<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended April 30, 2000
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
----------------- -----------------
Commission file number 1-13437
THE SOURCE INFORMATION MANAGEMENT COMPANY
(Exact Name of Small Business Issuer as Specified in Its Charter)
MISSOURI 43-1710906
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
TWO CITY PLACE DRIVE, SUITE 380
ST. LOUIS, MISSOURI 63141
(Address of Principal Executive Offices)
(314) 995-9040
(Issuer's Telephone Number, Including Area Code)
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 Exchange Act during the past
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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding on May 31, 2000
Common Stock, $.01 Par Value 17,538,020
<PAGE> 2
THE SOURCE INFORMATION MANAGEMENT COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Page
ITEM 1. Financial Statements
Consolidated Balance Sheets as of
April 30, 2000 and January 31, 2000
Consolidated Statements of Income for the three months
ended April 30, 2000 and 1999
Consolidated Statements of Comprehensive Income for the
three months ended April 30, 2000 and 1999
Consolidated Statement of Stockholders'
Equity for the three months ended April 30, 2000
Consolidated Statements of Cash Flows for
the three months ended April 30, 2000 and 1999
Notes to Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
ITEM 2. Changes in Securities
ITEM 3. Defaults Upon Senior Securities
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 5. Other Information
ITEM 6. Exhibits and Reports on Form 8-K
<PAGE> 3
THE SOURCE INFORMATION MANAGEMENT COMPANY
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
January 31, 2000 April 30, 2000
========================================================================================================================
<S> <C> <C>
ASSETS
CURRENT
Cash $ 1,738 $ 1,992
Trade receivables (net of allowance for doubtful accounts of $1,123 at
January 31, 2000 and April 30, 2000) 64,836 71,459
Income taxes receivable -- 2,079
Inventories (Note 3) 9,994 8,331
Other current assets (Note 2) 1,448 999
------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 78,016 84,860
========================================================================================================================
Land 2,233 2,233
Plants and buildings 11,896 11,914
Office equipment and furniture 12,337 11,966
------------------------------------------------------------------------------------------------------------------------
Property, Plants and Equipment 26,466 26,113
Less accumulated depreciation and amortization 4,670 3,922
------------------------------------------------------------------------------------------------------------------------
NET PROPERTY, PLANTS AND EQUIPMENT 21,796 22,191
========================================================================================================================
OTHER ASSETS
Goodwill, net of accumulated amortization of $3,360 and $4,098, at January
31, 2000 and April 2000, respectively (Note 4) 53,930 53,346
Notes receivable - officer (Note 2) 975 801
Other 2,042 2,041
------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 56,947 56,188
========================================================================================================================
$156,759 $163,239
========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
THE SOURCE INFORMATION MANAGEMENT COMPANY
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
January 31, 2000 April 30, 2000
========================================================================================================================
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Checks issued against future deposits $ 1,217 $ 4,626
Accounts payable and accrued expenses 9,239 6,815
Income taxes payable 1,093 --
Due to retailers 3,723 1,415
Deferred income taxes 1,115 1,401
Current maturities of long-term debt (Note 5) 174 175
------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 16,561 14,432
========================================================================================================================
LONG-TERM DEBT, LESS CURRENT MATURITIES (NOTE 5) 32,215 35,675
------------------------------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES 569 593
------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 49,345 50,700
========================================================================================================================
COMMITMENTS
------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Contributed Capital:
Common Stock, $.01 par - shares authorized, 40,000,000; 17,345,071issued,
of which 42,250 are being held as Treasury Stock at January 31, 2000 and
17,679,561 issued, of which 47,250 is being held as Treasury Stock at 173 176
April 30, 2000
Preferred Stock, $.01 par - shares authorized, 2,000,000; -0- issued and
outstanding at January 31, 2000 and April 30, 2000 -- --
Additional paid-in-capital 91,770 94,092
------------------------------------------------------------------------------------------------------------------------
Total contributed capital 91,943 94,268
Accumulated other comprehensive income 80 1
Retained earnings 15,878 18,852
------------------------------------------------------------------------------------------------------------------------
Total contributed capital and retained earnings 107,901 113,121
Less: Treasury Stock (42,250 and 47,250 shares at cost, respectively at
January 31, 2000 and April 30, 2000) (487) (582)
------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 107,414 112,539
========================================================================================================================
$156,759 $163,239
========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
THE SOURCE INFORMATION MANAGEMENT COMPANY
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
Three Months Ended April 30,
1999 2000
========================================================================================================================
<S> <C> <C>
Service Revenues $ 4,226 $ 5,543
Product Sales 12,254 19,318
------------------------------------------------------------------------------------------------------------------------
16,480 24,861
------------------------------------------------------------------------------------------------------------------------
Cost of Service Revenues 1,980 2,923
Cost of Goods Sold 7,632 12,205
------------------------------------------------------------------------------------------------------------------------
9,612 15,128
------------------------------------------------------------------------------------------------------------------------
6,868 9,733
Selling, General and Administrative Expense 3,334 4,064
------------------------------------------------------------------------------------------------------------------------
Operating Income 3,534 5,669
------------------------------------------------------------------------------------------------------------------------
Other Income (Expense)
Interest income 7 15
Interest expense (295) (480)
Other 139 20
========================================================================================================================
Total Other Income (Expense) (149) (445)
========================================================================================================================
Income Before Income Taxes 3,385 5,224
Income Tax Expense 1,491 2,250
------------------------------------------------------------------------------------------------------------------------
Net Income $ 1,894 $ 2,974
========================================================================================================================
Earnings per Share - Basic $ .15 $ .17
------------------------------------------------------------------------------------------------------------------------
Weighted Average of Shares Outstanding - Basic (Note 6) 12,574 17,491
------------------------------------------------------------------------------------------------------------------------
Earnings per Share - Diluted $ .13 $ .16
------------------------------------------------------------------------------------------------------------------------
Weighted Average of Shares Outstanding - Diluted (Note 6) 14,557 19,125
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(in thousands)
Three Months Ended April 30,
1999 2000
========================================================================================================================
<S> <C> <C>
Net Income $ 1,894 $ 2,974
Foreign Currency Translation Adjustment 25 (79)
------------------------------------------------------------------------------------------------------------------------
Comprehensive Income $ 1,919 $ 2,895
========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
THE SOURCE INFORMATION MANAGEMENT COMPANY
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
(in thousands, except shares)
Other
Common Stock Additional Compre- Treasury Stock Total
------------------------- Paid - in Retained hensive -------------------- Stockholders'
Shares Amount Capital Earnings Income Shares Amount Equity
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 31, 2000 17,345,071 $ 173 $ 91,770 $ 15,878 $ 80 42,250 $ (487) $ 107,414
Exercise of stock options 21,503 175 175
Exercise of warrants 300,000 3 1,947 1,950
Acquisition contingency 12,987 196 196
payment
Reacquire Common Stock 5,000 (95) (95)
Foreign currency translation (79) (79)
adjustment
Other 4 4
Net income 2,974 2,974
-------------------------------------------------------------------------------------------------------------------------
Balance, April 30, 2000 17,679,561 $ 176 $ 94,092 $ 18,852 $ 1 47,250 $ (582) $ 112,539
=========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
THE SOURCE INFORMATION MANAGEMENT COMPANY
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended April 30, 1999 2000
=======================================================================================================================
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,894 $ 2,974
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 774 1,153
Deferred income taxes 4 309
Other 71 (28)
Changes in assets and liabilities:
Increase in accounts receivable (2,663) (6,623)
Decrease in inventories 810 1,663
Increase in other assets (750) (1,602)
Decrease in accounts payable and accrued expenses and (1,004) (3,517)
other liabilities
Decrease in amounts due to retailers (1,015) (2,308)
-----------------------------------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (1,879) (7,979)
=======================================================================================================================
INVESTMENT ACTIVITIES
Acquisitions, net of cash acquired (17,674) --
Capital expenditures (182) (782)
Loans to officers (975) --
Collections on loan to officer -- 174
Other (19) --
-----------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (18,850) (608)
=======================================================================================================================
FINANCING ACTIVITIES
(Decrease) increase in checks issued against future deposits (1,326) 3,409
Proceeds from issuance of Common Stock 138 2,125
Borrowings under credit facility 45,794 24,311
Principal payments on credit facility (23,189) (20,846)
Principal payments on long-term debt agreements (2)
Common Stock reacquired -- (95)
Deferred loan costs (144) (56)
Registration costs (28) --
Other -- (7)
-----------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 21,243 8,841
=======================================================================================================================
INCREASE IN CASH 514 254
CASH, beginning of period 753 1,738
-----------------------------------------------------------------------------------------------------------------------
CASH, end of period $ 1,267 $ 1,992
=======================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 8
THE SOURCE INFORMATION MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The consolidated financial statements as of April 30, 2000 and for the three
month periods ended April 30, 2000 and 1999, include, in the opinion of
management, all adjustments (consisting of normal recurring adjustments and
reclassifications) necessary to present fairly the financial position, results
of operations and cash flows at April 30, 2000 and for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Form 10-K for the year
ended January 31, 2000. The results of operations for the three month period
ended April 30, 2000 are not necessarily indicative of the operating results to
be expected for the full year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
2. RELATED PARTY TRANSACTIONS
In connection with his employment with the Company, the Chief Operating Officer
received two loans from the Company in the amounts of $600,000 ("Loan 1") and
$375,000 ("Loan 2"). Loan 1, including interest, will be forgiven over a 5-year
term and Loan 2, including interest, will be forgiven over a 7-year term,
provided, in each case, that he remains an employee of the Company. The loans
bear interest at 5% per annum.
In May 1999, the Company purchased its facility in High Point, North Carolina
for $1.8 million. The facility was owned by a partnership in which stockholders
of the Company were partners. The Board of Directors appointed Timothy Braswell,
an independent director who has since resigned from the Board, to negotiate the
transaction on the Company's behalf and, based on Mr. Braswell's recommendation,
the Board believes the terms of the purchase were fair to the Company.
3. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
January 31, 2000 April 30, 2000
-------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 3,433 $ 3,280
Work-in-process 2,286 1,515
Finished goods 4,275 3,536
-------------------------------------------------------------------------------------------
$ 9,994 $ 8,331
-------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
THE SOURCE INFORMATION MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4. BUSINESS COMBINATIONS
Acquisition of Yeager Industries, Inc.
On January 7, 1999, the Company acquired the net assets of Yeager Industries,
Inc. for $2.3 million in cash and 164,289 shares of the Company's Common Stock,
valued at the time of the acquisition at $1.15 million. The purchase price could
be increased by up to $500,000 (the "Earnout") depending on Yeager's performance
over the next two years. In April 2000, the parties terminated the Earnout
provision and the Company issued to Yeager 12,987 shares of the Company's common
stock. Yeager manufactures front-end display racks from facilities in
Philadelphia, Pennsylvania.
This transaction has been accounted for as a purchase, and accordingly, the
assets and liabilities have been recorded at fair market value. Results of
operations have been included as of the effective date of the transaction. The
purchase price exceeds the fair value of the assets acquired by approximately
$1,247,000 and is being amortized straight line over 20 years.
Acquisition of U.S. Marketing Services, Inc.
On January 7, 1999 the Company acquired all of the stock of U.S. Marketing
Services, Inc. ("U.S. Marketing") in exchange for 1,926,719 shares of the
Company's Common Stock and 1,473,281 shares of the Company's Class A Convertible
Preferred Stock, valued at the time of the acquisition at $26.3 million in
total. The Class A Convertible Preferred Stock was converted into an equal
number of Common Shares on March 30, 1999. U.S. Marketing's subsidiary Brand
Manufacturing Corporation ("Brand") manufactures front-end display racks from
manufacturing facilities in Brooklyn, New York and a warehouse and distribution
facility in New Jersey. Through its affiliates, Brand provides trucking and
freight services and removes and disposes of display racks no longer required by
its customers.
This transaction has been accounted for as a purchase, and accordingly, the
assets and liabilities have been recorded at fair market value. Results of
operations have been included as of the effective date of the transaction. The
purchase price exceeded the fair value of the assets acquired by approximately
$23,471,000 and is being amortized straight line over 20 years.
Acquisition of Chestnut Display Systems, Inc.
On February 1, 1999 the Company acquired the net assets of Chestnut Display
Systems, Inc. and its affiliate Chestnut Display Systems (North), Inc. for $3.6
million in cash and 285,714 shares of the Company's Common Stock, valued at the
time of acquisition at $1.8 million. The purchase price for Chestnut may be
increased to a value (including the amounts already paid) not to exceed $9.5
million if Chestnut meets certain performance goals during fiscal 2000 and 2001.
Any increase in the purchase price will be paid 50% in cash and 50% in shares of
Common Stock. The shares will be valued using a formula contained in the
acquisition agreement, subject to a minimum value of $5.00 per share and a
maximum value of $7.00 per share. Chestnut manufactures front-end display racks
from its facility in Jacksonville, Florida.
This transaction has been accounted for as a purchase, and accordingly, the
assets and liabilities have been recorded at fair market value. Results of
operations have been included as of the effective date of the transaction. The
purchase price exceeded the fair value of the assets acquired by approximately
$6,301,000 and is being amortized straight line over 20 years.
7
<PAGE> 10
THE SOURCE INFORMATION MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Acquisition of MYCO, Inc.
On February 26, 1999 the Company acquired the net assets of MYCO, Inc. for $12
million in cash and 134,615 shares of the Company's Common Stock, valued at the
time of acquisition at $875,000. The Company also assumed MYCO's industrial
revenue bond indebtedness of $4 million and repaid MYCO's indebtedness of $1.5
million. The purchase price may be increased by up to an additional 250,000
shares of Common Stock and cash up to $342,000 depending on MYCO's performance
in the twelve months following the acquisition. MYCO is a Rockford, Illinois
manufacturer of front-end display racks.
This transaction has been accounted for as a purchase, and accordingly, the
assets and liabilities have been recorded at fair market value. Results of
operations have been included as of the effective date of the transaction. The
purchase price exceeded the fair value of the assets acquired by approximately
$12,067,000 and is being amortized straight line over 20 years.
Acquisition of 132127 Canada, Inc.
On March 23, 1999 the Company purchased the net assets of 132127 Canada, Inc.,
known as ProMark, for $1.5 million Canadian. ProMark is a Canadian corporation
headquartered in Toronto which provides rebate and information services to
retail customers throughout Canada.
This transaction has been accounted for as a purchase, and accordingly, the
assets and liabilities have been recorded at fair market value. Results of
operations have been included as of the effective date of the transaction. The
purchase price exceeded the fair value of the assets acquired by approximately
$682,000 and is being amortized straight line over 20 years.
Acquisition of Aaron Wire and Metal Products, Ltd.
On July 1, 1999 the Company acquired all of the stock of Aaron Wire and Metal
Products, Ltd. for $2.4 million Canadian. Aaron Wire manufactures front-end
display racks from manufacturing facilities in Vancouver, British Columbia.
This transaction has been accounted for as a purchase, and accordingly, the
assets and liabilities have been recorded at fair market value. Results of
operations have been included as of the effective date of the transaction. The
purchase price exceeded the fair value of the assets acquired by approximately
$1,519,000 and is being amortized straight line over 20 years.
Acquisition of Huck Store Fixture Company
On September 21, 1999 the Company purchased the net assets of Huck Store Fixture
Company for $3.0 million in cash and 100,000 shares of the Company's common
stock, valued at the time of acquisition at approximately $1.5 million. The
Company also repaid Huck Store Fixture Company's indebtedness of approximately
$6.8 million. The sellers were entitled to a payment, based on performance,
which was calculated and paid in January, 2000. The payment was an additional
$6.7 million in cash and 267,883 shares of the Company's common stock, valued at
the time of issuance at $3.8 million The sellers will be entitled to an earnout
payment in the amount (if any) by which four times the average of Huck's EBITDA
for its years ending November, 1999 and 2000 exceeds the amount previously paid.
The earnout will be paid 70% in cash and 30% in the Company's common shares,
with shares valued for such purposes at the closing value on the date of the
letter of intent. The closing price on the date of the letter of intent was
$11.375. Huck manufactures wood store fixtures from its facilities in Quincy,
Illinois and Carson City, Nevada.
This transaction has been accounted for as a purchase, and accordingly, the
assets and liabilities have been recorded at
8
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THE SOURCE INFORMATION MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
fair market value. Results of operations have been included as of the effective
date of the transaction. The purchase price exceeded fair market value of the
assets acquired by approximately $5,897,000 and is being amortized straight line
over 20 years.
Acquisition of Arrowood, Inc.
On September 27, 1999 the Company acquired the net assets of Arrowood, Inc. for
$939,000 in cash and two separate notes for a total of $380,000. Arrowood
manufactures wood store fixtures from its facility in Norwood, North Carolina.
Huck Store Fixture Company had entered into a letter of intent to purchase
Arrowood prior to the Company acquisition of Huck. With the North Carolina
facility, the Company has wooden store fixture manufacturing facilities to
service accounts on the East Coast, the Midwest and the West Coast.
This transaction has been accounted for as a purchase, and accordingly, the
assets and liabilities have been recorded at fair market value. Results of
operations have been included as of the effective date of the transaction. The
purchase price exceeded fair market value of the assets acquired by
approximately $435,000 and is being amortized straight line over 20 years.
Unaudited pro forma results of operations for the year ended January 31, 2000
for the Company, MYCO and Huck are listed below (in thousands):
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
<S> <C> <C>
Total Revenues As reported $ 82,488
Pro forma 95,528
Net Income As reported 10,111
Pro forma 11,376
Earnings Per Share
Basic As reported $ .66
Diluted As reported .60
Basic Pro forma .73
Diluted Pro forma .67
-------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
THE SOURCE INFORMATION MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
5. LONG-TERM DEBT AND REVOLVING CREDIT FACILITY
Long-term debt consists of (in thousands):
<TABLE>
<CAPTION>
January 31, April 30,
2000 2000
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving Credit Facility $ 27,899 $ 31,364
Industrial Revenue Bonds 4,000 4,000
Unsecured note payable to former owners of acquired
company, non-interest bearing, payable in five equal annual
installments beginning in November 1999 240 240
Unsecured note payable to former owner of acquired company,
7% annual interest, payable in two annual installments
beginning in September 2000 200 200
Other 50 46
---------------------------------------------------------------------------------------------------
Total Long-term Debt 32,389 35,850
Less current maturities 174 175
---------------------------------------------------------------------------------------------------
Long-term Debt $ 32,215 $ 35,675
---------------------------------------------------------------------------------------------------
</TABLE>
On December 22, 1999, the Company entered into an unsecured credit agreement
with Bank of America, N.A., replacing its previous credit agreement with
Wachovia Bank, N.A. The credit agreement enables the Company to borrow up to $50
million under a revolving credit facility that terminates December 31, 2002.
Borrowings under the credit facility bear interest at a rate equal to the
monthly London Interbank Offered Rate ("LIBOR") plus a percentage ranging from
1.0% to 2.1% depending on the Company's ratio of funded debt to earnings before
interest, taxes, depreciation and amortization. Under the credit agreement, the
Company is required to maintain certain financial ratios. The Company was in
compliance with such ratios at April 30, 2000. The availability at April 30,
2000 on the revolving credit facility was approximately $14.5 million.
In connection with the acquisition of MYCO, Inc., the Company assumed the
liabilities of MYCO's Industrial Revenue Bonds. On January 30, 1995, the City of
Rockford issued $4.0 million of its Industrial Project Revenue Bonds, Series
1995, and the proceeds were deposited with the Amalgamated Bank of Chicago, as
trustee. Bank of America, N.A. has issued an unsecured letter of credit for $4.1
million in connection with the bonds with an initial expiration date of April
20, 2001. The bonds are secured by the trustee's indenture and the $4.1 million
letter of credit. The bonds bear interest at a variable weekly rate
(approximately 80% of the Treasury Rate) not to exceed 15% per annum. The bonds
mature on January 1, 2030. Fees related to the letter of credit are .75% per
annum of the outstanding bond principal plus accrued interest.
10
<PAGE> 13
THE SOURCE INFORMATION MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
6. EARNINGS PER SHARE
A reconciliation of the denominators of the basic and diluted earnings per share
computations are as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
April 30,
1999 2000
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Weighted average number of common shares outstanding 12,574 17,491
Effect of dilutive securities:
Stock options 548 1,257
Warrants 475 377
Incremental shares from assumed conversion of
preferred stock 960 -
----------------------------------------------------------------------------------------------------
Total effect of dilutive securities 1,983 1,634
----------------------------------------------------------------------------------------------------
Weighted average number of common shares outstanding - as
adjusted 14,557 19,125
----------------------------------------------------------------------------------------------------
</TABLE>
7. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental information on interest and income taxes paid is as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended April 30, 1999 2000
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest $ 169 $ 350
Income Taxes $ 1,041 $ 5,108
----------------------------------------------------------------------------------------------------
</TABLE>
In connection with the acquisitions in January 1999, the Company issued
2,091,008 shares of Common Stock and 1,473,281 shares of Class A Convertible
Preferred Stock which were converted to an equal number of common shares on
March 30, 1999. Additionally, in April 2000, the parties terminated the Earnout
provision with Yeager and the Company issued 12,987 shares of the Company's
common stock.
In connection with the acquisitions in February 1999, the Company issued 420,329
shares of Common Stock.
11
<PAGE> 14
THE SOURCE INFORMATION MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
8. SEGMENT FINANCIAL INFORMATION
The Company is engaged in two lines of business based on the reporting of senior
management to the Chief Executive Officer. The reportable segments of the
Company are services and display rack and store fixture manufacturing. The
accounting policies of the segments are the same as those described in the
Summary of Accounting Policies. Segment operating results are measured based on
gross profit. All intersegment sales during the periods presented were
eliminated.
<TABLE>
<CAPTION>
Display Rack &
Store Fixture
Services Manufacturing Consolidated
----------------------------------------------------
<S> <C> <C> <C>
(in thousands)
Three Months Ended April 30, 2000
---------------------------------------------------
Revenue $ 5,543 $ 19,318 $ 24,861
Cost of Revenue 2,923 12,205 15,128
----------------------------------------------------
Gross Profit 2,620 7,113 9,733
Selling, General & Administrative 4,064
----------------
Operating Income 5,669
Other Expenses, net (445)
----------------
Income Before Income Taxes $ 5,224
----------------
Total Assets $ 60,644 $ 102,595 $ 163,239
----------------------------------------------------
Three Months Ended April 30, 1999
---------------------------------------------------
Revenue $4,226 $12,254 $16,480
Cost of Revenue 1,980 7,632 9,612
----------------------------------------------------
Gross Profit 2,246 4,622 6,868
Selling, General & Administrative 3,334
----------------
Operating Income 3,534
Other Expenses, net (149)
----------------
Income Before Income Taxes $3,385
----------------
Total Assets $32,954 $68,082 $101,036
----------------------------------------------------
</TABLE>
12
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
We derive our revenues from (1) providing information and management services
relating to retail magazine sales to U.S. and Canadian retailers and magazine
publishers and confectioners and vendors of gum and general merchandise sold at
checkout counters and (2) manufacturing display racks and store fixtures used by
retailers at checkout counters and other areas of their stores.
Fees earned in connection with the collection of incentive payments under our
Traditional Claim Submission and Advance Pay Programs continue to be significant
contributors to our service revenues. Payments collected from publishers under
the Advance Pay Program as a percentage of all incentive payments collected from
publishers grew from 21.9% during fiscal 1998 to 30.4% during fiscal 1999 and
32.6% during fiscal 2000. Most incentive payment programs offer the retailer a
cash rebate, equal to a percentage of the retailer's net sales of the
publisher's titles, which is payable quarterly upon submission of a properly
documented claim. Under our Traditional Claim Submission Program, we submit
claims for incentive payments on behalf of the retailer and receive a fee based
on the amounts collected. Under the Advance Pay Program, we pay participating
retailers a negotiated fixed percentage of total quarterly incentive payments
and pocket rental fees and then collect the payments from the publishers for our
own account.
Under both the Traditional Claim Submission Program and the Advance Pay Program,
service revenues are recognized at the time claims for incentive payments are
substantially completed for submission to the publishers. Our allowance for
doubtful accounts has to date been approximately 2% of accounts receivable. This
amount has been adequate to satisfy losses from uncollectible accounts
receivable. Under the Advance Pay Program, the revenues we recognize represent
the difference between the amount advanced to the retailer customer and the
amount claimed against the publisher.
ICN and PIN revenues consist of subscription fees. Subscribers pay for their
subscriptions on a quarterly basis. Subscriptions have an initial term of one
year and are automatically renewed for successive one-year terms unless earlier
terminated. Revenues are recognized ratably over the subscription term. We also
receive fees from publishers for advertising, promotions and special programs on
ICN.
Front-end management includes configuring and designing front-end display racks,
supervising installation and collecting incentive payments from vendors for
product placement. Front-end management revenues are recognized as services are
performed.
Since January 1999, we acquired five manufacturers of front-end and
free-standing point-of-purchase display racks and two manufacturers of wooden
store fixtures. Manufacturing display racks and store fixtures in our own
facilities allows us to be a full-service provider of management services for
the front-end of a customer's store.
We intend to continue to increase the operating margins in our display rack and
store fixture manufacturing segment by consolidating duplicative administrative
functions, through increased purchasing power, by using more efficient
manufacturing methods in our acquired facilities and by more efficiently
utilizing plant capacities.
We generally recognize manufacturing revenues as products are shipped to
customers. When we receive payment prior to shipment, we record the amount as a
liability and recognize the amount as revenues when products are shipped. Upon
request from a customer, the product can be stored for future delivery for the
convenience of the customer. In this case revenue is recognized when the
manufacturing and earnings processes are complete, the customer accepts title in
writing, the product is invoiced with payment due in the normal course of
business, the delivery schedule is fixed and the products are segregated from
other goods. In our display rack and store fixture manufacturing segment, we
also receive trucking revenues for transporting racks and warehousing revenues
for storing racks. We generally recognize trucking revenues as shipments are
completed. Warehousing revenues are recognized when services are rendered.
Cost of revenues generally includes personnel costs, including in some cases the
cost of independent contractors. For manufacturing, cost of revenues also
includes the cost of materials and supplies directly used in the completion of
display racks and store fixtures. Cost of service revenues is an allocation of
operating costs and is not separately analyzed by management primarily because
operating costs do not vary significantly with revenues.
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<PAGE> 16
Selling, general and administrative expense includes corporate overhead, project
management, management information systems, executive compensation, human
resource expenses and finance expenses.
Manufacturing has accounted for a substantial increase in our cost of revenues
due to both the cost of materials and supplies used in manufacturing and
substantially increased personnel costs relating to our manufacturing
facilities. Selling, general and administrative expenses also increased
substantially due to the increased scope of our operations.
See Note 8 in the "Notes to Consolidated Financial Statements" for certain
financial information on our two business segments, which are services and
display rack and store fixture manufacturing.
RECENT ACQUISITIONS
Since January 7, 1999, we acquired the following companies. Each of the
acquisitions was accounted for as a purchase.
- SOURCE-U.S. MARKETING SERVICES, INC. U.S. Marketing is the parent of
Brand Manufacturing Corporation, a manufacturer of front-end display
racks with manufacturing facilities in Brooklyn, New York and a
warehouse and distribution facility in New Jersey. Through its
affiliates, Brand also provides trucking and freight services and
removes and disposes of display racks no longer required by our
customers. We acquired the stock of U.S. Marketing in January 1999 for
1,926,719 shares of our common stock and 1,473,281 shares of our Class A
Convertible Preferred Stock, valued at the time of the acquisition at
$26.3 million in total. The Class A Convertible Preferred Stock was
converted into an equal number of shares of common stock on March 30,
1999.
- SOURCE-YEAGER INDUSTRIES, INC. Yeager manufactures front-end display
racks from facilities in Philadelphia, Pennsylvania. We purchased the
assets of Yeager Industries, Inc. and assumed its operating liabilities
in January 1999 for $2.3 million in cash and 164,289 shares of our
common stock, valued at the time of the acquisition at $1.2 million. The
purchase price could be increased by up to $500,000 (the "Earnout"),
depending upon Yeager's performance during fiscal 2000 and 2001. In
April 2000, the parties terminated the Earnout provision and we issued
to Yeager 12,987 shares of our common stock.
- SOURCE-MYCO, INC. MYCO is a Rockford, Illinois manufacturer of front-end
display racks. We purchased the assets and assumed the operating
liabilities of MYCO, Inc. in February 1999 for $12.0 million in cash and
134,615 shares of our common stock, valued at the time of the
acquisition at $875,000. We also assumed MYCO Inc.'s industrial revenue
bond indebtedness of $4.0 million and repaid MYCO, Inc.'s indebtedness
of $1.5 million. The purchase price may be increased by up to an
additional 250,000 shares of our common stock and cash up to $342,000
depending on MYCO's performance in the twelve months following the
acquisition.
- SOURCE-CHESTNUT DISPLAY SYSTEMS, INC. Chestnut manufactures front-end
display racks from facility in Jacksonville, Florida. We purchased the
assets and assumed the operating liabilities of Chestnut Display
Systems, Inc. and its affiliate, Chestnut Display Systems (North), Inc.
in February 1999 for $3.6 million in cash and 285,714 shares of our
common stock, valued at the time of the acquisition at $1.8 million. The
purchase price may be increased to a value (including the amounts
already paid) not to exceed $9.5 million if Chestnut meets certain
performance goals during fiscal 2000 and 2001. Any increase in the
purchase price will be paid in a combination of cash and common stock.
The number of shares will be calculated using a formula contained in the
acquisition agreement, subject to a minimum value of $5.00 per share and
a maximum value of $7.00 per share.
- PROMARK. We purchased the assets and assumed the operating liabilities
of 132127 Canada Inc., known as ProMark, in March 1999. Headquartered in
Toronto, this operation provides rebate and information services to
retail customers throughout Canada and strengthens our ability to obtain
information about retail sales from checkout areas in Canada. We paid a
cash purchase price of Cdn$1.5 million for ProMark.
- AARON WIRE AND METAL PRODUCTS, LTD. Aaron Wire manufactures front-end
display racks from its facilities in Vancouver, British Columbia. In July
1999, we acquired the stock of Aaron Wire for approximately Cdn$2.4
million.
- SOURCE-HUCK STORE FIXTURE COMPANY. Huck manufactures wooden store
fixtures from its facilities in Quincy, Illinois
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<PAGE> 17
and Carson City, Nevada. In September 1999, we purchased the assets and
assumed certain operating liabilities of Huck Store Fixture Company for
$3.0 million in cash and 100,000 shares of our common stock, valued at
the time of acquisition at approximately $1.5 million. We also repaid
Huck Store Fixture Company's indebtedness of approximately $6.8 million.
The sellers were entitled to a payment, based on performance, which was
calculated and paid in January, 2000. That payment was an additional
$6.7 million in cash and 267,883 shares of our common stock, valued at
the time of issuance at $3.8 million. The sellers will be entitled to an
additional payment, an earnout payment, in the amount (if any) by which
four times the average of Huck's EBITDA for its years ending November,
1999 and 2000 exceeds the amounts previously paid.. The earnout will be
paid 70% in cash and 30% in our common shares, with shares valued for
such purposes at the closing value on the date of the letter of intent.
The closing price on the date of the letter of intent was $11.375.
- HUCK STORE FIXTURE COMPANY OF NORTH CAROLINA. In September 1999, our
subsidiary, Huck Store Fixture Company of North Carolina, acquired the
net assets of Arrowood, Inc. for $939,000 in cash and two separate notes
for a total of $380,000. This company manufactures wooden store fixtures
from its facility in Norwood, North Carolina. Huck Store Fixture Company
had entered into a letter of intent to purchase Arrowood prior to our
acquisition of Huck.
RESULTS OF OPERATIONS
The following table sets forth, for the periods presented, information relating
to our operations expressed as a percentage of Total Revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30,
1999 2000
--------- -------
<S> <C> <C>
Service Revenues 21.6% 22.3%
Product Sales 78.4 77.7
----- -----
Total Revenues 100.0 100.0
Cost of Service Revenues 12.0 11.8
Cost of Goods Sold 46.3 49.1
---- ----
Gross Profit 41.7 39.1
Selling, General and Administrative Expense 20.3 16.3
---- ----
Operating Income 21.4 22.8
Interest Expense, Net (1.7) (1.9)
Other Income (Expense), Net 0.8 0.1
---- ----
Income Before Income Taxes 20.5 21.0
---- ----
Net Income 11.5% 12.0%
==== ====
</TABLE>
QUARTER ENDED APRIL 30, 2000 COMPARED TO QUARTER ENDED APRIL 30, 1999
Service Revenues. Services, which include the Claim Submission Program, Advance
Pay Program, PIN/ICN and front-end management, accounted for approximately 22.3%
and 21.6% of our revenues for the quarters ended April 30, 2000 and 1999,
respectively. Service revenues of $5.5 million in first quarter of fiscal 2001
increased $1.3 million compared to the first quarter of fiscal 2000 as a result
of an increase in front-end management revenues and the acquisition in March
1999 of ProMark.
Product Sales. In January, 1999, we acquired Yeager and U.S. Marketing. In
February, 1999, we acquired Chestnut and MYCO. In July, 1999, we acquired Aaron
Wire and in September, 1999, we acquired Huck and Arrowood. Results of
operations for all companies have been included in our consolidated financial
statements since their respective dates of acquisition. Manufacturing display
racks and store fixtures accounted for approximately 77.7% and 78.4% of our
revenues for the quarters ended April 30, 2000 and 1999, respectively. Product
sales of $19.3 million in the first quarter of fiscal 2001 increased $7.1
million compared to the first quarter of fiscal 2000. Aaron Wire, Huck and
Arrowood contributed $6.5 million during the quarter ended April 30, 2000 with
no corresponding revenue in the quarter ended April 30, 1999.
Gross Profit. Gross profit increased to $9.7 million in the quarter ended April
30, 2000 from $6.9 million in quarter ended April 30, 1999, an increase of
approximately $2.9 million. Of the total increase, $2.5 million was due to our
recently acquired manufacturing subsidiaries. Aaron Wire, Huck and Arrowood
contributed approximately $2.1 million to the manufacturing gross
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<PAGE> 18
profit. Gross profit of the services segment increased from $2.2 million in the
first quarter of fiscal 2000 to $2.6 million in the first quarter of fiscal
2001. Cost of service revenues includes all costs dedicated to generating
service revenues as well as an allocation of the non-dedicated costs, which
include administrative costs. Increased dedicated costs associated with the
accumulation of store-level magazine sales data and ICN (which include hiring
and training information technology personnel) and growth in wage rates
contributed to a decrease in the service gross margin from 53.1% to 47.3%. We
have completed the development stage and presently are in the implementation
stage regarding store-level magazine sales data. Management anticipates that the
gross margin for services will increase as the data begins to be utilized by our
customers.
Selling, General and Administrative Expense. Selling, general and administrative
expense increased slightly to $4.0 million in the quarter ended April 30, 2000
from $3.3 million in the quarter ended April 30, 1999, an increase of $0.7
million, of which Huck's expenses were $0.5 million. Selling, general and
administrative expense as a percentage of revenues decreased from 20.3% in the
first quarter of fiscal 2000 to 16.3% in the first quarter of fiscal 2001.
Operating Income. Operating income increased to $5.7 million in the quarter
ended April 30, 2000 from $3.5 million in the quarter ended April 30, 1999, an
increase of $2.2 million. Operating margins increased from 21.4% to 22.8%.
Interest Expense. The increase of $0.2 million in interest expense is believed
to be reasonable by management considering the increased scope of our
operations.
Income Tax Expense. The effective income tax rates for the quarters ended April
30, 2000 and 1999 were 43.1% and 44.0%, respectively. These rates varied from
the federal statutory rate due to state income taxes and expenses not deductible
for income tax purposes. These non-deductible expenses include goodwill
amortization, meals and entertainment and officers' life insurance premiums.
LIQUIDITY AND CAPITAL RESOURCES
Our primary cash requirements for the service segment are for funding the
Advance Pay Program and for meeting general working capital requirements. Our
primary cash requirements for the display rack and store fixture segment are for
purchasing materials and the cost of labor incurred in the manufacturing
process. Historically, we have financed our business activities through cash
flows from operations, borrowings under available lines of credit and through
the issuance of equity securities.
During the three months ended April 30, 2000, we advanced approximately $21.6
million under the Advance Pay Program. During fiscal 2000, 1999 and 1998, we
advanced approximately $68.9 million, $59.8 million and $41.7 million,
respectively, under the Advance Pay Program. These advances grew by 15.2% from
fiscal 1999 to fiscal 2000 and 43.4% from fiscal 1998 to fiscal 1999. Generally,
the primary source of funding the advances is our credit facility, which is
discussed below. During the quarter ended April 30, 2000, the Program was funded
by borrowings under the revolving credit facility and cash flows from
operations. Collections under the Advance Pay Program are used to pay down any
outstanding balance under the credit facility. Thus, the credit facility is
primarily used to manage the timing of payments and collections under the
Advance Pay Program. Growth of the Advance Pay Program will be monitored and
controlled to ensure that funding will be available either through cash provided
by operations or borrowings under our credit facility.
Net cash used by operating activities of $8.0 million for the three months ended
April 30, 2000 was primarily from the increase in accounts receivable, decreases
in accounts payable and accrued expenses and amounts due to retailers offset by
net income and non cash items of depreciation and amortization. The average
collection period for the three months ended April 30, 2000 was approximately
164 days (considered to be within an acceptable range by management based on the
nature of our business and historical experience). The collection period cannot
be calculated by examining our financial statements because reported revenue
associated with the Advance Pay Program includes only the difference between
what we advance the retailer and what is due from the publisher. The receivable
equals the amount due from the publisher, not the amount of revenue recorded. If
the revenues were reported in a manner consistent with the recording of the
receivables, revenues would have been approximately $21.6 million higher than
reported, or approximately $46.5 million. Dividing the average accounts
receivable into $46.5 million results in an average collection period of
approximately 164 days. Net cash used by operating activities of $1.9 million
for the three months ended April 30, 1999 was primarily from the increase in
accounts receivable, decreases in accounts payable and accrued expenses and
amounts due to retailers offset by net income.
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Net cash used in investing activities was $0.6 million for the three months
ended April 30, 2000 and $18.9 million for the three months ended April 30,
1999. The primary use of cash during the quarter ended April 30, 1999 was for
acquisitions. Net cash provided by financing activities was $8.8 million in the
three months ended April 30, 2000 and $21.2 million in the three months ended
April 30, 1999.
At April 30, 2000, we did not have any commitments for capital expenditures.
Currently, we do not anticipate any significant capital expenditures during
fiscal 2001.
At April 30, 2000, our total long-term debt obligations were approximately $35.7
million. In December 1999, we entered into an unsecured credit agreement with
Bank of America, N.A. to provide for a $50.0 million revolving credit facility.
The revolving credit facility bears interest at a rate equal to the LIBOR plus a
percentage ranging from 1.0% to 2.1% depending on our ratio of funded debt to
earnings before interest, taxes, depreciation and amortization and carries a
facility fee of 1/4% per annum on the difference between $25.0 million and the
average principal amount outstanding under the loan (if less than $25.0 million)
plus 3/8% per annum of the difference between the maximum amount of the loan and
the greater of (i) $25.0 million or (ii) the average principal amount
outstanding under this loan. The revolving credit facility terminates December
31, 2002.
Under the Credit Agreement, we are subject to various financial and operating
covenants. These include (i) requirements that we satisfy various financial
ratios and (ii) limitations on the payment of cash dividends or other
distributions on capital stock or payments in connection with the purchase,
redemption, retirement or acquisition of capital stock.
In connection with the acquisition of MYCO, Inc., the Company assumed MYCO's
Industrial Revenue Bonds (IRB). On January 30, 1995, the City of Rockford issued
$4.0 million of its Industrial Project Revenue Bonds, Series 1995, and the
proceeds were deposited with the Amalgamated Bank of Chicago, as trustee. Bank
of America has issued an unsecured letter of credit for $4.1 million in
connection with the IRB with an initial expiration date of April 20, 2001. The
bonds are secured by the trustee's indenture and the $4.1 million letter of
credit. The bonds bear interest at a variable weekly rate (approximately 80% of
the Treasury Rate) not to exceed 15% per annum. The bonds mature on January 1,
2030. Fees related to the letter of credit are .75% per annum of the outstanding
bond principal plus accrued interest.
We believe that our cash flow from operations together with our revolving credit
will be sufficient to fund our working capital needs and capital expenditures
for the foreseeable future.
NEW ACCOUNTING STANDARDS
In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivatives and
Hedging Activities," which establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. SFAS No. 133 is effective for years beginning after June 15, 2001
and requires comparative information for all fiscal quarters of fiscal years
beginning after June 15, 2001. The Company does not expect the adoption of this
statement to have a significant impact on the results of operations, financial
position or cash flows.
YEAR 2000 COMPLIANCE
The Company successfully completed its Year 2000 project including all
assessment, remediation and testing of all internal systems by December 31,
1999. Subsequent to that date, no adverse developments have occurred which would
affect the Company's business, financial condition or results of operations. All
internal systems have functioned as planned in 2000, and no third party vendors,
suppliers or customers have failed to provide the required levels of service.
The Company will continue to monitor both its systems and its transactions with
third parties during the year and address any problems as needed.
The costs of the Year 2000 project were expensed as incurred. The total cost of
this project through the end of 1999 was approximately $40,000. Hardware
purchases to replace existing computers that were not Y2K compliant accounted
for $39,000 of the total amount. The remaining $1,000 was used to cover travel
expenses for trips to our third party software consultant. The time spent at the
third party consultant was for testing software upgrades to ensure programs were
Y2K compliant. All costs were expensed during fiscal year 2000.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders in the
quarter ended April 30, 2000.
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
See Exhibit Index.
(a) There were no Current Reports on Form 8-K filed during the quarter
ended April 30, 2000.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THE SOURCE INFORMATION MANAGEMENT COMPANY
Date: June 14, 2000 /S/ W. BRIAN RODGERS
--------------------
W. Brian Rodgers
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
------ -----------
10.19 Irrevocable Letter of Credit No. 3022930 dated
February 8, 2000, issued by Bank of America, N.A. in
the amount of $4,073,973 upon the request of
Source-Myco, Inc., a Delaware corporation, and The
Source Information Management Company, a Missouri
corporation, in respect to the Industrial Project
Revenue Bonds, Series 1995, issued pursuant to the
Indenture of Trust dated as of January 1, 1995
between the City of Rockford, Illinois and
Amalgamated Bank of Chicago, as trustee
27.1 Financial Data Schedule (Filed in EDGAR version only)
20
