................................ -- -- 3,714 --
Provision in lieu of
income taxes ........................................ -- 3 -- --
Exercise of stock options
for common stock .................................... -- 5 -- --
------- ------ ------- -------
BALANCE, September 30, 1995 ........................... $ 57 $38,114 $14,365 $ 496
====== ======= ======= =======
BALANCE, March 30, 1996 ............................... $ 57 $38,259 $19,075 $ (282)
Translation adjustment
for the six months
ended September 28, 1996 ............................ -- -- -- 122
Net income for the six
months ended September
28, 1996 ............................................ -- -- 4,334 --
Exercise of stock options
for common stock .................................... -- 26 -- --
------- ------- ------- -------
BALANCE, September 28, 1996 ........................... $ 57 $38,285 $23,409 $ (160)
====== ======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995
(In Thousands)
September 28, September 30,
1996 1995
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net income ....................................... $ 4,334 $ 3,714
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization .............. 1,652 1,476
(Increase) decrease in deferred
income taxes ............................. -- (50)
Provision in lieu of income taxes .......... -- 3
Net (gain) on sale of property,
plant and equipment ........................ (13) (34)
Changes in operating assets and
liabilities:
(Increase) in net trade
accounts receivable ........................... (1,192) (9,022)
(Increase) in inventories ...................... (6,576) (6,724)
Decrease (increase) in prepaid expenses
and other current assets ...................... (1,281) 8
Decrease (increase) in other assets ............ (167) (221)
Increase (decrease) in bank overdrafts ......... (412) 343
Increase in accounts payable
and accrued expenses .......................... 2,387 4,058
-------- --------
Total adjustments ............................ (5,602) (10,163)
-------- --------
Cash flows (used in)
operating activities ......................... (1,268) (6,449)
-------- --------
<PAGE>
<CAPTION>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995
(In Thousands)
(Continued)
September 28, September 30,
1996 1995
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES:
Capital expenditures ........................... $ (1,385) $(12,460)
Proceeds from sale of property,
plant and equipment .......................... 13 59
-------- --------
Cash flows (used in)
investing activities ....................... (1,372) (12,401)
-------- --------
CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES:
Sale of common stock ........................... 26 5
Borrowings (payments) under working
capital revolver, net ........................ (281) 19,880
Borrowings (payments) of other debt and
capitalized lease obligations ................ 4,317 (342)
-------- --------
Cash flows provided by
financing activities ....................... 4,062 19,543
-------- --------
Effect of exchange rate changes
on cash ...................................... 60 (79)
-------- --------
Net change in cash ........................... 1,482 614
CASH, begining of period ....................... 4,960 3,806
-------- --------
CASH, end of period ............................ $ 6,442 $ 4,420
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid .................................. $ 1,386 $ 720
Income taxes paid (received), net .............. 412 2,594
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
BRIDGEPORT MACHINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY AND BASIS OF PRESENTATION
Bridgeport Machines, Inc. and subsidiaries (the "Company") is a
manufacturer and distributor of metal cutting machine tools and
accessories. The Company manufactures its products in the U.S. and
Europe.
The consolidated balance sheet as of September 28, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows
for the three and/or six month periods ended September 28, 1996 and
September 30, 1995 have been prepared by the Company without audit. In
the opinion of management, all adjustments necessary to present fairly
the financial position, results of operations and cash flows as of or
for the periods ended September 28, 1996 and September 30, 1995 have
been made. The accounting principles followed during interim periods
are generally consistent with those applied for annual periods and are
described in the Company's financial statements included in its Form
10-K filed with the Securities and Exchange Commission (the "SEC").
2. INTERIM STATEMENTS
The following accounting policies which are applied in the preparation
of the interim financial statements are different from those applied in
the year-end financial statements:
Inventories:
Inventories are valued at year-end based upon actual inventory
on hand verified by a physical count. Inventories are adjusted
during interim periods for purchases, production and shipments
based upon standard costs for material, labor and overhead.
Income Taxes:
The income tax provision is calculated based upon an estimated
effective tax rate for the year for each tax jurisdiction.
3. EARNINGS PER SHARE
Primary earnings per share has been computed based on the weighted
average number of common shares and common equivalent shares calculated
for stock options under the treasury stock method.
4. ACQUISITION OF ASSETS
In June 1995, the Company acquired, through a newly formed subsidiary,
for 6,000,000 (pounds)(approximately $9,600,000) certain assets of a
bankrupt German machine tool manufacturer. The assets acquired consist
of machinery and equipment that are being used by the Company to
establish operations in the Republic of Germany.
<PAGE>
In addition, the subsidiary entered into a lease for manufacturing and
office space in Germany. The lease requires minimum annual rental
payments of approximately $525,000. The lease is for a minimum term of
seven years and can be extended at the Company's option up to twenty
years.
5. DEBT OBLIGATIONS
In August 1996, the Company's subsidiary, Bridgeport Machines GmbH,
borrowed DM 7,375,000 (approximately $4,868,000). This loan is with the
same financial institutions the Company maintains its credit facility
with and falls under the same covenant guidelines. The loan bears
interest at 7.345% and is repayable in 39 monthly installments of
approximately DM 123,000 (approximately $81,000) beginning September
1996 and a final payment in December 1999 of the remaining unpaid
balance.
<PAGE>
BRIDGEPORT MACHINES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following table sets forth, for the periods indicated, the
percentage of net sales represented by certain items reflected in the Company's
consolidated financial statements:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Gross profit 23.0 23.5 22.7 23.8
Selling, general and
administrative
expenses 16.3 15.4 15.1 15.6
Operating income 6.7 8.1 7.6 8.2
Interest expense 1.4 1.5 1.2 1.2
Other income
(expense) (0.5) 0.0 (0.3) (0.2)
Income tax expense 1.7 2.9 2.3 2.9
Net income 3.1 3.7 3.8 3.9
</TABLE>
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 28, 1996 ("SECOND QUARTER OF
FISCAL 1997") TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 ("SECOND QUARTER OF
FISCAL 1996")
Net sales were $51.5 million in the second quarter of fiscal l997, an
increase of $4.2 million, or 8.8%, as compared to the second quarter of fiscal
l996. Increased production at the Company's facilities resulted in increased
sales of machining centers of approximately $4 million in the second quarter of
fiscal 1997 as compared to the second quarter of fiscal 1996. Sales increases
were attributable to unit growth and increased sales of higher priced products.
Gross profit was $11.8 million in the second quarter of fiscal l997, an
increase of $0.7 million, or 6.6%, as compared to the second quarter of fiscal
l996. Gross profit as a percent of net sales was 23.0% compared with 23.5% in
the second quarter of fiscal 1996. Included in cost of sales in the second
quarter of fiscal 1997 is a $700,000 refund of import duties for prior periods
which had previously been expensed. In August 1996, the United States government
retroactively reinstated the General System of Preferences which allowed the
Company to obtain a refund of import duties. Without this refund, gross profit
as a percent of sales was 21.7%. The decrease in gross profit as a percentage of
net sales resulted from increased sales of machining centers and CNC lathes,
both of which have lower gross margins than many of the Company's other
products.
<PAGE>
Selling, general and administrative expenses were $8.4 million in the
second quarter of fiscal l997, an increase of $1.1 million, or 15.4%, as
compared to the second quarter of fiscal l996. The increase in dollar amount
consisted of increases in salaries of $0.4 million and marketing expenses of
$0.3 million. The remaining increase was a result of small increases in numerous
categories. As a percentage of net sales, selling, general and administrative
expenses were 16.3% in the second quarter of fiscal l997, as compared to 15.4%
for the second quarter of fiscal l996.
Operating income was $3.4 million in the second quarter of fiscal l997,
a decrease of $0.4 million, or 10.1%, as compared to the second quarter of
fiscal l996. The decrease in operating income was a result of higher selling,
general and administrative costs. As a percentage of net sales, operating income
was 6.7% in the second quarter of fiscal l997 as compared to 8.1% in the second
quarter of fiscal l996.
Interest expense was $0.7 million in the second quarter of fiscal l997
and fiscal l996.
Provision for income taxes was $0.9 million in the second quarter of
fiscal l997, a decrease of $0.5 million or 37.3%. The effective tax rate was
34.6% in the second quarter of fiscal l997 as compared to 43.5% for the second
quarter of fiscal l996. The decline in the effective tax rate is a result of
more income being generated in lower tax jurisdictions and the utilization of a
net operating loss carryforward in the Company's German operations.
COMPARISON OF THE SIX MONTHS ENDED SEPTEMBER 28, 1996 TO THE SIX MONTHS ENDED
SEPTEMBER 30, 1995
Net sales were $113.7 million for the six months ended September 28,
1996, an increase of $19.1 million, or 20.2%, as compared to the six months
ended September 30, 1995. Increased production at the Company's facilities
resulted in increased sales of machining centers of approximately $18.6 million
in the six months ended September 28, 1996 as compared to the six months ended
September 30, 1995. Sales increases were attributable to unit growth and
increased sales of higher priced products.
Gross profit was $25.8 million for the six months ended September 28,
1996, an increase of $3.3 million, or 14.4%, as compared to the six months ended
September 30, 1995. The gross profit as a percentage of net sales was 22.7% for
the six months ended September 28, 1996 versus 23.8% for the six months ended
September 30, 1995. Included in cost of sales for the six months ended September
28, 1996 is a $700,000 refund of import duties for prior periods which had
previously been expensed. In August 1996, the United States government
retroactively reinstated the General System of Preferences which allowed the
Company to obtain a refund of import duties. Without this refund, gross profit
as a percent of sales was 22.1%. The decrease in gross profit as a percentage of
net sales resulted from increased sales of machining centers and CNC lathes,
both of which have lower gross margins than many of the Company's other
products.
<PAGE>
Selling, general and administrative expenses were $17.2 million for the
six months ended September 28, 1996, an increase of $2.4 million, or 16.2%, as
compared to the six months ended September 30, 1995. The increase in dollar
amount consisted primarily of salaries of $0.9 million, marketing expenses of
$0.6 million and professional fees of $0.4 million. The remaining increase was a
result of small increases in numerous categories. As a percentage of net sales,
selling, general and administrative expenses were 15.1% for the six months ended
September 28, 1996, as compared to 15.6% for the six months ended September 30,
1995.
Operating income was $8.6 million for the six months ended September
28, 1996, an increase of $0.9 million, or 11.1%, as compared to the six months
ended September 30, 1995. The increased operating income was a result of the
higher gross profit, partially offset by higher selling, general and
administrative expenses. As a percentage of net sales, operating income was 7.6%
for the six months ended September 28, 1996 compared to 8.2% for the six months
ended September 30, 1995.
Interest expense was $1.4 million for the six months ended September
28, 1996 and $1.1 million for the six months ended September 30, 1995.
Provision for income taxes was $2.6 million for the six months ended
September 28, 1996, a decrease of $0.1 million or 5.3%. The effective tax rate
was 37.2% for the six months ended September 28, 1996 as compared to 42.2% for
the six months ended September 30, 1995. The decline in the effective tax rate
is a result of more income being generated in lower tax jurisdictions and the
utilization of a net operating loss carryforward in the Company's German
operations.
FOREIGN OPERATIONS:
During the six months ended September 28, 1996, net sales outside North
America represented approximately 49% of total net sales, as compared to 41% for
the six months ended September 30, 1995. A substantial portion of these net
sales were made by the Company's European operations. The Company's European
operations were expanded during fiscal 1996 through the establishment of a
manufacturing facility in Kempten, Germany in June 1995. In addition, 50,000
square feet of leased assembly and warehouse space was added to the Company's
existing Leicester, England facility.
The Kempten, Germany operations were established in fiscal 1996 through
the acquisition of machinery and equipment by the Company's newly formed
indirectly wholly owned subsidiary, Bridgeport Machines GmbH. In addition,
Bridgeport Machines GmbH entered into a lease for 124,000 square feet of
manufacturing and office space. The Kempten, Germany operations are being used
to machine parts which are used by the Leicester facility to manufacture the
Company's machine tool products. The Company paid approximately $9.6 million to
acquire the machinery and equipment in Kempten, Germany. This payment was
financed through borrowings under the Company's credit facility.
Generally, the Company enters into forward exchange contracts to
provide economic hedges against foreign currency fluctuations on its
intercompany sales transactions between its U.S. and U.K. operations. At
September 28, 1996, the Company is committed under outstanding forward purchase
contracts to purchase 800,000 U.K. pounds sterling for $1.2 million in stages
through December 1996.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
As of September 28, 1996, the Company had working capital of $46.9
million compared with $39.1 million at March 30, 1996. The Company meets its
short-term financing needs through cash from operations and its revolving credit
facility which provides for maximum borrowings of up to $23 million in the
United States and $16 million in the United Kingdom.
The table below presents the summary of cash flow for the periods
indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
September 28, 1996 September 30, 1995
<S> <C> <C>
Net cash (used in)
operating activities $ (1,268) $( 6,449)
Net cash (used in)
investing activities (1,372) (12,401)
Net cash provided by
financing activities 4,062 19,543
</TABLE>
Net cash used in operating activities fluctuates between periods
primarily as a result of differences in net income, the level of sales activity
and the timing of the collection of accounts receivable, purchase of inventory
and payment of accounts payable. During the six months ended September 28, 1996,
increases in the Company's trade accounts receivable and inventories accounted
for uses of cash in operations of $1.2 million and $6.6 million, respectively,
versus uses of $9.0 million and $6.7 million for the six months ended September
30, 1995, respectively.
During periods when the Company's sales are increasing, net cash used
in operating activities generally increases in order to support higher trade
accounts receivable and inventory levels. During the six months ended September
28, 1996, net sales increased 20.2% as compared with the same period in the
prior year. During the six months ended September 30, 1995, net sales increased
44.6% as compared with the same period in the prior year. Management expects
that if sales continue to increase, the trend of using cash in operating
activities would continue.
The net cash used in investing activities in the six months ended
September 30, 1995 includes the acquisition of machinery and equipment in
Kempten, Germany for approximately $9.6 million. The net cash provided by
financing activities in the six months ended September 30, 1995 represents net
borrowings under the Company's credit facility. These borrowings were made to
finance the acquisition of the machinery and equipment in Kempten, Germany, and
higher inventory and trade accounts receivable due to the Company's increased
sales level.
<PAGE>
CHANGES IN FINANCIAL POSITION:
At September 28, 1996, inventories increased $6.9 million as compared
to March 30, 1996. The increased inventory level is a result of supporting a
higher sales level and the build up of inventory for a new lathe product to be
introduced later in fiscal 1997.
<PAGE>
PART II - OTHER INFORMATION
Item l Legal Proceedings None
Item 2 Changes in Securities None
Item 3 Defaults Upon Senior Securities None
Item 4 Submission of Matters to a
Vote of Security Holders
a) Election of Directors:
Joseph E. Clancy
Votes For 5,224,340
Votes Withheld 8,180
Robert J. Cresci
Votes For 5,223,365
Votes Withheld 8,155
b) Ratification of the selection of Arthur Andersen LLP as
independent public accountants for fiscal 1996.
Votes For 5,222,680
Votes Against 7,640
Abstained 2,200
Item 5 Other Information None
Item 6 Exhibits and Reports on Form 8-K Exhibit No.
-------------------------------- -----------
a) Exhibits
(2) Not Applicable
(4) Not Applicable
(l0) Material Contracts:
Amendment No. 4 to Amended
and Restated Revolving Credit,
Term Loan and Security Agreement 10.1
(ll) Statement regarding computation of per share
earnings is not required because the relevant
computation can be determined from the material
contained in the Financial statements included herein.
(l5) Not Applicable
(l8) Not Applicable
(l9) Not Applicable
<PAGE>
(22) Not Applicable
(23) Not Applicable
(24) Not Applicable
(27) Not Applicable
(99) Not Applicable
b) There were no reports or exhibits on Form 8-K filed
during the three months ended September 28, 1996.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
BRIDGEPORT MACHINES, INC.
(Registrant)
November 8, 1996 By: /s/Dan L. Griffith
------------------
Dan L. Griffith
President and
Chief Executive Officer
November 8, 1996 /s/Walter C.Lazarcheck
----------------------
Walter C. Lazarcheck
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
10.1 Amendment No. 4 to Amended and Restated Revolving
Credit, Term Loan and Security Agreement
AMENDMENT NO. 4
TO
AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 ("Amendment") is entered into as of
August 2, 1996, by and among BRIDGEPORT MACHINES, INC. ("BMI"), BRIDGEPORT
MACHINES LIMITED ("BML") and BRIDGEPORT MACHINES GmbH ("BMG") (BMI, BML and BMG
each, a "Borrower" and jointly and severally, the "Borrowers"); IBJ SCHRODER
BANK & TRUST COMPANY ("IBJS"), GENERAL ELECTRIC CAPITAL CORPORATION ("GECC")
(IBJS and GECC each, a "Lender" and jointly and severally, the "Lenders"); and
IBJS, as agent for the Lenders (in such capacity, the "Agent").
BACKGROUND
BMI, BML, Lenders and Agent are parties to an Amended and
Restated Revolving Credit, Term Loan and Security Agreement, dated as of
December 23, 1994, as amended by Amendment No. 1 to Amended and Restated
Revolving Credit, Term Loan and Security Agreement, dated as of March 31, 1995,
Consent and Amendment No. 2 to Amended and Restated Revolving Credit, Term Loan
and Security Agreement dated as of May 31, 1995, an Amended and Restated Consent
and Amendment No. 2 to Amended and Restated Revolving Credit, Term Loan and
Security Agreement dated as of June 28, 1995 and an Amendment No. 3 to Amended
and Restated Revolving Credit, Term Loan and Security Agreement dated as of
November 30, 1995 (as same may be further amended, supplemented or otherwise
modified from time to time, the "Loan Agreement"), pursuant to which Lenders
provide BMI and BML with certain financial accommodations.
BMI and BML have requested that Lenders add BMG as a Borrower
and provide BMG with a Term Loan of Seven Million Three Hundred Seventy Five
Thousand Deutschmarks and Lenders are willing to do so on the terms and
conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the account of Borrowers
by Lenders, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Amendments to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 4 below:
(a) The following definitions are hereby added to Section 1.2 of
the Loan Agreement in appropriate alphabetical order:
"BMG Term Loan" shall mean the term loan made by Lenders to BMG on the
effective date of the Fourth Amendment in the original principal amount of Seven
Million Three Hundred Seventy Five Thousand Deutschmarks.
"Borrowing Agent" shall have the meaning given to it in Section 15.1
hereof.
"Deutschmark" shall mean lawful money of the Republic of Germany.
<PAGE>
"Deutschmark Loans" shall mean the BMG Term Loan and any other
financial accommodation that may in the future be provided to BMG in
Deutschmarks.
"Fixed Rate" shall mean an interest rate per annum equal to 7.345%.
"Fixed Rate Loan" shall mean any Loan that bears interest at the Fixed
Rate.
"Fourth Amendment" shall mean Amendment No. 4 to Amended and Restated
Revolving Credit, Term Loan and Security Agreement dated as of August 2, 1996
among Borrowers, Lenders and Agent.
"Fourth Amendment Effective Date" shall mean August 2, 1996 or such
other date on which the conditions set forth in Section 4 of the Fourth
Amendment shall have been satisfied in the reasonable opinion of the Lenders.
(b) The following definitions in Section 1.2 of the Loan Agreement
are hereby amended in their entirety to read as follows:
(i) "Eurodollar Revolving Interest Margin" for Revolving
Advances consisting of Sterling Loans and Domestic Loans shall be
two percent (2.00%).
(ii) "Eurodollar Term Loan Interest Margin" for Eurodollar
Rate Domestic Term Loans and Eurodollar Rate U.K. Term Loans shall
be two and one quarter percent (2.25%).
(iii) "Loans" shall mean, jointly and severally, Domestic
Loans, Sterling Loans and the Deutschmark Loan.
(iv) "Term Loans" shall mean the BMI Term Loan, BML Term Loan,
Additional BMI Term Loan, Additional BML Term Loan and BMG Term
Loan.
(c) The definition of "Dollar Equivalent" is hereby amended by
adding "or Deutschmark" after "Sterling" wherever "Sterling" appears.
(d) The definition "GAAP" is hereby amended by deleting "in the
United States of America" and inserting "of the country of domicile of the
applicable Borrower" in its place and stead.
(e) The definition of "Guarantors" is hereby amended by adding "and
BMG" after "BML" on the second line thereof.
(f) The definition of "Interest Rate" is hereby amended by adding
the following at the end thereof: "and (f) the Fixed Rate with respect to the
BMG Loan."
(g) The definition of "Maximum Loan Amount" is hereby amended by
deleting "Forty-Five Million Seven Hundred Thousand Dollars ($45,700,000)" and
inserting "Forty Nine Million Five Hundred Eighty Three Thousand Three Hundred
Thirty Six Dollars ($49,583,336.00)" in its place and stead.
(h) The definition of "Sterling Equivalent" is hereby amended by
adding "or Deutschmark Amount" after "Dollar Amount" in the third line thereof
and by adding "or Deutschmark" after "U.S. Dollars" in the fifth line thereof.
<PAGE>
(i) All references to "each Borrower", "any Borrower", "Borrowers"
or "Borrowers'" in Sections 2.2(f), 4.2, 4.3, 4.4, 4.5, 4.6, 4.9 (second and
third sentence only), 4.11, 4.12, 4.15, 4.16, 4.17, 5.5(b) and 9.2 of the Loan
Agreement and/or in the definitions of Collateral are hereby amended by
inserting "(other than BMG)" or "(other than BMG's)", as the case may be,
immediately after such word(s).
(j) Section 2.1(c) the Loan Agreement is hereby amended in its
entirety to provide as follows:
(c) Conversions; Several Obligations. In determining the
amount of Advances outstanding, the amount of any Sterling Loans
and Deutschmark Loans outstanding shall be converted to the Dollar
Equivalent of such amount on the date of any such determination.
The Advances may be either Deutschmark Loans to BMG, Domestic Loans
to BMI or Sterling Loans or Loans in Dollars to BML. Each Advance
made by Agent shall be made and maintained at Agent's Lending
Office for Sterling Loans, Deutschmark Loans or Domestic Loans, as
the case may be. No Borrower shall be liable for Advances to or
other Obligations of the other Borrowers except pursuant to any
Guaranty.
(k) Section 2.5(a) of the Loan Agreement is hereby amended by
deleting the last sentence thereof and inserting the following in its place and
stead:
"The Term Loans shall be due and payable as provided in
Sections 2.13 through 2.15 hereof and in the Term Loan Notes.
(l) A new Section 2.15 is hereby added to the Loan Agreement and
shall read as follows:
"2.15. BMG Term Loan. Subject to the terms and conditions set
forth in the Fourth Amendment, each Lender, severally and not
jointly, shall make available such Lender's Domestic Commitment
Percentage of the BMG Term Loan to BMG. The BMG Term Loan shall be
payable, with respect to principal, in equal consecutive monthly
installments aggregating Deutschmarks equal to one-sixtieth of the
original amount of the BMG Term Loan per month, commencing on the
last day of the month immediately following the month in which the
Fourth Amendment Effective Date occurs, except that the final
installment shall be in the amount of the balance thereof and shall
be due on the expiration of the Term, subject to acceleration upon
the occurrence of a Default or Event of Default under this
Agreement or termination of this Agreement.
(m) Section 3.7 is hereby amended by adding "or any Fixed Rate
Loan" immediately following (i) "Agreement" on the second line of subclause (a)
and (ii) "Documents" on the third line of subclause (c).
(n) Section 3.10 is hereby amended by adding "and/or BMG"
immediately following "BML" in each place it appears in such Section.
(o) Section 4.1 of the Loan Agreement is hereby amended in its
entirety to provide as follows:
<PAGE>
"4.1. Security Interest in the Collateral. BMI and BML each
hereby acknowledge, confirm and agree that as security for the
Obligations (including, without limitation, any Guaranty) Agent has
and shall continue to have for the ratable benefit of the Lenders a
continuing security interest and fixed and floating charges in, on
or to, all the Collateral heretofore granted, whether now owned or
existing or hereafter acquired or arising and wheresoever located.
Each Borrower, to the extent applicable, shall mark its books and
records as may be necessary or appropriate to evidence, protect and
perfect as may be necessary or appropriate to evidence, protect and
perfect Agent's security interest and shall cause its financial
statements to reflect such security interest.
(p) The fourth sentence of Section 4.13 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"The amount of any payment by Agent under this Section 4.13
shall be, in case of BMI or BML, charged to the applicable
Borrower's account as a Revolving Advance and added to the
Obligations, until such Borrower shall furnish Agent with an
indemnity therefor (or supply Agent with evidence satisfactory to
Agent that due provision for the payment thereof has been made),
Agent may hold without interest any balance standing to such
Borrower's credit and Agent shall retain its security interest in
any and all Collateral held by Agent or, in the case of BMG, paid
by BMG to Agent immediately upon demand therefor by Agent."
(q) Section 6.6 of the Loan Agreement is hereby amended by deleting
"1.5" and inserting "1.25" in its place and stead.
(r) A new Section 6.14 to the Loan Agreement is hereby added to the
Loan Agreement to provide as follows:
"6.14 BMG Collateral. In the event that two (2) consecutive
Borrowing Base Certificates delivered by Borrowers to Agent
pursuant to Section 9.2 hereof indicate that the amount of Undrawn
Availability (for the purposes hereof, clause (a) of such
definition shall be deemed to be only "the Formula Amount" without
application of the dollar limitations set forth in Sections
2.1(a)(iii) and (iv)) shall be less than $5,000,000, then BMI and
BML shall cause BMG, within thirty (30) days thereafter, to (x)
grant a lien and/or security interest in its Equipment to Agent for
the ratable benefit of Lenders subject only to the statutory lien
in favor of the landlord of BMG's premises in Kempten, Germany;
provided, however, BMG agrees to use its best efforts to obtain a
waiver and/or subordination of such landlord's statutory lien on
terms and conditions acceptable to Lenders, (y) execute and deliver
any and all documents and instruments requested by Agent to cause
such lien and/or security interest to be properly perfected in
accordance with the provisions of German law, all at the expense of
Borrowers; provided, that Borrowers obligations for any legal
expenses incurred by Agent and/or Lenders in connection therewith
shall not exceed $35,000.
(s) Section 15.1 of the Loan Agreement is hereby amended by
inserting "(BMI in such capacity, the "Borrowing Agent") immediately following
"hereunder" on the sixth line thereof.
<PAGE>
(t) Section 16.1(b) is hereby amended by adding "and BMG"
immediately following "BML" in each place that it appears.
(u) The address for Seeley & Berglass in Section 16.6(c) is hereby
amended to read
as follows:
3695 Post Road
Southport, Connecticut 06490
(v) The notice parties for BMI and the telephone and telecopier
numbers for BMI are hereby amended to read as follows:
Attention: Walter Lazarcheck
Yvonne Megenis
Telephone: (203) 337-8511
Telecopier: (203) 337-8339
(w) Notwithstanding anything to the contrary contained in Sections
9.7, 9.8 or 9.9 of the Loan Agreement, all financial statements provided to
Agent pursuant to such sections shall be prepared in accordance with GAAP
applicable to BMI.
(x) Notwithstanding anything to the contrary contained in Section
16.5 of the Loan Agreement, BMG shall be obligated to indemnify Agent and each
Lender only for liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements imposed on, incurred by or
asserted against Agent or any Lender in connection with any litigation,
proceeding or investigation instituted or conducted by any Person with respect
to any transaction contemplated by, referred to in, or related to, BMG's
Obligations under the Agreement.
3. Consents. Lenders hereby consent to the payment of a dividend by BML
to BMI during the period commencing on the Fourth Amendment Effective Date and
ending on the first anniversary date thereof in an aggregate amount not to
exceed (pound)3,000,000 as long as (i) no notice of termination with regard to
this Agreement shall be outstanding, (ii) no Event of Default shall have
occurred and be continuing and (iii) after giving effect to any such payment no
Event of Default shall exist. At the written direction of BMG, the Lenders shall
advance the proceeds of the BMG Term Loan directly to BML in the Sterling
Equivalent of the BMG Term Loan.
4. Conditions Precedent. This Amendment shall become effective upon
satisfaction of the following conditions precedent:
(a) This Amendment shall have been executed by the Lenders, the
Borrowers, and the Guarantor, in four counterparts, with executed counterparts
delivered to each of the parties.
(b) Agent shall have received a Guaranty from BMI of the
Obligations of BMG, which Guaranty will be in form and substance satisfactory to
Agent.
(c) Agent shall have received opinions of counsel to BMI, BML and
BMG indicating that the transactions contemplated by this Amendment have been
properly authorized, and that the documents executed and delivered in connection
therewith are the legal, valid, and binding obligations of the respective
signatories.
<PAGE>
(d) Agent shall have received an amendment fee of $18,750 to be
shared equally by the Lenders.
5. Representations and Warranties.
(a) Borrowers hereby represent and warrant as follows:
(i) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrowers and
are enforceable against Borrowers in accordance with their
respective terms.
(ii) On the Fourth Amendment Effective Date, BMG shall become
a Borrower under the Loan Agreement and Borrowers hereby reaffirm
all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree
that all such covenants, representations and warranties shall be
deemed to have been remade as of the Fourth Amendment Effective
Date.
(iii) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(iv) Borrowers have no knowledge of any facts which would form
the basis for any defense, counterclaim or offset with respect to
the Loan Agreement.
(b) Lenders hereby represent and warrant that this Amendment and
the Loan Agreement, as amended hereby, constitute legal, valid and binding
obligations of Lenders and are enforceable against Lenders in accordance with
their respective terms.
6. Effect on the Loan Agreement.
(a) On the Fourth Amendment Effective Date, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) Except as specifically amended herein, the Loan Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of Lenders, nor
constitute a waiver of any provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
7. Governing Law. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York.
8. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
<PAGE>
9. Counterparts. This Amendment may be executed by the parties hereto
in one or more counterparts, each of which shall be deemed to be an original and
all of which taken together shall be deemed to constitute one and the same
agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written
above.
BRIDGEPORT MACHINES, INC.,
as Borrower and Guarantor
By: _______________________________
Name:
Title:
BRIDGEPORT MACHINES LIMITED,
as Borrower
By: _______________________________
Name:
Title:
BRIDGEPORT MACHINES, GmbH,
as Borrower
By: _______________________________
Name
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as Lender and as Agent
By: _______________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
By: _______________________________
Name:
Title:
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