<PAGE> 1
United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 29, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission File Number 0-21677
PROSOURCE, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or other jurisdiction of 65-0335019
incorporation or organization) (IRS Employer Identification No.)
1500 San Remo Avenue, 3rd Floor, Coral Gables, FL 33146
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305)740-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ( X ) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 8, 1997
Class A Common Stock, $.01 par value 3,400,000 shares
Class B Common Stock, $.01 par value 5,923,956 shares
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PROSOURCE, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. Financial Information......................................... 3
Item 1. Financial Statements.......................................... 3
Condensed Consolidated Balance Sheets
March 29, 1997 and December 28, 1996.......................... 3
Condensed Consolidated Statements of Operations
For the periods ended March 29, 1997 and March 30, 1996....... 4
Condensed Consolidated Statements of Cash Flows
For the periods ended March 29, 1997 and March 30, 1996...... 5
Notes to Condensed Consolidated Financial Statements.......... 6
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................. 8
PART II. Other Information............................................. 11
Item 1. Legal Proceedings............................................. 11
Item 2. Changes in Securities......................................... 11
Item 3. Defaults upon Senior Securities............................... 11
Item 4. Submission of Matters to a Vote of Security Holders........... 11
Item 5. Other Information............................................. 11
Item 6. Exhibits and Reports on Form 8-K.............................. 11
Exhibits........................................................................ 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PROSOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 29, 1997 AND DECEMBER 28, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 28,
1997 1996(1)
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,643 $ 2,763
Accounts receivable, net 212,907 219,340
Inventories 148,689 144,040
Prepaid expenses and other current assets 23,757 21,234
-------- --------
Total current assets 395,996 387,377
Property and equipment, net 53,952 49,637
Intangible assets, net 41,635 42,135
Deferred income taxes, net 18,264 16,100
Other assets 5,478 11,422
-------- --------
Total assets $515,325 $506,671
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $263,670 $257,854
Accrued liabilities 39,999 42,475
Current portion of long-term senior debt -- 1,500
-------- --------
Total current liabilities 303,669 301,829
Long-term senior debt, less current portion 129,000 111,084
Subordinated notes payable 500 500
Other noncurrent liabilities 10,185 14,743
-------- --------
Total liabilities 443,354 428,156
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $.01 par value -- --
Class A Common Stock, $.01 par value 34 34
Class B Common Stock, $.01 par value 59 60
Additional paid-in capital 104,747 105,256
Accumulated deficit (32,915) (26,901)
Accumulated foreign currency translation adjustments 46 66
-------- --------
Total stockholders' equity 71,971 78,515
-------- --------
Total liabilities and stockholders' equity $515,325 $506,671
======== ========
</TABLE>
(1) Condensed from audited financial statements
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
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PROSOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED MARCH 29, 1997 AND
MARCH 30, 1996 (DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------
MARCH 29, MARCH 30,
1997 1996
--------------------------
<S> <C> <C>
Net sales $1,017,062 $968,668
Cost of sales 936,404 895,518
---------- --------
Gross profit 80,658 73,150
Operating expenses 78,098 73,479
Loss on impairment of
long-lived assets -- 15,733
Restructuring charges -- 10,866
---------- --------
Earnings (loss) from operations 2,560 (26,928)
Interest expense (2,600) (4,046)
Interest income 485 426
---------- --------
Earnings (loss) before income
taxes and extraordinary charge 445 (30,548)
Income tax (provision) benefit (197) 11,348
---------- --------
Earnings (loss) before
extraordinary charge 248 (19,200)
Extraordinary charge, net of income
tax benefit of $4,073 in 1997 (6,262) --
---------- --------
Net loss $ (6,014) $(19,200)
========== ========
Net earnings (loss) per share:
Earnings (loss) before extraordinary charge $ .03 $ (3.64)
========== ========
Net loss $ (.64) $ (3.64)
========== ========
Average outstanding shares used
in calculation (in thousands) 9,347 5,280
========== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
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PROSOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED MARCH 29, 1997
AND MARCH 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
-------------------------
MARCH 29, MARCH 30,
1997 1996
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,014) $(19,200)
Adjustments for non-cash items 9,784 2,635
Changes in operating assets and liabilities (1,042) (6,855)
--------- --------
Net cash provided by (used in) operating activities 2,728 (23,420)
--------- --------
Cash flows from investing activities:
Capital expenditures (6,553) (3,659)
--------- --------
Net cash used in investing activities (6,553) (3,659)
--------- --------
Cash flows from financing activities:
Net borrowing from new long-term senior debt 129,000 --
Net borrowing (repayment) of former long-term senior debt (112,584) 26,937
Repayment on long-term debt to Onex -- (1,415)
Fees incurred in conjunction with long-term senior debt (4,181) --
Proceeds from issuance of common stock -- 1,415
Payments to acquire and retire treasury stock (510) (14)
--------- --------
Net cash provided by financing activities 11,725 26,923
--------- --------
Effect of exchange rate changes on cash (20) (5)
--------- --------
Net increase (decrease) in cash and cash equivalents 7,880 (161)
Cash and cash equivalents at beginning of period 2,763 2,325
--------- --------
Cash and cash equivalents at end of period $ 10,643 $ 2,164
========= ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest to Onex $ -- $ 104
========= ========
Interest to others $ 2,640 $ 3,428
========= ========
Income taxes, net of refunds $ 207 $ 52
========= ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
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PROSOURCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) DESCRIPTION OF BUSINESS
ProSource, Inc. (the "Parent") and its subsidiaries (collectively, the
"Company") are engaged in the foodservice distribution business, specializing in
limited-menu quick service and casual dining restaurant customers, primarily
operating in the United States. As of March 29, 1997, the Company distributed to
approximately 14,800 restaurants in such chains as Burger King, Red Lobster,
Olive Garden, Long John Silver's, TGI Friday's, Chick-fil-A, Chili's and Sonic.
The Company is a subsidiary of Onex Corporation (collectively with its
affiliates, "Onex"), a company traded on the Toronto and Montreal stock
exchanges.
The Company operates on a 52-to-53-week accounting year ending on the last
Saturday of each calendar year.
(2) INTERIM FINANCIAL INFORMATION
The accompanying unaudited condensed consolidated financial statements
include, in the opinion of management, all adjustments (consisting only of
normal and recurring adjustments) necessary to present fairly the Company's
consolidated financial position, results of operations and cash flows. Operating
results for the thirteen weeks ended March 29, 1997 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 27, 1997 due, in part, to seasonal fluctuations in the Company's
business and changes in economic conditions.
The accompanying condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in the annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.
These condensed consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Annual Report for the fiscal year ended December 28, 1996.
(3) EXTRAORDINARY CHARGE
In March 1997, the Company entered into five-year loan agreements
aggregating $225 million with a large financial institution to replace its
existing credit facility. The agreements, which consist of a $150 million
accounts receivable securitization facility and a $75 million inventory
revolving-credit facility, provide the Company with greater financial
flexibility as well as a lower cost of borrowing. The accounts receivable
securitization facility bears interest, at the Company's option, of the prime
rate or one-or-two month LIBOR plus 0.55%. The interest rate on the inventory
facility is, at the Company's option, either prime plus up to 1% or LIBOR plus
0.75% to 2%, dependent on certain financial ratios.
6
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PROSOURCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
ProSource Receivables Corporation ("PRC"), a subsidiary within the
consolidated group, is the legal borrower for the accounts receivable
securitization facility. The creditor for this facility has security interests
in PRC's assets (consisting primarily of accounts receivable) and is entitled to
be satisfied by such assets prior to equity holders.
In connection with the early extinguishment of the previous credit
facility, the Company recorded a pre-tax extraordinary charge of $10.3 million
($6.3 net of tax or $.67 per share) in the first quarter of 1997. This charge
reflected the write-off of deferred financing costs of $6.3 million, prepayment
penalties of $2.7 million and $1.3 million in costs associated with the
termination of interest-rate protection agreements.
(4) SUBSEQUENT EVENT
On April 1, 1997 the Company discontinued its distribution services to
Arby's restaurants. As of March 29, 1997, the Company was serving approximately
2,500 Arby's restaurants. Net sales generated from Arby's included in the
accompanying statements of operations for the first quarter of 1997 and 1996
were approximately $98 million and $95 million, respectively. In the fourth
quarter of 1996, the Company accrued approximately $10.6 million of costs
associated with the termination of this agreement.
(5) CONTINGENCIES
The Company and its subsidiaries are parties to various legal actions
arising in the ordinary course of business. Management believes that the outcome
of such cases will not have a material adverse effect on the consolidated
results of operations or the financial position of the Company.
7
<PAGE> 8
ITEM 2.
PROSOURCE, INC.
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 components
of the Company's consolidated statements of operations expressed as a percentage
of net sales.
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
-----------------------
MARCH 29, MARCH 30,
1997 1996
---- ----
<S> <C> <C>
Net sales 100.00% 100.00%
Cost of sales 92.07 92.45
------ ------
Gross profit 7.93 7.55
Operating expenses 7.68 7.59
Loss on impairment of long-lived assets -- 1.62
Restructuring charges -- 1.12
------ ------
Earnings (loss) from operations .25 (2.78)
Interest expense, net (.21) (.37)
------ ------
Earnings (loss) before income taxes
and extraordinary charge .04 (3.15)
Income tax (provision) benefit (.02) 1.17
------ ------
Earnings (loss) before extraordinary
charge .02 (1.98)
Extraordinary charge, net (.62) --
------ ------
Net earnings (loss) (.60)% (1.98)%
====== ======
</TABLE>
8
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PROSOURCE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
THREE MONTHS ENDED MARCH 29, 1997 COMPARED TO THREE MONTHS ENDED MARCH 30, 1996
Net sales increased 5.0% to $1,017.1 million in the three month (13 weeks)
fiscal period ended March 29, 1997 (the "1997 first quarter") from $968.7
million in the three month (13 weeks) fiscal period ended March 30, 1996 (the
"1996 first quarter"). The increase in net sales is primarily attributable to
increased sales volume at existing restaurants.
Gross profit increased 10.3% to $80.7 million in the 1997 first quarter
compared to $73.2 million in the 1996 first quarter due to the increase in net
sales. As a percentage, gross profit increased from 7.6% to 7.9% due to an
increase in revenues from value-added services.
Operating expenses increased 6.3% to $78.1 million in the 1997 first
quarter compared to $73.5 million in the 1996 first quarter due to the increase
in net sales. As a percentage of net sales, operating expenses were slightly
higher than in the 1996 first quarter.
Earnings from operations in the 1997 first quarter were $2.6 million as
compared to a loss in the 1996 first quarter of $26.9 million. The 1996 first
quarter loss from operations included restructuring charges of $10.9 million
and a loss on impairment in value of long-lived assets of $15.7 million, both
of which were related to the Company's plan to consolidate and integrate its
corporate and network operations. The loss from operations excluding
restructuring and impairment losses in the 1996 first quarter was $0.3 million.
The improvement in earnings from operations in the 1997 first quarter excluding
the effect of the restructuring and impairment losses reflects the higher gross
profit (derived primarily from value-added services) without a corresponding
percentage increase in operating expenses.
Net interest expense decreased 41.6% to $2.1 million in the 1997 first
quarter from $3.6 million in the 1996 first quarter. Net interest expense as a
percentage of net sales decreased 43.2% from 0.37% to 0.21%. The decrease in net
interest expense was primarily as a result of the prepayment of outstanding
indebtedness with the proceeds of the Company's initial public offering on
November 15, 1996.
The income tax provision in the 1997 first quarter was $0.2 million
compared to an income tax benefit in the first quarter of 1996 of $11.3 million.
The change in the tax provision was attributed to the Company's pre-tax profit
in 1997 compared to a pre-tax loss in 1996. The effective rates of the
Company's income tax provision (expressed as a percentage of pre-tax earnings
or loss) were 44.3% for the 1997 first quarter and 37.1% for the 1996 first
quarter, which rates reflect, after considering the effect of permanent
differences, the anticipated annual effective rates for the respective fiscal
years.
The extraordinary charge in the 1997 first quarter relates to the early
extinguishment of the Company's credit facility which resulted in a charge of
$10.3 million, net of the related tax benefit of $4.1 million. See "Liquidity
and Capital Resources."
9
<PAGE> 10
PROSOURCE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has financed its operations and growth primarily
with cash flow from operations, borrowings under its credit facilities,
operating leases and normal vendor trade credit terms. The Company's cash flow
from operations was $2.7 million in the 1997 first quarter compared to cash used
in operating activities of $23.4 million in the 1996 first quarter. The
increased cash flow from operations in the 1997 first quarter was primarily
attributable to a timing difference in the payment of trade accounts payable
between the 1997 and 1996 quarters.
The Company anticipates capital expenditures of $20 to $30 million in
1997 in connection with the implementation of its new distribution network,
including the expansion of warehousing facilities to accommodate expected
growth, and for continued investment in computer systems. There can be no
assurance that such capital expenditures will not be higher than currently
anticipated. The Company intends to finance capital expenditures with cash
provided from operations, borrowings under its credit facilities and through
operating leases.
Cash used in investing activities was $6.6 million in the 1997 first
quarter, all of which related to capital expenditures, primarily for the
distribution network ($2.8 million) and computer systems upgrades ($2.0
million). Cash used in investing activities was $3.7 million in the 1996 first
quarter, all of which related to capital expenditures (primarily for cart
delivery equipment and computer systems upgrades).
In March 1997, the Company entered into five-year loan agreements
aggregating $225 million with a large financial institution to replace its
existing credit facility. The agreements consist of a $150 million accounts
receivable securitization facility and a $75 million inventory revolving-credit
facility. The accounts receivable securitization facility bears interest, at the
Company's option, of the prime rate or one-or-two month LIBOR plus 0.55%. The
interest rate on the inventory facility is, at the Company's option, either
prime plus up to 1% or LIBOR plus 0.75% to 2%, dependent on certain financial
ratios. The credit facilities are secured by liens on substantially all of the
Company's assets and contain various restrictions on, among other things, the
Company's ability to pay dividends and dispose of assets.
The Company believes that the combination of cash flow generated from
operations and borrowings available under its credit facilities are sufficient
to satisfy its anticipated working capital needs for at least 12 months.
Management may determine that it is necessary or desirable to obtain financing
for growth through additional bank borrowings or the issuance of new debt or
equity securities.
The Company is a holding company with no independent operations or assets
other than investment in its operating subsidiaries, and, as such, is dependent
on its operating subsidiaries to obtain cash flow. The Company's loan agreement
includes certain restrictive covenants which limit the flow of funds from the
Company's subsidiaries to the parent company. Such covenants are not expected to
have a material effect on the ability of the parent to meet its cash
obligations.
10
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PROSOURCE, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its subsidiaries are parties to various legal actions
arising in the ordinary course of business. Management believes that
the outcome of such cases will not have a material adverse effect on
the consolidated results of operations or the financial position of
the Company.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Forward Looking Statements
This quarterly report contains certain forward looking statements
within the meaning of Section 21E of the Securities Exchange Act of
1934. Actual results could differ materially from those projected in
such forward looking statements. Results are affected by economic
trends in the quick service and casual dining segments of the
restaurant industry, competitive conditions in the foodservice
industry, adverse developments affecting the largest chains serviced
by the Company or a decision by a major customer to revoke its
approval of the Company as a distributor, developments such as
unforeseen costs and expenses, inflation and complications arising
from the complexity of the Company's new distribution network, and
the Company's continued ability to make acquisitions of businesses on
satisfactory terms.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 ProSource, Inc. 1997 Directors Stock Option Plan
10.2 ProSource, Inc. 1997 Employee Stock Purchase Plan
11.1 Computation of Earnings Per Share
27.1 Financial Data Schedule
11
<PAGE> 12
(b) Reports on Form 8-K
No current report on Form 8-K was filed by the Company during
the fiscal quarter ended March 29, 1997.
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ProSource, Inc.
Date: May 12, 1997 /s/ William F. Evans
---------------------------------------------------
William F. Evans
Executive Vice President, Chief Financial Officer
Date: May 12, 1997 /s/ Marcelino Iturrey
---------------------------------------------------
Marcelino Iturrey
Vice President-Controller, Chief Accounting Officer
13
<PAGE> 1
EXHIBIT 10.1
PROSOURCE, INC.
1997 DIRECTORS STOCK OPTION PLAN
SECTION 1. PURPOSE
The purposes of the Plan are to assist the Company in (i) promoting
a greater identity of interests between the Company's stockholders and its
directors who are not employees of the Company or Onex, and (ii) attracting and
retaining directors by affording them an opportunity to share in the future
success of the Company.
SECTION 2. DEFINITIONS
"Act" shall mean the Securities Exchange Act of 1934, as amended.
"Board" shall mean the Board of Directors of the Company.
"Change of Control" shall mean the occurrence of any of the
following events:
(i) An acquisition, after the effective date of the Plan, by any
individual, entity or group (within the meaning of Section 13(d) (3) or 14(d)(2)
of the Act) (a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Act) of 20% or more of the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
excluding, however, the following: (1) any acquisition directly from the
Company, other than an acquisition pursuant to the conversion, exchange or
exercise, as the case may be, of options, warrants or other securities
convertible into or exchangeable or exercisable for Common Stock or voting
securities of the Company, unless the security being so converted, exchanged or
exercised was itself acquired from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (4) any acquisition by any Person pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection (iii) of this definition;
or
(ii) A change in the composition of the Board such that the
individuals who, as of the effective date of the Plan, constitute the Board
(such Board shall be hereinafter referred to as the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided, however,
for purposes of this definition, that any individual who becomes a member of the
Board subsequent to such effective date, whose election or nomination for
election by the Company's stockholders was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the Incumbent
Board; but, provided further, that any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Act) or other actual or threatened
<PAGE> 2
solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so considered as a member of the Incumbent Board; or
(iii) The approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Corporate Transaction");
excluding, however, any Corporate Transaction pursuant to which (1) all or
substantially all of the individuals and entities who are the beneficial owners,
respectively, of the then outstanding shares of Company Common Stock (the
"Outstanding Company Common Stock") and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the company resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (2) no Person (other than the Company, any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or such corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed with respect to the
Company prior to the Corporate Transaction and (3) individuals who were members
of the Incumbent Board will constitute at least a majority of the board of
directors of the corporation resulting from such Corporate Transaction; or
(iv) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company;
Notwithstanding the foregoing, so long as Onex beneficially owns more than 50%
of the combined voting power of the Outstanding Company Voting Securities, no
Change of Control shall be deemed to have occurred.
"Change of Control Price" shall mean the highest cash purchase price
per share of Class A Common Stock paid in a Corporate Transaction.
"Class A Common Stock" shall mean the Class A Common Stock, par
value $0.01 per share, of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations thereunder.
2
<PAGE> 3
"Common Stock" shall mean, collectively, the Company's shares of
Class B Common Stock, par value $.01 per share, and Class A Common Stock.
"Company" shall mean ProSource, Inc., a Delaware corporation.
"Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of performing
his customary and usual duties as a director of the Company, or any medically
determinable illness or other physical or mental condition resulting from a
bodily injury, disease or mental disorder which is expected to be permanent and
continuous in nature.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations thereunder.
"Fair Market Value" of a share of Class A Common Stock shall mean
the average closing price of shares of the Class A Common Stock for the five
trading days immediately preceding the applicable date on (i) the Nasdaq
National Market, if the Class A Common Stock is then listed on such exchange,
(ii) if the Class A Common Stock is not listed on the Nasdaq National Market, on
the principal national stock exchange on which the Class A Common Stock is then
listed or (iii) if not listed on any national exchange, as reported by NASDAQ.
If the Class A Common Stock is not then listed on any national stock exchange or
reported by NASDAQ, then the Fair Market Value shall be determined in any
reasonable manner approved by the Committee.
"Fees" shall mean the annual retainer fee payable to a Participant
in connection with his or her service on the Board for any Plan Fiscal Year of
the Company.
"Onex" shall mean, collectively, Onex Corporation and its
affiliates.
"Participant" shall mean any person who has been granted a Stock
Option under the Plan.
"Plan" shall mean the ProSource, Inc. 1997 Directors Stock Option
Plan.
"Plan Fiscal Year" shall mean (i) the period beginning upon
effectiveness of the Plan and ending on the December 31 immediately following
and (ii) thereafter, each calendar year during which the Plan is effective.
"Stock Option" shall mean a non-qualified stock option, which is
further defined as any right to acquire Class A Common Stock which does not
qualify as an "incentive stock option" as defined under the Code.
3
<PAGE> 4
SECTION 3. ELIGIBILITY
Each member of the Board who is not an employee of the Company, any
subsidiary of the Company or Onex.
SECTION 4. SHARES SUBJECT TO THE PLAN
The number of shares of Class A Common Stock which shall be
available for use under the Plan shall be 100,000, subject to adjustment
pursuant to Section 12 hereunder. The shares issued under the Plan may be
authorized and unissued shares or issued shares heretofore or hereafter acquired
and held as treasury shares.
SECTION 5. DURATION OF PLAN
Unless earlier terminated pursuant to Section 10 hereof, this Plan
shall automatically terminate on, and no grants or elections may be made after
December 31, 2007.
SECTION 6. ADMINISTRATION
The Plan shall be administered under the direction of the Board or
any committee thereof so designated by the Board; provided, however, that the
Board or any such committee shall have no authority to administer the Plan with
respect to selection of Participants under the Plan or the timing, pricing or
amounts of any grants.
SECTION 7. STOCK OPTIONS IN LIEU OF FEES
(a) Each Participant who, prior to the first day of any Plan Fiscal
Year, files with the Company an irrevocable election (an "Election") concerning
the Fees to be earned in such Plan Fiscal Year, may receive in lieu of all or
any portion of such Fees (but, with respect to any such portion, only in
increments of 25% or a multiple thereof (the "Election Percentage")), as so
designated by the Participant, a Stock Option exercisable for a number of shares
of Class A Common Stock equal to the Fees payable in such Plan Fiscal Year
divided by $4.00 (or, if so designated by the Participant, such lesser number of
shares equal to such amount multiplied by the Election Percentage). With respect
to Fees payable in the Plan Fiscal Year in which the Plan becomes effective, the
election to receive a Stock Option in lieu of Fees may be made at any time prior
to such effectiveness. In the case of any Participant elected to the Board
during a Plan Fiscal Year, such Participant's Election shall be filed with the
Company prior to such Participant's election as a director.
(b) The exercise price for such Stock Option shall be equal to $4.00
per share below the Fair Market Value of a share of Class A Common Stock on the
date of grant; provided, however, that in no event shall the exercise price of
such Stock Option be less than 50% of the Fair Market Value of a share of Class
A Common Stock on the date of the grant.
4
<PAGE> 5
(c) The date of grant of a Stock Option pursuant to this Section 7
shall be the date of the annual meeting of stockholders of the Corporation.
(d) A Stock Option granted pursuant to this Section 7 shall vest and
be exercisable on the day prior to the date of the next annual meeting of
stockholders after the date of grant (the "Vesting Date"). In the event that a
Participant is not a member of the Board on the Vesting Date, any Stock Option
held by the Participant which has not become vested and exercisable as of such
time shall expire without vesting.
(e) The term of exercisability for a Stock Option granted under this
Section 7 shall be ten (10) years, subject to Section 12.
(f) The remaining terms and conditions of each such Stock Option
shall be as set forth in this Plan and in the form of Stock Option Agreement
used in connection with this Plan.
SECTION 8. TRANSFERABILITY
Stock Options may not be assigned, transferred, pledged or
hypothecated, and shall not be subject to execution, attachment or similar
process, other than by will or by operation of applicable laws of descent and
distribution or pursuant to a domestic relations order or qualified domestic
relations order as such terms are defined by the Code or ERISA.
SECTION 9. AMENDMENT
The Plan may be amended by the Board; provided, however, that (a) no
amendment shall be made that would impair prior rights of a Participant without
his or her consent; (b) no such amendment shall be effective without the
approval of a majority of the votes cast by holders of shares of Common Stock
present or represented, and entitled to vote, at a meeting held for such
purpose, if such amendment would (i) materially increase the benefits accruing
to Participants under the Plan, (ii) materially increase the number of
securities which may be issued under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan; and (c) no
amendment shall be made which would prevent a Participant's participation in the
Plan from being entitled to an exemption from Section 16(b) of the Act.
SECTION 10. TERMINATION
The Plan may be terminated at any time by the Board or by the
approval by a majority of the votes cast by holders of shares of Common Stock
present or represented, and entitled to vote, at a meeting held for such
purpose.
SECTION 11. WITHHOLDING TAXES
5
<PAGE> 6
No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal income tax
purposes with respect to exercise of any Stock Option granted under the Plan,
the Participant shall pay to the Company, or make arrangements satisfactory to
the Company regarding the payment of, any Federal, state, local or foreign taxes
of any kind required by law to be withheld. Such withholding obligations may be
settled with Class A Common Stock, including Class A Common Stock that is
received upon the exercise of the Stock Option that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional upon such payment or arrangements, and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Participant. The Company may establish such
procedures as it deems appropriate, including the making of irrevocable
elections or the timing of the use of Class A Common Stock, for the settlement
of its withholding obligations.
SECTION 12. TERMINATION OF STOCK OPTION
In connection with a Participant's termination of membership on the
Board, a Stock Option shall terminate at the earliest of the following
circumstances:
(a) The date that is three (3) months after the Participant's
termination, for any reason other than as provided in paragraph (ii), (iii) or
(iv) or below;
(b) The date that is twelve (12) months after termination due to
death or Disability, but in no event later than the date the Stock Option would
have expired under Section 7(e); and
(c) The date the Participant is terminated for Cause.
SECTION 13. EFFECT OF CHANGE OF CONTROL
Notwithstanding any other provision of the Plan to the contrary, in
the event if a Change of Control, any Stock Options outstanding and not then
exercisable and vested as of the date such Change of Control is determined to
have occurred, shall become fully exercisable and vested to the full extent of
the original grant. During the 60-day period from and after a Change of Control
(the "Exercise Period"), a Participant who holds a Stock Option shall have the
right, in lieu of the payment of the exercise price for the shares of Class A
Common Stock being purchased under the Stock Option and by giving notice to the
Company, to elect (within the Exercise Period) to surrender all or part of a
Stock Option to the Company and to receive cash, within 30 days of such notice,
in an amount equal to the amount by which the Change of Control Price per share
of Common Stock on the date of such election exceeds the exercise price per
share of Class A Common Stock under the Stock Option multiplied by the number of
shares of Class A Common Stock granted under the Stock Option as to which the
right granted under this Section shall have been exercised.
SECTION 14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
6
<PAGE> 7
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, extraordinary distribution with
respect to Class A Common Stock or other change in corporate structure affecting
the Class A Common Stock, the Board may make such substitution or adjustments in
the aggregate number and kind of shares reserved for issuance under the Plan, in
the number, kind and exercise price of shares subject to outstanding Stock
Options to be granted under the Plan and/or such other substitution or
adjustments in the consideration receivable upon exercise as it may determine to
be appropriate in its sole discretion; provided, however, that the number of
shares subject to any Stock Option shall always be a whole number.
SECTION 15. REGULATORY MATTERS
The Plan is intended to be construed so that participation in the
Plan will be exempt from Section 16(b) of the Act, pursuant to Rule 16b-3
promulgated thereunder, as may be further amended or interpreted by the
Securities and Exchange Commission. In the event that any provision of the Plan
shall be deemed not to be in compliance with the Rules in order to enjoy the
exemption from the Act, such provision shall be deemed of no force or effect and
the remaining provisions of the Plan shall remain in effect.
SECTION 16. EFFECTIVENESS OF PLAN
The Plan shall become effective as of the date its adoption by the
Board is approved by a majority of the votes cast by holders of shares of Common
Stock present or represented, and entitled to vote, at a meeting held for such
purpose.
7
<PAGE> 1
EXHIBIT 10.2
PROSOURCE, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
Section 1. Establishment and Purpose
1.1 Establishment. ProSource, Inc., a Delaware corporation (hereinafter
called "ProSource" or the "Company"), hereby establishes a stock purchase plan
for employees as described herein, which shall be known as the PROSOURCE, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN (the "Plan").
1.2 Purpose. The purpose of the Plan is to provide eligible employees the
opportunity to purchase the Company's common stock at a favorable price by means
of payroll deductions. It is intended that the Plan qualify as an employee stock
purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended
(the "Code") and all provisions hereof shall be construed in a manner to so
comply.
Section 2. Definitions
2.1 Definitions. Whenever used hereinafter, the following terms shall have
the meanings set forth below:
(a)"Affiliate" means any corporation, a majority of the voting stock of
which is directly or indirectly owned by ProSource, and which has been
authorized by the Board to participate in the Plan.
(b)"Base Earnings" means a Participant's regular rate of pay and does
not include overtime pay, bonuses, or amounts payable under employee
benefit plans.
(c)"Board" means the Board of Directors of ProSource.
(d)"Committee" means the Equity Compensation Committee of the Board.
(e)"Eligible Employee", with respect to any Plan Year, means an
employee (including officers and directors who are also employees) of
ProSource or any Affiliate who have been employed by the Company or an
Affiliate continuously for at least three months prior to July 1 of such
Plan Year, other than those employees whose customary employment is 20
hours or less per week or not more than five months during any calendar
year.
(f)"Fair Market Value" of a share of Stock means the average closing
price of shares of the Stock for the five trading days immediately
preceding the applicable date on (i) the New York Stock Exchange, if the
Stock is then listed on such exchange, (ii) if the Stock is not listed on
the New York Stock Exchange, on the principal national stock exchange on
which the Stock is then listed or (iii) if not listed on any national
exchange, as reported
<PAGE> 2
by NASDAQ. If the Stock is not then listed on any national stock exchange
or reported by NASDAQ, then the Fair Market Value shall be determined in
any reasonable manner approved by the Committee.
(g)"Participant" means an Eligible Employee who has elected to
participate in the Plan pursuant to Section 4.1.
(h)"Plan Year" means the twelve-month period beginning each July 1.
(i)"Stock" means the Class A Common Stock of ProSource, par value $.01
per share.
Section 3. Stock Subject to the Plan
3.1 Number. The total number of shares of Stock to be offered for sale under
this Plan shall not exceed 300,000 shares in the aggregate. These shares may
consist, in whole or in part, of authorized but unissued Stock or treasury Stock
not reserved for any other purpose.
3.2 Adjustment in Capitalization. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, extraordinary
distribution with respect to Stock or other change in corporate structure
affecting the Stock, the Committee may make such substitution or adjustments in
the aggregate number and kind of shares reserved for issuance under the Plan and
the price payable therefor and/or such other substitution or adjustments in the
shares reserved for issuance under the Plan as it may determine to be
appropriate in its sole discretion; provided, however that the number of shares
of Stock issuable under the Plan shall always be a whole number.
Section 4. Participation
4.1 Participation. Any employee who is an Eligible Employee on June 1, 1997
may elect to become a Participant as of July 1, 1997. Any employee who is an
Eligible Employee on June 1 of any subsequent year, may elect to become a
Participant as of the first day of the next Plan Year. Any election to
participate shall be made in the form and at the time provided in rules adopted
by the Committee from time to time. Notwithstanding anything herein to the
contrary, in no event shall an Eligible Employee be granted the right to
purchase Stock under the Plan if after the purchase such Eligible Employee would
own capital stock of ProSource possessing 5% or more of the total combined
voting power or value of all classes of capital stock of ProSource. Also, an
Eligible Employee may not become or remain a Participant at any time when such
Eligible Employee owns capital stock possessing 5% or more of the total combined
voting power or value of all classes of capital stock of ProSource. For purposes
of this subsection, the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of an individual, and capital stock which an
employee may purchase under outstanding options shall be treated as capital
stock owned by the employee.
2
<PAGE> 3
Section 5. Purchase of Stock
5.1 Contributions for Purchase of Stock. At the time an Eligible Employee
elects to become a Participant in the Plan, such Eligible Employee shall elect
to contribute to the Plan by authorizing payroll deductions in an amount (in
increments of 1%) not less than 1%, and not more than 15%, of Base Earnings.
Unless otherwise elected by the Participant, the rate of withholding such
Participant has elected will remain in effect for subsequent Plan Years. A
Participant at any time may reduce the rate of withholding or discontinue
withholding entirely. A Participant may not increase the rate of withholding
except in connection with an election with respect to a subsequent Plan Year. If
a Participant elects to discontinue withholding, he or she may resume
withholding only as of the first day of any subsequent Plan Year. Any election
or direction under this section shall be made in writing in the form and
pursuant to rules adopted by the Committee from time to time, and shall become
effective at a time specified by the Committee.
5.2 Disposition of Contributions. Amounts withheld pursuant to Section 5.1
shall be held by a Participant's employer until the end of the Plan Year in
which withheld, except that:
(a) A Participant who elects to discontinue withholding may elect at
any time to withdraw all or any part of the amounts previously withheld.
Any such withdrawal shall be paid to the Participant by his or her
employer in cash, with interest, if any, on such amounts.
(b) Any portion of the amounts withheld which is not paid to the
Participant in cash pursuant to this Section shall be automatically
applied to purchase Stock under Section 5.3.
(c) Any withdrawal election under this Section shall be made in writing
in the form and pursuant to rules adopted by the Committee from time to
time.
5.3 Purchases of Stock. Amounts withheld from a Participant's pay during the
Plan Year (except any amounts refunded to such Participant in cash under Section
5.2) shall be used as of the last business day of such Plan Year to purchase
Stock from ProSource for a price equal to 85% of the Fair Market Value of a
share of Stock on the first business day of such Plan Year. Only whole shares
shall be purchased, and any amount remaining that is not sufficient to purchase
a whole share shall be carried over to the next Plan Year for the account of the
Participant.
5.4 Issuance of Stock Certificates. As soon as practicable after the close of
the Plan Year, ProSource shall, without Stock issue or transfer taxes to the
Participant, deliver to the Participant a certificate or certificates for the
requisite number of shares of Stock purchased under the Plan registered in the
name of the Participant or such other name or names as the Participant may
direct.
3
<PAGE> 4
5.5 Privileges of a Stockholder. A Participant shall not have stockholder
privileges with respect to any Stock until the date of issuance of a certificate
to such Participant for such Stock.
5.6 Limitation on Stock Purchases. As required by Section 423 of the Code, no
Participant may purchase Stock under the Plan and all other employee stock
purchase plans of ProSource (including any parent or subsidiary corporation, to
the extent provided in Section 423) at a rate in excess of $25,000 in Fair
Market Value of such Stock (determined as of the first Business Day of the Plan
Year with respect to which Stock is granted) for each calendar year in which any
such right to purchase Stock granted to such Participant is outstanding at any
time. If a Participant is not entitled to purchase Stock under any other such
plan during a Plan Year, the total number of shares purchased under this Plan
for the Participant with respect to that Plan Year may not exceed $25,000
divided by the Fair Market Value of a share of Stock on the first day of such
Plan Year.
Section 6. Termination of Employment
6.1 Termination of Employment. No shares of Stock may be purchased by a
Participant pursuant to this Plan with respect to a Plan Year if his or her
employment terminates for any reason prior to the end of such Plan Year. Any
amount withheld from the pay of a Participant during the Plan Year in which his
or her employment terminates shall be paid to such Participant in cash, with
interest, if any, on such amount promptly after such Participant's termination
of employment. If a Participant's death occurs at any time during a Plan Year,
any amount withheld from the pay of such Participant shall be paid to the
Participant's personal representative in cash, with interest, if any, on such
amount and no portion thereof shall be applied to purchase Stock under the Plan.
Section 7. Rights of Employees; Participants
7.1 Employment. Nothing in this Plan shall interfere with or limit in any way
the right of ProSource or any Affiliate to terminate any employee's, Eligible
Employee's, or Participant's employment at any time, nor confer upon any such
person any right to continue in the employ of ProSource or any of its
Affiliates.
7.2 Nontransferability. No right or interest of any Participant in the Plan
shall be assignable or transferable, or subject to any lien, directly or
indirectly, by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge, or bankruptcy. Any attempted assignment,
transfer, pledge or other disposition of any rights under the Plan shall be null
and void, and shall automatically terminate all rights of a participant under
the Plan.
4
<PAGE> 5
Section 8. Administration
8.1 The Committee. (a) The Plan shall be administered by the Committee.
(b) The Committee is vested with full authority to make, administer, and
interpret such equitable rules and regulations regarding the Plan as it may deem
advisable. The Committee's determination as to the interpretation and operation
of the Plan, or any right granted under it, shall be final and conclusive,
unless otherwise determined by the Board. No member of the Board or the
Committee shall be liable for any action or determination made in good faith by
such member with respect to the Plan or any option granted under it.
(c) Prior to the commencement of any Plan Year, the Committee may prescribe
rules to apply to such Plan Year including, but not limited to, setting forth a
limit on the aggregate number of shares of Stock which may be purchased under
the Plan during the Plan Year, and the method for reducing Participants'
elections if such limit would otherwise be exceeded.
(d) The Committee may act by a majority vote at a meeting of the Committee or
by a document signed by all of the members of the Committee.
Section 9. Amendment, Modification and
Termination of Plan
9.1 Amendment, Modification, and Termination of the Plan. The Board or the
Committee, at any time may terminate, and at any time and from time to time and
in any respect, may amend or modify the Plan, provided, however, that no such
action of the Board, or the Committee, without approval of the stockholders of
ProSource, may: (a) Increase the total amount of Stock which may be offered
under the Plan, except as provided in Section 3.2 of the Plan; (b) withdraw the
administration of the Plan from the Committee; or (c) permit any person, while a
member of the Committee, to be eligible to participate in the Plan.
Section 10. Requirements of Law
10.1 Requirements of Law. The issuance of Stock and the payroll deductions
pursuant to this Plan shall be subject to all applicable laws, rules, and
regulations, and shares of Stock shall not be issued nor cash payments made
except upon approval of proper government agencies of stock exchanges as may be
required.
10.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware,
without regard to the conflicts of law provisions thereof.
5
<PAGE> 6
Section 11. Effective Date of the Plan
11.1 Effective Date. Subject to approval by the stockholders of ProSource,
the Plan shall be effective as of July 1, 1997.
11.2 Duration of the Plan. Unless the Board terminates the Plan earlier, the
Plan shall remain in effect until the earlier of the date upon which all Stock
subject to it shall be distributed pursuant to the Plan and June 30, 2002.
6
<PAGE> 1
Exhibit 11.1
PROSOURCE, INC.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
FOR THE PERIODS ENDED MARCH 29, 1997
AND MARCH 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------
MARCH 29, MARCH 30,
1997 1996
-------- --------
<S> <C> <C>
Net loss applicable to common stock $(6,014) $(19,200)
======= ========
Weighted average common shares outstanding 9,347 5,280
Additional shares assuming exercise of stock
option and warrants -- --
------- --------
Shares used for primary earnings per share 9,347 5,280
======= ========
Earnings per share:
Net earnings (loss) $ (0.64) $ (3.64)
======= ========
</TABLE>
Earnings-per-share has been computed using the weighted average number of common
and common equivalent shares outstanding during each period. Common-equivalent
shares (consisting of options and warrants) have been excluded during periods of
net loss since they would be antidilutive.
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF PROSOURCE, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-27-1997 DEC-28-1996
<PERIOD-END> MAR-29-1997 DEC-28-1996
<CASH> 10,643,000 2,763,000
<SECURITIES> 0 0
<RECEIVABLES> 216,944,000 221,674,000
<ALLOWANCES> 4,037,000 2,334,000
<INVENTORY> 148,689,000 144,040,000
<CURRENT-ASSETS> 395,996,000 387,377,000
<PP&E> 78,319,000 77,131,000
<DEPRECIATION> 24,367,000 27,494,000
<TOTAL-ASSETS> 515,325,000 506,671,000
<CURRENT-LIABILITIES> 303,669,000 301,829,000
<BONDS> 129,500,000 113,084,000
0 0
0 0
<COMMON> 93,000 94,000
<OTHER-SE> 71,878,000 78,421,000
<TOTAL-LIABILITY-AND-EQUITY> 515,325,000 506,671,000
<SALES> 1,017,062,000 4,125,054,000
<TOTAL-REVENUES> 1,017,062,000 4,125,054,000
<CGS> 936,404,000 3,806,811,000
<TOTAL-COSTS> 936,404,000 3,806,811,000
<OTHER-EXPENSES> 78,098,000 345,494,000
<LOSS-PROVISION> 380,000 1,682,000
<INTEREST-EXPENSE> 2,600,000 14,824,000
<INCOME-PRETAX> 445,000 (40,381,000)
<INCOME-TAX> (197,000) 15,410,000
<INCOME-CONTINUING> 248,000 (24,971,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> (6,262,000) (610,000)
<CHANGES> 0 0
<NET-INCOME> (6,014,000) (24,361,000)
<EPS-PRIMARY> (.64)<F1> (4.19)<F1>
<EPS-DILUTED> (.64)<F1> (4.19)<F1>
<FN>
<F1>Earnings-per-share has been computed using the weighted average number of
common and common equivalent shares outstanding during each period.
Common-equivalent shares (consisting of options and warrants) have been
excluded during periods of net loss since they would be antidilutive.
</FN>
</TABLE>
