SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1999
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 0-27378
NuCo2 Inc.
(Exact Name of Registrant as Specified in Its Charter)
Florida 65-0180800
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2800 Southeast Market Place, Stuart, FL 34997
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (561) 221-1754
N/A
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
Indicate by check / / 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 March 31, 1999
----- -----------------------------
Common Stock, $.001 par value 7,216,664 shares
<PAGE>
NUCO2 INC.
INDEX PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 1999 and 3
June 30, 1998
Consolidated Statements of Operations for the Three Months
Ended March 31, 1999 and March 31, 1998 4
Consolidated Statements of Operations for the Nine Months
Ended March 31, 1999 and March 31, 1998 5
Consolidated Statement of Shareholders' Equity for the Nine
Months Ended March 31, 1999 6
Consolidated Statements of Cash Flows for the Nine Months
Ended March 31, 1999 and March 31, 1998 7
Notes to Consolidated Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 12
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES 18
ABOUT MARKET RISK
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
SIGNATURES 19
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
NUCO2 INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1998
-------------- -------------
(unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,207,062 $ 336,510
Trade accounts receivable; net of allowance for doubtful
accounts of $759,104 and $395,491, respectively 6,669,343 4,457,505
Inventories 228,871 211,027
Prepaid expenses and other current assets 1,233,795 262,437
----------- ------------
Total current assets 9,339,071 5,267,479
----------- ------------
Property and equipment, net 97,154,766 85,435,933
----------- ------------
Other assets:
Goodwill, net 21,965,708 22,891,846
Deferred charges, net 1,791,051 2,004,259
Customer lists, net 3,124,030 3,963,588
Restrictive covenants, net 2,032,760 2,275,964
Deferred lease acquisition costs, net 3,086,064 2,475,139
Deposits 232,468 184,059
------------ ------------
32,232,081 33,794,855
------------ ------------
$138,725,918 $124,498,267
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
<S> <C> <C>
Current maturities of long-term debt $ 124,155 $ 139,251
Accounts payable 6,994,963 6,596,722
Accrued expenses 176,600 323,254
Accrued interest 1,955,039 844,153
Accrued payroll 506,045 476,458
Other current liabilities 35,499 7,179
------------ ------------
Total current liabilities 9,792,301 8,387,017
Long-term debt, excluding current maturities 47,873,647 29,460,614
Subordinated debt 29,760,714 29,728,571
Customer deposits 1,863,921 1,279,178
------------ ------------
Total liabilities 89,290,583 68,855,380
----------- ------------
Commitments and contingencies
Shareholders' equity:
Preferred Stock; no par value; 5,000,000 shares authorized;
none issued - -
Common stock; par value $.001 per share; 30,000,000 authorized;
issued and outstanding 7,216,664 shares at each date 7,217 7,217
Additional paid-in capital 63,809,014 63,809,014
Accumulated deficit (14,380,896) (8,173,344)
----------- ------------
Total shareholders' equity 49,435,335 55,642,887
----------- ------------
$138,725,918 $124,498,267
============ ============
</TABLE>
3
<PAGE>
NUCO2 INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Net Sales $ 12,008,422 $ 9,463,552
Costs and expenses:
Cost of products sold 6,459,627 5,161,496
Selling, general and administrative expenses 2,703,649 2,523,072
Depreciation and amortization 3,229,969 2,506,824
------------ ------------
12,393,245 10,191,392
------------ ------------
Operating (loss) (384,823) (727,840)
Interest expense, net 1,892,699 1,208,740
------------ ------------
Net (loss) before extraordinary item (2,277,522) (1,936,580)
------------ ------------
Extraordinary item - loss on extinguishment of debt - 2,084
------------ ------------
Net (loss) $(2,277,522) $ (1,938,664)
============ ============
Basic and Diluted EPS:
(Loss) before extraordinary item $ (.32) $ (.27)
----------- -----------
Extraordinary item - -
------------ -----------
Net (loss) $ (.32) $ (.27)
=========== ===========
Weighted average number of common and common
equivalent shares outstanding
Basic and Diluted 7,216,664 7,216,605
=========== ===========
</TABLE>
4
<PAGE>
NUCO2 INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Net Sales $ 34,123,575 $ 24,655,640
Costs and expenses:
Cost of products sold 18,282,207 13,053,990
Selling, general and administrative expenses 7,602,121 6,922,432
Depreciation and amortization 9,170,979 6,190,822
------------ ------------
35,055,307 26,167,244
------------ ------------
Operating (loss) (931,732) (1,511,604)
Interest expense, net 5,275,820 2,224,574
------------ ------------
Net (loss) before extraordinary item (6,207,552) (3,736,178)
------------ ------------
Extraordinary item - loss on extinguishment of debt - 186,945
------------ ------------
Net (loss) $ (6,207,552) $ (3,923,123)
============ ============
Basic and Diluted EPS:
(Loss) before extraordinary item $ (.86) $ (.52)
------------ ------------
Extraordinary item - (.02)
------------ ------------
Net (loss) $ (.86) $ (.54)
============ ============
Weighted average number of common and common
equivalent shares outstanding
Basic and Diluted 7,216,664 7,208,252
============ ============
</TABLE>
5
<PAGE>
NUCO2 INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional Total
----------- Paid-in Accumulated Shareholders'
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1998 7,216,664 $ 7,217 $ 63,809,014 $ (8,173,344) $ 55,642,887
Net (loss) - - - (6,207,552) (6,207,552)
--------- -------- ------------- ------------- -------------
Balance, March 31, 1999 7,216,664 $ 7,217 $ 63,809,014 $ (14,380,896) $ 49,435,335
========= ======== ============= ============= =============
</TABLE>
6
<PAGE>
NUCO2 INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Net (loss) before extraordinary item $ (6,207,552) $ (3,736,178)
Extraordinary item - loss on extinguishment of debt - 186,945
------------- -------------
Net (loss) (6,207,552) (3,923,123)
Cash flows from operating activities:
Adjustments to reconcile net(loss) to net cash provided
by operating activities:
Depreciation and amortization of property and equipment 6,366,101 4,179,031
Amortization of other assets 2,804,878 2,011,790
Amortization of original issue discount 32,143 17,857
Loss on disposal of property and equipment 682,037 318,554
Write-off of deferred financing costs 186,945
Changes in operating assets and liabilities:
Decrease (increase) in:
Trade accounts receivable (2,211,838) (2,322,560)
Inventories (17,844) (142,694)
Prepaid expenses and other current assets (971,357) (518,231)
Increase (decrease) in:
Accounts payable 398,241 3,557,388
Accrued expenses (146,654) 135,111
Accrued payroll 29,587 211,242
Accrued interest 1,110,886 1,644,881
Other current liabilities 28,320 93,744
Customer deposits 584,743 485,526
---------- ------------
Net cash provided by operating activities 2,481,691 5,935,461
---------- ------------
Cash flows from investing activities:
Proceeds from disposal of property and equipment 83,980 337,238
Purchase of property and equipment (18,751,286) (15,173,107)
Acquisition of businesses 45,460 (12,270,750)
(Increase) in deposits (48,409) (78,183)
Increase in deferred lease acquisition costs (1,285,969) (1,256,760)
----------- ----------
Net cash (used in) investing activities (19,956,224) (28,441,562)
----------- ----------
Cash flows from financing activities:
Exercise of options - 999
Repayment of long-term debt (102,063) (800,634)
Proceeds from issuance of long-term debt and subordinated debt 18,500,000 13,813,754
Increase in deferred charges (52,851) (2,069,707)
----------- -----------
Net cash provided by financing activities 18,345,086 10,944,412
----------- -----------
Net increase (decrease) in cash and cash equivalents 870,552 (11,561,689)
Cash and cash equivalents at the beginning of period 336,510 11,672,506
------------- ------------
Cash and cash equivalents at the end of period $ 1,207,062 $ 110,817
============= ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest 4,153,560 $ 596,023
============= =============
Income taxes 0 $ 0
============= =============
Supplemental schedule of noncash investing and
financing activities:
Acquisition of businesses:
Fair value of assets acquired - $ 27,702,406
Cost in excess of net assets of businesses acquired - 15,536,887
Liabilities assumed or incurred - (31,072,553)
Issuance of common stock - (274,991)
------------- ------------
Cash paid $ - $ 11,891,749
============= =============
</TABLE>
In July 1997, the Company wrote-off a restrictive covenant and the related
liability in the amount of $19,231 due to the employee resigning.
In October 1997, the Company repaid long-term debt in the amount of
$20,782,995 with the proceeds of the issuance of subordinated debt. In
connection therewith, detachable warrants were issued and original issue
discount in the amount of $300,000 was recorded.
7
<PAGE>
NUCO2 INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q used for
quarterly reports under Section 13 or 15 (d) of the Securities Exchange Act of
1934, and therefore, do not include all information and footnotes necessary for
a fair presentation of consolidated financial position, results of operations
and cash flows in conformity with generally accepted accounting principles. The
accompanying unaudited consolidated financial statements include the accounts of
NuCo2 Inc. (the "Company") and its wholly-owned subsidiary, NuCo2 Acquisition
Corp. which was formed during the year ended June 30, 1998 to acquire the stock
of Koch Compressed Gases, Inc. in October 1997. All material intercompany
accounts and transactions have been eliminated.
The financial information included in this report has been prepared
in conformity with the accounting principles and methods of applying those
accounting principles, reflected in the consolidated financial statements for
the fiscal year ended June 30, 1998 included in Form 10-K filed with the
Securities and Exchange Commission.
All adjustments necessary for a fair statement of the results for
the interim periods presented have been recorded. This quarterly report on Form
10-Q should be read in conjunction with the Company's audited financial
statements for the fiscal year ended June 30, 1998. The consolidated results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the full fiscal year.
NOTE 2. NET LOSS PER COMMON SHARE
In February 1997, the FASB issued Statement 128, "Earnings Per
Share". Statement 128 supersedes APB Opinion No. 15, "Earnings Per Share" and
specifies the computation, presentation and disclosure requirements for earnings
per share ("EPS") for entities with publicly held Common Stock or potential
Common Stock. It replaces the presentation of primary EPS with the presentation
of basic EPS and replaces fully diluted EPS with diluted EPS. It also requires
dual presentation of basic and diluted EPS on the face of the statement of
operations for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. Statement 128 is
effective for financial statements for both interim and annual periods ending
after December 15, 1997.
Earnings per share of Common Stock for the three and nine months
ended March 31, 1999 and 1998 have been calculated according to the guidelines
of Statement 128.
Incremental shares for stock options and warrants calculated
pursuant to the treasury stock method for the three and nine months ended March
31, 1999 were 39,721 and 32,888, respectively. These shares were not included in
diluted EPS because they would have been antidilutive for such periods.
Additionally, options and warrants to purchase 1,073,715 shares, 869,833 shares
and 390,956 shares for $14.64 - $17.00 per share, $11.25 - $12.50 per share and
$8.94 - $11.00 per share, respectively, were outstanding during all or a portion
of the three and nine months ended March 31, 1999 but were not included in the
computation of diluted EPS because the exercise price of the options and
warrants was greater than the average market price of the Common Stock.
Incremental shares for stock options and warrants calculated
pursuant to the treasury stock method for the three and nine months ended March
31, 1998 were 143,760 and 148,726, respectively. These shares were not included
in diluted EPS because they would have been antidilutive for such periods.
Additionally, options and warrants to purchase 75,000 shares, 1,000,000 shares,
655,738 shares (see Note 5) and 30,000 shares (see Note 5) for $17.50 per share,
$17.00 per share, $16.40 per share and $14.64 per share, respectively, were
outstanding during all or a portion of the three and nine months ended March 31,
1998 but were not included in the computation of diluted EPS because the
exercise price of the options and warrants was greater than the average market
price of Common Stock.
8
<PAGE>
NOTE 3. ACQUISITIONS
Effective July 15, 1997, the Company purchased substantially all of
the assets of a bulk CO2 company operating in Colorado for a purchase price of
$675,000. The purchase price was funded through a borrowing under the Company's
credit facility.
Effective July 31, 1997, the Company purchased certain assets from
CC Acquisition Corp. (Carbo Co.) for an aggregate purchase price of $11.0
million. Carbo Co. had operations in Nebraska, Kansas, Oklahoma, Iowa, Missouri,
Arkansas and South Dakota. The Company funded $5.0 million through a borrowing
under its credit facility and paid cash for the balance.
In September 1997, the Company purchased certain assets of a bulk
CO2 company with operations in Arizona for an aggregate purchase price of
$1,084,250. The Company funded $1,075,000 through a borrowing under its credit
facility and paid cash for the balance.
Effective October 1, 1997, a newly formed wholly-owned subsidiary of
the Company purchased all of the issued and outstanding shares of common stock
of Koch Compressed Gases, Inc., ("Koch") for an aggregate purchase price of $5.0
million. Koch operated a bulk CO2 business as well as provided carbon dioxide
and other gases in high pressure cylinders throughout the tri-state New York
metropolitan area. The purchase price was funded through a borrowing under the
Company's credit facility.
In November 1997, the Company purchased substantially all of the
assets of a bulk CO2 company operating in Texas for a purchase price of
$949,240. The Company paid $674,249 cash and issued 18,835 shares of Common
Stock at market, for a value of $274,991.
Effective December 2, 1997, the Company purchased certain assets
from four related carbonic gas distributors, Miller Carbonic Systems Co. Inc.,
Miller Carbonic, Inc., Carbonic National Systems, Inc., and Carbonic Gas
Service, Inc., operating primarily in Illinois, Indiana, Wisconsin and Michigan
for an aggregate purchase price of $11,150,000. The Company paid approximately
$4,650,000 cash and funded $6.5 million through a borrowing under the Company's
credit facility.
Effective December 2, 1997, the Company purchased certain assets of
a bulk CO2 company with operations in Kansas for a purchase price of
approximately $990,000. The purchase price was funded through a borrowing under
the Company's credit facility.
Effective January 23, 1998, the Company purchased substantially all
of the assets of a bulk CO2 company operating in California for a purchase price
of $4.5 million. The purchase price was funded through a borrowing under the
Company's credit facility.
Effective March 2, 1998, the Company purchased certain assets from
Florida Carbonic Distributor Inc., a carbonic gas distributor operating in
Florida for a purchase price of $6.3 million. The purchase price was funded
through a borrowing under the Company's credit facility.
In March 1998, the Company purchased certain assets from three
unrelated carbonic gas distributors with operations in Texas, Maine, and Alabama
for an aggregate purchase price of $406,000. The Company paid cash for these
transactions.
These acquisitions were accounted for by the purchase method of
accounting and, accordingly, the purchase prices and direct costs of the
acquisitions have been allocated to the respective assets and liabilities of the
acquired companies based upon their estimated fair market values at the dates of
acquisition. This resulted in goodwill of approximately $16,257,000 for the nine
months ended March 31, 1998, which is being amortized on a straight-line basis
over twenty years. The results of operations of the acquired companies are
included in the Company's financial statements since the effective dates of the
acquisitions.
9
<PAGE>
NOTE 4. LONG-TERM DEBT
As of March 31, 1999, the Company had a $50.0 million syndicated
bank facility ("SunTrust Facility") lead managed by SunTrust Bank, South
Florida, National Association ("SunTrust"). The SunTrust Facility contained
interest rates and an unused facility fee based on a pricing grid calculated
quarterly on senior funded debt to annualized EBITDA.
The Company was entitled to select the Base Rate or LIBOR, plus
applicable margin, for principal drawings under the SunTrust Facility. Base Rate
was defined as the higher of the prime lending rate of SunTrust or the Federal
Funds rate plus one-half of one percent (1/2%) per annum. The applicable LIBOR
margin pursuant to the pricing grid ranges from 1.25% to 2.75%, the applicable
unused facility fee pursuant to the pricing grid ranges from 0.1875% to 0.50%
and the applicable Base Rate margin pursuant to the pricing grid ranges from
0.00% to 0.50%. Interest only was payable periodically until the expiration of
the SunTrust Facility at which time all outstanding principal and interest was
due. The SunTrust Facility was due to expire on October 31, 2000; however, it
contained a two year renewal option subject to approval. Additionally, it was
collateralized by substantially all of the assets of the Company. The Company
was precluded from declaring or paying any dividends and was required to meet
certain affirmative and negative covenants including, but not limited to
financial covenants (see Note 8).
A total of $47.5 million was outstanding pursuant to the SunTrust
Facility with interest from 7.73% to 7.88% per annum as of March 31, 1999.
As of March 31, 1999, the Company maintained an interest rate swap
transaction (the "Swap") with SunTrust Bank, Atlanta, in the amount of $10.0
million (the "Notional Amount"). The effective date of the Swap is September 2,
1998 and it terminates on September 5, 2000. Pursuant to the Swap, the Company
pays a fixed interest rate of 6% per annum and receives a LIBOR-based floating
rate.
NOTE 5. SUBORDINATED DEBT
Represents unsecured Senior Subordinated Promissory Notes ("Notes")
with interest only at 12% per annum payable semi-annually on April 30 and
October 31, due October 31, 2004. The Notes were sold with detachable seven year
warrants to purchase an aggregate of 655,738 shares of Common Stock at an
exercise price of $16.40 per stock unit. In July 1998, the Note agreement was
amended to adjust certain financial covenants as of June 30, 1998 and
prospectively. In exchange for the amendment, the exercise price for 612,023
warrants was reduced to $12.40 per stock unit (see Note 8). Additionally,
NationsBanc Montgomery Securities, Inc., the placement agent, received a warrant
to purchase an aggregate of 30,000 shares of Common Stock at an exercise price
of $14.64 per stock unit which expires on October 31, 2004.
NOTE 6. STOCK OPTION PLAN
In 1995, the Company adopted the 1995 Stock Option Plan (the "1995
Plan"). Under the 1995 Plan, the Company has reserved 850,000 shares of Common
Stock for employees of the Company. Under the terms of the 1995 Plan, options
granted may be either incentive stock options or non-qualified stock options.
The exercise price of incentive stock options must be at least equal to 100% of
the fair market value of the Common Stock at the date of grant, and the exercise
price of non-qualified stock options may not be less than 75% of the fair market
value of the Common Stock at the date of grant. The maximum term for all options
is 10 years. Options granted to date vest in three or four installments
commencing one year from the date of grant. As of March 31, 1999, options for
278,847 shares were exercisable.
The following table summarizes the transactions pursuant to the 1995
Plan.
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
SHARES EXERCISE PRICE EXERCISE PRICE
------ -------------- --------------
<S> <C> <C> <C> <C>
Outstanding at June 30, 1997 346,604 $9-$17.50 $12.28
Granted 341,500 $10.25-$11.28 $10.43
Expired or canceled 77,067 $9-$17.50 $17.29
Exercised 111 $9 $9
-------- ------------- -----------
Outstanding at June 30, 1998 610,926 $9-$11.28 $10.61
Granted 59,500 $5.50-$7.00 $6.38
Expired or canceled 18,660 $9-$11.25 $10.40
Exercised -0- -0- -0-
-------- ------------- -----------
Outstanding at March 31, 1999 651,766 $5.50-$11.28 $10.24
======== ============= ===========
</TABLE>
10
<PAGE>
In 1995, the Company adopted the Directors' Stock Option Plan (the
"Directors' Plan"). Under the Directors' Plan, the Company has reserved 60,000
shares of Common Stock. Under the terms of the Directors' Plan each non-employee
director receives options for 6,000 shares of Common Stock on the date of his or
her first election to the board of directors. In addition, on the third
anniversary of each director's first election to the Board, and on each three
year anniversary thereafter, each non-employee director receives an additional
option to purchase 6,000 shares of Common Stock. The exercise price per share
for all options granted under the Directors' Plan is equal to the fair market
value of the Common Stock at the date of grant. All options vest in three equal
annual installments beginning on the first anniversary of the date of grant. As
of March 31, 1999, options to purchase a total of 10,000 shares of Common Stock
at an exercise price of $9.00 per share, 6,000 shares of Common Stock at an
exercise price of $12.50 per share, 6,000 shares of Common Stock at an exercise
price of $8.938 per share and 6,000 shares of Common Stock at an exercise price
of $6.625 per share had been issued. Of these options, as of March 31, 1999
options to purchase 10,000 and 2,000 shares of Common Stock at an exercise price
of $9.00 and $12.50 per share, respectively, were exercisable.
NOTE 7. OPERATING LEASES
The Company entered into 60 operating leases from July 1, 1998
through March 31, 1999. Three leases were for warehouse facilities with
aggregate annual rentals of approximately $79,100 expiring at various dates
through 2004. Fifty-seven leases were for trucks with aggregate annual rentals
of approximately $578,000 expiring at various dates through 2006.
NOTE. 8. SUBSEQUENT EVENTS
a) Credit Facility
On May 4, 1999, the Company entered into a $75.0 million amended and
restated revolving credit facility with a syndicate of banks led by SunTrust
Bank, South Florida, National Association ("Amended SunTrust Facility"). The
Amended SunTrust Facility contains interest rates and an unused facility fee
based on a pricing grid calculated quarterly on senior funded debt to annualized
EBITDA. The Company is entitled to select the Base Rate or LIBOR, plus
applicable margin, for principal drawings under the Amended SunTrust Facility.
The applicable LIBOR margin pursuant to the pricing grid ranges from 1.75% to
3.5%, the applicable unused facility fee pursuant to the pricing grid ranges
from .375% to .50% and the applicable Base Rate margin pursuant to the pricing
grid ranges from 0.25% to 2.00%. Interest only is payable periodically until the
expiration of the Amended SunTrust Facility. The Amended SunTrust Facility
expires May 4, 2002, however, it contains a two year renewal option subject to
approval. Additionally, it is collateralized by substantially all of the assets
of the Company. The Company is precluded from declaring or paying any cash
dividends and is required to meet certain affirmative and negative covenants
including but not limited to financial covenants.
b) Senior Subordinated Promissory Notes
On May 4, 1999, the Company sold $10.0 million of its 12% Senior
Subordinated Promissory Notes due 2005 ("Additional 12% Notes"). Except for
their October 31, 2005 maturity date, the Additional 12% Notes are substantially
identical to the Company's 12% Senior Subordinated Promissory Notes due October
31, 2004 ("Notes"). The Additional 12% Notes were sold with detachable 6-1/2
year warrants to purchase an aggregate of 372,892 shares of Common Stock at an
exercise price of $6.65 per stock unit. In connection with the sale of the
Additional 12% Notes, certain financial covenants governing the Notes and the
Additional 12% Notes were adjusted as of March 31, 1999 and prospectively and
the exercise price for 612,023 warrants issued in connection with the sale of
the Notes was reduced from $12.40 per stock unit to $6.65 per stock unit.
11
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE
SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE COMPANY'S EXPANSION INTO
NEW MARKETS, COMPETITION, TECHNOLOGICAL ADVANCES, YEAR 2000 ISSUES AND
AVAILABILITY OF MANAGERIAL PERSONNEL.
OVERVIEW
The Company is the largest as well as the sole national supplier of
bulk CO2 systems and bulk CO2 for carbonating and dispensing fountain beverages.
At March 31, 1999, the Company operated 83 service locations in 44 states
servicing over 63,000 bulk and high pressure CO2 fountain beverage customers
consisting primarily of restaurants, convenience stores, taverns, theme parks,
resorts and stadiums. Over 96% of potential fountain beverage CO2 users in the
Continental United States are located within the Company's current service area.
CO2 is universally used for the carbonation and dispensing of
fountain beverages. In most instances, CO2 is presently supplied to fountain
beverage users in the form of gas, which is transported and stored in high
pressure cylinders. Bulk CO2 is a relatively new technology that is quickly
replacing high pressure CO2 as the beverage carbonation system of choice. It
reduces flat drinks, is safer to use, eliminates downtime, beverage waste and
employee handling, and is space efficient. The Company has been a significant
force in the introduction of bulk CO2 technology and the conversion of high
pressure CO2 users to bulk CO2.
The Company currently services approximately one-half of the
approximately 110,000 bulk CO2 fountain beverage users in the Continental United
States. The Company estimates that there are approximately 800,000 fountain
beverage CO2 users in the Continental United States, presenting the Company with
significant long-term growth potential.
In fiscal 1998, the Company achieved its objective of becoming the
sole national supplier of bulk CO2 systems and bulk CO2 to fountain beverage CO2
users. The Company's objective in fiscal 1999 is to replicate the business model
that it has achieved in its more mature markets by building route density
throughout the country. New depots operate at negative EBITDA margins in the
early stages and detract from the Company's highly profitable depots in mature
markets. Depots in mature markets have gross margins generally in the 55% to 65%
range. For the three months ended March 31, 1999, 30% of the Company's depots
were open over three years and averaged a 55% gross margin, 22% of depots were
open between two and three years and averaged a 51% gross margin, 39% of depots
were open between one and two years and averaged a 35% gross margin, and 9% of
depots were open under one year and averaged a (1)% gross margin. Additionally,
as of March 31, 1999, the Company had 14 mobile depots with an average 27% gross
margin. New accounts are being added to newer depots for which there is
substantial excess capacity, and therefore, relatively little additional cost is
incurred to service new customers. Increases in gross margins are directly
related to increases in the number of accounts serviced. New multi-unit
placement agreements combined with single-unit placements will help the Company
in achieving route density. During the nine months ended March 31, 1999, the
Company reached multi-unit placement agreements with national and regional
chains aggregating approximately 7,000 locations. The Company's success in
reaching these multi-placement agreements is due in part to the Company's
national delivery system. As the Company's customer base increases, the Company
anticipates that its financial performance on a sequential basis will improve at
an accelerated rate.
GENERAL
Net sales from bulk CO2 customers are comprised of budget plan
revenues and rental plus per pound revenues. Under the budget plan, the
Company's net sales consist of charges to customers for the use of Company owned
bulk CO2 systems and a predetermined quantity of bulk CO2. For customers on
rental plus per pound, invoices are broken down into the two respective
services, with the charge for bulk CO2 supply varying with the amount delivered.
The Company's net sales also include revenues from customers to which it
supplies only CO2 refill services, based on the amount delivered, and high
pressure charges.
12
<PAGE>
Cost of products sold is comprised of purchased CO2 and labor,
vehicle and depot costs associated with the Company's delivery and storage of
CO2 to customers. Selling, general and administrative expenses consist of
salaries, dispatch and communications costs, and expenses associated with
marketing, administration, accounting and employee training. Consistent with the
capital intensive character of its business, the Company incurs significant
depreciation and amortization expenses. These stem from the depreciation of
Company owned bulk CO2 systems; depreciation and amortization of bulk CO2 system
installation costs; amortization of sales commissions, and amortization of
goodwill, deferred financing costs and other intangible assets.
With respect to bulk CO2 systems, the Company only capitalizes costs
that are associated with specific successful placements of such systems with
customers under noncancelable contracts and which would not be incurred by the
Company but for a successful placement. All other service, marketing and
administrative costs are expensed as incurred.
The Company believes EBITDA is useful as a means of measuring the
growth and earning power of its business. In addition, the Company's revolving
credit facility utilizes EBITDA for its formal calculation of financial
leverage, affecting the amount of funds available and rates to the Company for
borrowing under such credit facility. EBITDA represents operating income plus
depreciation and amortization. Information regarding EBITDA is presented because
of its use by certain investors as one measure of a corporation's ability to
generate cash flow. EBITDA should not be considered an alternative to, or more
meaningful than, operating income or cash flows from operating activities as an
indicator of a corporation's operating performance. EBITDA excludes significant
costs of doing business and should not be considered in isolation from GAAP
measures.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentage relationship which various items bear to net sales:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
1999 1998 1999 1998
---- ---- ---- ----
Income Statement Data:
<S> <C> <C> <C> <C>
Net sales.............................................. 100.0% 100.0% 100.0% 100.0%
Cost of products sold.................................. 53.8% 54.5% 53.6% 52.9%
Selling, general and administrative expenses........... 22.5% 26.7% 22.3% 28.1%
Depreciation and amortization.......................... 26.9% 26.5% 26.9% 25.1%
--------- --------- -------- -----------
Operating (loss)....................................... (3.2%) (7.7%) (2.7%) (6.1%)
--------- --------- -------- -----------
Interest expense, net.................................. 15.8% 12.8% 15.5% 9.0%
Extraordinary item - loss on extinguishment of debt.... - - - 0.8%
--------- --------- -------- -----------
Net (loss)............................................. (19.0%) (20.5%) (18.2%) (15.9%)
========= ========= ======== ===========
Other Data:
Operating income before depreciation and amortization..
(EBITDA)............................................... 23.7% 18.8% 24.1% 19.0%
========= ========= ======== ===========
</TABLE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Net sales increased by $2.5 million, or 26.9%, from $9.5 million in
the 1998 period to $12.0 million in the 1999 period. Approximately $437,000 of
the increase represented net sales resulting from four acquisitions completed
during the quarter ended March 31, 1998. The remainder of the increase in net
sales was primarily due to internal growth in the number of Company owned and
customer owned bulk CO2 systems serviced.
Cost of products sold increased by $1.3 million, from $5.2 million
in the 1998 period to $6.5 million in the 1999 period and decreased as a
percentage of net sales from 54.5% to 53.8%. The dollar increase is primarily
attributable to the continued expansion of the Company and direct costs related
to additional customers. The percentage decrease is attributable to a decrease
in route driver expense expressed as a percentage of net sales. Fully loaded
route drivers increased by $201,000 from $1.8 million in the 1998 period to $2.0
million in the 1999 period and decreased as a percentage of net sales from 18.9%
to 16.6%. Expressed as a percentage of net sales, medical insurance premium cost
was 2.2% in the 1998 period and 1.3% in the 1999 period. The decrease in medical
insurance premium cost is attributable to re-negotiated lower rates.
Additionally, overtime expressed as a percentage of net sales was 3.8% in the
1998 period and 1.9% in the 1999 period. The percentage decrease in overtime is
attributable to new payroll software which enables the Company to more
effectively control overtime.
13
<PAGE>
The number of depots operated by the Company at March 31, 1999 increased to 69,
compared to 62 at March 31, 1998. When the Company opens new service locations
and expands into new markets, higher costs expressed as a percentage of net
sales are incurred until route density is achieved.
Selling, general and administrative expenses increased by $181,000
from $2.5 million in the 1998 period to $2.7 million in the 1999 period and
decreased as a percentage of net sales from 26.7% to 22.5%. The dollar increase
is primarily attributable to growth in the number of marketing and
administrative personnel and their associated expenses as well as an increase in
legal fees. The percentage decrease is attributable to economies of scale. At
March 31, 1998, the Company had operations in 42 states and employed 206
marketing and administrative personnel and at March 31, 1999, the Company had
operations in 44 states and employed 243 marketing and administrative personnel.
Legal fees increased by $82,000 from $52,000 in the 1998 period to $134,000 in
the 1999 period and increased as a percentage of net sales from 0.6% in the 1998
period to 1.1% in the 1999 period. The increase in legal fees is primarily
attributable to lawsuits initiated by the Company. The Company has asserted
claims that a competitor is engaged in unfair trade practices, and that a former
employee has been disparaging the Company on the Internet and infringing on the
Company's trademarks.
Depreciation and amortization increased by $723,000 from $2.5
million in the 1998 period to $3.2 million in the 1999 period. As a percentage
of net sales, such expenses increased from 26.5% in the 1998 period to 26.9% in
the 1999 period. Depreciation expense increased by $640,000 from $1.6 million in
the 1998 period to $2.3 million in the 1999 period principally due to the
increase in bulk CO2 systems owned by the Company and leased to customers.
Expressed as percentage of net sales, depreciation expense increased from 17.2%
in the 1998 period to 18.9% in the 1999 period. Amortization expense increased
by $83,000 from $878,000 in the 1998 period to $961,000 in the 1999 period
primarily due to amortization related to goodwill, customer lists and deferred
lease acquisition costs. As a percentage of net sales, amortization expense
decreased from 9.3% to 8.0%.
Net interest expense increased by $684,000 from $1.2 million in the
1998 period to $1.9 million in the 1999 period and increased as a percentage of
net sales from 12.8% to 15.8%. This increase was attributable to the increased
level of long-term debt and subordinated debt in the 1999 period as compared to
the 1998 period.
For the reasons described above, EBITDA, representing operating
income plus depreciation and amortization, increased by $1.1 million, or 59.9%,
from $1.8 million in the 1998 period to $2.8 million in the 1999 period and
increased as a percentage of net sales from 18.8% to 23.7%, respectively. The
Company believes EBITDA is useful as a means of measuring the growth and earning
power of its business. In addition, the Company uses EBITDA to measure how well
the Company is generating cash flow. EBITDA excludes significant costs and
should not be considered in isolation from GAAP measures.
NINE MONTHS ENDED MARCH 31, 1999 COMPARED TO NINE MONTHS ENDED MARCH 31, 1998
Net sales increased by $9.5 million, or 38.4%, from $24.7 million in
the 1998 period to $34.1 million in the 1999 period. Approximately $3.6 million
of the increase represented net sales resulting from 15 acquisitions completed
during the fiscal year ended June 30, 1998. The remainder of the increase in net
sales was primarily due to internal growth in the number of Company owned and
customer owned bulk CO2 systems in service. Increases in net sales due to price
increases were insignificant.
Cost of products sold increased by $5.2 million, from $13.1 million
in the 1998 period to $18.3 million in the 1999 period and increased as a
percentage of net sales from 52.9% in the 1998 period to 53.6% in the 1999
period. The increase is attributable to the continued expansion of the Company
and an increase in fully loaded route drivers. Fully loaded route drivers
increased by $1.6 million from $4.5 million in the 1998 period to $6.1 million
in the 1999 period and decreased as a percentage of net sales from 18.2% to
17.8%. The percentage decrease was attributable to a decline in overtime
expressed as a percentage of net sales from 3.4% in the 1998 period to 2.7% in
the 1999 period. This decrease is a direct result of new payroll software that
enables the Company to monitor and more effectively control overtime on a daily
basis. As of March 31, 1998, the Company employed 215 route drivers and at March
31, 1999, the Company employed 252 route drivers. The number of depots operated
by the Company at March 31, 1999, increased to 69, compared to 62 at March 31,
1998. When the Company opens new service locations and expands into new markets,
higher costs expressed as a percentage of net sales are incurred until route
density is achieved.
14
<PAGE>
Selling, general and administrative expenses increased by $680,000
from $6.9 million in the 1998 period to $7.6 million in the 1999 period and
decreased as a percentage of net sales from 28.1% to 22.3%. The dollar increase
was primarily attributable to growth in the number of marketing and
administrative employees and their associated expenses. The percentage decrease
is attributable to economies of scale. At March 31, 1998, the Company had
operations in 42 states and employed 206 marketing and administrative personnel
and at March 31, 1999, the Company had operations in 44 states and employed 243
marketing and administrative personnel.
Depreciation and amortization increased by $3.0 million from $6.2
million in the 1998 period to $9.2 million in the 1999 period. As a percentage
of net sales, such expenses increased from 25.1% in the 1998 period to 26.9% in
the 1999 period. Depreciation expense increased by $2.2 million from $4.2
million in the 1998 period to $6.4 million in the 1999 period principally due to
the increase in bulk CO2 systems owned by the Company and leased to customers.
Expressed as a percentage of net sales, depreciation expense increased from
16.9% in the 1998 period to 18.7% in the 1999 period. Amortization expense
increased by $793,000 from $2.0 million in the 1998 period to $2.8 million in
the 1999 period primarily due to amortization related to goodwill, customer
lists, and deferred lease acquisition costs. As a percentage of net sales,
amortization expense remained unchanged at 8.2%.
Net interest expense increased by $3.1 million from $2.2 million in
the 1998 period to $5.3 million in the 1999 period. This increase is
attributable to the decreased level of cash and cash equivalents and the
increased level of long-term debt and subordinated debt in the 1999 period as
compared to the 1998 period. Except for their October 31, 2005 maturity date,
the Additional 12% Notes are identical to the Company's 12% Senior Subordinated
Promissory Notes due October 31, 2004 ("Notes").
For the reasons described above, EBITDA, representing operating
income plus depreciation and amortization, increased by $3.6 million, or 76.1%,
from $4.7 million in the 1998 period to $8.2 million in the 1999 period and
increased as a percentage of net sales from 19.0% to 24.1%, respectively. The
Company believes EBITDA is useful as a means of measuring the growth and earning
power of its business. In addition, the Company uses EBITDA to measure how well
the Company is generating cash flow. EBITDA excludes significant costs and
should not be considered in isolation from GAAP measures.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements consist principally of capital
expenditures associated with placing new bulk CO2 systems into service at
customers' locations; payments of interest on its outstanding indebtedness;
payments for acquired businesses; and working capital. Whenever possible, the
Company seeks to obtain the use of vehicles, land, buildings, and other office
and service equipment under operating leases as a means of conserving capital.
The Company anticipates making cash capital expenditures of approximately $5.0
million to $10.0 million during the remaining three months of fiscal 1999,
primarily for the purchases of bulk CO2 systems that it expects to place into
service during this time. Once bulk CO2 systems are placed into service, the
Company has generally experienced significant positive cash flows on a per-unit
basis, as there are minimal additional capital expenditures required for
ordinary operations. In addition to the capital expenditures related to internal
growth, the Company reviews opportunities to acquire bulk CO2 service
businesses, and may require cash in an amount dictated by the scale and terms of
any such transactions successfully concluded.
On May 4, 1999, the Company entered into a $75.0 million amended
and restated revolving credit facility with a syndicate of banks led by SunTrust
Bank, South Florida, National Association ("Amended SunTrust Facility"). The
Amended SunTrust Facility contains interest rates and an unused facility fee
based on a pricing grid calculated quarterly on senior funded debt to annualized
EBITDA. The Company is entitled to select the Base Rate or LIBOR, plus
applicable margin, for principal drawings under the Amended SunTrust Facility.
The applicable LIBOR margin pursuant to the pricing grid ranges from 1.75% to
3.5%, the applicable unused facility fee pursuant to the pricing grid ranges
from .375% to .50% and the applicable Base Rate margin pursuant to the pricing
grid ranges from 0.25% to 2.00%. Interest only is payable periodically until the
expiration of the Amended SunTrust Facility. The Amended SunTrust Facility
expires May 4, 2002, however, it contains a two year renewal option subject to
approval. Additionally, it is collateralized by substantially all of the assets
of the Company. The Company is precluded from declaring or paying any cash
dividends and is required to meet certain affirmative and negative covenants,
including but not limited to financial covenants.
15
<PAGE>
Simultaneously with the Amended SunTrust Facility, the Company sold
$10.0 million of its 12% Senior Subordinated Promissory Notes due 2005
("Additional 12% Notes"). Except for their October 31, 2005 maturity date, the
Additional 12% Notes are substantially identical to the Company's 12% Senior
Subordinated Promissory Notes due October 31, 2004 ("Notes"). The Additional 12%
Notes were sold with detachable 6-1/2 year warrants to purchase an aggregate of
372,892 shares of Common Stock at an exercise price of $6.65 per stock unit. In
connection with the sale of the Additional 12% Notes, certain financial
covenants governing the Notes and the Additional 12% Notes were adjusted as of
March 31, 1999 and prospectively and the exercise price for 612,023 warrants
issued in connection with the sale of the Notes was reduced from $12.40 per
stock unit to $6.65 per stock unit.
During the nine months ended March 31, 1999, the Company's capital
resources included cash flows from operations and available borrowing capacity
under the Company's revolving credit facility. As of March 31, 1999, a total of
$47.5 million was outstanding under the Company's revolving credit facility with
interest at two hundred seventy-five basis points above the applicable London
InterBank Offering Rate ("LIBOR") (7.73% to 7.88% at March 31, 1999).
The Company believes that cash flows from operations and available
borrowings under the Amended SunTrust Facility together with the proceeds from
the sale of the Additional 12% Notes will be sufficient to fund proposed
operations for at least the next twelve months.
Working Capital. At June 30, 1998 the Company had negative working
capital of $3.1 million. At March 31, 1999, the Company had negative working
capital of $453,000.
Cash Flows from Operating Activities. For the nine months ended
March 31, 1998 and March 31, 1999, net cash provided by operating activities was
$5.9 million and $2.5 million, respectively. The decrease from the 1998 period
to the 1999 period of $3.5 million is primarily due to an increase in the net
loss of the Company and an increase in accounts receivable.
Cash Flows from Investing Activities. For the nine months ended
March 31, 1998 and March 31, 1999, net cash used in investing activities was
$28.4 million and $20.0 million, respectively. These investing activities were
attributable to the installation and direct placement costs and acquisition of
bulk CO2 systems. In addition, in the 1998 period, the Company completed 15
acquisitions and expended cash of $12.3 million.
Cash Flows from Financing Activities. For the nine months ended
March 31, 1998 and March 31, 1999, cash flows provided by financing activities
were $10.9 million and $18.3 million, respectively. For the nine months ended
March 31, 1998 and March 31, 1999, net cash provided by financing activities was
primarily from the issuance of long-term debt.
YEAR 2000
The Company has conducted a review to identify which of its computer
and other business operating systems will be affected by the "Year 2000" problem
and has developed a project plan and schedule to solve this issue. Among the
functions and systems impacted could be inventory and accounting systems,
dispatch and delivery systems, electronic data interchange, and mechanical
systems operating everything from office building environmental controls to
telephone switches and fax machines. The Company is on schedule to be Year 2000
compliant by June 30, 1999. The Company believes that the costs of
modifications, upgrades, or replacements of software, hardware, or capital
equipment which would not be incurred but for Year 2000 compatibility
requirements have not and will not have a material impact on the Company's
financial position or results of operations.
The Company is also engaged in communications with its significant
business partners, suppliers and customers to determine the extent to which the
Company is vulnerable to such third parties' failure to address their own Year
2000 issues. The Company's assessment of the impact of its Year 2000 issues
includes an assessment of the Company's vulnerability to such third parties. The
Company is seeking assurances from its significant business partners, suppliers
and customers that their computer applications will not fail due to Year 2000
problems. Nevertheless, the Company does not control, and can give no assurances
as to the substance or success of the Year 2000 compliance efforts of such
independent third parties and the Company believes that there is a risk that
certain of these third parties on whom the Company's finances and operations
depend will experience Year 2000 problems that could affect the financial
position or results of operations of the Company. These risks include, but are
not limited to, the potential inability of suppliers to correctly or timely
provide necessary services, materials and components for the Company's
operations; the inability of the Company's customers to timely or correctly
process and pay the Company's invoices; and the inability of lenders, lessors or
other sources of the Company's necessary capital and liquidity to make funds
available to the Company when required.
16
<PAGE>
INFLATION
The modest levels of inflation in the general economy since the
Company began business in 1990 have not affected its results of operations.
Additionally, the Company's contracts with its customers generally contain an
annual lease rate adjustment clause based on any increase in the consumer price
index. The Company believes that inflation will not have a material adverse
effect on its future results of operations.
17
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As discussed under "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
above, as of March 31, 1999, a total of $47.5 million was outstanding under the
Company's revolving credit facility with interest at two hundred seventy-five
basis points above the applicable LIBOR rate (7.73% to 7.88% at March 31, 1999).
Based upon $47.5 million outstanding at March 31, 1999, the Company's annual
interest cost under its revolving credit facility would increase by $475,000 for
each one percent increase in LIBOR (i.e., from 8.0% to 9.0%).
In order to reduce the Company's exposure to increases in LIBOR, and
consequently to increases in interest payments, on June 9, 1998 the Company
entered into an interest rate swap transaction (the "Swap") with SunTrust Bank,
Atlanta, in the amount of $10.0 million (the "Notional Amount"). The effective
date of the Swap is September 2, 1998 and it terminates on September 5, 2000.
Pursuant to the Swap, the Company pays a fixed interest rate of 6% per annum and
receives a LIBOR-based floating rate. The effect of the Swap is to neutralize
any changes in LIBOR on the Notional Amount. If LIBOR decreases below 6% during
the period the Swap is in effect, interest payments by the Company on the
Notional Amount will be greater than if the Company had not entered into the
Swap, since by exchanging LIBOR for a fixed interest rate, the Company would not
benefit from falling interest rates on LIBOR, a variable interest rate.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
(1) No reports on Form 8-K were filed during the quarter ended
March 31, 1999.
18
<PAGE>
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.
NuCo2 Inc.
Dated: May 12, 1999 By: /s/ Joann Sabatino
-----------------------------------
Joann Sabatino
Chief Financial Officer
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the NuCo2
Inc. Consolidated Financial Statements as of March 31, 1999 and is qualified in
its entirety by reference to such Consolidated Financial Statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,207,062
<SECURITIES> 0
<RECEIVABLES> 6,669,343
<ALLOWANCES> 759,104
<INVENTORY> 228,871
<CURRENT-ASSETS> 9,339,071
<PP&E> 115,620,800
<DEPRECIATION> 18,466,034
<TOTAL-ASSETS> 138,725,918
<CURRENT-LIABILITIES> 9,792,301
<BONDS> 0
<COMMON> 7,217
0
0
<OTHER-SE> 49,428,118
<TOTAL-LIABILITY-AND-EQUITY> 138,725,918
<SALES> 34,123,575
<TOTAL-REVENUES> 34,123,575
<CGS> 18,282,207
<TOTAL-COSTS> 35,055,307
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,296,572
<INCOME-PRETAX> (6,207,552)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,207,552)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,207,552)
<EPS-PRIMARY> (.86)
<EPS-DILUTED> (.86)
</TABLE>
