Add files using upload-large-folder tool

parsed_sections/prospectus_summary/1996/ANF_abercrombi_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a summary of certain information contained elsewhere in this Prospectus. Reference is made to, and this summary is qualified in its entirety by, the more detailed information contained in this Prospectus. As used herein, unless the context otherwise requires, the "Company" or "Abercrombie & Fitch" means Abercrombie & Fitch Co. and its subsidiaries (which, prior to the formation of the Company on June 26, 1996, are referred to herein as the "Abercrombie & Fitch Business"), and "The Limited" means The Limited, Inc. and its subsidiaries (other than the Company). Unless indicated otherwise, the information contained in this Prospectus assumes that the Underwriters do not exercise their over-allotment options. Except as otherwise specified, references herein to years are to the Company's fiscal year, which ends on the Saturday closest to January 31 in the following calendar year. For example, "1995" refers to the fiscal year ended February 3, 1996. All fiscal years for which financial information is included in this Prospectus had 52 weeks, except 1995 which had 53 weeks. All references to "dollars" or "$" are to U.S. dollars. Unless otherwise defined herein, capitalized terms used in this summary have the meanings ascribed to them elsewhere in this Prospectus. Prospective investors should carefully consider the information set forth under the heading "Risk Factors". THE COMPANY Abercrombie & Fitch is a rapidly growing specialty retailer of high-quality, casual apparel for men and women approximately 15 to 50 years of age. The Company's net sales have increased from $85.3 million in 1992 to $235.7 million in 1995, representing a compound annual growth rate of 40.3%. During this time, operating income has improved from an operating loss of $10.2 million in 1992 to operating income of $23.8 million in 1995, while the number of Abercrombie & Fitch stores in operation more than doubled, increasing from 40 at the end of 1992 to 100 at the end of 1995. The Company plans to continue this new store expansion program by opening 29 new stores in 1996 and by increasing the number of stores in operation by approximately 20% annually for the next several years thereafter. The Abercrombie & Fitch brand was established in 1892 and became well known as a supplier of rugged, high-quality outdoor gear. Famous for outfitting the safaris of Teddy Roosevelt and Ernest Hemingway and the expeditions of Admiral Byrd to the North and South Poles, Abercrombie & Fitch goods were renowned for their durability and dependability--and Abercrombie & Fitch placed a premium on complete customer satisfaction with each item sold. In 1992, a new management team began repositioning Abercrombie & Fitch as a more fashion-oriented casual apparel business directed at men and women with a youthful lifestyle. In reestablishing the Abercrombie & Fitch brand, the Company combined its historical image for quality with a new emphasis on casual American style and youthfulness. The Company believes that this strategic decision has contributed to the strong growth and improved profitability it has experienced since 1992. BUSINESS STRENGTHS The Company believes that certain business strengths have contributed to its success in the past and will enable it to continue growing profitably. ESTABLISHED AND DIFFERENTIATED LIFESTYLE BRAND. Abercrombie & Fitch has created a focused and differentiated brand image based on quality, youthfulness and classic American style. This image is consistently communicated through all aspects of the Company's business, including merchandise assortments, in-store marketing and print advertising. The Company believes that the strength of the Abercrombie & Fitch brand provides opportunities for increased penetration of current merchandise categories and entry into new product categories. BROAD AND GROWING APPEAL. The Company's merchandise assortment appeals to a broad range of customers with varying ages and income levels. The Company believes that both men and women interested in casual, classic American fashion are attracted to the Abercrombie & Fitch lifestyle image. The Company also believes that the brand's broad appeal has been augmented by, and should continue to benefit from, the current trend in fashion toward casual apparel. PROVEN MANAGEMENT TEAM. Since the current management team assumed responsibility in 1992, the Company has increased the level of brand awareness and consistently reported improved financial results. In addition, the Company's senior management has significant experience, with an aggregate of over one hundred years in the retail business. The Company believes that management's substantial experience and demonstrated track record of highly profitable growth strongly positions the Company for the future. CONSISTENT STORE LEVEL EXECUTION. Abercrombie & Fitch believes that a major element of its success is the consistent store level execution of its brand strategy. Store presentation is tightly controlled by the Company and is based on a detailed and comprehensive store plan regarding visual merchandising, marketing and fixtures to ensure that all stores provide a consistent portrayal of the brand. Store associates are trained as "brand representatives" who convey and reinforce the brand image through their attitude and enthusiasm. QUALITY. Since its founding over 100 years ago, Abercrombie & Fitch has maintained a strong reputation for quality. This reputation has been enhanced in recent years as management has made quality a defining element of the brand. The Company sources high quality natural fabrics from around the world and uses distinctive trim details and specialized washes to achieve a unique style and comfort in its products. As part of this focus on quality, the Company establishes on-going relationships with key factories to ensure reliability and consistency in production. INTERNAL DESIGN AND MERCHANDISING CAPABILITIES. The cornerstone of the Company's business is its ability to design products which embody the Abercrombie & Fitch image. Abercrombie & Fitch develops substantially all of its merchandise line through its own design group, which allows it to develop exclusive merchandise and offer a consistent assortment within a season and from year to year. In addition, because the Company's merchandise is sold exclusively in its own stores, Abercrombie & Fitch is able to control the presentation and pricing of its merchandise, provide a higher level of customer service and closely monitor retail sell-through, which provides competitive advantages over other brand manufacturers that market their goods through department stores. RELATIONSHIP WITH THE LIMITED. Unlike most high growth, specialty apparel retailers, Abercrombie & Fitch directly benefits from the resources and expertise of a major retailer such as The Limited. Abercrombie & Fitch has been able to concentrate the efforts of its management team and associates on strengthening its brand image by taking advantage of The Limited's capabilities in the areas of real estate negotiation and acquisition, central distribution, sourcing, store design and construction and general corporate services. The Company will continue to receive such services after the Offerings pursuant to agreements to be entered into with The Limited. See "Relationship with The Limited". GROWTH STRATEGY The Company has implemented a growth strategy designed to permit Abercrombie & Fitch to capitalize on its business strengths. The Company plans to continue its store expansion program by opening 29 new stores in 1996 and increasing the number of stores in operation by approximately 20% annually for the next several years thereafter. While substantially all stores to be opened in 1996 will be in regional shopping malls, the Company believes that selected street locations in university and high-traffic urban settings also provide attractive expansion opportunities. In addition, Abercrombie & Fitch believes that there are opportunities to expand its customer base and enhance the productivity of its stores through further penetration of existing merchandise categories and the introduction of new classifications and categories. Products which are being introduced or expanded in 1996 include men's and women's underwear and outerwear, fragrances, sunglasses and decorative home accessories. The Company believes that its internal design capability will enable it to continue to develop new merchandise which reflects the Abercrombie & Fitch lifestyle. See "Business--Growth Strategy".

parsed_sections/prospectus_summary/1996/CALM_cal-maine_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, INFORMATION IN THIS PROSPECTUS (I) ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION AND (II) IS ADJUSTED TO REFLECT A RECENT RECAPITALIZATION, WHICH RESULTED IN THE CREATION OF THE COMMON STOCK AND THE CLASS A COMMON STOCK, AND A 1,200-FOR-1 STOCK SPLIT OF THE CAPITAL STOCK, EFFECTIVE AS OF OCTOBER 3, 1996. SEE "CAPITALIZATION -- RECAPITALIZATION AND STOCK SPLIT." THE COMPANY GENERAL The Company is primarily engaged in the production, cleaning, grading, packing and sale of fresh shell eggs and the manufacture and sale of egg products. Shell eggs accounted for approximately 92% and egg products approximately 6% of the Company's net sales in fiscal 1996. The Company currently is the largest producer and distributor of fresh shell eggs in the United States, with fiscal 1996 sales of approximately 384.4 million dozen shell eggs, representing approximately 7.5% of all shell eggs sold in the United States. Cal-Maine primarily markets its shell eggs and egg products in 26 states, chiefly in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States. The Company's operations are fully integrated. It owns facilities to hatch chicks, grow pullets, manufacture feed and produce, process, manufacture and distribute shell eggs and egg products. Company-owned facilities accounted for approximately 60% of total egg production in fiscal 1996, with the balance attributable to contract producers used by the Company. Approximately 95% of the feed for Company-owned farms and contract producers is manufactured by the Company, from purchased ingredients, in feed mills that it owns and operates. Shell eggs are sold directly by the Company primarily to national and regional supermarket chains. Egg products are sold both on a direct basis and through egg product brokers to institutional users, including manufacturers of baked goods, mayonnaise and confections. GROWTH STRATEGY During the past eight years the Company has pursued an aggressive growth strategy, including the acquisition of existing shell egg production and processing facilities, as well as the construction of new and more efficient facilities. Since the beginning of fiscal 1989, the Company has consummated six acquisitions, adding an aggregate of 13.7 million layers to its capacity, and built four new "in-line" shell egg production and processing facilities and one pullet growing facility, adding 4 million layers and 950,000 pullets to its capacity. The increases in capacity have been offset by the retirement of older and less efficient facilities and a reduction in eggs produced by contract producers. As a result of the Company's growth strategy, its total flock, including pullets, layers and breeders, has increased from approximately 6.8 million at May 28, 1988 to an average of approximately 17.4 million for each of the past five fiscal years. Also, there has been a three-fold increase in the number of dozens of shell eggs sold, from approximately 117 million in the fiscal year ended May 28, 1988 to an average of approximately 394 million in each of the past five fiscal years. Net sales amounted to approximately $282.8 million in fiscal 1996, approximately four times net sales of approximately $70.0 million in fiscal 1988. The Company expects to continue to pursue its growth strategy and to use a portion of its net proceeds from this offering to acquire additional shell egg production and processing facilities and feed mills. However, it has no understandings or agreements in that regard at this time. The Company's new "in-line" facilities result in the gathering, cleaning, grading and packaging of shell eggs by less labor-intensive, more efficient, mechanical means. The increased use of in-line facilities has generated significant cost savings. The cost of eggs produced at these facilities was lower by 1.0cents, 1.5cents, 2.1cents, 2.3cents and 3.1cents per dozen in fiscal 1992, 1993, 1994, 1995 and 1996, respectively, than the cost to the Company of eggs produced from non-in-line facilities. Also, the Company produces a higher percentage of grade A eggs, which sell at higher prices, at its in-line facilities. The percentage of the total number of layers housed in the Company's in-line facilities increased from 25% in fiscal 1992 to 55% in fiscal 1996. The Company's acquisitions and construction of larger facilities, described in the tables below, reflect the continuing concentration of shell egg production in the United States in a decreasing number of shell egg producers. The Company believes that a continuation of that concentration trend may result in the reduced cyclicality of shell egg prices, but no assurance can be given in that regard. ACQUISITIONS OF EGG PRODUCTION AND PROCESSING FACILITIES <TABLE> <CAPTION> LAYERS PURCHASE FISCAL YEAR(1) SELLER LOCATION ACQUIRED PRICE - -------------- ---------------------------------------- --------------- -------------- ----------- <C> <S> <C> <C> <C> 1989 Egg City, Inc........................... Arkansas 1,300,000 $ 6,716,000 1990 Sunny Fresh Foods, Inc.................. (2) 7,500,000 21,629,000 1991 Sunnyside Eggs, Inc..................... North Carolina 1,800,000 6,000,000 1994 Wayne Detling Farms..................... Ohio 1,500,000 12,194,000 1995 A&G Farms(3)............................ Kentucky 1,000,000 2,883,000 1997 Sunbest Farms(4)........................ Arkansas 600,000 1,302,000 ---------- ----------- Total..................................................... 13,700,000 $50,724,000 ========== =========== </TABLE> CONSTRUCTION OF EGG PRODUCTION, PULLET GROWING AND PROCESSING FACILITIES(5) <TABLE> <CAPTION> FISCAL YEAR LAYER PULLET APPROXIMATE COMPLETED LOCATION CAPACITY CAPACITY COST - ----------- -------------------------------------------------- --------- -------- ----------- <C> <S> <C> <C> <C> 1990 Mississippi....................................... 1,000,000 200,000 $10,000,000 1992 Louisiana......................................... 1,000,000 -- 10,000,000 1992 Mississippi....................................... -- 500,000 3,500,000 1994 Mississippi....................................... 1,000,000 -- 9,200,000 1996 Texas............................................. 1,000,000 250,000 14,000,000 --------- ------- ----------- Total............................................. 4,000,000 950,000 $46,700,000 ========= ======= =========== </TABLE> - --------------- (1) The Company's fiscal year ends on the Saturday closest to May 31. (2) New Mexico, Kansas, Texas, Alabama, Oklahoma, Arkansas and North Carolina. (3) In connection with the purchase, the Company leased substantially all facilities and certain equipment of the business under an operating lease with monthly rentals of $79,000. See "Business -- Growth Strategy." (4) Acquired subsequent to quarter ended August 31, 1996. (5) Does not include (i) current construction in Chase, Kansas, expected to be completed in fiscal 1999 at an estimated cost of approximately $16,000,000, adding approximately 1,000,000 layer and 250,000 pullet capacity, and a feed mill and grain storage; or (ii) proposed construction in Waelder, Texas, expected to commence in fiscal 1997, and to be completed in fiscal 2000 at an estimated cost of approximately $13,900,000, adding approximately 1,000,000 layer and 250,000 pullet capacity. The Company was incorporated under Delaware law in 1969. Its principal executive offices are located at 3320 Woodrow Wilson Drive, Jackson, Mississippi 39209, and its telephone number is (601) 948-6813. Except as otherwise indicated by the context, references in this Prospectus to the "Company" or "Cal-Maine" include all subsidiaries of the Company. THE OFFERING Common Stock being offered.......... 1,700,000 shares by the Company and 800,000 shares by the Selling Stockholder(1) Common Stock to be outstanding after the offering...................... 12,006,800 shares(1)(2) Use of Proceeds..................... To provide additional funds for possible future acquisitions, increase working capital, and for general corporate purposes. Proposed NASDAQ National Market trading symbol...................... CALM - --------------- (1) Assumes no exercise of the Underwriters' over-allotment option. See "Underwriting." (2) Excludes shares reserved under the Company's 1993 Stock Option Plan. See "Management -- 1993 Stock Option Plan." SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA (DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) <TABLE> <CAPTION> FISCAL YEAR ENDED 13 WEEKS ENDED ----------------------------------------------------------- -------------------- MAY 30, MAY 29, MAY 28, JUNE 3, JUNE 1, SEPT. 2, AUG. 31, 1992 1993 1994 1995 1996 1995 1996 -------- ----------- -------- -------- -------- -------- -------- (UNAUDITED) <S> <C> <C> <C> <C> <C> <C> <C> STATEMENTS OF OPERATIONS DATA: Net sales.............................. $234,767 $ 235,908 $254,713 $242,649 $282,844 $56,219 $65,563 Net income (loss)...................... (2,192) 3,103 224 (8,685) 10,925 (1,635) 1,097 Net income (loss) per common share(1)............................. $ (.18) $ .26 $ .02 $ (.74) $ .94 $ (.14) $ .10 Weighted average shares outstanding(1)....................... 11,921 11,821 11,760 11,700 11,584 11,647 11,509 OPERATING DATA: Total flock size (thousands)(2)........ 16,839 17,439 17,697 18,014 17,209 17,819 17,375 Total shell eggs sold (millions of dozens).............................. 381.2 379.8 403.9 421.8 384.4 94.8 89.4 <CAPTION> AUGUST 31, 1996 ----------------------- (UNAUDITED) AS ACTUAL ADJUSTED(3) -------- ----------- <S> <C> <C> BALANCE SHEET DATA: Working capital........................ $ 28,229 $ 40,286 Total assets........................... 150,351 162,408 Total long-term debt (including current portion and capitalized lease obligations)......................... 62,866 62,866 Total stockholders' equity............. 48,976 61,033 </TABLE> - --------------- (1) Reflects the 1,200-for-1 stock split effective October 3, 1996 as if the split had occurred in the earliest period presented. (2) Includes pullets (young female chickens, usually under 20 weeks of age), layers (mature female chickens), and breeders (male or female birds used to produce fertile eggs to be hatched for egg production flocks). (3) Adjusted to give effect to (i) the sale of 1,700,000 shares of Common Stock offered by the Company (at an assumed initial public offering price of $7.00 per share and after deduction of the underwriting discount and estimated offering expenses payable by the Company) and the addition of the net proceeds thereof to working capital, and (ii) an increase in stockholders' equity resulting from the payment of a note payable to the Company by its principal stockholder. See "Use of Proceeds" and "Capitalization."

parsed_sections/prospectus_summary/1996/CIK0000004317_sento-corp_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS. THE COMPANY Sento Technical Innovations Corporation ("Sento" or the "Company") develops, configures, markets and distributes industry-leading hardware and software computing solutions, combined with consulting, training and support services, to business, government and educational organizations world-wide through direct sales and marketing, channel distribution, and industry partners. The Company, through its four wholly-owned subsidiaries, Spire Technologies, Inc. ("Spire Technologies"), Spire Systems Incorporated ("Spire Systems"), DewPoint Distributed Solutions Incorporated ("DewPoint") and Centerpost Innovations Pty. Ltd., develops and implements system management and office automation solutions for open and proprietary computing environments, acts as a "service and value-added reseller" and distributor of software developed by third parties, resells Digital Equipment Corporation ("Digital") network computer systems and components on a value-added basis and manages value-added reseller and distribution channels in the Americas, Europe, and Southeast Asia. The Company offers a wide range of desktop, workstation, client/server and centralized computing software, systems and peripheral equipment, as well as channel management and support services for both domestic and international clientele in a wide variety of industries and computing environments, including UNIX, Windows NT and Digital Open VMS. In September 1996, the Company obtained an option to acquire the assets (including all intellectual property) of Australian Software Innovations (Services) Pty. Ltd. ("ASI"), a developer of UNIX-based management and performance monitoring software and provider of software education and consulting services based in Sydney, Australia. ASI develops and markets performance monitoring software and provides related technical consulting services to customers located in Asia, Europe, the United Kingdom and the United States. See "Recent Developments--Australian Software Innovations" and "Business-- Products--Software." Unless the context requires otherwise, all references to the "Company" in this Prospectus refer to the Company and each of its subsidiaries. The Company's principal executive offices are located at 311 North State Street, Orem, Utah 84057, and its telephone number is (801) 226-3355. THE OFFERING <TABLE> <S> <C> Common Stock offered by the Selling Shareholders................................ 1,096,214 shares Common Stock outstanding prior to and after this offering............................... 4,347,914 shares(1) Use of Proceeds.............................. The proceeds of the offering will be received by the Selling Shareholders. See "Use of Proceeds." Over-the-counter Bulletin Board symbol....... STIC(2) </TABLE> - ------------------------ (1) As of October 31, 1996, and excluding 879,209 shares issuable upon the exercise of outstanding stock options and warrants granted by the Company. (2) The National Association of Securities Dealers has approved the Company's application for quotation of the Common Stock on the NASDAQ Small Cap Market under the symbol "SNTO." SUMMARY FINANCIAL DATA (1) <TABLE> <CAPTION> THREE MONTHS ENDED YEAR ENDED APRIL 30, JUNE 30, ---------------------------------------------------------- -------------------- 1996 1995 1994 1993 1992 1996 (2) 1995 ---------- --------- --------- ----------- ----------- --------- --------- <S> <C> <C> <C> <C> <C> <C> <C> (UNAUDITED) (UNAUDITED) STATEMENTS OF INCOME DATA: Total revenues....................... $13,873,401 $9,674,683 $6,043,411 $5,949,072 $4,164,044 $4,518,439 $3,302,858 Gross profit......................... 5,421,358 3,060,608 2,076,382 1,875,527 1,437,778 1,568,834 1,385,743 Operating income..................... 547,928 133,527 43,869 27,691 11,884 64,020 250,980 Net income........................... 339,555 98,735 18,233 10,951 (8,109) 51,975 153,462 Net income per common share (3)...... .08 .03 -- -- -- .01 .04 Weighted average common shares outstanding (3).................... 3,992,768 3,346,274 3,612,328 3,547,861 3,547,861 4,269,140 3,949,750 </TABLE> <TABLE> <CAPTION> APRIL 30, JUNE 30, 1996 1996 ------------- ------------- <S> <C> <C> (UNAUDITED) BALANCE SHEET DATA: Cash and Cash Equivalents........................................................... $ 2,459,938 $ 1,552,806 Working Capital..................................................................... 2,692,590 943,332 Total Assets........................................................................ 6,755,007 4,544,825 Total Long-term Debt................................................................ 222,169 223,412 Total stockholders' equity.......................................................... 3,103,490 1,480,907 </TABLE> - ------------------------------ (1) The consolidated financial statements of the Company as of and for the year ended April 30, 1996 include the financial statements of the Company and the three subsidiaries of the Company owned during such year (Spire Technologies, Spire Systems and DewPoint). The financial statements of the Company as of April 30, 1995, and for each of the years in the two-year period then ended are the combined financial statements of Spire Technologies and Spire Systems prior to the consummation of the share exchange transaction completed by the Company in April 1996. See "Recent Developments--Share Exchange." All significant intercompany balances and transactions have been eliminated in consolidation or combination. (2) In June 1996, the Company changed its fiscal year end from April 30 to March 31 of each year, commencing with the fiscal year ending March 31, 1997. The consolidated financial statements set forth in this Prospectus are based upon the Company's former fiscal year end of April 30. (3) Per share amounts are computed by dividing net income by the weighted average number of common shares and common share equivalents resulting from options outstanding. There were 3,992,768, 3,346,274 and 3,612,328 weighted average common shares and common share equivalents outstanding for the years ended April 30, 1996, 1995 and 1994, respectively, and there were 3,547,861 weighted average common shares and common share equivalents outstanding for the years ended April 30, 1993 and 1992, respectively. Income per share for the 1995 and prior fiscal years has been restated to give effect to the share exchange completed by the Company in April 1996. See "Recent Developments--Share Exchange."

parsed_sections/prospectus_summary/1996/CIK0000005588_american_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by more detailed information and financial statements and notes thereto included elsewhere in this Prospectus. Unless otherwise stated, the information contained in this Prospectus (i) assumes no exercise of the U.S. Underwriters' over-allotment option, (ii) reflects a 8.1192-for-one stock split of the existing Common Stock and Common Stock equivalents and (iii) reflects the conversion of all shares of preferred stock and preferred stock equivalents into shares of Common Stock and Common Stock equivalents, respectively. See "The Recapitalization." Unless otherwise stated in this Prospectus, references to (a) the "Company" shall mean American Pad & Paper Company, its consolidated subsidiaries and their respective predecessors; (b) "Williamhouse" shall mean the operations of Williamhouse--Regency of Delaware, Inc. prior to its acquisition by the Company on October 31, 1995 (the "Acquisition"); and (c) "Ampad" shall mean Ampad Corporation, the former operating subsidiary of the Company, prior to Ampad's merger with and into Williamhouse immediately prior to the Acquisition. On May 29, 1996, the Company executed a definitive agreement to purchase the Niagara Envelope Company, Inc. ("Niagara"). Financial data presented herein on a pro forma basis for the year ended December 31, 1995 gives effect to the Acquisition, the other transactions related thereto, the acquisition of Niagara and the Offering as if such transactions occurred on January 1, 1995. See "Unaudited Pro Forma Financial Data." THE COMPANY The Company is one of the largest manufacturers and marketers of paper-based office products (excluding computer forms and copy paper) in the $60 billion to $70 billion North American office products industry. The Company offers a broad product line including nationally branded and private label writing pads, file folders, envelopes and other office products. Through its Ampad division, the Company is among the largest and most important suppliers of pads and other paper-based writing products, filing supplies and envelopes to many of the largest and fastest growing office products distributors. Acquired in October 1995, the Company's Williamhouse division is the leading supplier of mill branded, specialty and commodity envelopes to paper merchants/distributors. The Company's strategy is to grow by focusing on the largest and fastest growing office product distribution channels, making acquisitions, introducing new product lines, broadening product distribution across its channels and maintaining its position among the lowest-cost manufacturers in the industry. As a result of this strategy, the Company's sales have grown at a compound annual rate of approximately 34% from 1992 to 1995. For the year ended December 31, 1995, the Company had net sales of $617.2 million and income from operations of $57.3 million on the pro forma basis described herein. See "Unaudited Pro Forma Financial Data." Since the mid-1980s, the office products industry has experienced significant changes in the channels through which office products are distributed such as the emergence of new channels, including national office products superstores, national contract stationers and mass merchandisers, and consolidation within these and other channels. As a result of these changes, approximately 6,800 office product distributors existed in 1994 compared with approximately 13,300 in 1987. The channels through which office products are distributed from the manufacturer to the end-user include retail channels such as national office products superstores, mass merchandisers and warehouse clubs; commercial channels such as national contract stationers; paper merchants/distributors; and other channels such as regional distributors, school campuses and direct mail. The Company believes that sales of office products through retail channels are approximately $20 billion to $25 billion. The three dominant national superstores (Office Depot, OfficeMax and Staples) have experienced significant growth over the past three years and currently account for approximately 17% of retail office products sales and approximately 6% of total office products sales. The Company believes that sales of office products through commercial channels are approximately $25 billion to $30 billion. Principally through the acquisition of smaller, regional contract stationers, national contract stationers (including Boise Cascade Office Products, BT Office Products, Corporate Express, U.S. Office Products and the contract stationer divisions of Office Depot and Staples) have grown more rapidly than other commercial channels. These national contract stationers now account for approximately 25% of commercial office products sales and approximately 11% of total office products sales. Certain office products, particularly envelopes, are sold predominantly through paper merchants/distributors or directly to end users. Paper merchants/distributors currently account for approximately 30% of the envelope market. The three largest paper merchants (ResourceNet, Unisource and Zellerbach) have experienced significant growth primarily through consolidation. The Company has targeted and will continue to target those customers driving consolidation in the retail, commercial and paper merchant distribution channels and believes that it is uniquely positioned to meet the special requirements of these customers. These customers seek suppliers, such as the Company, who are able to offer broad product lines, higher value-added innovative products, national distribution capabilities, low costs and reliable service. Furthermore, as these customers continue to grow and as they consolidate their supplier bases, the Company's ability to meet their special requirements becomes an increasingly important competitive advantage. Recognizing Ampad's potential for growth through the changing distribution channels, Bain Capital, Inc. ("Bain Capital") and management formed the Company and purchased Ampad from Mead Corporation ("Mead") in 1992. Since that time, management has enhanced the Company's scale, broadened its product line, expanded upon its national presence and strengthened its distribution capabilities through acquisition and innovation while simultaneously delivering higher customer service levels. As a result, the Company's net sales through the most rapidly growing retail and commercial channels increased from $8.8 million in 1992 to $134.8 million ($164.5 million on a pro forma basis) in 1995. COMPETITIVE STRENGTHS The combination of the Company's products, customers and national scale distinguishes it as a leading manufacturer and marketer of paper-based office products (excluding computer forms and copy paper) in North America. The Company attributes this position and its continued opportunities for growth and profitability to the following competitive strengths: . Market Leader. The Company has achieved market leadership in core products sold to customers in the largest and fastest growing office products channels by offering one of the broadest assortments of high quality products in the industry. Furthermore, the Company enjoys national brand awareness in many of its product lines, including Ampad, Century, Embassy, Evidence, Gold Fibre, Huxley, Karolton, Kent, Peel & Seel, SCM, Williamhouse and World Fibre. . Well-Positioned and Diversified Customer Base. The Company has substantial opportunities for growth within several distribution channels of the office products industry. The Company has focused on the largest and fastest growing office products channels. Several of the Company's largest customers, such as Boise Cascade Office Products, BT Office Products, Corporate Express, Office Depot, OfficeMax and Staples, are expected by industry analysts to experience annual revenue growth of 15% to 35% over the next five years. The Company's Williamhouse division maintains particularly strong relationships with the largest and fastest growing paper merchants/distributors in the market, including ResourceNet, Unisource and Zellerbach. The Company also maintains strong customer relationships across all of the other office products distribution channels, including mass merchandisers, warehouse clubs, office products wholesalers and independent dealers. . National Scale and Service Capability. The Company's extensive product line, multiple brands and broad price point coverage provide significant advantages and economies of scale in selling to and servicing its customers. The Company has become an increasingly important strategic partner to its customers as they seek higher value-added products, simplify their purchasing organizations and consolidate their relationships among selected national suppliers. The Company's national presence and network of 22 strategically located facilities have enabled it to maintain rapid and efficient order fulfillment standards. In addition, the Company's advanced electronic data interchange ("EDI") capabilities enable it to meet its customers' EDI requirements, executing automated transactions rapidly, efficiently and accurately. . Innovation/New Products. The Company has introduced several innovative products as part of its marketing strategy to differentiate itself from other suppliers and enhance profitability. Recent examples include Gold Fibre classic and designer notebooks, Papers with a Purpose, World Fibre ground- wood writing pads and Peel & Seel envelopes. Products introduced since 1992 accounted for over $70 million of the Company's 1995 net sales. The Company's brand recognition and presence with its national customers allows it to more easily introduce new or acquired product lines to those customers. . Low-Cost Manufacturer. The Company believes it is among the lowest-cost manufacturers of paper-based office products in the industry. The Company ensures its low-cost manufacturing position through its paper purchasing and distribution advantages as well as its maintenance of modern and efficient manufacturing technology and a high quality workforce. The Company has been successful in reducing costs with each of its acquisitions in the last three years by continually streamlining its manufacturing processes and overhead structure. From 1992 to 1995, the Company reduced its fixed manufacturing costs from 7.4% to 5.2% of net sales and its selling, general and administrative expenses from 10.5% to 7.2% of net sales. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Overview." . Purchasing Advantages. The Company has strong relationships with most of the country's largest paper mills, many of which have been conducting business with the Company for more than 30 years. The Company is one of the largest purchasers of the principal paper grades used in its manufacturing operations. In addition, the Company has the largest number of designated mill relationships which involve some of the largest and most recognized paper mill brands such as Hammermill, Hopper, Neenah and Strathmore. These relationships afford the Company certain paper purchasing advantages, including stable supply and favorable pricing arrangements. . Proven Management Team With Successful Track Record. The Company's senior operating management team averages over 25 years each in the paper products industry. Management has succeeded in increasing sales and operating profitability by recognizing and acting on the transition to the fastest growing distribution channels, introducing higher value-added products, acquiring complementary product lines (Karolton in December 1993, SCM Office Supplies, Inc. ("SCM") in July 1994 and certain product lines of Huxley and Globe-Weis in July 1994 and August 1995, respectively), improving manufacturing processes and reducing overhead and administrative costs. Upon completion of the Offering, the Company's senior management team (Messrs. Hanson, Gard and Benson) will collectively own 865,516 shares of Common Stock (438,427 shares if the U.S. Underwriters' over-allotment option is exercised in full) and hold currently exercisable options to purchase an additional 2,156,000 shares of Common Stock. Assuming an initial public offering price of $16.00 per share, these holdings represent on a fully-diluted basis approximately 10.3% of the outstanding Common Stock (8.9% if the U.S. Underwriters' over-allotment option is exercised in full). See "Principal and Selling Stockholders." GROWTH STRATEGY The Company's strategy is to maintain and strengthen its leadership position by focusing on the following: . Focus on Rapidly Growing Customers. The Company serves many of the largest and best positioned customers in the office products market segment including national office products superstores, mass merchandisers and warehouse clubs, national contract stationers and national paper merchants/distributors. For 1995 on a pro forma basis, approximately 15.3% of the Company's net sales were to national office product superstores, 7.8% to mass merchandisers and warehouse clubs, 9.1% to national contract stationers and 19.7% to the three largest national paper merchants/distributors. Anticipating further consolidation in the office products industry, the Company expects that its national scope and broad product line will be increasingly important in meeting the needs of its customers. The Company will continue to target those customers driving consolidation in the office products industry. . Continue to Introduce New Products. New, higher value-added products give the Company a greater selection to offer its customers and improve product line profitability for both the Company and its customers. The Company plans to differentiate itself from other suppliers and improve profitability through product innovation, differentiation and line extensions. . Pursue Complementary Product Line and Strategic Acquisitions. The office products industry is highly fragmented despite continuing consolidation among its manufacturers. The Company is leading consolidation among manufacturers of writing products, filing supplies and envelopes. The SCM and Williamhouse acquisitions broadened the Company's product line to include filing products and envelopes and enhanced its presence in the growing distribution channels. The Globe-Weis acquisition and the Company's agreement to acquire Niagara demonstrate its commitment to strengthening its competitive and strategic position within its markets. The Company believes that there are significant opportunities to acquire companies in both its existing and complementary product lines. In addition, the Company intends to enter new office products markets through acquisitions of established companies in those markets. . Broaden Product Distribution. The Company's market presence and distribution strengths uniquely position it to sell new or acquired product lines across its distribution channels, including national office products superstores, national contract stationers, office product wholesalers and mass merchandisers. As an important part of its growth strategy, for example, the Company has successfully introduced the envelope product lines acquired in the Acquisition, previously distributed primarily through paper merchants/distributors, to the Ampad division's distribution channels under the Ampad and private label names. The Company estimates that this market opportunity is approximately $350 million in annual net sales. . Continue to Reduce Costs. The Company has identified and is in the process of implementing cost reductions in connection with the Acquisition that are expected to result in approximately $7.4 million of annualized cost savings. In addition, management plans to implement further identified cost reductions beyond 1996. RECENT TRANSACTIONS On May 29, 1996, the Company executed a definitive agreement to acquire Niagara for an aggregate purchase price of approximately $50 million, plus $5.0 million to be paid under a one-year consulting services agreement (the "Niagara Acquisition"). Niagara supplies mill branded, specialty and commodity envelopes to paper merchants/distributors through four manufacturing facilities located near Buffalo, Chicago, Dallas and Denver. Niagara had 1995 net sales of approximately $106 million and operating income of approximately $8.5 million. The Company expects the Niagara Acquisition to be completed by the middle of July 1996. The Company believes that the Niagara Acquisition will strengthen the Company's distribution capabilities in the Midwest, provide additional manufacturing capacity and provide opportunities to achieve operating improvements through the consolidation of Niagara's operations with those of the Company. The completion of the Niagara Acquisition is subject to certain conditions. In October 1995, the Company acquired Williamhouse for an aggregate purchase price (including assumption of debt of approximately $152.9 million) of approximately $300 million, plus reimbursement of certain expenses. In connection with the Acquisition, the Company (i) refinanced an aggregate of approximately $119.1 million of combined indebtedness of the Company and Williamhouse, (ii) purchased for $109.0 million in cash all of the outstanding 11 1/2% Senior Subordinated Debentures due 2005 of Williamhouse (the "Old Debentures"), together with accrued interest thereon of $5.3 million, (iii) declared a stock dividend of $200 million in aggregate liquidation value of preferred stock and preferred stock equivalents (collectively, the "Preferred Stock") and subsequently redeemed approximately $70.6 million of such Preferred Stock and declared a $4.5 million cash dividend on its Class P Common Stock, (iv) paid approximately $34.2 million in related fees and expenses and (v) used approximately $3.4 million for working capital purposes. To finance the Acquisition and these related transactions, the Company's principal operating subsidiary (i) incurred borrowings under a credit agreement (the "Bank Credit Agreement") of approximately $245 million, (ii) issued $200 million in aggregate principal amount of senior subordinated notes due 2005 (the "Notes"), and (iii) received approximately $45 million from the establishment of a new non-recourse, off-balance sheet accounts receivable securitization program (the "Accounts Receivable Facility"). The Acquisition, the other transactions entered into in connection therewith, and the financing thereof are collectively referred to herein as the "Transactions." The Company's management identified the personalizing business division of Williamhouse (the "Personalizing Division") as a nonstrategic asset following the Acquisition and has decided to pursue a sale of the Personalizing Division. As a result, the financial statements of the Company included elsewhere in this Prospectus reflect the Personalizing Division as "Assets held for Sale" as of December 31, 1995 and March 31, 1996. On June 6, 1996, the Company signed a definitive agreement with a potential buyer to sell the Personalizing Division. Under the terms of the agreement, the Company will receive approximately $60 million in gross proceeds (subject to certain closing adjustments) from the sale of the Personalizing Division, which it expects to complete by the end of June 1996. The sales agreement is subject to certain conditions, some of which are outside the control of the Company. As a result, no assurance can be given that the proposed sale will be completed or, if completed, will be on the terms outlined herein. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Overview." Although the Company regularly engages in discussions with companies regarding potential acquisitions, it currently does not have any agreements or understandings relating to acquisitions other than the Niagara Acquisition. THE OFFERING(1) <TABLE> <S> <C> Common Stock offered by The Company........... 12,500,000 shares The Selling 3,125,000 shares Stockholders......... Total............... 15,625,000 shares Common Stock offered U. S. Offering........ 12,500,000 shares International 3,125,000 shares Offering............. Total............... 15,625,000 shares Common Stock to be outstanding after the Offering............... 26,925,272 shares(2) Use of proceeds......... The net proceeds to be received by the Company from the Offering will be used to repay certain outstanding bank indebtedness and to redeem a portion of the Notes issued by the Company's principal operating subsidiary and to pay certain fees. The Company will not receive any proceeds from the sale of shares by the Selling Stockholders. See "Use of Proceeds." Proposed NYSE symbol.... AGP </TABLE> - -------- (1) Does not include the Underwriters' over-allotment option granted by the Selling Stockholders for an aggregate of 2,343,750 shares of Common Stock. (2) Does not include 2,156,000 shares of Common Stock reserved for issuance upon the exercise of options outstanding as of June 5, 1996 and granted to members of management pursuant to the Company's 1992 Key Employees Stock Option Plan (the "1992 Stock Plan") or 2,100,000 shares of Common Stock reserved for issuance under the Company's 1996 Key Employees Stock Incentive Plan (the "1996 Stock Plan"), the Non-Employee Director Stock Option Plan (the "Non-Employee Director Plan") and the Management Stock Purchase Plan. See "Management--Stock Options." SUMMARY FINANCIAL DATA The summary historical consolidated financial data set forth below for the years ended December 31, 1993, 1994 and 1995 have been derived from, and are qualified by reference to, the audited consolidated financial statements of the Company included elsewhere in this Prospectus. The summary historical consolidated financial data set forth below for the three months ended March 31, 1995 and 1996 have been derived from the unaudited consolidated financial statements of the Company, which, in the opinion of the Company, reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation. Results for the three months ended March 31, 1996 are not necessarily indicative of results for the full year. The summary historical consolidated and unaudited pro forma financial data set forth below should be read in conjunction with, and are qualified by reference to, "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Financial Data" and the audited consolidated financial statements and accompanying notes thereto included elsewhere in this Prospectus. <TABLE> <CAPTION> YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31, ----------------------------------------- ----------------------------------- HISTORICAL HISTORICAL ------------------------------ ----------------- PRO FORMA PRO FORMA 1993 1994 1995 1995(1) 1995 1996 1996(2) -------- -------- -------- --------- ------- -------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> INCOME STATEMENT DATA(3)(4)(5): Net sales............... $104,277 $120,443 $259,341 $617,167 $47,691 $121,418 $149,735 Cost of sales(6)........ 88,491 113,394 211,814 481,804 42,394 97,889 121,245 -------- -------- -------- -------- ------- -------- -------- Gross profit............ 15,786 7,049(6) 47,527 135,363 5,297 23,529 28,490 Selling, general and administrative expenses............... 10,765 10,615 18,545 74,678(7) 2,749 11,026 14,493(7) Non-recurring compensation charge(8).............. -- -- 27,632 3,367 -- -- -------- -------- -------- -------- ------- -------- -------- Income (loss) from operations............. 5,021 (3,566) 1,350 57,318 2,548 12,503 13,997 Interest expense........ 3,320 4,560 13,657 30,953 1,656 12,542 7,738 Other (income) expense.. (167) (90) (735) (642) (65) (269) (265) -------- -------- -------- -------- ------- -------- -------- Income (loss) before income taxes........... 1,868 (8,036) (11,572) 27,007 957 230 6,524 Provision for (benefit from) income taxes..... 64 (488) (6,538) 9,814 366 102 2,596 -------- -------- -------- -------- ------- -------- -------- Income (loss) before extraordinary item..... 1,804 (7,548) (5,034) 17,193 591 128 3,928 Extraordinary loss from extinguishment of debt, net of income tax benefit................ -- -- (9,652) -- -- -- -- -------- -------- -------- -------- ------- -------- -------- Net income (loss)....... $ 1,804 $ (7,548) $(14,686) $ 17,193 $ 591 $ 128 $ 3,928 ======== ======== ======== ======== ======= ======== ======== Pro forma earnings (loss) per share(9).... $ (.95) $ .59 $ .01 $ .14 ======== ======== ======== ======== Pro forma weighted average number of common shares and common share equivalents outstanding(9)......... 15,540 29,063 16,562 29,063 ======== ======== ======== ======== OTHER DATA: Depreciation and amortization........... $ 159 $ 942 $ 4,248 $ 17,982 $ 528 $ 3,020 $ 3,803 Capital expenditures.... 1,656 942 5,640 13,688 2,530 2,321 3,087 </TABLE> <TABLE> <CAPTION> MARCH 31, 1996 ------------------------- PRO FORMA ACTUAL AS ADJUSTED(10) -------- --------------- <S> <C> <C> BALANCE SHEET DATA: Working capital...................................... $109,238 $114,799 Total assets......................................... 500,794 541,933 Long-term debt, less current maturities(11).......... 440,453 319,295 Stockholders' equity (deficit)(12)................... (66,293) 100,650 </TABLE> (footnotes on next page) (1) The summary unaudited pro forma income statement and other data for the year ended December 31, 1995 give pro forma effect, in the manner described under "Unaudited Pro Forma Financial Data" and the notes thereto, to: (i) the Transactions, (ii) the Globe-Weis Acquisition (as defined), (iii) the pending disposal of the Personalizing Division, (iv) the transactions described under "The Recapitalization," (v) refinancing of the Bank Credit Agreement, (vi) the Niagara Acquisition and (vii) the Offering (assuming an initial public offering price of $16.00 per share) and the application of the net proceeds therefrom as described under "Use of Proceeds," as if each had occurred on January 1, 1995. The summary pro forma income statement data and other data do not (i) purport to represent what the Company's results of operations actually would have been if the foregoing transactions had actually occurred as of such date or what such results will be for any future periods or (ii) give effect to certain non- recurring charges expected to result from items (i), (v) and (vii) above, including certain non-cash compensation charges directly related to the Acquisition and an extraordinary charge for the write-off of deferred financing fees and direct expenses to retire and refinance existing Company debt. The final allocation of purchase price and the resulting amortization expense in the income statement data may differ somewhat from the preliminary estimates for the reasons described in more detail in "Unaudited Pro Forma Financial Data" and in Note 3 of the Notes to Consolidated Financial Statements of the Company. (2) The summary unaudited pro forma income statement and other data for the three months ended March 31, 1996 give pro forma effect, in the manner described under "Unaudited Pro Forma Financial Data" and the notes thereto, to: (i) the pending disposal of the Personalizing Division, (ii) the transactions described under "The Recapitalization," (iii) refinancing of the Bank Credit Agreement, (iv) the Niagara Acquisition and (v) the Offering (assuming an initial public offering price of $16.00 per share) and the application of the net proceeds therefrom as described under "Use of Proceeds," as if each had occurred on January 1, 1996. (3) Effective July 5, 1994, the Company acquired the assets and assumed certain liabilities of SCM Office Supplies, Inc. (the "SCM Acquisition"). The acquisition has been accounted for under the purchase method of accounting and, accordingly, the operating results have been included with the Company's results since the date of acquisition. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3 of the Notes to Consolidated Financial Statements of the Company included herein. (4) Effective August 16, 1995, the Company acquired the inventories and certain equipment of the file folder and hanging file product lines of the Globe-Weis office products division ("Globe-Weis") of Atapco (as defined) (the "Globe-Weis Acquisition"). The acquisition has been accounted for under the purchase method of accounting and, accordingly, the operating results have been included in the Company's results since the date of acquisition. See "Management's Discussion and Analysis of Financial Condition and Results of Operations," Note 3 of the Notes to Consolidated Financial Statements of the Company and the audited statements of Net Sales and Cost of Sales of Globe-Weis included herein. (5) Effective October 31, 1995, the Company acquired Williamhouse in the Acquisition. The Acquisition has been accounted for under the purchase method of accounting and accordingly, the operating results of Williamhouse, except for the Personalizing Division, for the two-month period ended December 31, 1995 have been included in the Company's results for the year ended December 31, 1995. The Personalizing Division was held for sale at December 31, 1995 and March 31, 1996. As such, the operating results of the Personalizing Division are excluded from the results of operations for the two-month period ended December 31, 1995 (period subsequent to the Acquisition) and the three months ended March 31, 1996. See "Management's Discussion and Analysis of Financial Condition and Results of Operations," Note 3 of the Notes of Consolidated Financial Statements of the Company and the audited financial statements of Williamhouse included herein. (6) Inventory cost is determined using the last-in, first-out ("LIFO") method of valuation. Gross profit in the fourth quarter of 1994 was adversely impacted by a significant increase in paper prices, resulting in a $5.4 million charge for LIFO in advance of the Company's raising selling prices in the first quarter of 1995. Beginning in January 1995, the Company adopted new pricing policies enabling it to set product prices consistent with the Company's cost of paper at the time of shipment. The Company believes that it is now able to price its products so as to minimize the impact of price volatility on dollar margins. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Overview." (7) Includes charges under a one-year consulting services agreement to be entered into in connection with the Niagara Acquisition of $5.0 million and $1.25 million for the year ended December 31, 1995 and the three months ended March 31, 1996, respectively. (8) Includes non-cash stock option compensation charges of $24.3 million directly related to the Acquisition as well as other non-recurring cash and non-cash charges aggregating $3.3 million. See Note 9 of Notes to Consolidated Financial Statements of the Company included herein. (9) Pro forma earnings (loss) per common share and pro forma weighted average number of shares and share equivalents outstanding have been adjusted to give effect to (i) a 8.1192-for-one stock split of all existing Common Stock and Common Stock equivalents and (ii) the conversion of all shares of Preferred Stock and Preferred Stock equivalents into shares of Common Stock and Common Stock equivalents at the assumed offering price per share to the public. Common Stock equivalents were determined using the treasury stock method. (10) The unaudited "Pro Forma As Adjusted" balance sheet data at March 31, 1996 gives pro forma effect to (i) the transactions described under "The Recapitalization," (ii) the refinancing of the Bank Credit Agreement, (iii) the Niagara Acquisition and (iv) the sale by the Company of 12,500,000 shares of Common Stock pursuant to the Offering, assuming an initial public offering price of $16.00 per share and the application of the estimated net proceeds to the Company therefrom as described under "Use of Proceeds," as if each had occurred on such date. See "Unaudited Pro Forma Financial Data." (11) Does not reflect the expected repayment of debt from the estimated proceeds from the sale of the Personalizing Division. (12) Includes $4.5 million to pay the liquidation preference, including the return of original cost, of the Company's Class P Common Stock and $70.6 million to redeem a portion of its Preferred Stock. See "Dividend Policy."

parsed_sections/prospectus_summary/1996/CIK0000006885_stage_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by reference to the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. References in this Prospectus to the Company shall, as the context requires, refer to Stage Stores, Inc. ("Stage Stores"), which was previously known as Apparel Retailers, Inc., together with its wholly-owned subsidiaries, including Specialty Retailers, Inc. ("SRI"). References to a particular year are to the Company's fiscal year which is the 52 or 53 week period ending on the Saturday closest to January 31 of the following calendar year (e.g., a reference to "1995" is a reference to the fiscal year ended February 3, 1996). The term pro forma refers to the basis described under "Unaudited Pro Forma Combined Financial Data." In addition, unless otherwise indicated, (i) the information in this Prospectus reflects a .94727 for 1 reverse stock split of the common stock to be consummated prior to the Offering and (ii) the information contained herein assumes that the Underwriters' over-allotment option is not exercised. See "Underwriting." The Company The Company operates the store of choice for well known, national brand name family apparel in over 200 small towns and communities across the central United States. The Company has recognized the high level of brand awareness and demand for fashionable, quality apparel by consumers in small markets and has identified these markets as a profitable and underserved niche. The Company has developed a unique franchise focused on small markets, differentiating itself from the competition by offering a broad range of merchandise with a high level of customer service in convenient locations. The Company currently operates 314 stores through its "Stage", "Bealls" and "Palais Royal" trade names in 20 states throughout the central United States. Approximately 77% of these stores are located in small markets and communities with as few as 4,000 people. The Company's store format (averaging approximately 18,000 total selling square feet) and merchandising capabilities enable the Company to operate profitably in small markets. The remainder of the Company's stores operate in metropolitan areas, primarily in suburban Houston. For the twelve months ended February 3, 1996, the Company would have had pro forma sales and income before extraordinary item of $742.4 million and $20.7 million, respectively. Stage Stores' merchandise offerings include a carefully edited but broad selection of branded, moderately priced, fashion apparel, accessories, fragrances and cosmetics and footwear for women, men and children. Over 85% of 1995 sales consisted of branded merchandise, including nationally recognized brands such as Levi Strauss, Liz Claiborne, Chaps/Ralph Lauren, Calvin Klein, Guess, Hanes, Nike, Reebok and Haggar Apparel. In recent years, the Company has undertaken several initiatives to realize the full potential of its unique franchise in small markets, including (i) recruiting a new senior management team, (ii) embarking on a store expansion program to capitalize on available opportunities in new markets through new store openings and strategic acquisitions, (iii) continuing to refine the Company's retailing concept and (iv) closing unprofitable stores. As a result of these initiatives, the lower operating costs of small market stores, the benefits of economies of scale, and its highly automated facilities and sophisticated information systems, the Company has among the highest operating income margins in the apparel retailing industry. Competitively Well Positioned As a result of its small market focus, Stage Stores generally faces less competition for brand name apparel because consumers in small markets generally have only been able to shop for branded merchandise in distant regional malls. In those small markets where the Company does compete for brand name apparel sales, such competition generally comes from local retailers, small regional chains and, to a lesser extent, national department stores. The Company believes it has a competitive advantage over local retailers and smaller regional chains due to its (i) economies of scale, (ii) strong vendor relationships, (iii) proprietary credit card program and (iv) sophisticated operating systems. The Company believes it has a competitive advantage in small markets over national department stores due to its (i) experience with smaller markets, (ii) ability to effectively manage merchandise assortments in a small store format and (iii) established operating systems designed for efficient management within small markets. In addition, due to minimal merchandise overlap, Stage Stores generally does not directly compete for branded apparel sales with national discounters such as Wal-Mart. Key Strengths The following factors serve as the Company's key strengths and distinguishing characteristics: Ability to Operate Profitably in Smaller Markets. In targeting small markets, the Company has developed a store format, generally ranging in size from 12,000 to 30,000 square feet, which is smaller than typical department stores yet large enough to offer a well edited, but broad selection of merchandise. This format, together with economies of scale in buying and merchandising, information systems, distribution and advertising, has enabled the Company to operate profitably in small markets. In 1995, the Company's small market stores open for at least one year generated a store contribution (operating profit before allocation of corporate overhead) as a percentage of sales of 18%, as compared to 12% for its larger market stores. Benefits of Strong Vendor Relationships. The Company's large store base offers major vendors a unique vehicle for accessing multiple small markets in a cost effective manner. The proliferation of media combined with the significant marketing efforts of these vendors has created significant demand for branded merchandise. However, the financial and other limitations of many local retailers have left vendors of large national brands with limited access to such markets. Further, these vendors, in order to preserve brand image, generally do not sell to national discounters. As a result, the Company is able to carry branded merchandise frequently not carried by local competitors. Additionally, the Company continuously seeks to expand its vendor base and has recently added nationally recognized brand names such as Polo, Dockers for Women, and Oshkosh, and fragrances by Elizabeth Arden, Liz Claiborne and Perry Ellis. In addition, the Company has successfully increased the participation by key vendors in joint marketing programs to a level that the Company believes exceeds the standard programs provided to its smaller, regional competitors. Effective Merchandising Strategy. The Company's merchandising strategy is based on an in-depth understanding of its customers and is designed to accommodate the particular demographic profile of each store. Store layouts and visual merchandising displays are designed to create a friendly, modern, department store environment, which is frequently not found in small markets. The Company's strategy focuses on moderately priced merchandise categories of women's, men's and children's apparel, accessories, fragrances, cosmetics and footwear, which have traditionally experienced attractive margins. The Company utilizes a sophisticated merchandise allocation and transfer system which is designed to maximize in-stock positions, increase sales and reduce markdowns. The Company believes that the combination of the size and experience of its buyer group, strong vendor relationships, effective merchandising systems and participation in the Associated Merchandising Corporation ("AMC") cooperative buying service enable it to compete effectively on both price and selection in its markets. Focused Marketing Strategy. The Company's primary target customers are women between the ages of 20 and 55 with household incomes over $25,000 who are the primary decision makers for family clothing purchases. The Company uses a multi-media advertising approach to position its stores as the local destination for fashionable, brand name merchandise. In addition, the Company heavily promotes its proprietary credit card in order to create customer loyalty and to effectively identify its core customers. The Company believes it has a high level of customer awareness due to the small size of its markets, its aggressive advertising strategy and well developed corporate programs designed to encourage a high level of customer interaction and employee participation in local community activities. Benefits of Proprietary Credit Card Program. The Company aggressively promotes its proprietary credit card and, as a result, the Company believes it experiences a higher percentage of proprietary credit card sales (55.6% of net sales in 1995) than most retailers. The Company considers its credit card program to be a critical component of its retailing concept because it (i) enhances customer loyalty by providing a service that few local and regional competitors or discounters offer, (ii) allows the Company to identify and regularly contact its best customers and (iii) creates a comprehensive database that enables the Company to implement detailed, segmented marketing and merchandising strategies for each store. Emphasis on Customer Service. A primary corporate objective is to provide excellent customer service through stores staffed with highly trained and motivated sales associates. Each sales associate is evaluated based upon the attainment of specific customer service standards such as offering prompt assistance, suggesting complementary items, sending thank-you notes to charge customers and establishing consistent contact with customers in order to create the associate's own customer base. The Company continuously monitors the quality of its service by making over 3,000 calls each month to credit card customers who have recently made a purchase. The results of these surveys are used to determine a portion of each store manager's bonus. The Company further extends its service philosophy to the design of the store, including installing call buttons in its fitting rooms and, in its small market stores, locating the store manager on the selling floor to increase accessibility to customers. Sophisticated Operating and Information Systems. The Company supports its retail concept with highly automated and integrated systems in areas such as merchandising, distribution, sales promotions, credit, personnel management, store design and accounting. These systems have enabled the Company to effectively manage its inventory, improve sales productivity and reduce costs, and have contributed to its relatively high operating income margins. Growth Strategy In order to fully realize the potential of its unique market position and proven ability to operate profitably in small markets, the Company has initiated an aggressive growth strategy to capitalize on available opportunities in new markets through new store openings and strategic acquisitions. The Company opened 23 new stores and 45 acquired stores in 1995, has opened 25 new stores and acquired 34 stores to date in 1996, and expects to open approximately 10 additional new stores during the remainder of 1996. The Company's goal is to open at least 55 new stores in 1997. The following are the primary elements of the Company's strategy for profitable growth: New Store Openings in Smaller Markets. As part of its ongoing expansion program, the Company has identified over 600 additional markets in the central United States and contiguous states which meet its demographic and competitive criteria. All of these target markets are smaller communities, where the Company has historically experienced its highest profit margins. Strategic Acquisitions. The Company believes that it can benefit from strategic acquisitions by (i) applying its buying and merchandising capabilities, sales promotion techniques and customer service methods, (ii) introducing its proven management systems, and (iii) consolidating overhead functions. This strategy has been successfully demonstrated by the Company's acquisition of 45 stores from Beall-Ladymon, Inc. ("Beall-Ladymon") in 1994 and the subsequent reopening of the stores in the first quarter of 1995 under the Stage name. In 1993, the year prior to their acquisition, the Beall-Ladymon stores generated sales of approximately $53.4 million, whereas the newly opened Stage stores in the same locations generated sales for the twelve months ended August 3, 1996 of $95.0 million, an increase of 78%. Over the same periods, store contribution more than doubled. In June 1996, the Company acquired Uhlmans Inc. ("Uhlmans"), a privately held retailer with 34 locations in Ohio, Indiana and Michigan, where the Company previously had no stores (the "Uhlmans Acquisition"). These stores are of similar size and merchandise content to the Company's existing stores and are compatible with the Company's retailing concept and growth strategy. For 1995, Uhlmans had net sales of $59.7 million and operating income of $2.2 million. The Company believes significant opportunities are available to improve Uhlmans' financial results through the expansion of certain merchandise categories, the Company's lower merchandising costs, increased proprietary credit card-based sales, the implementation of the Company's operating systems and the elimination of duplicative central and administrative overhead. Expansion to Micromarkets. The Company recently began targeting its small market retailing concept towards communities with populations from 4,000 to 12,000 ("micromarkets"). These efforts are designed to capitalize on the Company's favorable operating experience in markets of this size. Stage Stores believes that micromarkets may offer a significant avenue for potential growth, because the Company is able to apply its existing successful store model in those micromarkets due to its ability to scale its store concept to the appropriate size (less than 12,000 gross square feet), the generally lower levels of competition and low labor and occupancy costs. The Company has identified approximately 1,200 potential micromarkets in the central United States and contiguous states which meet these criteria. The Offering Common Stock offered by: The Company (1) 10,000,000 shares Selling Stockholders 1,000,000 shares (1) Total 11,000,000 shares ============= Common Stock to be outstanding after the Offering (2) 22,520,892 shares Use of proceeds The net proceeds to be received by the Company from the Offering are estimated to be approximately $139.7 million and will be used (i) to purchase for cash up to all of the Company's outstanding 12-3/4% Senior Discount Debentures due 2005 (the "Senior Discount Debentures") in a tender offer (the "Tender Offer") and to pay a consent fee for elimination or amendment of certain covenants in the Senior Discount Debentures for an aggregate amount of approximately $135.0 million, (ii) to pay consent fees for amendments to certain covenants in the indebtedness of SRI and (iii) to pay a $2.0 million fee to terminate the Professional Services Agreement (as defined). See "Use of Proceeds" and "Certain Relationships and Related Transactions." The Company will not receive any of the proceeds from the sale of shares by the Selling Stockholders. Proposed Nasdaq National "STGE" Market symbol - ------------- (1) Assumes that the Underwriters' over-allotment option is not exercised. (2) Includes 1,351,967 shares issuable upon the conversion of non-voting Class B Common Stock, $0.01 par value per share (the "Class B Common Stock"), which are convertible into Common Stock on a share-for-share basis, subject to certain restrictions. See "Description of Capital Stock." Excludes 1,511,523 shares that may be issued upon the exercise of options granted pursuant to the 1993 Stock Option Plan (as defined). See "Management--1993 Stock Option Plan." Prospective purchasers of the Common Stock offered hereby should carefully consider the "Risk Factors" immediately following this Prospectus Summary. The executive offices of the Company are located at 10201 Main Street, Houston, Texas 77025. The Company's telephone number is (713) 667-5601. Summary Consolidated Historical and Pro Forma Combined Financial and Operating Data The following table sets forth summary consolidated historical and pro forma combined financial and operating data of the Company for the periods indicated. The Company's summary consolidated historical financial data were derived from the Company's Consolidated Financial Statements. The summary pro forma combined financial data were derived from the Unaudited Pro Forma Combined Financial Data of the Company and give effect to the Uhlmans Acquisition, including the issuance of the SRPC Notes (as defined), and the Offering (including a .94727 for 1 reverse stock split of the common stock to be consummated prior to the Offering). The information in the table should be read in conjunction with "Selected Consolidated Historical Financial and Operating Data", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Unaudited Pro Forma Combined Financial Data", the Company's Consolidated Financial Statements and the Financial Statements of Uhlmans, included elsewhere in this Prospectus. <TABLE> <CAPTION> Fiscal Year ----------------------------------------------------------------------------- Pro Forma 1991 1992 1993(1) 1994 1995(2) 1995 (2) ------------ ------------ ------------ ------------ ------------ ------------ (dollars in thousands, except per share and store data) <S> <C> <C> <C> <C> <C> <C> Statement of operations data: Net sales $447,142 $504,401 $557,422 $581,463 $682,624 $742,373 Gross profit 135,569 154,265 172,579 182,804 214,277 229,498 Selling, general and administrative expenses 116,403 129,193 135,011 134,715 159,625 168,936 Service charge income (3) 22,840 29,670 20,003 8,515 10,523 11,374 Store opening and closure costs 255 120 199 5,647 3,689 3,689 Operating income (4) 41,751 54,622 57,372 50,957 61,486 68,247 Net interest expense 33,407 31,771 36,377 40,010 43,989 34,713 Income before extraordinary item 3,961 12,235 13,426 6,630 10,730 20,673 Pro forma earnings per common share (5) -- -- -- -- -- 0.91 Margin and other data: Gross profit margin 30.3% 30.6% 31.0% 31.4% 31.4% 30.9% Selling, general and administrative expense rate 26.0% 25.6% 24.2% 23.2% 23.4% 22.8% Operating income margin (4) 9.3% 10.8% 10.3% 8.8% 9.0% 9.2% Adjusted operating income margin (6) 8.1% 8.7% 8.4% 9.2% 9.4% 9.4% Adjusted operating income (6) $ 36,064 $ 43,680 $ 46,828 $ 53,677 $ 63,996 $ 70,036 Depreciation and amortization 10,049 9,065 9,259 9,997 12,816 13,712 Capital expenditures 4,768 7,631 8,503 19,706 28,638 -- Store data: (7) Comparable store sales growth: Bealls/Stage (8) 4.1% 5.1% 7.2% 4.8% 3.3% -- Palais Royal (2.8)% (9.8)% 0.8% 1.7% 1.4% -- Total Company (9) 2.9% 1.8% 6.3% 4.1% 0.8%(10) -- Net sales per selling square foot: Bealls/Stage (8) $ 113 $ 118 $ 129 $ 138 $ 142 -- Palais Royal 228 191 200 205 203 -- Total Company (9) 138 138 149 157 157 -- Total selling square footage(11) 3,354 3,418 3,472 3,516 4,581 -- Number of stores open at end of period(12) 159 175 180 188 256 290 </TABLE> Six Months Ended -------------------------------------- Pro Forma July 29, August 3, August 3, 1995 1996 1996 ------------ ------------ ------------ Statement of operations data: Net sales $296,931 $345,927 $362,443 Gross profit 92,838 108,704 112,697 Selling, general and administrative expenses 70,877 84,335 86,425 Service charge income (3) 5,124 5,902 6,171 Store opening and closure costs 1,176 301 301 Operating income (4) 25,909 29,970 32,142 Net interest expense 21,365 24,054 18,091 Income before extraordinary item 2,659 3,520 8,563 Pro forma earnings per common share (5) -- -- 0.37 Margin and other data: Gross profit margin 31.3% 31.4% 31.1% Selling, general and administrative expense rate 23.9% 24.4% 23.8% Operating income margin (4) 8.7% 8.7% 8.9% Adjusted operating income margin (6) 8.5% 7.8% 8.0% Adjusted operating income (6) $ 25,134 $ 27,128 $ 29,031 Depreciation and amortization 5,721 6,844 7,148 Capital expenditures 16,786 15,183 -- Store data: (7) Comparable store sales growth: Bealls/Stage (8) 3.8% 7.7% -- Palais Royal 0.9% 6.2% -- Total Company (9) 0.5% 7.3% -- Net sales per selling square foot: Bealls/Stage (8) -- -- -- Palais Royal -- -- -- Total Company (9) -- -- -- Total selling square footage(11) 4,365 5,361 5,361 Number of stores open at end of period(12) 242 308 308 Balance sheet data (at end of period): Working capital $181,118 $204,808 Total assets 463,240 473,534 Total long-term debt 425,353 308,354 Stockholders' (deficit) equity (68,428) 56,451(13) Notes to Summary Consolidated Historical and Pro Forma Combined Financial and Operating Data (1) During 1993, Stage Stores was formed and concurrently became the direct parent of SRI when the existing stockholders of SRI exchanged all of their common stock for common stock of Stage Stores. Concurrent with the formation of Stage Stores, the Company completed the refinancing of its existing debt and preferred stock (the "Refinancing"). As a result of the Refinancing, the Company recorded an after-tax extraordinary charge of $16.2 million. (2) 1995 includes 53 weeks. (3) Service charge income for 1993, 1994 and 1995 decreased as compared to levels achieved during 1991 and 1992 due to the sale of accounts receivable to the SRI Receivables Master Trust (the "Trust") established as part of the Refinancing in which the Company adopted an accounts receivable securitization program (the "Accounts Receivable Program"). Without giving effect to the Accounts Receivable Program, service charge income for 1993, 1994 and 1995 would have been $32.5 million, $35.2 million and $41.3 million, respectively. For a complete summary of the impact of the Company's proprietary credit card program and the Accounts Receivable Program, see Note 2 to the Company's Consolidated Financial Statements, Note 6 below and "Management's Discussion and Analysis of Financial Condition and Results of Operations--General--Accounts Receivable Program." (4) Operating income and operating income margin decreased during 1994 compared to 1993 due primarily to the impact of the adoption of the Accounts Receivable Program (See Note 2 to the Company's Consolidated Financial Statements and Note 6 below) combined with a $5.2 million provision associated with the closure of a majority of the stores operated under the Fashion Bar name (the "Store Closure Plan") (substantially all of which were underperforming). See Note 4 to the Company's Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." (5) Pro forma earnings per common share reflects the impact of a .94727 for 1 reverse stock split of the common stock to be consummated prior to the Offering. (6) Adjusted operating income represents operating income adjusted to eliminate store opening and closure costs, and the positive impact on operating income of the Company's proprietary credit card program (including the Accounts Receivable Program). Fiscal Year ---------------------------------------------------------- Pro Forma 1991 1992 1993 1994 1995 1995 --------- --------- ------------------ --------- --------- (in thousands) Operating income $41,751 $54,622 $57,372 $50,957 $61,486 $68,247 Plus: Store opening and closure costs 255 120 199 5,647 3,689 3,689 Less: Positive impact of proprietary credit card program on operating income 5,942 11,062 10,743 2,927 1,179 1,900 --------- --------- ------------------ --------- --------- Adjusted operating income $36,064 $43,680 $46,828 $53,677 $63,996 $70,036 ========= ========= ================== ========= ========= Six Months Ended ----------------------------- July 29, August 3, Pro Forma August 3, 1995 1996 1996 --------- --------- --------- Operating income $25,909 $29,970 $32,142 Plus: Store opening and closure costs 1,176 301 301 Less: Positive impact of proprietary credit card program on operating income 1,951 3,143 3,412 --------- --------- --------- Adjusted operating income $25,134 $27,128 $29,031 ========= ========= ========= The impact of the Company's proprietary credit card program (including the Accounts Receivable Program) on operating income is calculated as: (i) the reported service charge income less (ii) the servicing and bad debt costs reflected in the Company's selling, general and administrative expenses less (iii) the gain (or plus the loss) associated with the sale of receivables to the Trust. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--General--Accounts Receivable Program" and Note 7 to Selected Consolidated Historical Financial and Operating Data. Although adjusted operating income and adjusted operating income margin do not represent operating income or any other measure of financial performance under generally accepted accounting principles, the Company believes they are helpful in understanding the profitability of the Company's retailing operations prior to the impact of its credit card program, the Accounts Receivable Program and store opening and closure costs. (7) Store data exclude Bealls stores scheduled to be closed under the Bealls 1988 store closure program, except as otherwise noted in Note 12 below, and also exclude the Fashion Bar stores included in the Store Closure Plan. Comparable store sales growth and net sales per selling square foot for 1995 have been determined based on a comparable fifty-two week period. Sales are considered comparable after a store has been in operation fourteen months. Net sales per selling square foot are calculated for stores open the entire year. (8) Excludes for all the periods presented the six Bealls stores located on the border of Mexico which were adversely affected by the peso devaluation in 1994. Comparable stores sales growth and net sales per selling square foot for Bealls/Stage including these stores were: Fiscal Year ------------------------------------ Bealls/Stage 1991 1992 1993 1994 1995 ------ ------ ------ ------ ------ Comparable store sales growth 5.4% 6.7% 7.7% 4.6% 0.2% 0.3% Net sales per selling square foot $119 $125 $137 $146 $145 -- Six Months Ended ------------------------- July 29, August 3, Bealls/Stage 1995 1996 ------------ ------------ Comparable store sales growth 0.3% 7.7% Net sales per selling square foot -- -- (9) Total Company comparable store sales growth and net sales per selling square foot including the stores which were part of the Store Closure Plan were as follows: Fiscal Year ------------------------------------ Total Company 1991 1992 1993 1994 1995 ------ ------ ------ ------ ------ Comparable store sales growth 2.9% 1.8% 5.4% 3.2% 0.5% Net sales per selling square foot $138 $138 $143 $151 $150 Six Months Ended ------------------------- July 29, August 3, Total Company 1995 1996 ------------ ------------ Comparable store sales growth 0.4 6.8% Net sales per selling square foot -- -- (10) Excluding the six Bealls stores located on the border of Mexico which were adversely affected by the peso devaluation in 1994, total Company comparable store sales growth for 1995 would have been 3.0%. (11) Excludes data related to the stores which were included in the Store Closure Plan. Data is in thousands and is as of the end of the period. (12) Number of stores open at the end of each period presented also exclude stores in the Store Closure Plan. Stores open at the end of 1992 and 1993 included one and six stores, respectively, which were previously excluded under the Bealls 1988 store closure program. Such stores are only included in the Company's results of operations subsequent to their removal from the Bealls 1988 store closure program. Both the Store Closure Plan and the Bealls 1988 store closure program were substantially completed before the end of 1995. (13) Reflects non-recurring charges, net of tax, totalling approximately $14.8 million in connection with the early retirement of the Senior Discount Debentures and the write-off of related debt issue costs, the payment of consent fees for amendments to certain covenants in the indebtedness of SRI and the termination of the Professional Services Agreement (as defined).

parsed_sections/prospectus_summary/1996/CIK0000007974_associates_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a summary of certain information contained elsewhere in this Prospectus. Reference is made to, and this summary is qualified in its entirety by, the more detailed information and supplemental combined financial statements, including the notes thereto, appearing elsewhere in this Prospectus. Unless the context otherwise requires, (i) the "Company" means Associates First Capital Corporation and its consolidated subsidiaries after giving effect to the recontribution by Ford of certain non-U.S. subsidiaries described below under "The Company", (ii) "ACONA" means Associates Corporation of North America, the Company's principal operating subsidiary, (iii) "Ford" means Ford Motor Company and its consolidated subsidiaries (other than the Company) and (iv) the information contained in this Prospectus assumes that the Class A Common Stock offered hereby will be sold in the Offerings at $26.50 per share (the mid-point of the range set forth on the cover page of this Prospectus) and that the Underwriters' over-allotment options are not exercised. Unless otherwise defined herein, capitalized terms used in this summary have the respective meanings ascribed to them elsewhere in this Prospectus. For a description of certain terms and phrases in this Prospectus, see "Glossary" at the end of this Prospectus. Terms and phrases set forth in the Glossary are printed in bold face type the first time they appear in this Prospectus. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER THE HEADING "RISK FACTORS". THE COMPANY The Company is a leading, diversified consumer and commercial finance organization which provides finance, leasing and related services to approximately 9.4 million individual consumers and 143,000 businesses in the United States and internationally. At or for the year ended December 31, 1995, the Company had aggregate NET FINANCE RECEIVABLES of $39.7 billion, total assets of $41.3 billion, net earnings of $723.1 million and stockholder's equity of $4.8 billion. The Company, through its predecessors, commenced operations in 1918 and was acquired by Ford in 1989. The Company believes that it is the second largest INDEPENDENT FINANCE COMPANY in the United States based on aggregate net finance receivables outstanding. The Company's operations outside the United States are conducted principally in Japan ($2.1 billion of net finance receivables) and are also conducted in, among other places, the United Kingdom and Canada. The current credit ratings for the long-term debt of ACONA, through which the Company conducts substantially all of its funding activities, are Aa3 and AA- as determined by MOODY'S and STANDARD & POOR'S, respectively, and those of the Company are A1 and A+. Through various economic conditions and interest rate environments, the Company has produced growth in pre-tax earnings for twenty-one consecutive years. As the following graph depicts, over this period, pre-tax earnings have grown at a compound annual rate in excess of 22% to $1.2 billion for the year ended December 31, 1995. Such growth resulted principally from internal expansion (through, among other things, branch openings, new lines of business and geographic expansion) as well as selective acquisitions. PRE-TAX EARNINGS TREND(1) (DOLLARS IN MILLIONS) [GRAPH] (1) 1990 and 1991 pre-tax earnings exclude non-recurring interest expense. See the immediately following financial information and note (4) thereto. The table below sets forth certain financial information (dollars in millions): <TABLE> <CAPTION> YEAR ENDED OR AT DECEMBER 31(1) --------------------------------------------------------- 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- --------- <S> <C> <C> <C> <C> <C> CONSUMER NET FINANCE RECEIVABLES: Home equity lending.............. $ 14,386.2 $ 12,349.9 $ 10,619.7 $ 9,630.1 $ 8,249.1 Personal lending and retail sales finance....................... 6,117.6 5,304.2 4,354.2 3,640.2 3,224.2 Credit card...................... 4,818.6 3,915.5 3,104.8 2,614.6 2,668.4 COMMERCIAL NET FINANCE RECEIVABLES: Truck and truck trailer.......... $ 7,648.4 $ 6,681.5 $ 5,540.0 $ 4,350.7 $ 4,000.3 Equipment........................ 3,827.2 2,987.4 2,464.5 2,290.6 2,157.9 Manufactured housing(2).......... 2,034.1 1,669.2 1,290.2 983.9 697.2 Other(3)......................... 416.3 336.5 345.3 324.7 269.8 TOTAL NET FINANCE RECEIVABLES...... 39,702.5 33,685.7 28,294.7 24,371.0 21,672.8 TOTAL ASSETS....................... 41,303.9 35,283.5 30,039.6 25,996.3 23,523.5 STOCKHOLDER'S EQUITY............... 4,801.1 4,436.8 3,774.3 3,231.1 3,061.0 NET EARNINGS(4).................... 723.1 603.3 494.0 410.1 311.9 RETURN ON AVERAGE ASSETS(4)........ 1.89% 1.85% 1.76% 1.66% 1.40% RETURN ON AVERAGE EQUITY(4)........ 15.66 14.70 14.10 13.04 12.49 RETURN ON AVERAGE TANGIBLE EQUITY(4)........................ 21.90 21.71 22.31 22.15 24.59 </TABLE> - --------------- (1) Amounts in this table reflect the inclusion of certain non-U.S. subsidiaries of Ford which are expected to be recontributed to the Company prior to the completion of the Offerings. Such subsidiaries were owned by the Company prior to its acquisition by Ford and have been continuously managed by the Company since such acquisition. These subsidiaries had total assets of $4.1 billion at December 31, 1995. See "-- Relationship with Ford" and "The Company". (2) Manufactured housing operations are discussed in this Prospectus as part of the Company's commercial activities because the marketing and management of manufactured housing products are more closely related to commercial finance products. See "Business -- Commercial Finance". Except as otherwise indicated, the dollar amount of manufactured housing receivables is included in the dollar amount of total consumer net finance receivables throughout this Prospectus, because the credit and related risks of the manufactured housing business are similar to those of the Company's consumer finance business. Similarly, manufactured housing receivables are included with consumer net finance receivables in determining the percentage of total net finance receivables which are consumer net finance receivables. (3) Includes auto fleet leasing and management, small business administration lending, relocation services and auto club and roadside assistance services. See "Business -- Commercial Finance -- Other Commercial Activities". (4) In 1991, certain debt related to Ford's acquisition of the Company's operation in Japan was converted to equity. Non-recurring interest expense related to such debt was $39.2 million and $54.2 million in 1991 and 1990, respectively. If 1991 results treated the converted debt as equity and excluded the related non-recurring interest expense consistent with subsequent years, net earnings would have been $351.1 million and the return on average assets, average equity and average tangible equity would have been 1.58%, 12.29% and 21.56%, respectively. In addition, if 1990 results excluded the related non-recurring interest expense, pre-tax earnings would have been $493.7 million. CONSUMER FINANCE The Company's consumer finance business represents approximately $27.6 billion, or 70%, of its 1995 year-end net finance receivables. HOME EQUITY LOANS account for the largest share, or 52%, of the Company's consumer finance portfolio based on outstanding net finance receivables at December 31, 1995. In addition, the Company offers secured and unsecured personal loans and purchases retail sales finance contracts from consumer goods retailers. The Company also provides REVOLVING CREDIT through its VISA(R) and MasterCard(R) bankcard and PRIVATE LABEL CREDIT CARD businesses. In addition, the Company sells a variety of credit-related and other specialized insurance products to its consumer finance customers. At December 31, 1995, the Company had approximately 9.4 million individual consumer finance customers spanning a wide range of income levels, age groups and credit histories. The Company markets its consumer finance products through a number of different channels of distribution, including its network of over 1,400 domestic branch offices and 400 international branch offices as well as its centralized lending operations. The Company believes that its domestic branch system is the largest consumer finance branch system in the United States. In Japan, the Company's branch system and net finance receivables have been growing in recent years at rates in excess of the Company's overall rates of growth, and the Company believes that its international markets offer significant opportunities for future growth. The Company believes that its domestic and international branches enable it to attract, service and retain customers through personal relationships with branch employees. COMMERCIAL FINANCE The Company's commercial finance business, which represents $12.1 billion, or 30%, of its 1995 year-end net finance receivables, consists of a variety of retail and WHOLESALE FINANCING and leasing products and services for heavy-duty (Class 8) and medium-duty (Classes 3 through 7) trucks and truck trailers, construction and material handling equipment and other industrial equipment. The Company believes that it is the leading independent source of financing for heavy-duty trucks, truck trailers and heavy construction equipment in the United States. The Company also engages in a number of other commercial activities, including auto fleet leasing and management, small business administration lending, relocation services and auto club and roadside assistance services. In addition, the Company's commercial operations' staff manages its $2.0 billion portfolio of MANUFACTURED HOUSING receivables (which for financial reporting purposes are treated as consumer receivables). The Company also sells a variety of credit-related and other specialized insurance products to its commercial finance customers. At December 31, 1995, the Company had approximately 143,000 commercial finance customers ranging from large corporate customers to small, individually-owned businesses. The Company provides truck and truck trailer financing and leasing services from 39 branch offices in the United States and Canada, and provides equipment financing and leasing services through 19 branch offices in the United States, Mexico and the United Kingdom and, in the case of material handling and certain other equipment, from two centralized lending and service operations. Manufactured housing financing is provided from five regional offices and 14 sales purchase offices, and fee-based services are provided from centralized locations. STRATEGY The Company believes that its consistent growth in profits has resulted from the balanced pursuit of asset and revenue growth and risk and expense control. The Company believes that the following operating disciplines have been key to its success: (i) focusing employees on growth and profitability through incentives, (ii) maintaining strict credit underwriting standards and collection policies to reduce losses, (iii) controlling operating expenses and (iv) sourcing funds on a cost effective basis. The Company believes that adherence to these disciplines has created a receivables portfolio that is diversified by market, geography, customer, maturity and product. As a result, the Company believes that it has been able to reduce its exposure to adverse economic developments in any particular market or region. The Company's business objective is to continue to achieve consistent profitable growth based upon the foregoing operating disciplines, regardless of economic conditions and interest rate environments. The Company seeks to achieve this goal by (i) expanding its existing businesses by developing new product lines in its core businesses and expanding its flexible delivery systems, (ii) identifying and entering new markets with strong profit potential, (iii) providing superior customer service through building long-term relationships and maintaining an intimate knowledge of its business segments, (iv) employing proven technology to reduce costs and enhance product delivery and portfolio management and (v) pursuing selective acquisitions designed to leverage operating costs, increase market share, introduce new product lines and fuel growth. The Company believes that its strong, experienced management team has developed a disciplined operating philosophy and has defined and implemented a distinct business strategy in each of the Company's diverse business units. Management believes that employees' commitment to a distinct culture and set of core values distinguishes the Company from its competitors. The Company seeks to reinforce its culture and core values to all employees through extensive training, incentive programs and operating controls at every level. The Company believes that maintaining its distinct culture, core values and strong management at every level will continue to be a key element of the Company's future strategy. THE OFFERINGS <TABLE> <S> <C> Class A Common Stock Offered(1): United States Offering........ 51,000,000 shares International Offering........ 9,000,000 shares Total................. 60,000,000 shares Common Stock Outstanding After the Offerings(1)(2): Class A Common Stock.......... 85,883,019 shares Class B Common Stock.......... 253,601,830 shares Total................. 339,484,849 shares Use of Proceeds................. The net proceeds to the Company from the offering made hereby in the United States (the "U.S. Offering") and the concurrent international offering (the "International Offering" and, together with the U.S. Offering, the "Offerings"), are estimated to be $1.51 billion ($1.74 billion if the Underwriters' over-allotment options are exercised in full), all of which is expected to be used to reduce short-term indebtedness of the Company. See "Use of Proceeds". New York Stock Exchange Symbol for Class A Common Stock...... AFS Dividends; Voting Rights; Conversion.................... The holders of CLASS A COMMON STOCK and CLASS B COMMON STOCK (collectively, "Common Stock") share ratably on a per share basis in all dividends and other distributions declared by the board of directors; however, the holders of Class A Common Stock are entitled to one vote per share and holders of Class B Common Stock are entitled to five votes per share. See "Description of Capital Stock -- Common Stock -- Voting Rights". Under certain circumstances, shares of Class B Common Stock convert or are convertible into an equivalent number of shares of Class A Common Stock. See "-- Relationship with Ford" and "Description of Capital Stock -- Common Stock -- Conversion". Controlling Stockholder......... For information regarding the Company's controlling stockholder, see "-- Relationship with Ford" below. </TABLE> - --------------- (1) Excludes up to 7,650,000 shares and 1,350,000 shares subject to over-allotment options granted by the Company to the U.S. Underwriters and the International Underwriters, respectively. See "Underwriting". (2) Excludes 204,200 shares of Class A Common Stock reserved for issuance pursuant to certain employee benefit plans. See "Management -- Additional Material Employee Compensation Plans and Agreements -- Long-Term Equity Compensation Plan". DIVIDEND POLICY The Company's board of directors currently intends to declare quarterly dividends on both the Class A Common Stock and Class B Common Stock. It is expected that the first quarterly dividend payment will be $0.10 per share (a rate of $0.40 annually), with the initial dividend to be declared and paid in the third quarter of 1996. The declaration and payment of dividends by the Company are subject to the discretion of its board of directors. Any determination as to the payment of dividends will depend upon, among other things, general business conditions, the Company's financial results, contractual, legal and regulatory restrictions regarding the payment of dividends by the Company's subsidiaries, the credit ratings of the Company and ACONA and such other factors as the board of directors may consider to be relevant. See "Risk Factors -- Limitations Upon Liquidity and Capital Raising -- Limitations upon the payment of dividends" and "-- Holding Company Structure". The Company paid cash dividends to Ford of $226.0 million, $288.1 million and $318.0 million during the years ended December 31, 1993, 1994 and 1995, respectively. The Company paid a dividend of $1.75 billion to its immediate parent, Ford FSG, Inc., an indirect, wholly-owned subsidiary of Ford ("FFSG"), on February 8, 1996 in the form of an intercompany note (which the Company paid on April 2, 1996), and also paid a cash dividend of $100.0 million to FFSG on March 29, 1996. In 1993, 1994 and 1995, Ford made cash capital contributions to the Company of $200.0 million, $215.1 million and $200.0 million, respectively. Thus, the dividends historically paid by the Company are not indicative of its future dividend policy. RELATIONSHIP WITH FORD The Company is an indirect, wholly-owned subsidiary of Ford. Upon completion of the Offerings, Ford will beneficially own 30.1% of the outstanding Class A Common Stock (27.3% if the Underwriters' over-allotment options are exercised in full) and 100% of the outstanding Class B Common Stock. Accordingly, Ford will beneficially own Common Stock representing in the aggregate 95.6% of the combined voting power of all of the outstanding Common Stock (94.9% if the Underwriters' over-allotment options are exercised in full) and will continue to have the ability to direct the election of members of the board of directors of the Company and exercise a controlling influence over the business and affairs of the Company. Ford has advised the Company that its current intent is to continue to hold all of the Common Stock beneficially owned by it following the Offerings. However, Ford is not subject to any contractual obligation to retain its controlling interest, except that Ford has agreed not to sell or otherwise dispose of any shares of Common Stock of the Company for a period of 180 days after the date of this Prospectus without the prior written consent of Goldman, Sachs & Co. See "Underwriting". As a result, there can be no assurance concerning the period of time during which Ford will maintain its beneficial ownership of Common Stock owned by it following the Offerings. See "Risk Factors -- Control by and Relationship with Ford", "-- Possible Future Sales of Common Stock by Ford" and "Relationship with Ford". From time to time the Company and Ford have entered into, and can be expected to continue to enter into, certain agreements and business transactions in the ordinary course of their respective businesses, and the Company's Restated Certificate of Incorporation includes certain provisions relating to the Company's relationship with Ford. See "Relationship with Ford" and "Description of Capital Stock -- Certain Certificate of Incorporation and By-law Provisions -- Corporate Opportunities". The Company was acquired by Ford and became part of its Financial Services Group in 1989. In connection with this acquisition, the Company's operations in Japan, the United Kingdom, Canada and Puerto Rico were transferred to certain non-U.S. subsidiaries of Ford, but the Company continued to manage such operations. Prior to completion of the Offerings, Ford is expected to recontribute the operations of Ford's non-U.S. subsidiaries managed by the Company (principally subsidiaries in Japan, the United Kingdom, Canada, Puerto Rico and Mexico, the "Foreign Subsidiaries"). In connection with this transaction, Ford will receive an estimated 25,883,019 shares of Class A Common Stock and an estimated 28,113,208 shares of Class B Common Stock (assuming an initial public offering price of $26.50 per share, the mid-point of the range set forth on the cover page of this Prospectus). These share amounts have been used in determining the number of shares of Class A Common Stock and Class B Common Stock to be outstanding upon completion of the Offerings and the percentages of economic and voting interests in the Company to be held by Ford and the other holders of the Class A Common Stock upon completion of the Offerings. The number of shares of Class A Common Stock and Class B Common Stock to be received by Ford in connection with the contribution of the Foreign Subsidiaries will be determined by dividing the aggregate fair market value of such subsidiaries by the initial public offering price per share of Class A Common Stock. The Foreign Subsidiaries had aggregate total assets at December 31, 1995 of $4.1 billion, and the financial and other information with respect to the Foreign Subsidiaries have been retroactively included in the financial and other information of the Company contained herein. See "The Company". SUMMARY SUPPLEMENTAL COMBINED FINANCIAL DATA The summary supplemental combined financial data of the Company presented below presents financial information of the Company giving supplemental combined effect to the expected recontribution by Ford to the Company of the Foreign Subsidiaries. See "The Company". The summary supplemental combined results of operations and balance sheet data presented below as of December 31, 1995 and 1994 and for each of the years in the three-year period ended December 31, 1995 was derived from the supplemental combined financial statements of the Company and the notes thereto set forth herein. The summary supplemental combined results of operations and balance sheet data presented below as of December 31, 1993, 1992 and 1991 and for each of the years in the two-year period ended December 31, 1992 was derived from supplemental combined financial statements and the related notes thereto not presented herein. The data presented below should be read in conjunction with the supplemental combined financial statements and the related notes thereto set forth herein (dollars in millions, except per share data): <TABLE> <CAPTION> YEAR ENDED OR AT DECEMBER 31 --------------------------------------------------------------- 1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- <S> <C> <C> <C> <C> <C> RESULTS OF OPERATIONS Total revenue....................................... $ 6,107.2 $ 4,925.8 $ 4,114.8 $ 3,696.2 $ 3,495.8 Finance charge revenue.............................. 5,560.8 4,445.2 3,709.7 3,330.7 3,117.9 Interest expense.................................... 2,177.9 1,657.3 1,421.7 1,352.1 1,452.8 Net interest margin................................. 3,382.9 2,787.9 2,288.0 1,978.6 1,665.1 Operating expenses.................................. 1,754.7 1,456.1 1,216.8 1,007.2 911.7 Provision for losses................................ 834.0 647.1 536.1 568.6 494.3 Insurance benefits paid............................. 142.5 147.9 118.9 103.7 99.9 Earnings before provision for income taxes and cumulative effect of changes in accounting principles........................................ 1,198.1 1,017.4 821.3 664.6 537.1 Provision for income taxes.......................... 475.0 414.1 327.3 254.5 225.2 Net earnings(1)..................................... 723.1 603.3 494.0 410.1 311.9 Pro forma net earnings per share(2)(3).............. 2.13 BALANCE SHEET DATA Net finance receivables: Consumer.......................................... 27,575.3 23,627.8 19,912.4 17,412.7 15,275.9 Commercial........................................ 12,127.2 10,057.9 8,382.3 6,958.3 6,396.9 --------- --------- --------- --------- --------- Total............................................. 39,702.5 33,685.7 28,294.7 24,371.0 21,672.8 ========= ========= ========= ========= ========= Allowance for losses................................ (1,268.6) (1,061.6) (892.3) (764.7) (649.7) Total assets........................................ 41,303.9 35,283.5 30,039.6 25,996.3 23,523.5 Short-term debt (notes payable)..................... 13,747.3 12,431.9 10,385.9 9,086.4 8,632.4 Long-term debt(4)................................... 21,372.6 17,306.2 14,826.8 12,846.5 11,022.3 Stockholder's equity................................ 4,801.1 4,436.8 3,774.3 3,231.1 3,061.0 Pro forma stockholder's equity per share(2)(3)...... 14.14 SELECTED DATA AND RATIOS Net interest margin as a percentage of average net finance receivables............................... 9.22% 9.00% 8.69% 8.59% 8.25% Earnings to fixed charges........................... 1.55x 1.61x 1.57x 1.49x 1.37x Total debt to equity................................ 7.2:1 6.6:1 6.6:1 6.7:1 6.4:1 Total debt to tangible equity....................... 9.9:1 9.6:1 10.1:1 11.1:1 11.2:1 Return on average assets(1)......................... 1.89% 1.85% 1.76% 1.66% 1.40% Return on average equity(1)......................... 15.66 14.70 14.10 13.04 12.49 Return on average tangible equity(1)................ 21.90 21.71 22.31 22.15 24.59 60+days contractual delinquency..................... 1.71 1.35 1.43 1.85 2.56 Net credit losses to average net finance receivables....................................... 1.70 1.64 1.68 2.04 2.17 Allowance for losses to net finance receivables..... 3.20 3.15 3.15 3.14 3.00 Allowance for losses to net credit losses........... 2.03x 2.09x 2.02x 1.63x 1.49x Number of employees................................. 16,647 15,318 13,933 12,430 11,142 Number of consumer and commercial branch offices Domestic.......................................... 1,543 1,472 1,378 1,133 892 International..................................... 404 329 278 256 240 Total............................................. 1,947 1,801 1,656 1,389 1,132 </TABLE> - --------------- (1) In 1991, certain debt related to Ford's acquisition of the Company's operation in Japan was converted to equity, and 1991 results therefore include $39.2 million of non-recurring interest expense related to the converted debt. If 1991 results treated the converted debt as equity and excluded the related non-recurring interest expense consistent with subsequent years, net earnings would have been $351.1 million and the return on average assets, average equity and average tangible equity would have been 1.58%, 12.29% and 21.56%, respectively. (2) Based on 339,484,849 shares to be outstanding after the Offerings. Excludes up to 7,650,000 shares and 1,350,000 shares subject to over-allotment options granted by the Company to the U.S. Underwriters and the International Underwriters, respectively. See "Underwriting". If such options are exercised in full, pro forma net earnings per share and pro forma stockholder's equity per share would be $2.08 and $13.78, respectively. (3) Due to the change in the Company's capital structure, historical share and per share data will not be comparable to, or meaningful in the context of, future periods. See "Capitalization".

parsed_sections/prospectus_summary/1996/CIK0000011913_beverly_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS PROSPECTUS (I) ASSUMES THE REINCORPORATION OF BEVERLY BANCORPORATION, INC., AN ILLINOIS CORPORATION ("BEVERLY ILLINOIS"), AS A DELAWARE CORPORATION, WHICH TOOK PLACE ON AUGUST 16, 1996 (THE "REINCORPORATION"), (II) GIVES EFFECT TO THE ISSUANCE OF FIVE SHARES OF COMMON STOCK OF THE COMPANY FOR EACH SHARE OF COMMON STOCK OF BEVERLY ILLINOIS IN CONNECTION WITH THE REINCORPORATION AND ALL STOCK DIVIDENDS PAID THROUGH THE DATE HEREOF, AND (III) ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH IN "RISK FACTORS." THE COMPANY Beverly Bancorporation, Inc. (the "Company") is a community-based financial services holding company headquartered in Chicago, Illinois. Through its subsidiaries, the Company provides a full range of banking services and also provides personal and corporate trust services. The Company's principal operating subsidiaries are Beverly Bank, Beverly Bank Matteson, First National Bank of Wilmington ("Wilmington") and Beverly Bank Lockport (collectively, the "Banks"), and Beverly Trust Company ("Beverly Trust"). The Banks are chartered as Illinois state banks, with the exception of Wilmington, which was federally chartered in 1863 and is the second oldest active national bank in Illinois. The Banks are community-oriented, full-service commercial banks, providing a full range of banking services to individuals, small-to-medium-sized businesses, and not-for-profit organizations. The Banks operate out of 12 full-service locations in the south and southwest parts of the Chicago metropolitan area, a business development office located in downtown Chicago and a mortgage origination office located in Naperville, Illinois. Through Wilmington, the Company also operates a full-service insurance agency and a residential mortgage brokerage business and offers a broad range of annuities and mutual funds through a relationship with a securities firm. Beverly Trust provides a wide array of trust services for individuals and corporations. As of June 30, 1996, Beverly Trust managed $277.1 million in assets, primarily in the areas of personal living trusts and corporate employee benefit plans, and administered more than 3,000 land trusts. As of December 31, 1995, the Company's total assets were $591.2 million and net income for the year ended December 31, 1995 was $6.2 million, with a return on average assets of 1.09% and a return on average equity of 13.37% for the year then ended. As of June 30, 1996, the Company's total assets had grown to $614.6 million, with net income of $3.0 million for the six months then ended, an increase in net income of 5.4% from the six months ended June 30, 1995. The Company's strategy is to continue to increase its core banking business through its commercial community banking presence and its retail product sales and distribution system. The Company will also pursue an increased market share in personal and corporate trust services and intends to further develop its securities sales and insurance activities. Where opportunities arise, the Company may seek to augment its internal growth through the establishment of additional branches and offices, as well as acquisitions or joint ventures in both banking and non-banking areas. In 1996, Wilmington formed a joint venture, currently in its initial stages, with a prominent realtor for the purpose of increasing its mortgage origination business. The Company was incorporated in Delaware on June 13, 1996 as a wholly-owned subsidiary of Beverly Bancorporation, Inc., an Illinois corporation ("Beverly Illinois"). Beverly Illinois was organized in 1969 and prior to the Reincorporation owned all of the outstanding capital stock of the Banks and Beverly Trust. Pursuant to the Reincorporation, which took place on August 16, 1996, Beverly Illinois was merged with and into the Company and the Company is the surviving corporation. As a result of the Reincorporation, the Company owns all of the outstanding capital stock of the Banks and Beverly Trust. In connection with the Reincorporation, each outstanding share of common stock of Beverly Illinois was converted into five shares of Common Stock of the Company. The Company intends to merge Beverly Bank, Beverly Bank Matteson and Beverly Bank Lockport with and into Wilmington by year-end 1996. Pursuant to the merger, Wilmington will be renamed Beverly National Bank and will remain a nationally chartered bank. The anticipated result of the merger, assuming all regulatory approvals are received, will be to consolidate the operations of the Banks and to reduce the administrative costs under which the Banks presently operate. The Company's principal executive offices are located at 1357 West 103rd Street, Chicago, Illinois 60643, and its telephone number is (312) 881-2214. Except where the context otherwise requires, when used herein the term "Company" refers to Beverly Bancorporation, Inc., a Delaware corporation, its predecessor and its subsidiaries. THE OFFERING <TABLE> <S> <C> Common Stock offered.............. 1,000,000 shares Common Stock to be outstanding after the offering (1)........... 4,974,942 shares Nasdaq symbol..................... BEVB Use of Proceeds................... The Company will use a portion of the net proceeds from the sale of shares of Common Stock offered hereby to repay outstanding short-term borrowings of $9.0 million. The remaining net proceeds will be used for general corporate purposes including, if and when opportunities arise, establishing additional branches and offices and acquiring businesses complementary to those of the Company. See "Use of Proceeds." </TABLE> - ------------------------ (1) Based on the number of shares of Common Stock outstanding as of June 30, 1996 and excluding 7,159 shares of Common Stock issued on July 15, 1996 pursuant to the reinvestment of dividends and the payment of directors' fees and 1,100 shares of Common Stock issued on July 23, 1996 pursuant to the exercise of options. In addition, as of June 30, 1996, 532,945 shares of Common Stock were reserved for issuance under the Company's stock option plan pursuant to which options to purchase 418,040 shares of Common Stock were outstanding, 146,610 of which were exercisable. SUMMARY CONSOLIDATED FINANCIAL DATA <TABLE> <CAPTION> SIX MONTHS ENDED JUNE 30, (1) YEAR ENDED DECEMBER 31, -------------------- ----------------------------------------------------- 1996 1995 1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- --------- --------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF INCOME DATA: Total interest income................... $ 20,778 $ 19,512 $ 39,970 $ 35,206 $ 33,468 $ 36,583 $ 42,328 Total interest expense.................. 9,649 8,335 17,184 12,949 12,805 15,256 20,858 --------- --------- --------- --------- --------- --------- --------- Net interest income..................... 11,129 11,177 22,786 22,257 20,663 21,327 21,470 Provision for loan losses............... 75 103 159 311 1,299 3,577 2,923 Other income............................ 4,149 3,762 7,870 8,017 9,820 11,300 9,048 Operating expenses...................... 10,879 10,727 21,416 20,875 22,169 23,127 22,513 Income tax expense...................... 1,317 1,257 2,877 2,672 2,143 1,519 1,036 Cumulative effect of change in accounting principle................... -- -- -- -- 374 -- -- --------- --------- --------- --------- --------- --------- --------- Net income.............................. $ 3,007 $ 2,852 $ 6,204 $ 6,416 $ 5,246 $ 4,404 $ 4,046 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- PER SHARE DATA (2): Income before cumulative effect of change in accounting principle......... $ .74 $ .58 $ 1.26 $ 1.34 $ 1.05 $ .96 $ .89 Net income.............................. .74 .58 1.26 1.34 1.13 .96 .89 Cash dividends declared................. .10 .10 .19 .18 .17 .17 .12 Book value at end of period............. 10.19 9.87 10.35 8.44 8.58 7.72 6.94 Net tangible book value at end of period................................. 9.92 9.57 10.02 8.11 8.14 7.18 6.29 Stock dividends declared................ 5.00% 5.00% 5.00% 5.00% 5.00% -- -- SELECTED FINANCIAL RATIOS: Return on average assets................ 1.00% 1.02% 1.09% 1.20% 1.03% .90% .85% Return on average equity................ 14.58 13.03 13.37 16.10 13.33 12.61 12.95 Dividend payout ratio (dividends declared per share to net income per share)................................. 13.51 17.24 15.08 13.43 15.04 17.71 13.48 Average equity to average assets........ 6.86 7.84 8.17 7.47 7.72 7.17 6.53 Net interest margin (tax equivalent).... 4.18 4.49 4.49 4.66 4.52 5.05 5.27 Allowance for loan losses to total loans at end of period....................... 1.21 1.24 1.13 1.37 1.51 1.79 1.51 Non-performing loans to total loans at end of period.......................... .55 .57 .57 .82 1.05 1.76 2.70 Net loans charged off (recoveries) to average loans.......................... (.11) .06 .21 .13 .70 1.23 2.02 </TABLE> <TABLE> <CAPTION> JUNE 30, DECEMBER 31, -------------------- ----------------------------------------------------- 1996 1995 1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- --------- --------- (IN THOUSANDS) <S> <C> <C> <C> <C> <C> <C> <C> SELECTED BALANCE SHEET DATA: Total assets..................... $ 614,569 $ 567,312 $ 591,203 $ 561,339 $ 519,635 $ 510,642 $ 467,287 Total earning assets............. 566,425 524,183 539,842 505,307 477,196 462,549 422,185 Loans............................ 324,573 314,572 312,160 291,042 267,517 251,062 279,511 Total deposits................... 553,792 507,946 527,131 504,445 459,132 454,917 418,134 Short-term borrowings............ 14,770 7,678 17,292 11,414 13,346 15,795 12,884 Long-term obligations............ 596 -- -- -- -- -- -- Total stockholders' equity....... 40,587 47,951 40,961 40,808 40,055 35,253 31,266 Net tangible book value.......... 39,426 46,510 39,660 39,202 38,017 32,784 28,365 </TABLE> - ------------------------------ (1) Ratios for interim periods are stated on an annualized basis. However, interim operating results and ratios for the six months ended June 30, 1996 are not necessarily indicative of results that may be experienced for the full year. (2) All per share amounts have been adjusted to give effect to the issuance of five shares of Common Stock of the Company for each share of common stock of Beverly Illinois in connection with the Reincorporation and all stock dividends paid through the date hereof.

parsed_sections/prospectus_summary/1996/CIK0000014637_bns_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by reference to the more detailed information and the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Prospectus. As used in this Prospectus, the terms "Brown & Sharpe" and the "Company" refer to Brown & Sharpe Manufacturing Company and its subsidiaries. Except as otherwise noted, all information in this Prospectus assumes no exercise of the Underwriters' over-allotment option. See "Underwriting." THE COMPANY Brown & Sharpe, which was founded in 1833, is a leading designer, manufacturer and marketer of metrology products worldwide under numerous internationally recognized brand names. Metrology is the science of the physical measurement of objects using various precision instruments and equipment. The Company's high precision products measure physical dimensions of, and inspect and verify conformance to specifications of, components and products and are used in manufacturing, quality control and product development operations. The Company's product line ranges from hand tools and instruments to customized computer-controlled metrology systems which integrate hardware and software and are augmented by service, training and aftermarket support. The Company markets its metrology products and services in North America, Europe, Asia, South America and the Middle East. Important end user markets for the Company's products include the automotive, aerospace, industrial machinery, electronics and computer industries, and the Company's customers include Ford Motor Co., Daimler Benz, Toyota, Chrysler, BMW, Boeing Co., Eastman Kodak Co. Inc., International Business Machines Corp., Hewlett-Packard Co., General Electric Co., Caterpillar Inc., United Technologies Corp., Motorola Inc., Phillips, Samsung and Xerox Corp. For the twelve months ended June 30, 1996, the Company recorded net sales of $335.8 million, approximately two-thirds of which were sales to customers located outside of the United States. Manufacturers depend upon metrology hardware and software products to monitor consistent product conformance to their exacting specifications, thereby improving the reliability, fit and finish of their products. In addition to these quality and performance benefits, metrology products help manufacturers lower costs by reducing errors, scrap, rework and warranty expense, improving the manufacturing process, lowering throughput time, increasing capacity and reducing work-in-progress inventories. In recent years, manufacturers have accelerated the integration of quality control functions directly into the production process by incorporating the use of metrology products on the factory floor. In addition, manufacturers are demanding more precise, capable and flexible metrology systems as their products become smaller, more complex and/or must meet more stringent quality and safety standards. Their exacting product specifications often require measurement to an accuracy of less than one micron (one millionth of a meter or approximately 1/100th of the thickness of a human hair) or, in some special cases, measurement of nanometers (one billionth of a meter or the unit of measurement for the wavelength of light). Increasingly, metrology systems must incorporate a mix of traditional contact and newer non-contact technologies because of reduced part sizes and the diversity of new materials used in manufactured products. Metrology systems are purchased by customers regardless of their need for additional production capacity because of ever-increasing quality requirements and the need to reduce product costs. The price points of metrology products range from $100 for a caliper to over $1.5 million for a sophisticated coordinate measuring machine ("CMM") system. The Company's operations are conducted through three management units: Measuring Systems, Precision Measuring Instruments and Custom Metrology. The Measuring Systems Group (the "MS Group"), which accounted for approximately 67% of the Company's net sales in 1995, manufactures and markets a wide range of manual and computer-controlled, high precision CMMs including "in-process" measuring systems under the Brown & Sharpe, DEA and Leitz brand names. The Company believes it is the worldwide market leader for CMMs as measured by net sales and installed base. The Company believes it has an installed base of over 18,000 CMMs worldwide, creating a significant opportunity for aftermarket sales and services. The Precision Measuring Instruments Division (the "PMI Division"), which accounted for approximately 30% of the Company's net sales in 1995, manufactures a wide range of mechanical and electronic measuring and inspection tools (including height gauges, calipers, dial indicators, micrometers and gauge blocks) which are marketed under the Brown & Sharpe, Tesa, Etalon, Interapid, Standard Gage, Select Gauge, Mauser, Mercer and Roch brand names through more than 450 distributors and catalog houses worldwide. The Custom Metrology Division (the "CM Division") designs and engineers, under the Tesa brand name, specialty products and systems that provide customized solutions for unique measurement or inspection problems primarily utilizing non-contact technology. Technologies and custom applications developed by the CM Division with customer funding have been directly applied to the design of standard products or systems distributed by the MS Group or the PMI Division. REPOSITIONING INITIATIVES Over the past several years, the Company has undertaken a series of divestitures, acquisitions and other strategic initiatives which have repositioned the Company from its historical origins as a machine tool manufacturer into a leader in the field of metrology. These repositioning initiatives included: . Divestiture of Non-Core Operations. The divestiture of non-strategic operations including the machine tool, pump and hydraulics businesses enabled the Company to focus on its core metrology technologies and market distribution strengths. . Strategic Metrology Acquisitions. Strategic metrology acquisitions enabled the Company to increase greatly the breadth of its metrology product offering and the strength of its distribution system. These acquisitions included the 1994 acquisitions of DEA S.p.A. ("DEA"), the Italy-based metrology business of Finmeccanica S.p.A. ("Finmeccanica"), Ets. Pierre Roch S.A. and its German affiliate, Mauser Prazisions- Messmittel GmbH ("Mauser") (together, "Roch") and certain intellectual property and assets of Metronic Engineering Limited ("Metronic Ltd."). . Rationalization and Consolidation of Operations. Lowering the Company's overhead cost structure by reducing duplicative functions and associated headcount and by consolidating and rationalizing the Company's manufacturing facilities and operations enabled the Company to increase productivity and efficiency. As a result of these repositioning initiatives, the Company's net sales increased from $162.5 million in fiscal 1992 to $328.0 million in fiscal 1995, while its gross profit margin increased from 28.5% to 32.4% and selling, general and administrative expenses, excluding foreign currency transaction gains and losses, as a percentage of net sales decreased from 34.0% to 29.1% during the same period. See "Selected Consolidated Financial Data." NEW LEADERSHIP AND BUSINESS STRATEGY Following completion of the Company's repositioning initiatives, the Company sought to recruit new management leadership to enhance the Company's leading market positions, improve its global competitiveness and continue to improve its financial performance. To that end, the Company recruited Frank T. Curtin as its new President and Chief Executive Officer in May 1995, who then restructured the senior management team and recruited additional senior managers for key management roles. The current ten-member senior management team has over 296 years of combined experience in highly competitive industrial businesses and global manufacturing organizations. This team is focused on enhancing the financial performance of the Company, motivated in part by an equity-based incentive compensation system, and has made significant progress in realigning the structure and culture of the Company towards a more focused and integrated metrology business. As a result of the repositioning of the Company and the focus of the current management team on enhancing financial performance, the Company has achieved positive net income in each of its fiscal quarters since Mr. Curtin joined the Company. In addition, management believes that its focus on cost reduction during Mr. Curtin's tenure has resulted in a decrease in selling, general and administrative expenses, excluding foreign currency transaction gains or losses, as a percentage of net sales from 30.7% in the first half of 1995 to 26.7% in the first half of 1996. See "Selected Consolidated Financial Data." The Company is implementing its strategy based on the following elements: . Continue Cost Improvements. The Company intends to continue to implement measures designed to reduce its product costs through: (i) standardizing product designs worldwide; (ii) increasing the cost-effectiveness of product designs; (iii) outsourcing components and products; (iv) increasing supplier partnering; and (v) focusing on core manufacturing processes. The Company also intends to streamline its sales, marketing and general and administrative processes in an effort to reduce selling, general and administrative expenses as a percentage of sales. . Develop New Products and End User Markets. The Company's goal is to increase net sales by expanding penetration of served industrial end user markets and by capitalizing on high growth end user markets such as the electronics, computer and medical industries where metrology needs are growing rapidly. To expand in these high growth industries, the Company intends to focus on development of software and emerging non- contact metrology technologies through continued internal development and through strategic acquisitions and technical partnerships (such as the acquisition of certain intellectual property and assets of Metronic Ltd. and the Automation Software Incorporated joint venture, of which the Company owns 50% of the voting securities ("ASI")). To expand its penetration of served industrial end user markets, the Company expects to continue the introduction of new metrology systems utilizing both contact and non-contact technologies, and to develop sensors and other sophisticated products that can be imbedded in a variety of manufacturing processes. The Company plans to form technical and commercial alliances with manufacturers of process equipment to provide enhanced combined manufacturing systems utilizing the Company's sensors and other products. . Enhance Existing and Develop New Software. The Company intends to emphasize research and development of software systems and applications designed to meet the evolving metrology needs of its end users. To that end, the Company intends to leverage off its software development team of approximately 320 software and applications engineers and technicians (including 50 engineers of ASI) in the following four areas: (i) metrology software for inspection and verification of piece-part integrity and conformance to design specifications; (ii) process control software designed to detect and correct drifts in part tolerances before the manufacturing process produces scrap or improperly configured components; (iii) enhanced management information systems that report statistical and quality information from the manufacturing process; and (iv) new software that will link the Company's CMMs and, therefore, the manufacturing process with computer-aided engineering and manufacturing systems that will provide the means for real-time feedback, analysis and, ultimately, control of manufacturing to design specifications. The Company believes that its existing library of metrology software, together with newly developed software, should enable it to respond to the growing demand in manufacturing for on-line inspection and verification. The Company also believes that its experience with CMM software and manufacturing processes are critical to the successful development of software that is linked with computer-aided engineering systems. . Leverage Worldwide Distribution Capability. Through the acquisitions of DEA and Roch, Brown & Sharpe expanded its product lines and strengthened its marketing and distribution capabilities in Europe, South America, the Middle East, India and China. The Company plans to continue to strengthen and expand its worldwide distribution capability, principally by continuing to rationalize its existing distribution network and by opening new demonstration centers and adding direct sales capacity and distributors where cost effective. The Company also intends to capitalize on the strength of its global distribution network by increasing the number of Company-designed and third-party sourced products sold through its distribution channels in an effort to increase gross profit without a corresponding increase in selling, general and administrative expenses. . Increase Aftermarket Sales and Services. The Company intends to increase its focus on higher margin aftermarket sales and services, including calibration and rebuilding of CMMs, software upgrades and parts sales. The Company believes that the worldwide installed base of CMMs, estimated at over 60,000 (including 18,000 of the Company's CMMs), creates a significant demand for such aftermarket services. The Company believes that the level of customer service it provides, as measured by third-party surveys of its customers, is superior to that of its principal competitors, and expects to further strengthen its customer relationships through enhanced aftermarket support and increased partnering efforts. The Company's net sales attributable to aftermarket sales and service in 1995 were estimated to be approximately 25% of MS Group net sales for the same period. For a discussion of certain risk factors which the Company may face in implementing this strategy, see "Risk Factors--Achievement of Strategic Plan." The Company was founded in 1833, incorporated in Rhode Island in 1868 and reincorporated in Delaware in 1969. The Company's principal executive offices are located at Precision Park, 200 Frenchtown Road, North Kingstown, Rhode Island, 02852, and its telephone number is (401) 886-2000. THE OFFERING <TABLE> <S> <C> Class A Common Stock offered(1): By the Company........ 4,000,000 shares By the Selling Stockholders......... 3,286,000 shares Total............... 7,286,000 shares Common Stock outstanding after the Offering(2): Class A Common Stock(3)............. 12,199,989 shares Class B Common Stock(3)............. 519,436 shares Total............... 12,719,425 shares Use of proceeds......... Approximately $35.1 million of the net proceeds to the Company from the Offering will be used to repay $31.9 million of outstanding short-term indebtedness and $3.2 million of the current portion of long-term indebtedness. The remaining net proceeds to the Company of $10.5 million will be used for working capital and general corporate purposes. See "Use of Proceeds." New York Stock Exchange Symbol................. BNS </TABLE> - -------------------- (1) Pursuant to the Rights Plan adopted in 1988, each purchaser of shares of Class A Common Stock offered pursuant to the Offering will receive three quarters of a preferred stock purchase right (the "Rights") for each share of Class A Common Stock purchased. No additional consideration will be payable with respect to the Rights and, prior to the occurrence of specified events, the Rights will not be exercisable or evidenced separately from the Class A Common Stock. See "Description of Capital Stock--Rights Plan." (2) Excludes 864,283 shares of Class A Common Stock reserved for issuance under the 1989 Equity Incentive Plan, the Amended 1973 Stock Option Plan and the Employee Stock Ownership and Profit Participation Plan. See "Management-- Executive Compensation." Excludes 50,000 shares of Class A Common Stock reserved for issuance upon certain specified events under the Stock Purchase and Transfer Agreement dated March 24, 1994 between the Company and Diehl GmbH & Co. See "Certain Transactions." (3) Assumes no conversions of Class B Common Stock into Class A Common Stock after August 31, 1996. SUMMARY CONSOLIDATED FINANCIAL INFORMATION During the periods presented below, the Company has undertaken a number of divestitures and acquisitions, including the 1994 acquisitions of DEA and Roch. Consequently, the summary consolidated financial information set forth in the table below may not be comparable for all periods presented. The following data should be read in conjunction with the Company's Consolidated Financial Statements and the Notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Prospectus. <TABLE> <CAPTION> SIX MONTHS ENDED FISCAL YEAR ENDED DECEMBER (1) JUNE 30, -------------------------------- ---------------------- 1993 1994 1995 1995 1996 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA: Net sales............... $ 159,518 $ 209,369 $ 328,031 $ 158,349 $ 166,113 Cost of sales........... 110,841 142,776 221,729 108,174 113,693 Selling, general and administrative expense(2)............. 48,073 68,473 94,902 46,580 45,104 Restructuring charges(3)............. -- 4,169 336 247 -- --------- --------- ---------- ---------- ---------- Operating profit (loss)................. 604 (6,049) 11,064 3,348 7,316 Interest expense........ 5,100 6,575 9,129 3,948 4,553 Other income, net....... 2,880 689 688 390 169 --------- --------- ---------- ---------- ---------- Income (loss) before taxes.................. (1,616) (11,935) 2,623 (210) 2,932 Income tax provision.... 800 2,400 697 200 528 --------- --------- ---------- ---------- ---------- Net income (loss)....... $ (2,416) $ (14,335) $ 1,926 $ (410) $ 2,404 ========= ========= ========== ========== ========== Net income (loss) per share.................. $ (0.49) $ (2.37) $ 0.22 $ (0.05) $ 0.27 ========= ========= ========== ========== ========== Weighted average number of shares outstanding and common stock equivalents............ 4,969,543 6,057,090 8,772,748 8,691,487 8,884,156 OTHER DATA: Gross profit margin(4).. 30.5% 31.8% 32.4% 31.7% 31.6% Selling, general, and administrative expense, excluding foreign currency transaction gains or losses, as a percent of net sales... 30.2% 33.2% 29.1% 30.7% 26.7% Net sales per employee(5)............ $ 104 $ 114 $ 138 NM NM PRO FORMA FINANCIAL DATA(6): Interest expense........ $ 5,733 $ 2,875 $ 2,768 Net income.............. 5,294 759 3,741 Net income per share.... $ 0.41 $ 0.06 $ 0.29 Weighted average number of shares outstanding and common stock equivalents............ 12,773,000 12,692,000 12,884,000 </TABLE> <TABLE> <CAPTION> AS OF JUNE 30, 1996 -------------------- AS ACTUAL ADJUSTED(7) <S> <C> <C> BALANCE SHEET DATA: Cash and cash equivalents.................................. $ 4,226 $ 14,686 Working capital............................................ 97,845 143,405 Total assets............................................... 302,652 313,112 Total debt................................................. 106,512 71,412 Total stockholders' equity................................. 84,870 130,430 </TABLE> - -------------------- (1) Fiscal years presented ended December 31, except the Company's 1993 fiscal year which ended on December 25. (2) During fiscal 1994, selling, general and administrative expenses included duplicative costs associated with the DEA and Roch operations which were consolidated during 1994 and 1995. Includes foreign currency transaction gains of $0.2 million, $1.1 million, $0.6 million and $2.0 million in 1993, 1994, 1995 and the first half of 1995, respectively, and $0.7 million of transaction losses in the first half of 1996. (3) Restructuring charges are principally attributable to the payment of employee severance and the closing of sales offices associated with integrating the Company's existing operations with those of DEA and Roch. (4) Data for the first half of the year may not be indicative of data for the full year due to seasonal factors and the frequent impact of product mix variations quarter to quarter. (5) During fiscal 1994, DEA employees have been accounted for by annualizing the number of employees for the period. (6) Pro forma to reflect the sale of the shares of Class A Common Stock offered by the Company hereby, at an assumed public offering price of $12.25 per share, and repayment of all short-term indebtedness and current portions of long-term debt outstanding during the pro forma periods, not exceeding $31.9 million and $3.2 million, respectively, as if such transactions had occurred on the first day of the relevant period. The unaudited pro forma financial information does not purport to be indicative of the financial position or operating results which would have been achieved had the Offering taken place at the dates indicated and should not be construed as representative of the Company's financial position or results of operations for any future period or date. See "Use of Proceeds."

parsed_sections/prospectus_summary/1996/CIK0000018827_ekco_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety and should be read in conjunction with the more detailed information and financial statements, including the notes thereto, included elsewhere in this Prospectus. As used in this Prospectus, unless the context requires otherwise, "Ekco" refers to Ekco Group, Inc. and "Company" refers to Ekco and its subsidiaries. References to "fiscal years" refer to the Company's fiscal years ended on the Sunday closest to December 31 of the referenced year. THE COMPANY The Company is a leading U.S. manufacturer and marketer of multiple categories of branded houseware products for everyday home use. The Company believes it is the leading U.S. supplier of metal bakeware, kitchen tools and gadgets and non-toxic pest control products. In addition, the Company believes it is a leading U.S. supplier of plastic storage products (including crates, containers, baskets and office organizers), cleaning products (primarily brushes, brooms and mops) and small animal care and control products. The Ekco(R) brand ranked eighth in a recent survey of the 300 most widely recognized brand names in home furnishings. The Company markets its products primarily in the U.S. through substantially all distribution channels that sell houseware products for everyday home use, including mass merchandisers, supermarkets, and hardware, drug and specialty stores. The Company has a significant presence among mass merchandisers, selling to each of the 30 largest discount department store chains, and in supermarkets where it occupies space in over 90% of the approximately 38,000 U.S. supermarkets. The Company's sales have increased in each of the last five years as a result of internal growth and acquisitions. The Company's net revenues increased from $166.7 million in Fiscal 1991 to $278.0 million in Fiscal 1995, a compound annual growth rate of 13.6%. The Company's EBITDA (as defined) increased from $31.0 million in Fiscal 1991 to $50.1 million in Fiscal 1995, a compound annual growth rate of 12.7%. The following table summarizes the Company's principal product lines, brand names and net revenues by product category for Fiscal 1995 (in millions): <TABLE> <CAPTION> FISCAL 1995 NET PRODUCT CATEGORY PRINCIPAL PRODUCT LINES PRINCIPAL BRAND NAMES REVENUES ---------------- ----------------------- --------------------- -------- <S> <C> <C> <C> Bakeware Non-stick and uncoated cookie Ekco(R), Baker's Secret(R) $ 81.3 sheets, muffin tins, brownie pans and loaf pans Kitchenware Tools including spoons, spatulas, Ekco(R), Ekco Pro(TM) 73.0 serving forks, ladles and specialty cooking accessories Gadgets including peelers, corkscrews, whisks and can and bottle openers Cleaning products Brushes, brooms and mops Ekco(R), Wright-Bernet(TM) 55.2 Pest control and Spring action rodent traps, glue-based Victor(R), Havahart(R) 34.0 small animal care rodent and insect traps and live animal and control traps products Molded plastic Crates, bins, baskets, organizers, carts Ekco(R) 31.0 products and caddies for storage, laundry and the office VIA! Upscale bakeware, kitchen tools and VIA!(TM) 3.5 gadgets, and tea kettles $278.0 ====== </TABLE> - 4 - <PAGE> 7 THE EKCO INTEGRATION Since the fourth quarter of Fiscal 1993, Ekco has taken a series of actions to position the Company for long-term growth (the "Ekco Integration"). The Ekco Integration included (i) the combination of four of the Company's principal business units into a single operating division and (ii) the introduction of a new branding strategy to capitalize on the strength of the Ekco(R) brand name. The Ekco Integration combined the management and operations of the Company's bakeware, kitchenware, cleaning products and molded plastic products businesses, which sell through common channels of distribution and accounted for over 75% of the Company's net revenues in Fiscal 1995. The newly created single organization combines and coordinates the sales, marketing, manufacturing, distribution, administrative and financial activities for the four product categories. The Company also consolidated a large portion of the distribution of bakeware and kitchenware products as well as certain cleaning products into its new distribution facility in Bolingbrook, Illinois from four separate warehousing and distribution locations. These steps have improved customer service, created more effective sales and marketing programs, reduced costs and resulted in distribution efficiencies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Notes to the Consolidated Financial Statements included elsewhere in this Prospectus. As part of the Ekco Integration, in January 1996 the Company introduced its new branding strategy in which the Ekco(R) brand name is used to market most of the products in these four categories. The new strategy enables the Company to capitalize on the strength of the Ekco(R) brand name by improving the brand identification of these products by consumers and increasing promotional opportunities for retailers. In addition, management believes that the new branding strategy enhances the effectiveness of the Company's newly combined sales and marketing effort by facilitating cross-marketing of the Company's products to retail customers under Ekco(R), one of the strongest brand names in the housewares industry. COMPETITIVE STRENGTHS The Company believes its competitive strengths include: - LEADING MARKET POSITIONS. More than 50% of the Company's sales are from metal bakeware and kitchen tools and gadgets, categories in which the Company believes it is the industry leader. The Company has achieved primary vendor status with many of its retail customers in certain product categories, including bakeware, kitchenware, cleaning products and non-toxic pest control products. - WIDELY RECOGNIZED BRAND NAMES. In 1995, the Ekco(R) brand ranked eighth in Home Furnishing News' survey of the 300 most widely recognized brand names in home furnishings. Ekco(R) and the Company's other brand names, including Baker's Secret(R) bakeware, Wright-Bernet(TM) cleaning products, Victor(R) pest control products and Havahart(R) small animal care and control products, are recognized by consumers and retailers for quality, value, design and functionality. - BROAD MARKET PENETRATION. Management believes that the Company has one of the broadest distribution networks of any company in the housewares industry. The Company has a significant presence in mass merchandisers (including Wal-Mart, Kmart and Target) and supermarkets (including Winn-Dixie, Kroger and Albertson's). - MULTIPLE CATEGORY SUPPLIER. The Company serves as a single source for a wide range of products at a variety of price points in several categories, enabling the Company to be a more efficient and attractive vendor to the retail industry, which is consolidating its supply base. - EFFICIENT DISTRIBUTION SYSTEM. The Company's distribution facilities and processes enable the Company to effectively pick, pack and deliver customer orders from its inventory, resulting in greater on-time deliveries, higher order fill rates, optimal use of full-truckload shipments and short purchase order lead times. - CUSTOMER SERVICE. The Company offers retailers an integrated program of productivity enhancing services which are designed to reduce their operating costs and working capital and to increase their sales volume of the Company's products. - 5 - <PAGE> 8 BUSINESS STRATEGY The Company's business strategy has four primary components: (i) leverage Ekco's brand names, (ii) focus on customer sales and service, (iii) increase market and customer penetration and (iv) pursue growth through acquisitions. - LEVERAGE EKCO'S BRAND NAMES: The Company intends to leverage the Ekco(R) brand name to (i) further increase brand recognition and reputation among both retailers and consumers, (ii) expand sales through cross-marketing of the Company's product lines to existing customers and (iii) become the sole or primary vendor to existing and future customers across multiple product categories. As part of the Ekco Integration, in January 1996 the Company introduced its new branding strategy in which the Ekco(R) brand name is used to market most of the Company's bakeware, kitchenware, cleaning products and molded plastic products. The Company continues to promote its Baker's Secret(R), Wright-Bernet(TM), Victor(R) and Havahart(R) brand names and to enhance them with the Ekco(R)signature. - FOCUS ON CUSTOMER SALES AND SERVICE: The Ekco Integration has enabled the Company to shift the focus of its sales and marketing strategy from individual product categories to the broader needs of each of its customers. Each of the Company's customers now has one Ekco sales person responsible for selling and marketing most of the Company's products. The combined marketing staff now coordinates most of the Company's market research, advertising and other marketing related functions. This coordination augments the Company's efforts to leverage the Ekco(R) brand name, to increase market and customer penetration and to provide superior service to its customers. - INCREASE MARKET AND CUSTOMER PENETRATION: The Company strives to expand its retail space at existing customers and to gain new customers by (i) offering differentiated product lines, (ii) developing new and proprietary products, (iii) cross-marketing existing product lines to existing customers who do not currently purchase such product lines and (iv) cross-merchandising combinations of products from different product categories with a uniform Ekco(R) message. The Company offers products which are differentiated by price, quality, value, color, design, packaging and functionality. The Company strives to be a full-line supplier and to be the first to market with new product introductions to increase sales of each of its product lines. - PURSUE GROWTH THROUGH ACQUISITIONS: The Company's growth has been enhanced by acquisitions. The Company's acquisition strategy is focused on long life-cycle consumer products related to the Company's current product portfolio which can benefit from (i) integration into the Company's existing manufacturing, warehousing and distribution systems, (ii) if appropriate, inclusion under the Ekco(R) brand name and (iii) the Company's broad distribution network. Management believes that there are and will continue to be opportunities to acquire additional consumer product lines and businesses due to, among other things, the large number of consumer product companies and the increased pressure on such companies from retailers to provide greater and more costly levels of service and support. The Company's principal executive offices are located at 98 Spit Brook Road, Nashua, New Hampshire 03062 and its telephone number is (603) 888-1212. THE EXCHANGE OFFER Registration Rights Agreement.............. The Old Senior Notes were sold by the Company on March 25, 1996, to Bear, Stearns & Co. Inc. and Smith Barney Inc. (the "Initial Purchasers"), who placed the Old Senior Notes with institutional investors. In connection therewith, the Company and the Guarantors executed and delivered for the benefit of the Holders of the Old Senior Notes a registration rights agreement (the "Registration Rights Agreement") providing, among other things, for the Exchange Offer. - 6 - <PAGE> 9 The Exchange Offer......................... New Senior Notes are being offered in exchange for a like face amount of Old Senior Notes. As of the date hereof, $125,000,000 aggregate face amount of Old Senior Notes are outstanding. The Company will issue the New Senior Notes to Holders promptly following the Expiration Date. See "Risk Factors - Consequences of Failure to Exchange." Expiration Date............................ 5:00 p.m., New York City time, on August 7, 1996, unless the Exchange Offer is extended, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Accrued Interest on the New Senior Notes and the Old Senior Notes................. Each New Senior Note will bear interest from its issuance date. Holders of Old Senior Notes that are accepted for exchange will receive, in cash, accrued interest thereon to, but not including, the issuance date of the New Senior Notes. Such interest will be paid with the first interest payment on the New Senior Notes. Interest on the Old Senior Notes accepted for exchange will cease to accrue upon issuance of the New Senior Notes. Conditions to the Exchange Offer........... The Exchange Offer is subject to certain customary conditions, which may be waived by the Company. See "The Exchange Offer - Conditions." Procedures for Tendering Old Senior Notes.................................... Each Holder of Old Senior Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with the Old Senior Notes and any other required documentation to the exchange agent (the "Exchange Agent") at the address set forth herein. By executing the Letter of Transmittal, each Holder will represent to the Company, among other things, that (i) the New Senior Notes acquired pursuant to the Exchange Offer by the Holder and any beneficial owners of Old Senior Notes are being obtained in the ordinary course of business of the person receiving such New Senior Notes, (ii) neither the Holder nor such beneficial owner is participating in, intends to participate in or has an arrangement or understanding with any person to participate in the distribution of such New Senior Notes and (iii) neither the Holder nor such beneficial owner is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company. Each broker-dealer that receives New Senior Notes for its own account in exchange for Old Senior Notes, where such Old Senior Notes were acquired by such broker or dealer as a result of market-making activities or other trading activities (other than Old Senior Notes acquired directly from the Company), may participate in the Exchange Offer but may be deemed an "underwriter" under the Securities Act and, therefore, must acknowledge in the Letter of Transmittal that it will deliver a prospectus in connection with any resale of such New Senior Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker or dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. See "The Exchange Offer - Procedures for Tendering" and "Plan of Description." - 7 - <PAGE> 10 Special Procedures for Beneficial Owners........................ Any beneficial owner whose Old Senior Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered Holder promptly and instruct such registered Holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering its Old Senior Notes, either make appropriate arrangements to register ownership of the Old Senior Notes in such owner's name or obtain a properly completed bond power from the registered Holder. The transfer of registered ownership may take considerable time. See "The Exchange Offer - Procedures for Tendering." Guaranteed Delivery Procedures............. Holders of Old Senior Notes who wish to tender their Old Senior Notes and whose Old Senior Notes are not immediately available or who cannot deliver their Old Senior Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date must tender their Old Senior Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer - Guaranteed Delivery Procedures." Withdrawal Rights.......................... Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange Offer - Withdrawal of Tenders." Acceptance of Old Senior Notes and Delivery of New Senior Notes............. The Company will accept for exchange any and all Old Senior Notes which are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The New Senior Notes issued pursuant to the Exchange Offer will be delivered promptly following the Expiration Date. See "The Exchange Offer - Terms of the Exchange Offer." Exchange Agent............................. Fleet National Bank is serving as Exchange Agent in connection with the Exchange Offer. See "The Exchange Offer - Exchange Agent." SUMMARY DESCRIPTION OF THE NEW SENIOR NOTES The Exchange Offer applies to $125,000,000 aggregate face amount of Old Senior Notes. The terms of the New Senior Notes are identical in all material respects to the Old Senior Notes, except that the New Senior Notes have been registered under the Securities Act and, therefore, will not bear legends restricting their transfer and will not contain certain provisions providing for an increase in the interest rate on the Old Senior Notes under certain circumstances relating to the timing of the Exchange Offer, which rights will terminate when the Exchange Offer is consummated. The New Senior Notes will evidence the same debt as the Old Senior Notes and will be entitled to the benefits of the Indenture, under which both the Old Senior Notes were, and the New Senior Notes will be, issued. See "Description of the Notes." The New Senior Notes....................... $125,000,000 principal amount of 9 1/4% New Senior Notes due 2006. Maturity Date.............................. April 1, 2006. Interest Payment Dates..................... April 1 and October 1, commencing October 1, 1996. Guarantees................................. The New Senior Notes will be fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by substantially all of Ekco's existing and future domestic - 8 - <PAGE> 11 subsidiaries (collectively, the "Guarantors"). See "Description of Senior Notes--General." Ranking.................................... The New Senior Notes will be senior unsecured obligations of Ekco and will rank pari passu in right of payment with all existing and future Senior Indebtedness of Ekco and senior in right of payment to all existing and future Subordinated Indebtedness of Ekco. The Guarantees will be senior unsecured obligations of the Guarantors and will rank pari passu in right of payment with all existing and future Senior Indebtedness of the Guarantors and senior in right of payment to all existing and future Subordinated Indebtedness of the Guarantors. The indebtedness under the Revolving Credit Facility is secured by substantially all of the assets of the Company. As a result, the Senior Notes will effectively be subordinated to the Revolving Credit Facility. At March 31, 1996 the Company's only outstanding indebtedness was its $124.1 million of Senior Notes. The Company had no outstanding Subordinated Indebtedness or indebtedness under the Revolving Credit Facility as of such date. Mandatory Redemption....................... None. Optional Redemption........................ The New Senior Notes will be redeemable for cash at the option of Ekco, in whole or in part, on or after April 1, 2001, at the redemption prices set forth herein, together with accrued and unpaid interest and Liquidated Damages, if any, to the redemption date. See "Description of Senior Notes-- Redemption." Change of Control.......................... Upon the occurrence of a Change of Control, each holder of New Senior Notes will have the option to require Ekco to repurchase such holder's New Senior Notes, in whole or in part, at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, to the date of repurchase. Ekco's ability to repurchase the New Senior Notes following a Change of Control will be dependent upon it having sufficient cash therefor and the terms of its then outstanding Senior Indebtedness, including the Revolving Credit Facility. See "Description of Senior Notes--Certain Covenants--Repurchase of Senior Notes at the Option of the Holder Upon a Change of Control." Certain Covenants.......................... The indenture under which the New Senior Notes will be issued (the "Indenture") contains certain restrictive covenants that, among other things, limit the ability of Ekco and its Subsidiaries to incur additional Indebtedness (as defined) and issue preferred stock, create liens, pay dividends, repurchase capital stock and make certain other Restricted Payments (as defined), sell assets, engage in transactions with affiliates, enter into sale and leaseback transactions, conduct unrelated lines of business and consummate mergers or consolidations. The term "Subsidiaries" is defined in the Indenture to exclude "Unrestricted Subsidiaries." See "Description of Senior Notes- -Certain Covenants." - 9 - <PAGE> 12 Use of Proceeds............................ The Exchange Offer is intended to satisfy certain of Ekco and the Guarantors' obligations under the Registration Rights Agreement. Ekco will not receive any cash proceeds from the issuance of the New Senior Notes in the Exchange Offer. The net proceeds from the issuance of the Old Senior Notes were used by the Company to (i) repurchase all of the outstanding 12.70% Senior Subordinated Notes due 1998 (the "12.70% Notes") of Ekco Housewares, Inc., (ii) repurchase its outstanding 7.0% Subordinated Convertible Note due 2002 (the "7.0% Note") and (iii) repay amounts outstanding under the Revolving Credit Facility. See "Use of Proceeds."

parsed_sections/prospectus_summary/1996/CIK0000025757_crompton_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a summary of certain information contained elsewhere in this Prospectus. This summary is not intended to be complete and is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in this Prospectus. Prospective investors are urged to read and consider carefully all of the information contained in this Prospectus. As used herein, the terms "Crompton" and "the Company" refer to Crompton & Knowles Corporation and its consolidated subsidiaries, unless the context otherwise requires. THE COMPANY Crompton is engaged in the manufacture and sale of specialty chemicals and specialty process equipment and controls which are marketed throughout the world. Crompton's line of specialty value-added chemicals includes textile and industrial dyes and auxiliary chemicals, reaction flavors, specialty sweeteners, food colors and inactive pharmaceutical additives and coatings. Crompton's specialty process equipment and controls business consists primarily of the manufacture and sale of plastics and rubber extrusion equipment and integrated extrusion systems, industrial blow molding equipment and electronic controls. The principal executive offices of Crompton are located at One Station Place, Metro Center, Stamford, Connecticut 06902, and its telephone number is (203) 353-5400. See "The Company." RECENT DEVELOPMENTS Pursuant to an Agreement and Plan of Merger, dated as of April 30, 1996 (the "Merger Agreement"), Crompton has agreed to the merger (the "Merger") of Tiger Merger Corp., a Delaware corporation and a wholly owned subsidiary of Crompton ("Subcorp"), with and into Uniroyal Chemical Corporation, a Delaware corporation ("Uniroyal"), subject to the approval of the transaction by the stockholders of each of Uniroyal and Crompton at special meetings thereof currently scheduled to be held on August 21, 1996. The Board of Directors of Crompton has fixed the close of business on July 9, 1996, as the record date for determination of holders of Crompton Common Stock entitled to notice of and to vote at such meeting of Crompton stockholders. Accordingly, purchasers of the shares of Crompton Common Stock offered hereby will not be entitled to vote such shares at such special meeting. The Merger will be consummated on the terms and subject to the conditions set forth in the Merger Agreement (which was filed by Crompton with the Commission as an exhibit to Crompton's Quarterly Report on Form 10-Q for the quarter ended March 30, 1996), pursuant to which, among other things, (i) Subcorp will be merged with and into Uniroyal as a result of which Uniroyal will become a wholly owned subsidiary of Crompton, (ii) each issued and outstanding share (other than shares, if any, held in the treasury of Uniroyal or held by Crompton or any of its subsidiaries, which will be cancelled) of common stock, $0.01 par value per share (together with the attached preferred stock purchase rights, "Uniroyal Common Stock"), of Uniroyal will be converted into 0.9577 shares of Crompton Common Stock (with cash in lieu of fractional shares), and (iii) each issued and outstanding share (other than shares, if any, held in the treasury of Uniroyal or held by Crompton or any of its subsidiaries, which will be cancelled, and other than shares as to which dissenters' appraisal rights have been perfected) of Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share ("Series A Preferred Stock"), of Uniroyal and of Series B Preferred Stock, par value $0.01 per share ("Series B Preferred Stock," and together with the Series A Preferred Stock, "Uniroyal Preferred Stock"), of Uniroyal will be converted into 6.3850 shares of Crompton Common Stock (with cash in lieu of fractional shares). It is currently anticipated that the Merger will be consummated shortly after the special meetings of Crompton and Uniroyal stockholders, assuming the Merger Agreement and the Merger are approved at such meetings and all other conditions to the Merger have been satisfied or waived. Uniroyal, through its subsidiaries, is a major multinational manufacturer of a wide variety of specialty chemical products, including specialty elastomers, rubber chemicals, crop protection chemicals and additives for the plastics and lubricants industries. Uniroyal produces high value added products which are currently marketed in approximately 120 countries. Crompton does not currently AVAILABLE INFORMATION Crompton is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by Crompton with the Commission can be inspected and copied at the public reference facilities maintained by the Commission at its principal office at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following Regional Offices of the Commission: New York Regional Office, 7 World Trade Center, 13th Floor, New York, New York 10048, and Chicago Regional Office, Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates, or through the World Wide Web (http://www.sec.gov). Crompton Common Stock is listed on the NYSE, and such reports, proxy statements and other information concerning Crompton are available for inspection and copying at the offices of the NYSE, 20 Broad Street, New York, New York 10005. Crompton has filed with the Commission a Registration Statement on Form S-1 under the Securities Act of 1933, as amended (together with the rules and regulations promulgated thereunder, the "Securities Act"), with respect to the shares of Crompton Common Stock to be offered hereby (the "Registration Statement"). This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is hereby made to the Registration Statement and related exhibits for further information with respect to Crompton and the securities offered hereby. Statements contained herein concerning the provisions of any document are necessarily summaries of such documents and not complete, and in each instance, reference is made to the copy of such document attached hereto or filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. intend to make any material changes to the general operating activities of Uniroyal following consummation of the Merger. The principal executive offices of Uniroyal are located at Benson Road, Middlebury, Connecticut 06749, and its telephone number is (203) 573-2000. Uniroyal is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy statements and other information with the Commission. Prospective investors are urged to read and consider carefully such reports, proxy statements and other information. Uniroyal Common Stock is quoted on the Nasdaq National Market (the "NASDAQ/NM"). Crompton is effecting the Offering in order for the Merger to qualify as a pooling-of-interests for accounting and financial reporting purposes. See "Recent Developments." THE OFFERING <TABLE> <S> <C> Common Stock offered by Crompton............. 1,000,000 shares Common Stock to be outstanding immediately after the Offering........................... 49,039,309 shares(1) NYSE Symbol.................................. CNK Use of Proceeds.............................. The net proceeds to Crompton from the Offering will be used to partially offset the estimated merger costs discussed elsewhere herein. See "Use of Proceeds." Risk Factors................................. See "Risk Factors." </TABLE> - ------------ (1) Calculated based on 48,039,309 shares of Common Stock outstanding on July 30, 1996, and not giving effect to the up to approximately 26,089,206 shares of Common Stock expected to be issued in connection with the Merger. SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL DATA Selected Historical Financial Data The selected financial data presented below for Crompton as of December 31, 1994 and December 30, 1995 and for the years ended December 25, 1993, December 31, 1994 and December 30, 1995, and Uniroyal as of October 2, 1994 and October 1, 1995 and for the three years ended September 30, 1993, October 2, 1994 and October 1, 1995, have been derived from and are qualified in their entirety by, and should be read in conjunction with, the respective audited financial statements and notes thereto contained herein. See "Index to Financial Statements." Crompton's statement of operations data for the years ended December 28, 1991 and December 26, 1992 and the balance sheet data as of December 28, 1991, December 26, 1992 and December 25, 1993 are derived from audited Crompton consolidated financial statements that are neither included nor incorporated by reference herein. Uniroyal's statement of operations data for the fiscal years ended September 30, 1991 and 1992 and the balance sheet data as of September 30, 1991, 1992 and 1993 are derived from audited Uniroyal financial statements which are neither included nor incorporated by reference herein. The unaudited financial data presented below for the interim periods ended July 1, 1995 and June 29, 1996, and July 2, 1995 and June 30, 1996, are derived from the unaudited consolidated financial statements of Crompton and Uniroyal, respectively, that are contained herein. In the opinion of Crompton, such unaudited financial data have been prepared on the same basis as the audited financial statements contained herein or otherwise filed with the Commission and include all adjustments (consisting only of normal recurring adjustments) necessary to fairly state the information set forth herein. Operating results for the interim periods ended June 29, 1996 and June 30, 1996 are not necessarily indicative of the results that may be expected for the year or for any other interim period. <TABLE><CAPTION> YEARS ENDED SIX MONTHS ENDED ------------------------------------------------------------------------ ------------------- DECEMBER 28, DECEMBER 26, DECEMBER 25, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29, 1991 1992 1993 1994 1995 1995 1996 ------------ ------------ ------------ ------------ ------------ -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> <C> <C> Crompton & Knowles Corporation CONSOLIDATED STATEMENT OF OPERATIONS DATA: Net sales.................. $450,228 517,718 558,348 589,757 665,513 343,810 332,410 Income before extraordinary charges and cumulative effect of accounting changes.................... $ 35,941 43,265 51,958 50,916 40,493 25,254 19,180 Net income................. $ 35,941 34,465 51,958 50,916 40,493 25,254 19,180 Income per common share before extraordinary charges and cumulative effect of accounting changes.................... $ 0.73 0.87 1.00 1.00 0.84 0.52 0.40 Net income per common share...................... $ 0.73 0.69 1.00 1.00 0.84 0.52 0.40 Weighted average number of shares outstanding......... 49,317 49,967 52,176 51,152 48,448 48,569 48,499 CONSOLIDATED BALANCE SHEET DATA: Total assets............... $308,562 350,715 363,246 432,328 484,138 537,369 Long-term debt............. $ 76,118 24,000 14,000 54,000 64,000 79,000 Cash dividends declared per common share............... $ 0.25 0.31 0.38 0.46 0.525 0.255 0.27 </TABLE> <TABLE><CAPTION> YEARS ENDED NINE MONTHS ENDED ------------------------------------------------------------------------- --------------------- SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, OCTOBER 2, OCTOBER 1, JULY 2, JUNE 30, 1991 1992 1993 1994 1995 1995 1996 ------------- ------------- ------------- ---------- ---------- ------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> <C> <C> Uniroyal Chemical Corporation CONSOLIDATED STATEMENT OF OPERATIONS DATA: Net sales............ $ 832,302 856,591 907,862 946,454 1,079,321 784,567 829,171 Income (loss) before extraordinary charges and cumulative effect of accounting changes... $ (23,648) (27,790) (24,792) (213,843)(3) 99,429(4) 95,694(4) 17,982 Net income (loss).... $ (23,648) (27,790) (236,733) (213,843)(3) 91,150(4) 87,415(4) 17,541 Income (loss) per common share before extraordinary charges and cumulative effect of accounting changes (1)(2)............... $ (2.15) (2.54) (2.31) (20.31)(3) 5.37(4) 5.80(4) 0.72 Net income (loss) per common share (1)(2).. $ (2.15) (2.54) (21.85) (20.31)(3) 4.92(4) 5.30(4) 0.70 Weighted average number of shares outstanding(2)....... 11,167 11,038 10,847 10,543 18,461 16,436 24,582 CONSOLIDATED BALANCE SHEET DATA (5): Total assets......... $ 1,253,370 1,228,569 1,225,438 1,056,017 1,171,707 1,161,047 Long-term debt....... $ 854,619 880,343 1,034,799 1,048,225 910,156 888,856 </TABLE> - ------------ (1) Calculated based on income (loss) available to common shareholders after preferred dividends earned of $375, $262, $267, $292, $395, $298 and $313 for the years ended September 30, 1991, 1992 and 1993, October 2, 1994, and October 1, 1995, and the nine-month periods ended July 2, 1995 and June 30, 1996, respectively. (2) During the second quarter of fiscal 1995, Uniroyal completed an initial public offering. Upon consummation of the offering, certain redeemable common stock owned by Uniroyal management was converted into a single class of common stock. Weighted average number of shares outstanding reflects the conversion on a retroactive basis for all periods presented. (3) Includes an after-tax write-off of $163 million for impairment of certain intangible assets. (4) Includes a gain of $78.9 million related to a deferred tax asset reserve. (See note 10 under "Unaudited Pro Forma Combined Financial Information--Notes To Unaudited Pro Forma Combined Financial Information.") (5) Uniroyal has not declared any dividends on its common stock during the periods indicated above. UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL DATA The unaudited selected pro forma combined financial data shown below gives effect to the Merger using the pooling-of-interests basis of accounting. The pro forma statement of operations data reflects the combination of statement of operations data of Crompton for each of the years ended December 25, 1993, December 31, 1994 and December 30, 1995, and the six-month periods ended July 1, 1995 and June 29, 1996, with statement of operations data of Uniroyal for each of the years ended September 30, 1993, October 2, 1994 and October 1, 1995, and the six-month periods ended July 2, 1995 and June 30, 1996. The pro forma balance sheet data reflects the combination of balance sheet data of Crompton as of December 25, 1993, December 31, 1994, December 30, 1995 and June 29, 1996 with balance sheet data of Uniroyal as of September 30, 1993, October 2, 1994, October 1, 1995 and June 30, 1996. The selected pro forma combined financial data should be read in conjunction with the unaudited pro forma combined financial information and notes thereto, which are included elsewhere in this Prospectus. These pro forma data do not purport to be indicative of the results that would have actually been obtained if the Merger had been in effect for the above-mentioned periods and on the dates indicated or that may be obtained in the future. <TABLE><CAPTION> SIX MONTHS YEARS ENDED ENDED --------------------------------------------- --------------------- DECEMBER 25, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29, 1993 AND 1994 AND 1995 AND 1995 AND 1996 AND SEPTEMBER 30, OCTOBER 2, OCTOBER 1, JULY 2, JUNE 30, 1993 1994 1995 1995 1996(4) ------------- ------------ ------------ -------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> PRO FORMA STATEMENT OF OPERATIONS DATA: (2) Net sales................ $ 1,466,210 1,536,211 1,744,834 916,736 930,101 Operating profit........ $ 187,372 1,417(5) 218,122 139,986 131,756 Income (loss) before extraordinary charges and cumulative effect of accounting changes.................. $ 27,166 (162,927)(5) 139,922(6) 131,484(6) 45,530 Income (loss) per common share before extraordinary charges and cumulative effect of accounting changes (1)...................... $ 0.43 (2.65)(5) 2.11(6) 1.96(6) 0.63(7) Weighted average number of shares outstanding (1)...................... 63,689 61,515 66,394 67,109 72,405 PRO FORMA BALANCE SHEET DATA: Total assets............. $ 1,588,684 1,488,345 1,655,845 1,698,416 Long-term debt........... $ 1,048,799 1,102,225 974,156 1,007,906(3) Cash dividends declared per common share (8)..... $ 0.38 0.46 0.525 0.255 0.27 </TABLE> - ------------ (1) Common and common equivalent shares outstanding were calculated assuming a conversion rate of 0.9577 shares of Crompton Common Stock for each share of Uniroyal Common Stock, and 6.3850 shares of Crompton Common Stock for each share of Uniroyal Preferred Stock as provided for in the Merger Agreement. (2) The Pro Forma Statement of Operations Data does not include an estimated $55 million of after tax costs associated with the Merger, as such costs are non-recurring and will be reflected in the statement of operations of the combined company in its first reporting period. (3) Long-term debt includes the financing of the estimated costs of the Merger (see notes 1, 2 and 6 under "Historical and Unaudited Pro Forma Combined Capitalization--Notes to Historical and Unaudited Pro Forma Combined Capitalization"), net of proceeds from the issuance from treasury stock of 1,000,000 shares of Crompton Common Stock to be issued in an offering to take place prior to the consummation of the Merger. (4) After the consummation of the Merger, Uniroyal will change its fiscal year-end to conform with that of Crompton. Results of operations for Uniroyal's quarter ended December 31, 1995 were a net loss of $8.4 million which will be reflected as a one-time adjustment to stockholders' equity in the combined company's 1996 financial statements. (5) Includes an after-tax write-off of $163 million for impairment of certain intangible assets. (6) Includes a gain of $78.9 million related to a deferred tax asset reserve. (See note 10 under "Unaudited Pro Forma Combined Financial Information--Notes To Unaudited Pro Forma Combined Financial Information.") (7) The calculation of pro forma income (loss) per common share before extraordinary charges and cumulative effect of accounting changes does not reflect as outstanding 1,000,000 shares of Crompton Common Stock to be issued in an offering prior to the consummation of the Merger, as such amounts are not reflective of historical trends for the combined company. Assuming the issuance of 1,000,000 shares of treasury stock (see note 3 above) had taken place at the beginning of the year, income per common share before extraordinary charges and cumulative effect of accounting changes for the six months ended 1996 would have been $0.62. (8) Represents Crompton's historical dividends per share. Uniroyal has not declared any dividends on its common stock during the periods presented.

parsed_sections/prospectus_summary/1996/CIK0000028630_drs_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements (including the notes thereto) appearing elsewhere in this Prospectus. Unless the context otherwise requires, all references herein to the "Company" include Diagnos- tic/Retrieval Systems, Inc. and its consolidated subsidiaries. THE COMPANY Diagnostic/Retrieval Systems,Inc. ("DRS" or the "Company") designs, manufactures and markets high-technology computer workstations for the United States (the "U.S.") Department of Defense, electro-optical targeting systems for military customers and image and data storage products for both military and commer- cial customers. In response to a 1992 mandate by the Joint Chiefs of Staff, the Company focuses on "commercial-off-the- shelf" ("COTS") product designs, whereby commercial electronic components are adapted, upgraded and "ruggedized" for application in harsh military environments. The Company believes that military expenditures on electronic systems and equipment will grow in coming years as the nature of modern warfare dictates increasing reliance on real-time, accurate battlefield informa- tion and the electronic content and sophistication of defense systems increases. During its last three fiscal years, the Company has restruc- tured its management team and implemented strategies to exploit the changing nature of military procurement programs brought on by the end of the cold war, military budget constraints and the COTS mandate. The Company's strategies include: * expanding and diversifying the Company's technol- ogy and product base into complementary military and commercial markets primarily through acquisi- tions and the forging of strategic relationships; * increasing revenue opportunities through the de- sign and adaptation of products for use by all branches of the military; and * enhancing financial performance through specific cost reduction measures and increased manufactur- ing efficiencies. To effect these strategies, the Company has (i) acquired several businesses with complementary military and commercial products and technologies over the last three years; (ii) forged strategic relationships with other defense suppliers such as Lockheed-Martin Tactical Defense Systems (formerly, Loral Corpo- ration) and Westinghouse Electric Corporation, among others; (iii) emphasized the development of COTS-based products as well as products and systems that are easily adapted to similar weapons platforms for use by all branches of the military; and (iv) implemented cost reduction programs to reduce its fixed-cost base, allow for growth and maintain the flexibility of its operations. The implementation of these strategies has resulted in increasing revenues and profits over the last three fiscal years. Although the Company experienced operating losses in fiscal 1990 through 1992, primarily due to cost overruns on a single fixed- price development contract, a shift over the last several years in the nature of military development contracting from fixed- price to cost-type contracts has reduced the Company's exposure in this area. For the fiscal year ended March 31, 1995, the Company had revenues of $69.9 million, net income of $2.6 million and earnings per share of $.50, representing increases of 20.9%, 61.2% and 66.7%, respectively, compared with the year ended March 31, 1994. For the nine months ended December 31, 1995 the Company had revenues of $65.6 million, net income of $2.5 million and fully diluted earnings per share of $.44, representing increases of 38.4%, 45.7% and 29.4%, respectively, compared with the same nine-month period ended December 31, 1994. <TABLE> <CAPTION> SUMMARY FINANCIAL INFORMATION Nine Months Year Ended March 31, Ended December 31, _____________________________________________________________ _____________________ 1995 1994 1993 1992 1991 1995 1994 ____ ____ ____ ____ ____ ____ ____ <S> <C> <C> <C> <C> <C> <C> <C> SUMMARY OF OPERATIONS DATA: Revenues . . . . . . . . $ 69,930,000 $ 57,820,000 $ 47,772,000 $ 28,925,000 $ 47,762,000 $ 65,628,000 $ 47,404,000 Costs and Expenses 64,836,000 54,372,000 45,461,000 37,032,000 52,812,000 60,289,000 44,143,000 Operating Income (Loss) 5,094,000 3,448,000 2,311,000 (8,107,000) (5,050,000) 5,339,000 3,261,000 Interest and Related Expenses (1,372,000) (1,574,000) (1,735,000) (2,198,000) (2,362,000) (1,675,000) (1,020,000) Other Income, Net 534,000 834,000 1,224,000 944,000 1,677,000 425,000 613,000 Earnings (Loss) before Income Taxes (Benefit) 4,256,000 2,708,000 1,800,000 (9,361,000) (5,735,000) 4,089,000 2,854,000 Income Taxes (Benefit) 1,652,000 1,093,000 715,000 (4,006,000) (1,488,000) 1,594,000 1,142,000 Net Earnings (Loss) $ 2,604,000 $ 1,615,000 $ 1,085,000 $ (5,355,000) $ (4,247,000) $ 2,495,000 $ 1,712,000 Net Earnings (Loss) per share of Class A and Class B Common Stock(1)(2) $ .50 $ .30 $ .20 $ (1.01) $ (.79) $ .44 $ .34 December 31, 1995 BALANCE SHEET DATA: Working Capital $ 40,585,000 Net Property, Plant and Equipment $ 14,728,000 Total Assets $ 90,770,000 Long-Term Debt, Excluding Current Installments $ 35,319,000 Net Stockholders' Equity $ 24,907,000 <FN> ___________________________ (1) No cash dividends have been distributed during any of the years in the five-year period ended March 31, 1995 or the nine months ended December 31, 1995. (2) Does not give effect to the Reclassification (as hereinafter defined). On April 1, 1996, the Reclassification became effective pursuant to which each share of the Class A Common Stock (as hereinafter defined) and each share of the Class B Common Stock (as hereinafter defined) was reclassified into one share of the Common Stock. See "The Offering--Reclassification" and "Description of Capital Stock." </TABLE> THE OFFERING Common Stock Offered . . . . 885,924 shares Common Stock to be outstanding after the offering . . . . . . . 5,467,632 shares(1) Reclassification . . . . . . On February 7, 1996, the Board of Directors of the Company approved and recommended for submission to the stockholders of the Company by a majority vote the consideration and approval of an Amended and Restated Certificate of Incor- poration (the "Restated Cer- tificate"), which amended and restated the Company's certif- icate to (i) effect a reclas- sification (the "Reclassifica- tion") of each share of Class A Common Stock, $.01 par value per share (the "Class A Common Stock"), and each share of Class B Common Stock, $.01 par value per share (the "Class B Common Stock"), into one share of Common Stock of the Compa- ny, (ii) provide that action by the stockholders may be taken only at a duly called annual or special meeting, and not by written consent, and (iii) provide that the stock- holders of the Company would have the right to make, adopt, alter, amend, change or repeal the by-laws of the Company only upon the affirmative vote of not less than 66-2/3 % of the outstanding capital stock of the Company entitled to vote thereon. On March 26, 1996, the stockholders approved the Restated Certificate. The Restated Certificate was filed with the Secretary of State of the State of Delaware and became effective on April 1, 1996. As a result of the Reclassification, the Company's 9% Senior Subordi- nated Convertible Debentures due October 1, 2003 (the "De- bentures") and the 81/2% Con- vertible Subordinated Deben- tures due August 1, 1998 (the "1998 Debentures") are con- vertible into shares of Common Stock. In addition, each option issued or issuable pursuant to the Company's stock option plan is now exer- cisable for an equal number of shares of the Common Stock. The purpose of the Reclassifi- cation was to simplify the Company's capital structure, streamline the Company's vot- ing procedures and enhance the marketability and liquidity of and maximize investor interest in the Company's capital stock. In addition, the Com- pany believes that, as a re- sult of the Reclassification, the Company is in a more flex- ible position to raise capital and effect mergers and acqui- sitions using its common stock. However, there can be no assurance that the Reclas- sification will have such effects. Voting Rights . . . . . . . . Holders of Common Stock are entitled to one vote per share on all matters submitted for approval of stockholders. See "Description of Capital Stock." AMEX symbol for Common Stock . . "DRS" Registration Rights . . . . . Pursuant to a registration rights agreement (the "Regis- tration Rights Agreement") between the Company and Pali- sade Capital Management L.L.C. ("Palisade"), acting as in- vestment adviser to the Sell- ing Stockholders, the Company has agreed to file a shelf registration statement (the "Shelf Registration State- ment") relating to the shares of Common Stock offered here- by. The Company has agreed to use its reasonable best ef- forts to maintain the effec- tiveness of the Shelf Regis- tration Statement until the earlier of the disposition of the shares offered hereby or the third anniversary of the effective date of the Shelf Registration Statement, except that it will be permitted to suspend the use of the Shelf Registration Statement during certain periods under certain circumstances. Use of Proceeds . . . . . . . The Company will not receive any proceeds from the sale of shares of Common Stock offered pursuant to this Prospectus. The Selling Stockholders will receive all of the net pro- ceeds from any sale of shares of Common Stock offered here- by. See "Use of Proceeds" and "Selling Stockholders." (1) Based upon 5,467,632 shares of Common Stock outstanding as of May 23, 1996 (exclusive of 498,434 shares held in treasury).

parsed_sections/prospectus_summary/1996/CIK0000030302_alco_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements and notes thereto appearing elsewhere in this Prospectus. Except as otherwise noted, all information in this Prospectus assumes the Underwriters' over-allotment option has not been exercised (see ``Underwriting''). The Company operates on a fiscal year basis which ends on the Sunday which falls most closely to January 31 of each year. The Company is currently operating in fiscal 1997. This Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results may differ materially from those discussed in the forward-looking statements. Factors that might cause such a disparity include, but are not limited to, those discussed in ``Risk Factors.'' Prospective investors should carefully consider the information set forth under the heading ``Risk Factors.'' THE COMPANY Duckwall-ALCO Stores, Inc. (the ``Company''), which was established in 1901, is a regional retailer operating, as of September 4, 1996, 173 stores in 16 states in the central United States. Under the names ``ALCO'' and ``Duckwall,'' the Company's strategy is to target smaller markets not served by other regional or national retail discount chains and provide the most convenient access to retail shopping within each market. The Company's ALCO discount stores offer a full line of merchandise consisting of approximately 35,000 items, including automotive, candy, crafts, domestics, electronics, fabrics, furniture, hardware, health and beauty aids, housewares, jewelry, ladies', men's and children's apparel and shoes, pre-recorded music and video, sporting goods, seasonal items, stationery and toys. The Company's smaller Duckwall variety stores offer a more limited selection of merchandise. Of the Company's 121 ALCO discount stores, 77 stores are located in communities which do not have another full service discounter. The Company intends to continue its strategy of opening ALCO stores in markets that do not have other discount retailers and where the opening of an ALCO store would significantly reduce the likelihood of the entry by other competitors in the market. The ALCO stores accounted for approximately 95% of the Company's fiscal 1996 net sales. While the current ALCO stores average approximately 23,300 square feet of selling space, the Company's store expansion program is primarily directed toward stores with a design prototype of approximately 18,000 square feet of selling space, which, based on the Company's experience, has been a design that maximizes return on investment for newly-constructed stores (referred to as ``Class 18 Stores''). The Company's 52 Duckwall variety stores are primarily located in communities of less than 2,500 residents and are designed to act as the primary convenience retailer in these smaller communities. These stores, which accounted for the remaining 5% of the Company's fiscal 1996 net sales, average approximately 4,800 square feet of selling space and offer approximately 12,000 items. Operating Duckwall stores offers the Company the opportunity to serve the needs of a community that would not support a full service retail discount store with a reduced investment per store and a higher return on investment than the Company's average. The Company believes that its strong operating performance and improved financial condition over the last four fiscal years and the first twenty-six weeks of the current fiscal year is the result of the focused execution of a business strategy that includes the following key components: Markets: The Company intends to open ALCO stores in towns with populations of typically less than 5,000 which are in trade areas with populations of less than 16,000 where: (1) there is no direct competition from national or regional discount retailers; (2) economic and demographic criteria indicate the market is able to commercially support a discount retailer; and (3) the opening of an ALCO store would significantly reduce the likelihood of the entry into such market by another discount retailer. This strategy has guided the Company in both its opening of new stores and in the closing of existing stores. Market Selection: The Company has a detailed process which it uses to analyze under-served markets which includes examining factors such as distance from competition, trade area, disposable income and retail sales levels. Markets that are determined to be sizable enough to support an ALCO or a Duckwall store, and that have no direct competition from another discount retailer, are examined closely and eventually selected or passed over by the Company's experienced management team. As of September 4, 1996, the Company's management had approximately 166 markets which it had identified for possible ALCO stores and was in the site selection or development process in 34 of those markets. Store Expansion: The Company's expansion program for ALCO stores is designed around the prototype Class 18 Store. This prototype details for each new store plans for shelf space, merchandise presentation, store items to be offered, parking, storage, as well as other store design considerations. The 18,000 square feet of selling space is large enough to permit a full line of the Company's merchandise, while minimizing capital expenditures, required labor costs and general overhead costs. Generally, the Company has expanded its ALCO stores through internal development efforts on a location-by-location basis. Recently, however, the Company entered into a definitive agreement to assume 14 leases and purchase the related fixtures for ALCO stores in eastern Indiana and western Ohio (the ``Real Estate Transaction''). The Company's expansion strategy for the Duckwall variety store is based on opportunities presented to the Company in and by those communities where there is demand and where existing premises are available for lease at a relatively low cost and with limited financial commitment. Technology: The Company is continually improving its management information technologies in order to reduce costs, improve customer service, and enhance general business planning. The Company's accounting and information systems and merchandise and inventory planning systems have recently been enhanced and are in the process of being implemented. The Company has undertaken a $2.3 million project to upgrade the back office equipment and software being used at the ALCO stores for sales processing. This project is expected to extend the life of the current point-of-sale equipment, as well as to improve efficiencies in training and operations and is expected to be completed in fiscal 1998. In conjunction with the project, the ALCO stores will be equipped with radio frequency hand held devices to allow for additional efficiencies in processing inventory receipts and counts. Advertising and Promotion: The Company utilizes full-color photography advertising circulars of 8 to 20 pages distributed by insertion into newspapers or direct mail where newspaper service is inadequate. These circulars are distributed approximately 41 times per year in ALCO markets. In its Duckwall markets, the Company advertises approximately 12 times a year during seasonal promotions. The Company's marketing program is designed to create an awareness, on the part of its identified target customer base, of the Company's comprehensive selection of merchandise and its competitive pricing. Store Environment: The Company's stores are open, clean, bright and offer a pleasant atmosphere with disciplined product presentation, attractive displays and efficient check-out procedures. The Company strives to staff its stores with courteous, highly motivated, knowledgeable store associates in order to provide a convenient, friendly and enjoyable shopping experience. The Company's growth strategy is to increase sales and profitability at existing stores by continually refining the merchandising mix and improving operating efficiencies, and to open new stores in under-served markets in the central United States. The Company plans to open a total of 15 ALCO stores and 15 Duckwall stores and close 1 ALCO store in the current fiscal year, and open 25 ALCO stores (including the 14 locations involved with the Real Estate Transaction) and at least 15 Duckwall stores during fiscal year 1998, and a minimum of 16 ALCO stores and 15 Duckwall stores during fiscal year 1999. THE OFFERING <TABLE> <S> <C> Common Stock offered: By the Company.............................. 1,000,000 shares By the Selling Stockholders................. 400,000 shares Total................................... 1,400,000 shares Common Stock outstanding after the offering..... 5,000,523 shares <F1> Use of proceeds................................. The Company intends to use the net proceeds of the offering to fund the opening of new stores. Pending such use, the Company intends to use the net proceeds to repay indebtedness under its revolving loan credit facility. Nasdaq National Market symbol................... DUCK <FN> - -------- <F1> Excludes 188,325 Shares of Common Stock for which options have been granted under the Company's Incentive Stock Option Plan and includes 1,013 Shares of Common Stock issued in August and September of 1996 pursuant to options exercised by former employees of the Company. </TABLE> <TABLE> SUMMARY CONSOLIDATED FINANCIAL DATA (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) <CAPTION> TWENTY-SIX WEEKS FISCAL YEAR ENDED ENDED ------------------------------------------------------------------- --------------------- FEBRUARY 2, JANUARY 31, JANUARY 30, JANUARY 29, JANUARY 28, JULY 30, JULY 28, 1992<F1> 1993 1994 1995 1996 1995 1996 ----------- ----------- ----------- ----------- ----------- --------- --------- (UNAUDITED) <S> <C> <C> <C> <C> <C> <C> <C> STATEMENTS OF OPERATIONS DATA: Net sales......................... $210,812 $217,236 $225,903 $242,144 $256,454 $117,532 $127,774 Gross margin...................... 66,181 68,402 71,686 78,964 83,158 38,393 41,962 Income from operations............ 5,561 7,038 8,304 10,207 11,047 4,012 4,715 Interest expense.................. 5,197 4,284 4,091 3,390 2,958 1,417 1,592 Net earnings (loss)............... $ (794) $ 1,559 $ 2,260 $ 4,130 $ 5,130 $ 1,609 $ 1,927 Earnings (loss) per common and common equivalent share<F2><F3>................... $ (.50) $ .57 $ .80 $ 1.51 $ 1.28 $ .40 $ .48 Weighted average common and common equivalent shares outstanding<F3>................. 1,575,813 2,006,250 2,006,250 2,737,620 4,014,351 4,007,909 4,033,522 OPERATING DATA: Stores open at period-end......... 104 110 121 138 156 146 170 Stores in noncompetitive markets at period-end<F4>............... 48 57 72 91 110 100 123 Percentage of total stores in non-competitive markets<F4>..... 46.2% 51.8% 59.5% 65.9% 70.5% 68.4% 72.4% Net sales of stores in non- competitive markets<F4>......... $ 84,835 $ 96,243 $112,590 $132,743 $151,733 $ 69,252 $ 80,793 Percentage of net sales from stores in non-competitive markets<F4>..................... 40.2% 44.3% 49.8% 54.8% 59.2% 58.9% 63.2% Comparable store sales for all stores<F5>...................... (4.2%) (0.3%) 0.0% 1.1% (3.2%) (4.2%) (1.5%) Comparable store sales for stores in non-competitive markets<F4><F5>................. 0.0% 2.7% 4.0% 2.7% (1.0%) (1.4%) 0.2% <CAPTION> JULY 28, 1996 --------------------------- ACTUAL AS ADJUSTED<F6> -------- --------------- <S> <C> <C> BALANCE SHEET DATA: Working capital............................................................. $ 56,786 $ 56,786 Total assets................................................................ 123,072 123,072 Total debt (includes capital lease obligation and current maturities)....... 35,719 23,572 Stockholders' equity........................................................ 55,614 67,761 <FN> - --------- <F1> Net loss and the related loss per share amounts for the fiscal year ended February 2, 1992 as presented above exclude an extraordinary gain from discharge of indebtedness of $43,101 related to the Company's 1991 Reorganization. The extraordinary gain has been excluded from the above table because it is not relevant to ongoing operations. <F2> Earnings per common and common equivalent share for fiscal 1993 and 1994 includes the dilutive effect of accretion in the carrying value of a redeemable common stock purchase warrant of $408 and $645, respectively. See Note 1(i) of Notes to Consolidated Financial Statements. <F3> Pro forma earnings (loss) per common and common equivalent share for fiscal 1992, 1993 and 1994 amounted to $(.41), $.66 and $.96, respectively, based on pro forma weighted average common and common equivalent shares outstanding of 1,925,813, 2,356,250 and 2,356,250, respectively. See Note 1(i) of Notes to Consolidated Financial Statements. <F4> ``Non-competitive'' markets refer to those markets where there is not a national or regional discount store located in the primary market served by the Company. The Company's stores in such non-competitive markets nevertheless face competition from various sources. See ``Business--Competition.'' <F5> Percentages reflect the increase or decrease based upon a comparison of the applicable fiscal year with the immediately preceding fiscal year for stores open during the entirety of both years. <F6> Adjusted to reflect the issuance of 1,000,000 shares of Common Stock offered by the Company hereby, based on an assumed offering price of $13.25 per share, less the underwriting discount and estimated offering expenses, and the application of the net proceeds therefrom. See ``Use of Proceeds'' and ``Capitalization.'' </TABLE>

parsed_sections/prospectus_summary/1996/CIK0000043837_noodle_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere and incorporated by reference in this Prospectus. Unless the context otherwise requires, all references herein to the "Company" include Noodle Kidoodle, Inc. and its subsidiaries. The Company's fiscal year ends on the Saturday closest to January 31 of that year. For example, references to fiscal 1995 refer to the fiscal year ended January 28, 1995. Unless otherwise indicated, the information in this Prospectus assumes no exercise of the Underwriters' over-allotment option. THE COMPANY Noodle Kidoodle, Inc. is a specialty retailer of a broad assortment of educationally oriented, creative and non-violent children's products, including toys, books, games, video and audio tapes, computer software, crafts and other learning products. The Noodle Kidoodle concept offers something new to parents and children by combining the attractive pricing and larger size of traditional toy stores with the more creative product selection and superior customer service of smaller boutiques, while providing an entertaining shopping environment through interactive play areas and daily in-store events. The Company's prototype store is approximately 12,000 square feet and offers customers a warm and inviting shopping environment with brightly lit spaces, colorful walls, ceilings and carpets, wide aisles for strollers and kid-level seating and product shelving. Each store typically carries approximately 25,000 stock-keeping units ("SKUs"), conveniently displayed in separate merchandise departments, such as "Science & Nature" and "Arts & Crafts," which are identified by eye-catching signs that are visual as well as verbal so that children can understand them. All of the products carried in Noodle Kidoodle stores conform to the Company's creative, non-violent and educational merchandising strategy. The Company generally does not carry mass market television advertised toys. However, in certain product categories, the Company does carry brand name products which fit the Noodle Kidoodle philosophy, such as Crayola, Lego, Playmobil, the full line of Walt Disney video titles and the Goosebumps line of books. The Company currently operates 18 Noodle Kidoodle stores in New York, New Jersey, Connecticut and the Chicago metropolitan area, and plans to open approximately 15 more stores in fiscal 1997 in new and existing markets. The Company's near-term plan is to cluster its stores in the Northeastern United States and several Midwestern markets, in order to leverage the Company's advertising programs as well as optimize the capabilities of its strategically located distribution center. The Company believes that there are opportunities for nationwide expansion over the longer term beyond fiscal 1997. The Company's strategy is to become the leading national retailer of educationally oriented children's products. Key components of the Company's business strategy are: . Interactive Shopping Environment--Each Noodle Kidoodle store is designed with children in mind. Each store has designated play areas where children and their parents are encouraged to explore toys and games in keeping with the Company's "try before you buy" philosophy. Among the key interactive features of each store are the Computer Center, "Kidoodle Theater" and Electronic Learning Center. . Broad Assortment of Imaginative Products--Noodle Kidoodle stores offer a broad assortment of products designed to stimulate a child's imagination and contribute to his or her growth and development consistent with the Company's slogan that "Kids learn best when they're having fun." The Company believes that within its targeted age group of infant to twelve years, it offers in a single location one of the broadest available assortments of educationally oriented, creative and non-violent children's products. To keep its merchandise mix fresh and exciting, the Company continually seeks innovative new products. . Daily In-Store Events--The Company provides without charge daily in-store events such as personal appearances by authors and children's television personalities, arts and crafts workshops and readings from selected books to provide entertainment to its customers, increase store traffic and position Noodle Kidoodle as a destination store. . Superior Customer Service--By providing knowledgeable and friendly customer service and selecting enthusiastic employees who enjoy working with children, the Company believes that it has a competitive advantage over lower-service superstores and mass merchandisers. . Targeted Marketing--The Company has created the Noodle Kidoodle Club in order to establish customer loyalty and track repeat customers. The club provides its members advance notice of sale events and special promotions, a bi-monthly newsletter and events calendar, birthday cards sent to children and similar special privileges. The Company is also establishing a targeted direct mail marketing program and is in the process of expanding its customer database for this purpose. . Competitive Pricing--Noodle Kidoodle offers everyday competitive pricing. Many products are regularly discounted and prices in general are believed to be competitive with those featured by superstores carrying the same lines of merchandise. The Company was founded in 1946 and, doing business under its former name Greenman Bros. Inc., historically was engaged in the retail toy business as well as the wholesale distribution of general merchandise, with an emphasis on toys, stationery and housewares. During the 1980s, the Company operated a number of retail toy stores, including a chain of 330 stores under the Circus World name located principally in shopping malls in approximately 30 states. The Company sold the Circus World stores in fiscal 1991 but continued to operate a number of retail toy stores under the Playworld name. The Company opened its first Noodle Kidoodle store in November 1993, and opened three additional Noodle Kidoodle stores in fiscal 1995. During fiscal 1996, management determined, based in large part on the success of its early Noodle Kidoodle stores, that the Company should focus exclusively on its retail business by expanding and developing the Noodle Kidoodle retail concept. Accordingly, in August 1995, the Company adopted a new business plan and ceased operating its wholesale division, which generated net sales of $113.2 million in fiscal 1995. The Company recently changed its name from Greenman Bros. Inc. to Noodle Kidoodle, Inc. and its jurisdiction of incorporation to Delaware. The Company's executive offices are located at 105 Price Parkway, Farmingdale, New York 11735. Its telephone number is (516) 293-5300. RECENT DEVELOPMENT For the nine-week period ended December 30, 1995, during which the Company added three additional Noodle Kidoodle stores, the Company recorded net sales of $15.9 million and gross profit of $6.3 million. The Company was satisfied with its holiday season especially in light of the generally weak retail environment and the severe weather conditions in its major markets, particularly during the week prior to Christmas. THE OFFERING <TABLE> <S> <C> Common Stock Offered by the Company....................... 2,000,000 shares Common Stock to be Outstanding after the Offering......... 7,369,890 shares (1) Use of Proceeds........................................... Primarily to finance new store openings, as well as for general corporate purposes. See "Use of Proceeds" and "Business--Expansion Strategy." Nasdaq National Market Symbol............................. NKID </TABLE> - ------------ (1) Excludes as of February 8, 1996 (i) 587,984 shares of Common Stock issuable upon exercise of outstanding options at exercise prices ranging from $3.50 to $13.13 per share and (ii) 279,250 shares of Common Stock reserved for issuance pursuant to options issuable under the Company's stock option plans. SUMMARY FINANCIAL INFORMATION AND STORE DATA(A) (IN THOUSANDS, EXCEPT PER SHARE AND STORE DATA) <TABLE> <CAPTION> THIRTY-NINE WEEKS FISCAL YEARS ENDED ENDED ---------------------------------------------------- ----------------------- FEB. 2, FEB. 1, JAN. 30, JAN. 29, JAN. 28, OCT. 29, OCT. 28, 1991 1992 1993 1994 1995 1994 1995 -------- -------- -------- -------- -------- ----------- -------- <S> <C> <C> <C> <C> <C> <C> <C> (UNAUDITED) STATEMENT OF OPERATIONS DATA: Net sales......................... $ 11,022 $ 12,850 $ 18,250 $ 20,712 $ 23,308 $12,042 $ 13,508 Gross profit...................... 3,885 4,794 5,471 6,143 7,116 3,828 4,724 Selling and administrative expenses........................ 5,078 5,813 6,645 8,401 10,790 6,937 10,563 Provision for restructured operations(b)................... -- -- -- -- 3,900 3,500 500 Operating loss.................... (1,193) (1,019) (1,174) (2,258) (7,574) (6,609) (6,339) Net income (loss): Continuing operations........... (2,622) (1,141) (425) (1,180) (4,490) (3,819) (5,870) Discontinued operations(c)...... (12,305) 5,069 2,226 1,889 1,096 22 (9,059) Extraordinary item(d)........... 325 (263) -- -- -- -- -- -------- -------- -------- -------- -------- ----------- -------- Net income (loss)............. $(14,602) $ 3,665 $ 1,801 $ 709 $ (3,394) $(3,797) $(14,929) -------- -------- -------- -------- -------- ----------- -------- -------- -------- -------- -------- -------- ----------- -------- Net income (loss) per share: Continuing operations........... $ (.44) $ (.21) $ (.08) $ (.22) $ (.86) $ (.73) $ (1.11) Discontinued operations(c)...... (2.07) .92 .40 .35 .21 -- (1.71) Extraordinary item(d)........... .06 (.05) -- -- -- -- -- -------- -------- -------- -------- -------- ----------- -------- Net income (loss) per share... $ (2.45) $ .66 $ .32 $ .13 $ (.65) $ (.73) $ (2.82) -------- -------- -------- -------- -------- ----------- -------- -------- -------- -------- -------- -------- ----------- -------- Weighted average shares outstanding....................... 5,949 5,540 5,575 5,338 5,220 5,207 5,302 OTHER FINANCIAL DATA: Net sales: Noodle Kidoodle................. $ -- $ -- $ -- $ 1,168 $ 6,414 $ 2,544 $ 11,042 Other Retail(e)................. 11,022 12,850 18,250 19,544 16,894 9,498 2,466 -------- -------- -------- -------- -------- ----------- -------- Total net sales............... 11,022 12,850 18,250 20,712 23,308 12,042 13,508 Discontinued operations:(c) Net sales....................... $198,890 $151,718 $136,488 $122,138 $113,194 $80,729 $ 50,635 Gross profit.................... 52,753 33,475 31,035 26,711 24,604 17,069 9,164 Operating income (loss)......... (8,666) 5,576 3,633 3,171 1,781 37 (1,914) Provision for discontinued operations.................... 5,712 -- -- -- -- -- 7,145 -------- -------- -------- -------- -------- ----------- -------- Net income (loss)............... (12,305) 5,069 2,226 1,889 1,096 22 (9,059) STORE DATA (AT END OF PERIOD): Number of stores: Noodle Kidoodle................. -- -- -- 1 4 3 15 Other Retail(e)................. 6 8 10 10 4 10 4 -------- -------- -------- -------- -------- ----------- -------- Total......................... 6 8 10 11 8 13 19 Gross square footage: Noodle Kidoodle................. -- -- -- 10,450 39,700 29,700 160,130 Other Retail(e)................. 56,570 68,870 86,400 86,400 31,500 86,400 31,500 -------- -------- -------- -------- -------- ----------- -------- Total......................... 56,570 68,870 86,400 96,850 71,200 116,100 191,630 </TABLE> <TABLE> <CAPTION> OCTOBER 28, 1995 ------------------------- ACTUAL AS ADJUSTED(F) ------- -------------- <S> <C> <C> BALANCE SHEET DATA: Working capital............................................................... $14,772 $ 28,911 Net assets of discontinued operations(c)...................................... 6,327 6,327 Total assets.................................................................. 38,872 53,011 Total debt.................................................................... -- -- Total liabilities............................................................. 12,428 12,428 Stockholders' equity.......................................................... 26,444 40,583 </TABLE> - ------------ (a) As a result of recent strategic changes, period-to-period comparisons of financial results are not meaningful. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

parsed_sections/prospectus_summary/1996/CIK0000052532_mercury_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS NOT INTENDED TO BE COMPLETE AND SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY. UNLESS OTHERWISE INDICATED, ALL INFORMATION HEREIN ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED. ALL PER SHARE AND OTHER SHAREHOLDER INFORMATION HAS BEEN ADJUSTED TO REFLECT THE EFFECT OF A JUNE 16, 1995 TEN PERCENT STOCK DIVIDEND. EXCEPT AS OTHERWISE NOTED, REFERENCES IN THIS PROSPECTUS TO "MERCURY" OR THE "COMPANY" REFER TO MERCURY AIR GROUP, INC. AND ITS SUBSIDIARIES. THE DEBENTURES OFFERED HEREBY ARE OBLIGATIONS OF MERCURY AIR GROUP, INC., THE PARENT HOLDING COMPANY, AND NOT ITS SUBSIDIARIES, AND REFERENCES TO "MERCURY" OR THE "COMPANY" RELATING TO THE DEBENTURES REFER ONLY TO THE PARENT HOLDING COMPANY. THE COMPANY Mercury provides a broad range of services to the aviation industry. These services include fuel sales and fuel delivery to commercial, private and military aircraft (collectively, "fuel sales and services"); cargo handling, space brokerage and general cargo sales agent services (collectively, "cargo operations"); fixed base operations for commercial, private and other aircraft, including fuel sales, fuel delivery services ("into-plane services"), ground support services and tie-down facilities (collectively, "FBOs"); and the operation of government-owned fuel depots and the performance of aircraft and other services at U.S. military bases (collectively, "government contract services"). Mercury's customers in one or more of these categories include domestic and international airlines; regional and commuter air carriers; operators of cargo, corporate and private aircraft; and the U.S. government. FUEL SALES AND SERVICES. Mercury's fuel sales and services consist primarily of aviation fuel sales; comprehensive fuel management services, which allow customers to reduce administrative expenses; into-plane services; and the brokering of non-aviation fuel. Through its extensive network of third-party delivery and supply relationships, Mercury conducts its fuel sales business at over 100 airports primarily in the United States, as well as throughout the world. At most of these locations, Mercury contracts with third parties for into-plane services, thereby minimizing its fixed costs and capital requirements. Mercury believes that its status as a volume purchaser and its creditworthiness enable it to purchase fuel on more favorable pricing and credit terms than most of its customers could obtain independently. Mercury's fuel sales and services strategy is to expand its business with existing customers and attract new customers by further enhancing its customer services and by continuing to offer favorable credit terms and competitive fuel prices. CARGO OPERATIONS. Mercury's cargo operations are conducted primarily at Los Angeles International Airport ("LAX") where it maintains approximately 90,000 square feet of warehouse facilities. Mercury also leases a 45,000 square foot warehouse facility near the San Francisco International Airport which it uses for cargo handling operations. In September 1995, Mercury acquired the operating and other assets of certain providers of cargo handling services at airport facilities in Toronto and Montreal, Canada. See "Business -- Recent Developments - -- Excel Cargo." Mercury's strategy is to continue to expand its cargo handling operations by securing additional warehouse facilities on favorable economic terms and to obtain additional customers to fully utilize existing warehouse facilities. Space brokerage, a significant part of Mercury's cargo operations, consists of contracting with domestic and international airlines for cargo space and reselling the cargo space to customers with shipping needs. This allows airlines to increase cargo capacity utilization by using Mercury's marketing capabilities. Mercury's strategy is to expand its space brokerage operations by establishing relationships with additional shipping agents and by contracting for additional cargo space. In conducting its general cargo sales agent services, another important component of Mercury's cargo operations, Mercury acts as an agent for airlines in the Far East, Mexico, Central and South America and the United States. In this capacity, Mercury earns a commission from the airlines for selling air cargo space. Mercury's strategy is to expand its revenues and operating income from general cargo sales agent services by obtaining new sales territories for airlines with which it has an existing relationship and by entering into arrangements with additional airlines. FBOS. Mercury's FBO services are performed at leased facilities located at LAX and at airports in Reno, Nevada; Bakersfield, California; Burbank, California; and Santa Barbara, California. At each FBO, Mercury maintains administrative offices, conducts fuel sales and refueling operations, provides catering and other ground support services and provides tie-down space for its customers. Mercury's strategy is to acquire additional FBOs on favorable economic terms and to expand its business at existing FBOs. GOVERNMENT CONTRACT SERVICES. Mercury conducts its government contract services at 14 military bases throughout the United States and at three military bases outside the United States, one in Greece and two in Japan. The majority of these contracts entail providing equipment and manpower to fuel aircraft, but do not include the sale of fuel, the procurement of which is handled by the military. The Company's government contracts have terms of one to four years. Mercury has recently lost several government contracts due to base closures and other reasons. Mercury's strategy in the government contract services area is to retain existing contracts and cost effectively bid for new refueling contracts. Mercury also intends to expand the types of outsourcing services provided to the U.S. government beyond the Company's core military refueling business. Potential areas of expansion include engineering services, base operating services and maintenance and operations services. Mercury believes its expansion efforts in this area will be facilitated by its familiarity with military base operations and government contract requirements. Mercury's principal executive offices are located at 5456 McConnell Avenue, Los Angeles, California 90066, and its telephone number is (310) 827-2737. The Company was incorporated in New York in April 1956. THE OFFERING <TABLE> <S> <C> Securities Offered................. $25,000,000 aggregate principal amount of % Convertible Subordinated Debentures due 2006. Maturity Date...................... February , 2006. Interest Payment Dates............. Interest payable semi-annually on August and February of each year, commencing August , 1996. The first interest payment will represent interest from the date of original issuance to and including August , 1996. Denominations...................... $1,000 and any integral multiple thereof. Conversion Rights.................. The Debentures are convertible at the option of the holder at any time prior to maturity, unless previously redeemed or repurchased, at a conversion rate of shares of Common Stock per $1,000 principal amount of Debentures (equivalent to a conversion price of approximately $ per share), subject to adjustment in certain circumstances as described herein. No accrued interest will be paid upon conversion, except that Debentures called for redemption which are held on a record date respecting any interest payment date shall be paid accrued interest to the earlier of the date of conversion or through the end of the related semi-annual interest payment period. See "Description of Debentures -- Conversion Rights." </TABLE> <TABLE> <S> <C> Optional Redemption................ The Debentures are redeemable on or after February , 1999, in whole or in part, at any time, at the option of Mercury, at the declining redemption prices set forth herein plus accrued and unpaid interest to the date of redemption. In addition, Mercury may redeem the Debentures between February , 1998 and February , 1999, if the closing price of the Common Stock has been at least 140% of the Conversion Price (as defined herein) for at least 20 trading days within a period of 30 consecutive trading days ending not more than five trading days prior to the date of the redemption notice. See "Description of Debentures -- Optional Redemption." Sinking Fund....................... None. Redemption Option Upon Death of Holder.................. Debentures tendered by an authorized representative or the surviving joint tenant, tenant by the entirety or tenant in common of a deceased holder will be redeemable, in whole or in part, within 60 days of tender, at 100% of the principal amount plus accrued and unpaid interest to and including the date of redemption, subject to a maximum principal amount of $100,000 per deceased holder and a maximum aggregate principal amount for all deceased holders of $500,000 during each calendar year. See "Description of Debentures -- Repurchase of Debentures Upon Death of Holder." Repurchase at Option of Holder After Certain Changes of Control.......................... After a Change of Control and a Rating Downgrade, each holder will have the right, subject to certain conditions, to require Mercury to repurchase all or part of such holder's Debentures at 100% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. See "Risk Factors -- Limitations on Repurchase of Debentures" and "Description of Debentures -- Repurchase of Debentures at the Option of the Holder After Certain Changes of Control." Subordination...................... The Debentures are unsecured obligations of Mercury and are subordinated in the right of payment to all existing and future Senior Indebtedness (as defined herein) of Mercury. As of September 30, 1995, assuming application of the net proceeds of this offering in the manner described herein, Senior Indebtedness would have been approximately $10.9 million. The Indenture does not restrict the incurrence of additional Senior Indebtedness or other indebtedness by Mercury or any subsidiary. See "Risk Factors -- Subordination" and "Description of Debentures -- Subordination." Rating............................. The Debentures are rated "B-" by Standard & Poor's Corporation. See "Rating of Debentures." Listing............................ The Debentures have been approved for listing on the AMEX under the symbol MAX.A. Application has also been </TABLE> <TABLE> <S> <C> made to list the Debentures on the PSE. The Common Stock is listed on the AMEX and traded under the symbol "MAX." See "Price Range of Common Stock and Dividend Policy." Use of Proceeds.................... Mercury intends to use the net proceeds of this offering to repay the outstanding balance under the Revolver (as defined herein); to fund expansion and growth, both internally and through acquisitions; and for general corporate purposes. See "Use of Proceeds." </TABLE> SUMMARY CONSOLIDATED FINANCIAL DATA <TABLE> <CAPTION> THREE MONTHS ENDED FISCAL YEAR ENDED JUNE 30, SEPTEMBER 30, ----------------------------------------------------------- ---------------------- 1991 1992 1993 1994 1995 1994 1995 ---------- ---------- ----------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA: Sales and revenues.................... $ 73,498 $ 71,746 $ 84,543 $ 103,069 $ 183,000 $ 35,554 $ 51,880 Operating income...................... 7,909 6,492 8,903 12,665 16,573 3,851 4,597 Income before income taxes............ 1,634 616 3,363(1) 5,169 7,312 1,724 2,076 Net income............................ 944 359 1,950 2,995 4,307 1,002 1,232 PER SHARE DATA: (2) Net income per common share on a fully diluted basis....................... $ 0.38 $ 0.01 $ 0.39 $ 0.59 $ 0.76 $ 0.18 $ 0.22 Weighted average common shares outstanding......................... 2,377,821 2,394,151 2,431,549 3,719,884 5,420,158 5,354,000 5,415,000 SUPPLEMENTAL DATA: EBITDA (3)............................ $ 4,474 $ 2,761 $ 5,024 $ 8,404 $ 11,210 $ 2,661 $ 3,124 Ratio of earnings to fixed charges (4)................................. 1.82x 1.36x 2.73 x 3.82x 4.16x 4.34x 4.11x Dividends per share (5)............... -- -- -- -- $ 0.02 -- $ 0.01 </TABLE> <TABLE> <CAPTION> SEPTEMBER 30, 1995 -------------------------- ACTUAL AS ADJUSTED (6) --------- --------------- (IN THOUSANDS) <S> <C> <C> BALANCE SHEET DATA: Working capital......................................................................... $ 20,488 $ 31,991 Total assets............................................................................ 59,491 72,544 Long-term debt (net of current maturities).............................................. 20,011 33,064 Total liabilities....................................................................... 40,756 53,809 Shareholders' equity.................................................................... 18,735 18,735 </TABLE> - --------------- (1) Includes a pre-tax gain from a legal judgment in the amount of $1,060,000. (2) Shares outstanding and earnings per share have been adjusted retroactively to reflect the payment of a ten percent stock dividend on June 16, 1995. (3) EBITDA as used herein means earnings before interest expense, interest income, taxes, depreciation and amortization, and excludes minority interest and the pre-tax gain from a legal judgment in fiscal 1993. (4) For purposes of calculating this ratio, earnings consist of income before income taxes and fixed charges. Fixed charges consist of interest expense and one-third of rental expense, representative of that portion of the rental expense attributable to interest. The pro forma ratio, adjusted to reflect the issuance of the Debentures offered hereby and the application of the net proceeds therefrom to repay the Revolver, with the balance invested at short-term market rates, would be 2.70x and 2.96x for the year ended June 30, 1995 and the three months ended September 30, 1995, respectively. (5) In December 1994, Mercury's Board of Directors adopted a quarterly dividend plan of $.01 per share of common stock. Dividends in the aggregate amounts of $50,000, $50,000, $55,000 and $54,000 were paid on February 1, 1995, May 1, 1995, September 1, 1995 and November 1, 1995, respectively. (6) Adjusted to reflect the issuance of the Debentures offered hereby and the application of a portion of the net proceeds therefrom to repay the Revolver in full. As of December 31, 1995, the amount of the Revolver was $13.2 million. See "Use of Proceeds."

parsed_sections/prospectus_summary/1996/CIK0000055698_first_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and Financial Statements and Notes thereto appearing elsewhere in this Prospectus. Except as otherwise indicated, the information in this Prospectus assumes the Underwriters' over allotment option is not exercised. All information reflects the two-for-one, three-for-one, and two-for-one stock splits effected on June 14, 1991, December 15, 1992 and December 29, 1995, respectively. The First Years Inc. is a leading developer and worldwide marketer of a broad line of innovative, high-quality, value-priced, developmentally-sound products for infants and toddlers. Since 1973, the Company has sold products under its well-known brand name and principal trademark, THE FIRST YEARS. In the last three years, the Company has entered into licensing agreements with The Walt Disney Companies to feature Winnie the Pooh characters on a variety of its products in various countries. The Company's product line now contains approximately 300 items and is divided into five categories -- Feeding & Soothing, Care & Safety, Play & Discover, Gifts & Sets and Winnie the Pooh. Retail prices for the Company's products range from approximately $0.99 to $69.99. Major channels through which the Company sells its products include mass merchants, supermarkets, drug stores, department stores, wholesale clubs, convenience stores, specialty stores, mail-order catalogs and catalog showrooms. The Company currently has over 1,000 customers in over 40 countries. Major customers include Wal*Mart, Toys "R" Us, Target, Kmart, J. C. Penney, Kroger and Baby Superstore. The Company believes that a number of recent demographic trends in the United States have had a favorable impact on the market for juvenile products in general and the appeal of the Company's product line in particular. In the U.S. and many other developed countries, children are being born to dual-income parents and parents are having children at later ages. The Company also believes that parents in general, and especially older parents, are now more aware of the developmental importance of a child's early years and more concerned about safety, quality and value in juvenile products and that they are also more willing and able to pay for products that embody these qualities. Capitalizing on its reputation for parenting expertise and product quality, its development of products that are based on Ideas Inspired by Parents and its longstanding relationship with Dr. T. Berry Brazelton and the Child Development Unit at Boston's Children's Hospital, the Company believes it is well positioned to produce new and innovative products that meet the requirements of today's parents. The Company believes that its growth will result in large part from the continued expansion of its existing product line for infants and toddlers up to three years of age and the development of products for children from three to six years of age. The Company introduced 45 new products in 1994, 90 new products in 1995 and intends to introduce over 60 new products in 1996. Among the 1995 items were initial entries into product segments that were new to the Company. Those entries included several higher-priced furnishings, such as bath seats, booster seats and step stools; higher-priced boxed toys; electronic products for the nursery, including a nursery monitor and crib tape player/night light; travel-related products such as diaper bags and child carriers; and 25 products featuring Winnie the Pooh characters. In 1996, the Company is expanding each of its product categories, including the introduction of 26 new products featuring Winnie the Pooh characters. During this period of rapid product development, net sales have increased from approximately $46.1 million in 1993 to $75.8 million in 1995. The Company believes that its future growth will also come from the expansion of its distribution in both domestic and international markets. The Company's strategy in the United States is to increase its penetration in all of its major channels of distribution. Internationally, the Company has expanded its sales in Europe with the opening of a sales office in the United Kingdom in 1992 and has increased distribution of its products in the past few years in Canada, Central and South America, the Middle East and the Pacific Rim. The Company believes that its products have been well received by international consumers and that the number of births and rising income levels in international markets present significant opportunities for growth. The Company was incorporated in 1952 in Massachusetts under the name Kiddie Products, Inc. The Company changed its name to The First Years Inc. in May 1995. The Company's headquarters are located at One Kiddie Drive, Avon, Massachusetts 02322, and its telephone number is (508) 588-1220. [THE FIRST YEARS] IFC [Child on parent's shoulders with Company logo superimosed.] THE FIRST YEARS(R), Ideas Inspired by Parents(R), TumbleMates(R), Firstronics(R) and Washables(R) are registered trademarks of The First Years Inc. Simplicity(TM), Sure(TM), Choice(TM), Clip'n Go(TM), Neats(TM), PackMates(TM), Nurserytronics(TM), Step-by-Step(TM) and First Gifts(TM) are trademarks of The First Years Inc. 3M(R) and SCOTCHGARD(R) are registered trademarks of Minnesota Mining and Manufacturing Company. WINNIE THE POOH(R), POOH(R), DISNEY BABIES(R), and 101 DALMATIANS(R) are registered trademarks of Disney Enterprises, Inc. ------------------------ IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ------------------------ IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS AND THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING." THE OFFERING <TABLE> <S> <C> Common Stock offered by: The Company............................................. 400,000 shares The Selling Stockholders................................ 1,200,000 shares Total.............................................. 1,600,000 shares Common Stock to be outstanding after completion of this Offering(1)................................................ 4,935,570 shares Use of proceeds.............................................. Debt repayment and working capital. See "Use of Proceeds." Nasdaq National Market symbol................................ KIDD </TABLE> - --------------- (1) Based on shares outstanding at June 3, 1996. Does not include 453,662 shares issuable upon the exercise of outstanding options under the Company's stock plans. SUMMARY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA) <TABLE> <CAPTION> THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ----------------------------------------------- ----------------- 1991 1992 1993 1994 1995 1995 1996 ------- ------- ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF INCOME DATA: Net sales........................ $37,993 $45,267 $46,124 $53,233 $75,757 $15,802 $23,009 Cost of products sold............ 20,199 23,645 26,654 29,498 45,109 9,256 13,947 Selling, general, and administrative expenses........ 14,776 18,430 17,857 18,916 23,961 5,158 6,926 Income before income taxes....... 3,306 3,315 1,278 4,861 6,207 1,383 1,972 Net income....................... 1,916 1,930 796 2,989 3,724 830 1,187 Earnings per share(1)............ $ 0.43 $ 0.43 $ 0.18 $ 0.66 $ 0.80 $ 0.18 $ 0.25 Weighted average number of shares outstanding.................... 4,497 4,497 4,497 4,497 4,663 4,662 4,689 </TABLE> SUMMARY BALANCE SHEET AT MARCH 31, 1996: <TABLE> <CAPTION> AS ACTUAL ADJUSTED(2) ------- ----------- <S> <C> <C> Current assets........ $37,242 $$37,242 Property, plant, and equipment - net..... 6,708 6,708 ------- ----------- $43,950 $43,950 ======= ========= </TABLE> <TABLE> <CAPTION> AS ACTUAL ADJUSTED(2) ------- ----------- <S> <C> <C> Current liabilities... $16,272 $ 9,863 Long term liabilities......... 715 715 Stockholders' equity.............. 26,963 33,372 ------- ----------- $43,950 $43,950 ======= ========= </TABLE> - --------------- (1) The net proceeds from the sale of approximately 387,000 of the shares of Common Stock offered by the Company hereby will be used to repay certain indebtedness. Assuming these shares had been issued and the indebtedness repaid as of January 1, 1995, pro forma earnings per share for 1995 would have been $0.76. (2) Adjusted to reflect the sale of the 400,000 shares of Common Stock offered by the Company hereby at an assumed public offering price of $17.25 per share (the last reported sale price on June 3, 1996) and after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company related to the Offering, and the application of the net proceeds therefrom. See "Use of Proceeds."

parsed_sections/prospectus_summary/1996/CIK0000060064_loehmanns_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and consolidated financial statements appearing elsewhere in this Prospectus. Unless otherwise indicated, all information in this Prospectus, including the share and per share information, (i) gives effect to the Recapitalization Transactions as defined under "The Company" and (ii) assumes no exercise of the Underwriters' over-allotment option. As used in this Prospectus, references to a fiscal year refer to Loehmann's, Inc.'s fiscal year ended or ending on the Saturday closest to January 31 of the following year. Certain statements in this Prospectus (including this Prospectus Summary) constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). See "Special Note Regarding Forward-Looking Statements." THE COMPANY Loehmann's, Inc. ("Loehmann's" or the "Company"), founded in 1921 as the "Original Designer Outlet," is a leading specialty retailer of well known designer and brand name women's fashion apparel, accessories and shoes offered at prices that are typically 25% to 50% below department store prices. The Company believes it has developed a unique franchise as the largest national upscale off-price specialty retailer--one that differentiates itself from finer department stores by offering similar merchandise at significantly lower prices, and from other off-price apparel retailers by offering a broad range of designer and bridge merchandise. The Company currently operates 73 stores in major metropolitan markets located in 23 states. The Company has embarked on an expansion strategy to capitalize on the strength of its franchise and well-recognized name. The following factors serve as the Company's key strengths and distinguishing characteristics: . The Company, like finer department stores, is known for carrying designer and bridge labels by prominent designers such as Donna Karan, Calvin Klein, Ralph Lauren, Adrienne Vittadini, Tahari, Dana Buchman, Andrea Jovine and Emanuel Ungaro, among others. However, unlike finer department stores, the Company offers such merchandise for sale at a substantial discount. . Loehmann's high quality image and affluent customer base uniquely position the Company as a principal choice for well known designers who believe their prestige will be preserved by having their merchandise offered by Loehmann's as opposed to other off-price retailers. . The Company provides in-season high quality merchandise to its stores on a daily basis as a result of its flexible purchasing strategy, low-price, cyclical markdown policy and efficient inventory management systems. . The Company has a low-cost operating structure as a result of its no-frills store format, lean corporate overhead and disciplined real estate strategy. In recent years, the Company has sought to broaden its appeal and to increase margins through the addition of new product categories such as shoes and a broader range of accessories and intimate apparel. Since the introduction or expansion of these categories starting in fiscal 1992, gross margins have increased from 26.4% for fiscal 1992 to 31.1% for fiscal 1995 and to 31.7% for the first six months of fiscal 1996. In addition, to prepare for its store expansion program, the Company has made significant investments in merchandising, planning, allocation and MIS infrastructure and has continued to refine its store format. To capitalize on its unique franchise, the Company has embarked on a new store expansion program under which it intends to open seven stores in fiscal 1996 and seven to ten stores in each of the next two fiscal years. Four of the seven stores planned for fiscal 1996 already have been opened. Based on its historical operating experience, the Company believes that its larger stores typically experience enhanced operating performance with increased inventory turns, higher margins and increased profitability. The Company's eight stores which exceed 23,000 square feet averaged $11.7 million in net sales in fiscal 1995 as compared to $4.7 million for the balance of the Company's stores which were open for the entire year in fiscal 1995. These eight stores generated store contribution as a percentage of net sales of 15.1% as compared to 13.3% for the balance of the Company's stores. To take advantage of the favorable economics associated with its larger stores, the Company's prototype for its new stores is 25,000 to 35,000 square feet compared to the Company-wide average of approximately 16,000 square feet. The Company's planned store openings for fiscal 1996 will be located in existing markets where the Loehmann's franchise is well established and in central business districts which have appealing demographics, such as New York and Boston. As part of its store opening program, the Company intends to open a new 60,000 square foot flagship store in downtown Manhattan at the site that recently housed Barneys' Seventh Avenue Men's Store in October 1996. RECENT DEVELOPMENTS Since February 1996, the Company has opened four of the seven stores planned for fiscal 1996, one each in Merrick, New York, Houston, Texas, San Diego, California and Paramus, New Jersey. These new stores reflect the Company's new, larger store format and average approximately 26,000 square feet compared to the Company-wide average of approximately 16,000 square feet. Two of the new stores being opened in fiscal 1996 are replacing existing, smaller format stores. The Company has signed leases for its three remaining stores planned for fiscal 1996. Two of these stores are scheduled to open during the third quarter, including the Company's new 60,000 square foot flagship store in downtown Manhattan and a new central business district store in Boston, Massachusetts. The third store, a replacement store in Brooklyn, New York, is scheduled to open in November 1996. These new stores, other than the Company's Manhattan store, will each be approximately 30,000 square feet. The Company has also signed four leases associated with stores to be opened in fiscal 1997 including locations in Seattle, Washington, Ft. Lauderdale, Florida, Tustin, California, and Westbury, New York. The Company is currently in lease negotiations for several other store locations for fiscal 1997 openings. Combined sales of the Company for the months of August and September 1996 rose 12.0% to $73.2 million from $65.4 million in the comparable period in 1995, and combined comparable store sales of the Company for August and September 1996 were up 3.4% from the comparable period in 1995. THE OFFERING <TABLE> <CAPTION> <S> <C> Common Stock offered by the Selling Stockholders..... 1,970,000 shares Common Stock to be outstanding after the Offering.... 8,385,638 shares (1) Nasdaq National Market symbol........................ LOEH </TABLE> - ------------ (1) Excludes (i) 958,664 shares of Common Stock, par value $0.01 per share, of the Company (the "Common Stock") which, upon consummation of the Offering, will be issuable upon the exercise of outstanding stock options at a weighted average exercise price of approximately $7.08 per share, 365,963 of which will be exercisable immediately and (ii) 469,237 shares of Class B Common Stock, which are convertible after November 6, 1996 into 469,237 shares of Common Stock. SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA (IN THOUSANDS, EXCEPT OPERATING AND PER SHARE DATA) <TABLE><CAPTION> FISCAL YEAR SIX MONTHS ENDED ------------------------------------------------ ----------------------------- JULY 29, AUGUST 3, 1991 1992 1993 1994 1995 1995 1996 -------- -------- -------- -------- -------- ------------- -------------- <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA: ]Net sales........................ $389,183 $389,330 $373,443 $392,606 $386,090 $ 186,932 $194,772 Gross profit...................... 92,310 102,691 98,452 114,208 120,201 57,705 61,834 Store contribution (1)............ 39,384 45,948 39,180 49,192 52,159 25,240 28,402 Depreciation and amortization..... 12,462 11,492 14,334 11,955 12,120 6,062 6,046 Charge for store closings and impairment of assets (2)......... -- -- -- -- 15,300 15,300 -- Operating income (loss)........... 11,146 16,233 8,654 16,613 3,296 (6,116) 11,101 Interest expense, net............. 17,663 16,889 17,299 18,085 18,153 8,955 7,990 Income (loss) before extraordinary items............................. (6,472) (783) (8,724) (1,506) (14,963) (15,179) 3,051 Extraordinary items (3)........... -- -- 3,507 -- -- -- 7,101 Net loss (4)...................... (6,472) (783) (12,231) (1,506) (14,963) (15,179) (4,050) Stock dividends on and normal and accelerated accretion of preferred stock (5).............. 1,181 1,335 1,496 1,802 2,056 922 5,668 Net loss applicable to common stock (4)......................... (7,653) (2,118) (13,727) (3,308) (17,019) (16,101) (9,718) Net loss per share applicable to common stock before extraordinary items............................. $(1.78) $(0.49) $(2.18) $(0.63) $(3.12) $(3.07) $(0.38) Net loss per share applicable to common stock after extraordinary items............................. (1.78) (0.49) (2.93) (0.63) (3.12) (3.07) (1.40) Weighted average common shares outstanding (6)................... 4,297 4,299 4,680 5,228 5,463 5,247 6,934 </TABLE> <TABLE><CAPTION> SIX MONTHS ENDED ------------------------------- JULY 29, AUGUST 3, 1995 1996 ------------- -------------- <S> <C> <C> PRO FORMA STATEMENT OF OPERATIONS DATA (7): Net sales........................................................... $ 186,932 $194,772 Store contribution (1).............................................. 25,240 28,402 Depreciation and amortization....................................... 5,722 5,895 Operating income (loss)............................................. (5,776)* 11,253 Interest expense, net............................................... 5,800 5,499 Net income (loss)................................................... (7,061)* 3,510 Earnings (loss) per share........................................... $ (0.79)* $ 0.37 Weighted average common shares and common share equivalents outstanding......................................................... 8,946 9,503 </TABLE> - ------------ * Includes a charge to operating income (loss) and net income (loss) of $15.3 million, related to the closure of 11 stores in August 1995 and the impairment of certain primarily intangible assets, which had a negative impact of $1.03 per share (after tax effect) on earnings per share. <TABLE><CAPTION> FISCAL YEAR SIX MONTHS ENDED ------------------------------------------------ ----------------------------- JULY 29, AUGUST 3, 1991 1992 1993 1994 1995 1995 1996 -------- -------- -------- -------- -------- ------------- -------------- <S> <C> <C> <C> <C> <C> <C> <C> SELECTED OPERATING DATA: Number of stores open at end of period............................ 81 85 81 80 69 69 71 Average net sales per gross square foot (8).......................... $350 $333 $320 $337 $327 -- -- Inventory turnover (9)............ 5.4x 5.4x 5.1x 5.7x 5.4x -- -- </TABLE> <TABLE><CAPTION> AUGUST 3, 1996 --------- <S> <C> BALANCE SHEET DATA: Working capital.................................................................... $ 12,985 Total assets....................................................................... 155,667 Total debt......................................................................... 100,543 Common stockholders' equity........................................................ 16,721 </TABLE> - ------------ (1) Computed as gross profit less store operating expenses and pre-opening costs. (2) In fiscal 1995, the Company recorded charges related to the closure of 11 stores in August and the impairment of certain primarily intangible assets of $10.35 million and $4.95 million, respectively. Of the total $15.3 million charge, $10.45 million represents non-cash items. See Notes 5 and 6 to the Consolidated Financial Statements of the Company. (3) The extraordinary loss recorded in the first six months of fiscal 1996 related to the prepayment of the Company's 10 1/2% Senior Secured Notes ($52.5 million face amount), 13 3/4% Senior Subordinated Notes ($77.6 million face amount), 11 7/8% Senior Notes ($5.0 million face amount) along with the write-off of related deferred financing amounts of $2.2 million. The extraordinary loss in fiscal 1993 related to the repurchase of $30.0 million principal amount 13 3/4% Senior Subordinated Notes and the payment of $12.0 million on the remaining balance of a term loan in October 1993. The loss includes a $2.0 million premium paid on the repurchase of the 13 3/4% Senior Subordinated Notes and a $1.5 million write-off of the deferred financing costs attributed to the term loan. (4) At February 3, 1996, the Company had a net operating loss carryforward of $27.0 million which is available to reduce taxes payable on future taxable income. The Company's ability to utilize its net operating loss carryforward will be dependent on the Company generating taxable income in future years and will be subject to certain limitations on its ability to use all of the net operating loss carryforward in any single fiscal year pursuant to Section 382 of the Internal Revenue Code. (5) Represents stock dividends on and normal and accelerated accretion of the Company's Series A Preferred Stock to its liquidation price of $0.56 per share. All shares of Series A Preferred Stock were redeemed in connection with the Company's debt and equity offerings completed in May 1996 (see "The Company"). (6) Excludes for fiscal years 1991 to 1995 and for the six months ended July 29, 1995, 453,317 shares of Common Stock issuable as of August 3, 1996 upon the exercise of outstanding stock options at a weighted average exercise price of approximately $1.60 per share, 416,587 of which are exercisable within 60 days following such date, as inclusion of such options in weighted average shares would have been antidilutive. Excludes for the six months ended August 3, 1996, 877,884 shares of Common Stock issuable as of August 3, 1996 upon the exercise of outstanding stock options at a weighted average exercise price of approximately $3.77 per share, 416,587 of which are exercisable within 60 days following such date, as inclusion of such options in weighted average shares would have been antidilutive. Includes 469,237 shares of Class B Common Stock, convertible after November 6, 1996 into 469,237 shares of Common Stock. (7) Pro forma to reflect the effects of the Company's debt and equity offerings completed in May 1996 (see "The Company") and an assumed effective tax rate of 39%, as if such transactions had been completed immediately prior to the commencement of the respective periods. (8) Average net sales per gross square foot is determined by dividing total net sales by the weighted average gross square footage of stores open during the period indicated. (9) Inventory turnover is determined by dividing cost of sales by monthly average inventory valued at cost.

parsed_sections/prospectus_summary/1996/CIK0000061442_ascent_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION, INCLUDING "RISK FACTORS" AND THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES IN THIS PROSPECTUS TO THE COMPANY OR TODD-AO INCLUDE THE TODD-AO CORPORATION AND ITS SUBSIDIARIES. THE COMPANY Todd-AO provides sound, video and ancillary post production and distribution services to the motion picture and television industries in the United States and Europe. The Company believes that it is one of the largest independent providers of combined sound studio and video services in the world with facilities located in Los Angeles, New York, London and Atlanta. Sound services include music recording, sound editing and enhancement and the mixing of dialogue, music and sound effects. Todd-AO's principal video services include film-to-video transfer (telecine), mastering and duplication of professional videotape formats, transmission for satellite broadcast, videotape editing, audio post production, and visual effects and graphics. Todd-AO provides these sound and video services to over 500 clients, including the major motion picture studios and television production companies such as The Walt Disney Company ("Disney"), Paramount Pictures Corporation ("Paramount"), Turner Broadcasting System, Inc. ("Turner"), Sony Pictures Entertainment ("Sony"), Warner Bros. Studios Inc. ("Warner Bros.") and Spelling Entertainment Group, Inc. ("Spelling"). The Company believes that its principal strengths include the depth and continuity of its creative and artistic talent, the quality and scope of its facilities, a tradition of providing quality services to its clients and a history of technological innovation. Since its inception in 1952, the Company and its employees have been nominated for 31 Academy Awards-Registered Trademark- and have won 18. Demand for the Company's services and facilities is principally derived from the production of new motion pictures, television programs and television commercials, as well as the distribution of previously released motion pictures and television programming through distribution channels such as television syndication, home video, cable and satellite. Historically, its clients have outsourced, and are expected by the Company to continue to outsource, many services required for production, post production, and distribution of film and television programming. The Company believes that trends toward digitalization and globalization in the entertainment and media industries are increasing the quality, variety and number of post production services required by customers. The Company believes that the worldwide market penetration of distribution channels such as home video and digital satellite broadcast is contributing to a growing demand for original and reissued programming, American product in particular, which in turn should increase demand for the Company's services. The Company's objective is to be the leading worldwide independent provider of sound and video post production services. Since 1994, the Company has implemented a strategy to achieve this objective and to capitalize on the movement towards digitalization and globalization in the motion picture and television industries by expanding its range of services through strategic acquisitions, internal growth and strategic alliances. The Company believes that in the future, U.S. and international entertainment and media companies will demand a broader range of sound and video post production services and are likely to prefer a single-source service provider. This strategy was formulated by the Company and is being executed under the leadership of Salah M. Hassanein, who became President in 1994. Mr. Hassanein has spent his entire career in the entertainment and media industry and has garnered both international experience and mergers and acquisitions expertise with United Artists Theatre Circuit, Inc. and Time Warner International Theatres, where he was responsible for development and expansion of Warner Bros.' overseas theater operations. To implement its strategy, the Company has assembled a senior management team experienced in the industry. The Company entered the video services business in 1994 through its acquisition of Film Video Masters, renamed Todd-AO Video Services. In 1995, the Company expanded its sound studio business through the acquisition of Skywalker Sound South, renamed Todd-AO Studios West, with sound studios and facilities located in the West Los Angeles area. Also in 1995, the Company expanded its operations into Europe through the acquisition of Chrysalis Television Facilities, Ltd. ("Chrysalis"), which augmented the Company's video services capabilities to include the collation of television programming for satellite broadcast. The purchase of Filmatic Laboratories ("Filmatic") in 1996 enlarged Todd-AO's video services capabilities in London and added film processing capability. In August 1996, the Company acquired Edit Acquisition LLC ("Editworks"), located in Atlanta, Georgia, which specializes in providing video services to the advertising industry. As a result of these transactions, the Company has expanded its client base, increased its range of services and broadened its global market coverage. Largely as a result of efforts implementing its strategy, the Company's annual sales have grown in the past three years at an annual compounded rate of 32% from $27.4 million in fiscal 1993 to $62.9 million in fiscal 1996. Net income has grown in the same period at an annual compounded rate of 62% from $1.14 million in fiscal 1993 to $4.84 million in fiscal 1996. THE OFFERING <TABLE> <S> <C> Common Stock Offered................................ 2,500,000 shares of Class A Common Stock Common Stock Outstanding After the Offering......... 9,055,640 shares of Class A Common Stock and 1,747,181 shares of Class B Common Stock (1) Use of Proceeds..................................... For possible future acquisitions, temporary repayment of amounts under credit facility, working capital requirements and general corporate purposes. See "Use of Proceeds." Nasdaq National Market Symbol....................... "TODDA" </TABLE> - ------------------------ (1) Excludes 660,000, 330,000 and 770,000 shares of Class A Common Stock reserved for issuance under the Company's 1986 Stock Option Plan, 1994 Stock Option Plan, and 1995 Stock Option Plan (the "Stock Option Plans"), respectively, of which options for an aggregate of 1,008,645 shares of Class A Common Stock were issued and outstanding as of August 31, 1996 and options for an aggregate of 514,677 shares of Class A Common Stock were exercisable as of August 31, 1996. See "Management--Stock Options." SUMMARY CONSOLIDATED FINANCIAL DATA <TABLE> <CAPTION> YEARS ENDED AUGUST 31, NINE MONTHS ENDED MAY 31, -------------------------------------------- --------------------------------- 1995 1996 ---------------------- ---------------------- PRO PRO 1993 1994 ACTUAL FORMA(1) 1995 ACTUAL FORMA(1) --------- --------- --------- ----------- --------- --------- ----------- (IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> <C> <C> CONSOLIDATED INCOME STATEMENT DATA: Revenues............................. $ 27,402 $ 32,892 $ 50,003 $ 53,194 $ 37,125 $ 48,140 $ 51,445 --------- --------- --------- ----------- --------- --------- ----------- Costs and expenses: Operating costs and other expenses......................... 22,641 27,021 39,867 42,126 29,405 37,231 39,345 Depreciation and amortization...... 2,412 2,603 3,917 4,526 3,014 3,967 4,480 Interest expense................... 17 24 581 874 320 531 780 Equipment lease expense, net....... -- -- 593 593 371 415 415 Other (income) expense, net........ (483) (773) (290) (315) (223) (554) (600) --------- --------- --------- ----------- --------- --------- ----------- Total costs and expenses......... 24,587 28,875 44,668 47,804 32,887 41,590 44,420 --------- --------- --------- ----------- --------- --------- ----------- Income before loss from joint venture and provision for income taxes..... 2,815 4,017 5,335 5,390 4,238 6,550 7,025 Loss from joint venture.............. (1,014) (1,215) (249) (249) (167) (117) (117) --------- --------- --------- ----------- --------- --------- ----------- Income before provision for income taxes.............................. 1,801 2,802 5,086 5,141 4,071 6,433 6,908 Provision for income taxes........... 664 1,022 1,711 1,731 1,452 2,371 2,542 --------- --------- --------- ----------- --------- --------- ----------- Net income........................... $ 1,137 $ 1,780 $ 3,375 $ 3,410 $ 2,619 $ 4,062 $ 4,366 --------- --------- --------- ----------- --------- --------- ----------- --------- --------- --------- ----------- --------- --------- ----------- Net income per common share and common share equivalents(2)........ $ 0.14 $ 0.22 $ 0.40 $ 0.40 $ 0.31 $ 0.46 $ 0.49 --------- --------- --------- ----------- --------- --------- ----------- --------- --------- --------- ----------- --------- --------- ----------- Weighted average shares outstanding(2)..................... 8,279 8,196 8,399 8,466 8,352 8,805 8,872 --------- --------- --------- ----------- --------- --------- ----------- --------- --------- --------- ----------- --------- --------- ----------- OTHER FINANCIAL DATA: Capital expenditures................. $ 393 $ 1,404 $ 3,345 $ 3,848 $ 2,638 $ 3,317 $ 3,950 EBITDA(3)............................ 5,244 6,644 9,833 10,790 7,572 11,048 12,285 </TABLE> <TABLE> <CAPTION> MAY 31, 1996 ----------------------------------- PRO FORMA PRO AS ACTUAL FORMA(4) ADJUSTED(5) --------- ----------- ----------- (IN THOUSANDS) <S> <C> <C> <C> CONSOLIDATED BALANCE SHEET DATA: Cash and cash equivalents...................................................... $ 3,263 $ 3,274 $ 18,556 Working capital................................................................ 11,181 11,012 26,294 Total assets................................................................... 57,684 64,469 79,751 Long-term debt, net of current portion......................................... 6,065 10,945 2,315 Stockholders' equity........................................................... 34,594 35,564 59,476 </TABLE> (FOOTNOTES BEGIN ON NEXT PAGE) (1) The Company purchased substantially all of the assets and certain liabilities of Editworks for cash and the Company's Class A Common Stock as of August 15, 1996. The pro forma summary financial data gives effect to the acquisition of Editworks as if it had occurred as of September 1, 1994. Such pro forma consolidated financial information is not necessarily indicative of the financial position or results of operations as they may be in the future or as they might have been had the acquisition been effected on the assumed date. See "Unaudited Pro Forma Condensed Consolidated Information." (2) Such amounts represent net income per common share and common share equivalents, pro forma, to give effect to the 66,863 shares of the Company's Class A Common Stock issued as part of the purchase of Editworks. The net income per common share and common share equivalent is computed based upon the weighted average number of shares of common stock and common stock equivalents, including the number of shares of common stock issued in connection with the purchase of Editworks, and includes common share equivalents arising from the assumed conversion of any outstanding dilutive stock options. All share and per share data has been adjusted to give effect to the 10% stock dividends paid in August 1995. (3) EBITDA, defined as earnings before interest expense, income taxes, depreciation and amortization and loss from joint venture, is not intended to represent an alternative to net income (as determined in accordance with generally accepted accounting principles) as a measure of performance and is also not intended to represent an alternative to cash flow from operating activities as a measure of liquidity. Rather, it is included herein because management believes that it provides an important additional perspective on the Company's operating results and the Company's ability to service its long-term debt and to fund the Company's continuing operations. (4) Adjusted to give effect to the Editworks acquisition, consummated in the fourth quarter of 1996, as if the acquisition was consummated as of May 31, 1996. (5) Adjusted to give effect to (i) the sale of 2,500,000 shares of Class A Common Stock offered hereby by the Company at an assumed offering price to the public of $10.50 per share, net of underwriting discounts and commission and estimated expenses of the offering, (ii) the Editworks acquisition as if it occurred as of May 31, 1996, and (iii) the anticipated use of the estimated net proceeds of the offering. See "Unaudited Pro Forma Condensed Consolidated Information" and "Use of Proceeds."

parsed_sections/prospectus_summary/1996/CIK0000072575_nai_prospectus_summary.txt

@@ -0,0 +1 @@
+SUMMARY The following is a brief summary of certain information contained elsewhere in this Prospectus. This summary is not intended to be complete and is qualified in its entirety by the more detailed information appearing elsewhere in this Prospectus and in the documents referred to herein, all of which should be carefully reviewed. Capitalized terms used herein are defined on the pages of this Prospectus referred to in the Glossary found on page 91. The Company NAI Technologies, Inc., through its wholly-owned subsidiaries (the "Company"), designs, manufactures and markets rugged computer systems, advanced peripheral products, intelligent terminals, high performance work stations, TEMPEST computer systems (which suppress certain radiation to prevent external detectors from reading the data being transcribed) and telecommunications test equipment and transmission products. The Company operates in two distinct operating segments: an Electronic Systems segment and a Telecommunications segment. The Electronic Systems segment, comprised of three subsidiaries, Codar Technology, Inc. ("Codar"), NAI Technologies-Systems Division Corporation ("Systems"), and Lynwood Scientific Developments Limited ("Lynwood"), and all of the Company's defense, military and government-related businesses, provides rugged computer products specifically designed for deployment in harsh environments that require special attention to system configurations. This segment's customer base includes United States and foreign armed services and intelligence agencies. The Telecommunications segment consists of one company, Wilcom, Inc. ("Wilcom"), which provides transmission enhancement products and rugged, hand-held test equipment for analog, digital and fiber-optic communications and data-interchange networks. This segment has developed and is marketing a product which enables telephone companies to enhance the capacity of copper lines for improved voice and data transmission. This segment's customer base includes the Regional Bell Operating Companies ("RBOCs") and independent telephone companies. The Company sells its products directly to these customers and serves as a subcontractor to larger prime contractors serving the same customer base. The Company was incorporated in the State of New York in 1954. The Company's principal executive office is located at 2405 Trade Centre Avenue, Longmont, Colorado 80503, and its telephone number is (303) 776-5674. The Offering Securities Offered $6,342,000 aggregate principal amount of Notes 4,119,700 Warrants to Purchase Common Stock 8,904,336 shares of Common Stock See "DESCRIPTION OF SECURITIES." Terms of the Notes: Maturity Date January 15, 2001. Interest Rate 12% per annum. In the event of a Chapter 11 or Chapter 7 bankruptcy case in which the Company is the debtor, the Notes will bear interest from the date of commencement of the case at a default rate per annum equal to the lesser of 18% or the highest such rate allowable by law. Interest Payment Dates January 15, April 15, July 15 and October 15 of each year, commencing April 15, 1996. Conversion Each Note is convertible into shares of Common Stock at the option of the holder, at any time in whole or in part at a conversion price equal to $2.00 per share, subject to adjustment in certain events (the "Conversion Price"). The Conversion Price will be adjusted to $1.50 or $1.00, respectively, if earnings before interest, taxes, depreciation and amortization ("EBITDA") of the Company fall below $6,000,000 or $4,750,000 in 1996. Should the Company sell the stock or assets of a subsidiary in 1996, such amounts will be reduced by certain agreed amounts, depending on the time of sale. The Conversion Price and the number of shares of Common Stock to be received upon conversion are subject to adjustment upon the occurrence of certain events. See "DESCRIPTION OF SECURITIES--The Notes." The Company may at its option require the conversion of the Notes, at any time prior to maturity, provided that the closing bid price for the Common Stock exceeds $6.00 per share for the 30 consecutive trading days prior to the giving of notice of conversion. Prepayment The Notes are subject to prepayment, in whole and not in part, at the option of the Company, at any time after the third anniversary of the date of issuance, without premium or penalty. Upon the occurrence of a "change in control" of the Company, each holder of the Notes will have the right to require that the Company repurchase such holder's Notes in whole and not in part, without premium or penalty, at a purchase price in cash in an amount equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase, pursuant to an offer made in accordance with the procedures described in the Notes. Subordination; Sinking Fund The indebtedness evidenced by the Notes is subordinated to all existing and future Senior Indebtedness (as hereinafter defined) of the Company. The Notes do not provide for a sinking fund. Certain Covenants The Notes contain certain covenants prohibiting the Company from: (i) creating any liens on its assets, (ii) incurring or assuming any indebtedness other than certain specific indebtedness including the Senior Indebtedness and all extensions, renewals and refundings thereof, (iii) making any investments, (iv) paying dividends on its capital stock, (v) disposing of certain assets, (vi) engaging in certain affiliated party transactions, and (vii) merging or consolidating. Events of Default "Events of Default" under the Notes include the failure to pay principal when due or the failure to pay interest for a period of 10 days after such payment becomes due, the failure to pay other indebtedness for borrowed money in excess of $500,000 when due or the acceleration of such indebtedness, the failure to pay any judgment in excess of $500,000 when due or stayed, and the voluntary or involuntary bankruptcy of the Company. Terms of the Warrants: Exercise and Terms Each Warrant entitles the holder to purchase 250 shares of Common Stock at any time and from time to time on or before February 15, 2002, at an exercise price equal to $2.50 per share of Common Stock, subject to adjustment in certain events (the "Exercise Price"). The Exercise Price will be adjusted to $2.00 or $1.50, respectively, if the Company's EBITDA falls below $6,000,000 or $4,750,000 in 1996. Should the Company sell the stock or assets of a subsidiary in 1996, such amounts will be reduced by certain agreed amounts, depending on the time of sale. The Exercise Price and the number of shares of Common Stock to be received upon exercise are subject to adjustment upon the occurrence of certain events. Warrants will be exercisable, at any time and from time to time, on or before 5:30 p.m., local time, on or before February 15, 2002 (the "Expiration Date") by delivery of an exercise notice duly completed and tendering of the aggregate Exercise Price. Each Warrant may be exercised in whole or in part so long as any exercise in part would not involve the issuance of fractional shares of Common Stock. See "DESCRIPTION OF SECURITIES--The Warrants." Terms of the Common Stock: Terms Holders of shares of Common Stock are entitled to one vote for each share of Common Stock held. The holders of Common Stock are not entitled to preemptive or subscription rights. Upon liquidation, dissolution or winding up of the Company, the holders of the Common Stock are entitled to share ratably in all assets available for distribution after payment in full of creditors and after the preferential rights of holders of shares of Preferred Stock then outstanding, if any, have been satisfied. The affirmative vote of the holders of 80% of all Common Stock of the Company is required for the adoption or authorization of certain extraordinary matters. See "DESCRIPTION OF SECURITIES-- Common Stock." Trading The Common Stock is traded on Nasdaq under the symbol NATL. Offering Period From time to time after the date hereof. Use of Proceeds The Company will not receive any proceeds from the sale of the Securities by the Selling Securityholders. Risk Factors Reference is made to "RISK FACTORS" which contains material information that should be considered in connection with the Securities being offered hereby. Summary Financial Data The summary financial data set forth below for the fiscal years 1991 through 1995 are derived from the consolidated financial statements of the Company which financial statements have been audited by KPMG Peat Marwick LLP, independent certified public accountants, whose report on the Company's consolidated financial statements for the three years ended December 31, 1995 is included elsewhere in this Prospectus. The selected financial data for the six months ended July 1, 1995 and June 29, 1996 have been derived from the Company's unaudited consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 1996. Such unaudited consolidated financial statements in the opinion of the Company's management reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of interim data. <TABLE> <CAPTION> Year Ended December 31, Six Months Ended ----------------------- ---------------- 1991 1992 1993 1994 1995 July 1, June 29, ---- ---- ---- ---- ---- ------- -------- (in thousands except share and per share data and 1995 1996 ratios) ---- ---- (unaudited) <S> <C> <C> <C> <C> <C> <C> <C> Statement of Operations Data Net sales $ 59,412 $ 67,315 $ 81,024 $ 54,520 $ 60,008 $ 26,771 $ 33,857 Operating earnings (loss)(1) 6,308 8,407 8,960 (14,589) (8,875) (5,826) 1,789 Net earnings (loss)(1) 3,900 5,051 5,455 (11,591) (11,619) (6,899) 365 Per share data: Net earnings (loss)(2) .63 .80 .80 (1.69) (1.57) (0.94) 0.05 Cash dividends(3) -- -- -- -- -- -- -- Ratio of earnings to fixed charges 8.14 13.88 11.55 * * * 1.36 Balance Sheet Data (at end of period) Working capital $ 14,134 $ 17,094 $ 19,105 $ 16,665 $ 10,044 $ -- $ 14,255 Total assets at end of period 33,817 43,704 60,715 53,720 48,012 -- 48,891 Long-term debt 5,017 7,158 10,797 13,990 15,573 -- 15,951 Shareholders' equity 18,897 23,911 30,593 20,296 10,086 -- 13,515 Average market price per common share at end of period 4-9/16 8-3/16 6-1/4 2-11/16 1-1/2 3-1/4 3-5/8 Weighted average common shares outstanding(2) 6,222 6,309 6,843 6,580 7,382 7,459 8,459 </TABLE> (1) Includes $7,321 in restructuring costs in 1994. (2) Prior year per share data has been restated to reflect 4% stock dividends declared in February 1992, 1993 and 1994 and a three-for-two stock split declared in August 1993. (3) There have been no cash dividends paid during the above five fiscal years. * Earnings are inadequate to cover fixed charges. The coverage deficiency is $15,983 for 1994, $11,242 for 1995, and $6,789,000 for July 1, 1995.

parsed_sections/prospectus_summary/1996/CIK0000073822_strategic_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a summary of certain information contained elsewhere in this Prospectus and is qualified in its entirety by the more detailed information and financial statements, and notes thereto, contained elsewhere in this Prospectus. Unless otherwise indicated, the information in this Prospectus assumes no exercise of the Underwriters' over-allotment option. Prospective investors are urged to read this Prospectus in its entirety. Unless otherwise indicated, all information in this Prospectus gives effect to the three percent (3%) Common Stock dividend paid on December 29, 1995 to stockholders of record on December 18, 1995. THE COMPANY The Company provides proprietary industrial supply procurement solutions to industrial sites, primarily through its In-Plant Store(R) program. The Company sells a broad range of industrial supplies, which include maintenance, repair and operations ("MRO") items, replacement parts and selected classes of production materials. Industrial supplies are generally items which are low in price, but are critical to the production process and have historically been characterized by high procurement costs due to inherent inefficiencies in traditional industrial supply distribution methods. The Company's In-Plant Store(R) program, in which large industrial sites outsource the procurement of industrial supplies to the Company, substantially eliminates these inefficiencies by reducing both the process and product costs associated with industrial supply procurement. The Company's In-Plant Store(R) program also helps customers achieve operational improvements, such as reduced plant down-time resulting from unavailable parts and manufacturing process improvements due to better tracking of critical parts. The Company believes that its In-Plant Store(R) program is superior to both traditional and other alternative methods of industrial supply distribution. The Company believes that increased recognition of the inefficiencies associated with the traditional industrial supply distribution process has rapidly increased the demand for the Company's In-Plant Store(R) program in recent years. From January 1994 to April 1996, the number of In-Plant Store(R) sites operated by the Company increased from 13 to 44. Twenty of these sites were added from March 1995 to April 1996. In addition, the Company recently announced the signing of an agreement with a single customer to implement eight additional In-Plant Store(R) facilities during 1996. The In-Plant Store(R) program is a comprehensive outsourcing service through which the Company manages all aspects of industrial supply procurement at a customer's industrial site. Prior to the implementation of an In-Plant Store(R), the industrial site would typically obtain industrial supplies from as many as 500 traditional industrial distributors. Through the In-Plant Store(R) program, the Company becomes responsible for servicing all of its customer's industrial supply needs by establishing a dedicated, fully integrated store within the customer's plant. The customer, in turn, purchases virtually all of its industrial supplies from the In-Plant Store(R). The Company staffs the In-Plant Store(R) with its own highly trained industrial procurement professionals, installs proprietary software designed specifically for industrial procurement and helps determine optimal inventory levels based on the supply needs of each site. Upon implementation, the In-Plant Store(R) purchases, receives, inventories and issues industrial supplies directly to plant personnel, delivers ongoing technical support and provides the customer with a comprehensive invoice twice per month thereby reducing the administrative burden of traditional industrial supply. The In-Plant Store(R) generates system-wide savings generally ranging from 15% to 25% of customers' annual industrial supply purchase costs. The total United States market for the categories of industrial supplies offered by the Company is estimated to be approximately $225 billion annually. Of this total, it is estimated that approximately $20 billion to $30 billion of industrial supplies are purchased annually by the 15,000 largest industrial plants in the United States. These plants represent potential customers for the Company's In-Plant Store(R) program. The Company believes that very few of these 15,000 plants have outsourced their 4 <PAGE> industrial supply procurement. The Company's In-Plant Store(R) customers span a broad range of industries, including the automotive, chemicals, construction, food processing, power generation and natural resource extraction industries, and the In-Plant Store(R) program is suitable for virtually any industry that uses industrial supplies. The Company's existing customers include Allied Signal Inc., The Black and Decker Corporation, Bridgestone/Firestone, Inc., Onan Corporation, Homelite Inc., Hoechst Celanese Corporation, NACCO Materials Handling Group Inc. and Westinghouse Electric Corporation. In addition to its In-Plant Store(R) program, the Company offers several other proprietary industrial supply procurement solutions aimed at specific types of customers. Through its Value Managed SupplySM program, the Company is able to provide some of the features of the In-Plant Store(R) to customers which are too small to support an In-Plant Store(R) or are not prepared to outsource completely their industrial supply procurement. For industrial activities such as construction projects and plant turnarounds, the Company offers its proprietary On-Site StoreSM program in which customers temporarily outsource the management of industrial supply procurement to the Company. The Company offers its Value Managed SupplySM and On-Site StoreSM programs through its network of branches which also provide traditional industrial supply services to customers in markets that have historically been underserved by other industrial supply distributors. The Company also offers other selected outsourcing services for industrial customers, including the management of industrial laundry, process control maintenance and plant logistics. The Company delivers the Value Managed SupplySM program, the On-Site StoreSM program, other outsourcing services and traditional distribution to over 19,000 customers through a network of 32 branches and ten sales and service offices located throughout the United States and in Mexico. The Company's principal executive offices are located at 12136 West Bayaud, Suite 320, Lakewood, Colorado 80228, and the Company's telephone number is (303) 234-1419. 5 <PAGE> THE OFFERING <TABLE> <S> <C> Common Stock offered by the Company.......... 7,000,000 shares Common Stock offered by the Selling Stockholders............................... 1,200,000 shares(1) Total.................................. 8,200,000 shares Common Stock to be outstanding after the Offering................................... 28,765,957 shares(2) Use of Proceeds.............................. To repay bank indebtedness, for working capital, including the opening of In-Plant Store(R) facilities, for general corporate purposes and for the possible acquisition of companies engaged in the business of providing industrial supply services. See "Use of Proceeds." Nasdaq Symbol................................ STRD </TABLE> ------------ (1) Does not include up to 600,000 shares of Common Stock which may be offered by a stockholder of the Company upon exercise of the Underwriters' over-allotment option. See "Principal and Selling Stockholders" and "Underwriting." (2) Excludes (i) 2,976,093 shares of Common Stock at March 31, 1996 which were reserved for issuance under the Company's 1990 Incentive Stock Option Plan and certain other stock option agreements, 1,727,188 of which were subject to currently exercisable options and 429,983 of which were subject to options that were not currently exercisable, and (ii) warrants to purchase 38,625 shares of Common Stock outstanding at March 31, 1996. See Note 14 of Notes to the Company's Financial Statements included elsewhere in this Prospectus. 6 <PAGE> SUMMARY FINANCIAL AND OPERATING DATA The following summary consolidated financial and operating data should be read in conjunction with the Consolidated Financial Statements and Notes thereto of the Company and the other selected historical and pro forma consolidated financial data set forth elsewhere in this Prospectus. <TABLE> <CAPTION> THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, --------------------------------------------------- ----------------------- PRO FORMA(1) 1993 1994 1995 1995 1995 1996 ---------- ---------- ---------- ------------ ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA) <S> <C> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA: Revenues................... $37,098 $77,613 $117,493 $120,265 $25,396 $33,316 Income (loss) from continuing operations.... 202 2,235 1,004 429 540 (1,966)(2) Income from discontinued operations(3)............ 100 -- -- -- -- -- Net income (loss).......... 302 2,235 1,004 429 540 (1,966)(2) PER SHARE DATA: Primary: Income (loss) from continuing operations.. 0.02 0.13 0.05 0.02 0.02 (0.09)(2) Income from discontinued operations(3).......... -- -- -- -- -- -- Net income (loss)........ 0.02 0.13 0.05 0.02 0.02 (0.09)(2) Fully diluted-- Net income (loss)........ 0.02 0.13 0.04 0.02 0.02 (0.09)(2) AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING.. 12,684,911 16,993,971 21,689,653 21,689,653 21,661,222 21,740,823 OTHER DATA: Number of operational In-Plant Store(R) FACILITIES(4)............. -- 17 31 31 24 37 NUMBER OF IN-PLANT STORE(R) CUSTOMERS(4)............. -- 12 21 21 14 23 NUMBER OF BRANCHES(4)...... 23 26 32 32 26 32 REVENUES FROM IN-PLANT STORE(R) FACILITIES...... -- $31,931 $ 53,895 $ 53,895 $ 11,126 $ 16,805 REVENUES FROM BRANCHES(5).............. $37,098 $45,682 $ 63,598 $ 66,370 $ 14,270 $ 16,511 </TABLE> <TABLE> <CAPTION> MARCH 31, 1996 ---------------------- DECEMBER 31, AS 1995 ACTUAL ADJUSTED(6) ------------ ------- ----------- <S> <C> <C> <C> BALANCE SHEET DATA: Working capital.................................... $ 23,599 $19,650 $66,190 Total assets....................................... 48,051 48,881 95,421 Long-term debt obligations......................... 5,903 4,162 1,452 Stockholders' equity............................... 27,391 25,518 74,768 </TABLE> ------------ (1) Includes the applicable pro forma effect of adjustments in 1995 for the acquisition of American Technical Services Group, Inc. ("ATSG") as if such acquisition occurred on January 1 , 1995. See Pro Forma Statement of Income for the year ended December 31, 1995 set forth in the Company's Financial Statements included elsewhere in this Prospectus. (2) Includes a restructuring charge of $920,000. (3) Relates to the Company's discontinuance of its information services business, which constituted the Company's business prior to July 1, 1990. (4) As of the end of the period. (5) Includes all revenues other than those from the Company's In-Plant Store(R) PROGRAM. (6) Adjusted to give effect to the sale by the Company of the Shares offered by the Company hereby (based upon an assumed offering price of $7.50 per share) and the application of the net proceeds therefrom as described under "Use of Proceeds." 7 <PAGE>

parsed_sections/prospectus_summary/1996/CIK0000080816_providence_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. Unless the context otherwise requires, all references to the "Company" are to The Providence Journal Company and its consolidated subsidiaries, as successor to Providence Journal Company ("Old PJC") after giving effect to the transactions described herein under "The Company -- Background; Reorganization". Unless otherwise indicated, all market rank, station rank in market and station audience rating and share data contained herein have been obtained from the Nielsen Station Index dated May 1996 and all "effective buying income" ("EBI"), market population, household growth and retail sales data contained herein have been obtained from Investing in Television, 1996 Market Report, published by BIA Publications, Inc. ("BIA"). Unless otherwise indicated, the information in this Prospectus (i) assumes no exercise of the over-allotment option granted to the Underwriters, (ii) assumes that 450,000 shares of Class A Common Stock will be issued in the Direct Placement and (iii) gives effect to a 450-for-1 stock split (the "Stock Split") of the Common Stock effected on June 18, 1996. THE COMPANY GENERAL The Company owns and operates nine network-affiliated television stations (the "Stations") and provides or will provide programming and marketing services to three television stations (the "LMA Stations") under local marketing agreements ("LMAs") in geographically diverse markets throughout the United States (the "Broadcasting Business"), publishes the largest daily newspaper in the Rhode Island and southeastern Massachusetts market (the "Publishing Business"), and produces diversified programming and interactive electronic media services (the "Programming and Electronic Media Business"). The Company's television broadcasting group reaches 5.6 million households, or 6% of all U.S. television households; its newspaper is the leading newspaper in its market in terms of advertising and circulation; and certain of its programming and electronic media businesses, such as the Television Food Network, serve subscribers and viewers nationwide. Important factors in the success of the Company's broadcasting and publishing businesses have been its strong local news focus, targeted local advertising sales efforts, investment in advanced technology and emphasis on cost control. The resulting strength of its media franchises presents attractive opportunities for future growth and for realization of operating efficiencies. In addition to increasing the reach of its broadcasting operations and cable and satellite television networks through acquisitions and internal growth, the Company intends to develop new revenue sources that build on the existing strength of its brands and expertise and have broad regional or national appeal. See "Business". The Company's broadcasting operations are located in markets ranging from the 12th to the 127th largest Designated Market Areas (defined by A. C. Nielsen Co. ("Nielsen") as geographic markets for the sale of national "spot" and local advertising time) in the United States ("DMAs"), with five such Stations and one LMA Station in the 50 largest DMAs. Five of the Stations are network affiliates of the National Broadcasting Company Incorporated ("NBC") television network, two are network affiliates of the Fox Broadcasting Network ("Fox"), one is a network affiliate of the American Broadcasting Company ("ABC") and one is a network affiliate of CBS, Inc. ("CBS"). In 1995, EBITDA (as defined herein) of the Broadcasting Business represented approximately 81% of the Company's EBITDA excluding programming and electronic media and corporate expenses. Eight of these nine Stations are VHF (as defined herein) television stations. Two of the LMA Stations are affiliated with the United Paramount Network ("UPN"). See "Business -- Broadcasting". The Company publishes the leading newspaper in terms of advertising and circulation in its market of Rhode Island and southeastern Massachusetts, the Providence Journal-Bulletin Monday through Saturday and The Providence Sunday Journal (collectively the "Providence Journal"). Average daily circulation levels for the three months ended March 31, 1996 following the consolidation of the morning and afternoon newspapers in June 1995 (see "Business -- Publishing") were approximately 169,500 for Monday through - ------------------------------------------------------------------------------ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JUNE 21, 1996 PROSPECTUS - ---------- 7,125,000 SHARES THE PROVIDENCE [LOGO] JOURNAL COMPANY CLASS A COMMON STOCK ($1.00 PAR VALUE) --------------- All of the 7,125,000 shares of Class A Common Stock, $1.00 par value (the "Class A Common Stock"), offered hereby (the "Underwritten Offering") are being offered by The Providence Journal Company (the "Company"). In addition to the Underwritten Offering contemplated hereby, the Company is also offering an additional 450,000 shares of Class A Common Stock to eligible employees of the Company and its subsidiaries (the "Direct Placement" and, together with the Underwritten Offering, the "Offerings") at a price per share equal to the initial public offering price per share for the Class A Common Stock less an amount equal to the underwriting discount per share. Prior to the Offerings, there has been no public market for the Class A Common Stock. It is currently anticipated that the initial public offering price for the Class A Common Stock will be between $15.00 and $17.00 per share. See "Underwriting" for information relating to the determination of the initial public offering price. Upon consummation of the Offerings, the Company's authorized and outstanding capital stock will consist of Class A Common Stock and Class B Common Stock, $1.00 par value (the "Class B Common Stock" and together with the Class A Common Stock, the "Common Stock"). The rights of the holders of the Common Stock are identical, except that each share of Class B Common Stock entitles the holder to four votes per share, while each share of Class A Common Stock entitles the holder to one vote per share. The Class A Common Stock and Class B Common Stock vote as a single class on substantially all matters, except as otherwise required by law. The Class B Common Stock is convertible at any time at the election of the holder on a share-for-share basis into Class A Common Stock, and automatically converts into Class A Common Stock under certain circumstances involving a transfer. See "Description of Capital Stock". The shares of Class A Common Stock have been approved for listing on the New York Stock Exchange, subject to official notice of issuance, under the symbol "PRJ". SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON STOCK OFFERED HEREBY. --------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. <TABLE> ================================================================================ <CAPTION> PRICE TO UNDERWRITING PROCEEDS TO PUBLIC DISCOUNT(1) COMPANY(2) - -------------------------------------------------------------------------------- <S> <C> <C> <C> Per Share............. $ $ $ - -------------------------------------------------------------------------------- Total(3).............. $ $ $ ================================================================================ - ----------- <FN> (1) The Company has agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). See "Underwriting". (2) Before deducting expenses estimated at $1,400,000 payable by the Company. (3) The Company has granted the Underwriters an option, exercisable within 30 days after the date hereof, to purchase up to an aggregate of 1,068,750 additional shares of Class A Common Stock, at the initial price to public per share, less the underwriting discount, solely to cover over-allotments, if any. If such option is exercised in full, the total Price to Public, Underwriting Discount and Proceeds to Company will be $ , $ and $ , respectively. See "Underwriting". </TABLE> --------------- The shares of Class A Common Stock are being offered by the several Underwriters, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of certain legal matters by counsel for the Underwriters and certain other conditions. The Underwriters reserve the right to withdraw, cancel or modify such offer and to reject orders in whole or in part. It is expected that delivery of certificates for the shares of Class A Common Stock will be made in New York, New York on or about ,1996. --------------- MERRILL LYNCH & CO. BEAR, STEARNS & CO. INC. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION --------------- The date of this Prospectus is , 1996. - -------------------------------------------------------------------------------- Saturday and 251,300 for Sunday. The Company, which was founded in 1820, believes that the Providence Journal, published daily since 1829, is the oldest continuously published daily newspaper in the United States. See "Business -- Publishing". The Company produces cable and satellite television programming and interactive and on-line electronic media services through its management role or ownership interests in a variety of content-driven entertainment and information businesses. The Company owns a 46% interest in and participates in the management of Television Food Network, a cable television network that is distributed to approximately 16.5 million subscribers throughout the United States. The Company controls America's Health Network with a 65% ownership interest, and owns all of the equity interest in NorthWest Cable News, both recently launched development stage cable programming network services. The Company also owns equity interests in a variety of interactive, on-line, and broadcast programming businesses. See "Business -- Programming and Electronic Media". BROADCASTING GENERAL. The Stations generally are in markets that the Company believes will experience above-average economic growth in retail sales, EBI and population. The Stations are typically located in the largest cities or state capitals of the states in which they operate. The Company's Stations and the LMA Stations are in geographically diverse regions of the United States, which reduces the Company's exposure to regional economic fluctuations. The following table sets forth general information for each of the Stations and the LMA Stations and the markets they serve, based on the Nielsen Station Index as of May 1996. In February 1992, the Company acquired a 50% joint venture interest (the "King Acquisition") in King Holding Corp. ("KHC"), which indirectly owned Stations KING (Seattle), KGW (Portland), KHNL (Honolulu), KREM (Spokane) and KTVB (Boise) (the "King Stations"). The Company has operated the King Stations since such acquisition and in 1995 acquired 100% of the ownership of the King Stations in the Kelso Buyout (as defined herein). The Stations are listed in order of the ranking of their DMA. <TABLE> <CAPTION> NUMBER OF COMMERCIAL TELEVISION NETWORK CHANNEL/ DMA STATIONS RANK IN STATION MARKET AREA(1) STATION(1) STATUS AFFILIATION FREQUENCY(2) RANK(3) IN MARKET(4) MARKET(5) SHARE(6) - --------------- ------- -------- ----------- --------- ------- ------------ --------- -------- <S> <C> <C> <C> <C> <C> <C> <C> <C> Seattle, WA KING Owned NBC 5/VHF 12 8 1 19% KONG(8) LMA N/A N/A 12 8 -- -- Portland, OR KGW Owned NBC 8/VHF 24 8 1 17 Charlotte, NC WCNC Owned NBC 36/UHF 28 8 3 10 Albuquerque/ KASA Owned Fox 2/VHF 48 6 4 7 Santa Fe, NM Louisville, KY WHAS Owned ABC 11/VHF 50 6 1 23 Honolulu, HI KHNL Owned NBC 13/VHF 70 8 1 19 KFVE LMA UPN 5/VHF 70 8 -- -- Spokane, WA KREM Owned CBS 2/VHF 74 4 2 18 Tucson, AZ KMSB Owned Fox 11/VHF 80 6 4 10 KTTU LMA UPN 18/UHF 80 6 -- -- Boise, ID KTVB Owned NBC 7/VHF 127 5 1 30 <CAPTION> 1995 MARKET REVENUE(7) --------------------- STATION $ (IN MARKET AREA SHARE MILLIONS) - --------------- ------- --------- <S> <C> <C> Seattle, WA 25% $ 269.0 -- 269.0 Portland, OR 22 144.9 Charlotte, NC 11 118.1 Albuquerque/ 16 79.0 Santa Fe, NM Louisville, KY 31 82.3 Honolulu, HI 19 63.7 -- 63.7 Spokane, WA 27 42.8 Tucson, AZ 21 52.2 -- 52.2 Boise, ID 40 26.0 - --------------- <FN> (1) As used in this Prospectus, the following "call letters" refer, as the context may require, either to the corporate owner of the station indicated or to the station itself: "KING" refers to KING-TV, Seattle, Washington; "KONG" refers to KONG-TV, Seattle, Washington; "KGW" refers to KGW(TV), Portland, Oregon; "WCNC" refers to WCNC-TV, Charlotte, North Carolina; "KASA" refers to KASA-TV, Albuquerque/Santa Fe, New Mexico; "WHAS" refers to WHAS-TV, Louisville, Kentucky; "KHNL" refers to KHNL(TV), Honolulu, Hawaii; "KFVE" refers to KFVE(TV), Honolulu, Hawaii; "KREM" refers to KREM-TV, Spokane, Washington; "KMSB" refers to KMSB-TV, Tucson, Arizona; "KTTU" refers to KTTU(TV), Tucson, Arizona; and "KTVB" refers to KTVB(TV), Boise, Idaho. </TABLE> - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (2) As used in this Prospectus, "VHF" refers to the very high frequency band (channels 2-13) of the spectrum and "UHF" refers to the ultra-high frequency band (channels above 13) of the spectrum. (3) Ranking of DMA served by the Station among all DMAs, measured by the number of television households for the 1995-1996 broadcast year. (4) Represents the number of television stations ("reportable stations") designated by Nielsen as "local" to the DMA, excluding public television stations and stations that do not meet minimum Nielsen reporting standards (weekly cumulative audience of less than 2.5%) for reporting in the Sunday through Saturday, 6:00 a.m. to 2:00 a.m. period ("sign-on to sign-off"). Does not include national cable channels or satellite stations. The number of reportable stations may change for each reporting period. (5) Station's rank relative to other reportable stations, based upon the DMA rating as reported by Nielsen, 6:00 a.m. to 2:00 a.m., during the May 1996 measuring period. Data for KHNL and KMSB include KFVE and KTTU, respectively. Data for KING does not include KONG because the LMA for such LMA Station was entered into on May 14, 1996 and the station is not yet operational. (6) Represents the number of television households tuned to the Station as a percentage of the number of television households with sets in use for Sunday-Saturday 6:00 a.m. to 2:00 a.m. from the May 1996 Nielsen Station Index. Data for KHNL and KMSB include KFVE and KTTU, respectively. Data for KING does not include KONG because the LMA for such LMA Station was entered into on May 14, 1996 and the station is not yet operational. (7) Represents gross national, local, regional and political advertising revenues, excluding network and barter revenues (defined as the revenue resulting from the exchange of unsold advertising time for products or services, typically including programming, merchandise, fixed assets, other media advertising privileges, travel and hotel arrangements, and entertainment), for all commercial television stations in the DMA, based on actual local market reporting, as estimated by BIA. Station share of 1995 market revenue for KHNL and KMSB includes revenues of KFVE and KTTU, respectively. Data for KING does not include KONG because the LMA for such LMA Station was entered into on May 14, 1996 and the station is not yet operational. (8) Data for KONG is not available because the station is not yet operational. BROADCASTING BUSINESS AND OPERATING STRATEGY. The Company's strategy in the Broadcasting Business is to increase viewership, advertising revenue and EBITDA primarily by capitalizing on its strong local news franchises, targeted marketing and local sales efforts, high quality, non-network programming and strict cost controls. This strategy has contributed to average compound annual growth in the Company's net revenues and EBITDA in the Broadcasting Business, calculated on a combined basis as herein described, of 9.5% and 23.9%, respectively, from 1991 to 1995. In addition, EBITDA as a percentage of net revenues, calculated on a combined basis, has increased from 21.6% in 1991 to 35.7% in 1995. The components of the Company's Broadcasting Business strategy include the following: ENHANCE STRONG LOCAL NEWS FRANCHISES. Most of the Stations lead their markets in terms of ratings for local news and number of hours of local news that are broadcast per week. The Company has focused on enhancing each Station's local market news programming franchise as the foundation to build significant audience share in such market. Local news programming is commercially valuable because of its high viewership level, the attractiveness to advertisers of the demographic characteristics of the typical news audience (allowing stations generally to charge higher rates for advertising time) and the enhanced ratings of programming in time periods adjacent to the news. In addition, the Company believes that its strong local news programming has helped to differentiate the Stations from cable programming competitors, which generally do not provide such programming. LEVERAGE LOCAL MARKET STRENGTH WITH ADDITIONAL LMAS. The Company plans to pursue opportunities to enter into LMAs in the DMAs in which the Company's Stations operate. The Company believes that LMAs enable the Company to increase revenue and broadcast cash flow by taking advantage of the economies of scale derived from being a television station group owner. The Company also believes that there are benefits in terms of increased advertising revenue from LMA arrangements. MATCH ADVERTISERS TO AUDIENCES THROUGH TARGETED LOCAL SALES. The Company seeks to leverage its strong local presence to increase its advertising revenues and broadcast cash flow by expanding relationships with local and national advertisers and attracting new advertisers through targeted marketing techniques and carefully tailored programming. Each of the Company's Stations has developed high quality programming of local interest and sponsored community events to attract audiences with demographic characteristics desirable to advertisers. In addition, the Company works closely with - ------------------------------------------------------------------------------- advertisers to develop campaigns that match specifically targeted audience segments with the advertisers' overall marketing strategies. MAXIMIZE VIEWER SHARE THROUGH HIGH QUALITY, NON-NETWORK PROGRAMMING. Each of the Company's Stations is focused on improving its syndicated and locally produced non-network programming to attract audiences with favorable demographic characteristics. The Company believes that through a cooperative approach to programming, it can generate incremental revenue by adjusting its programming mix to capture viewers of certain targeted demographic segments that meet the needs of valued advertisers. MAINTAIN EFFECTIVE COST CONTROLS AND LEVERAGE ECONOMIES OF SCALE. Each Station emphasizes strict control of its programming and operating costs as an essential factor in increasing broadcast cash flow. In addition, the Company, as a television station group owner, believes that it has the ability to enter into advantageous group programming contracts. As the provider of NBC network programming in five markets, the Company believes that its ability to enter into stable and favorable affiliation agreements with NBC is enhanced. Through strategic planning and annual budget processes, the Company continually seeks to identify and implement cost-saving opportunities at each of the Stations. CREATE OPERATING EFFICIENCIES THROUGH INVESTING IN TECHNOLOGY. The Company invests selectively in technology to increase operating efficiency, reduce Station operating expenses, or gain a local market competitive advantage. Areas of focus include digital news production, editing and library systems, advanced weather radar equipment, and robotic cameras. The Company has entered into an agreement with AVID Technology, Inc. ("AVID") to test and deploy advanced digital editing, production and server technology that is intended to create a more efficient video production environment. The Company believes that the use of AVID or other digital equipment will result in cost savings and operating efficiencies when fully deployed at the Stations. BROADCASTING ACQUISITION STRATEGY. The Company plans to pursue favorable acquisition opportunities as they become available. The Company's acquisition strategy is to target network-affiliated television stations where it believes it can successfully apply its operating strategy and where such stations can be acquired on attractive terms. The Company generally intends to review acquisition opportunities in growth markets, typically in the 75 largest DMAs in the nation, with what the Company believes to be advantageous business climates. In assessing acquisitions, the Company targets stations for which it has identified specific expense reductions and proposals for revenue enhancement that can be implemented upon acquisition. The Company does not presently have any agreements or understandings to acquire or sell any television stations. See "Business -- Broadcasting -- Business and Operating Strategy". PUBLISHING GENERAL. The Providence Journal is the leading newspaper in terms of advertising and circulation in its market of Rhode Island and southeastern Massachusetts. Average daily circulation levels for the three months ended March 31, 1996 following the consolidation of the morning and afternoon newspapers in June 1995 (as described below) were approximately 169,500 for circulation Monday through Saturday and 251,300 for circulation on Sunday. According to a Belden Associates study, an average of approximately 58% and 69% of the 929,000 total adults in the market surveyed in the fourth quarter of 1995 read the daily Providence Journal-Bulletin and The Providence Sunday Journal, respectively, on a daily basis. In addition, according to this study, an average of approximately 77% and 87% of adults in the market who read any newspaper read the daily Providence Journal-Bulletin and The Providence Sunday Journal, respectively, on a daily basis. The Providence Journal has received numerous awards over the years for its local and national coverage, including its fourth Pulitzer Prize in 1994. BUSINESS AND OPERATING STRATEGY. The Company's publishing strategy is to leverage the Providence Journal's comprehensive regional and local news coverage to generate increased readership, local advertising sales, and new revenue sources based on its strong brand recognition. The Company believes that the recent consolidation of its daily newspapers, reorganization of its staff, and effective cost controls will help contribute to improved operating results. The Company's business and operating strategy for the Publishing Business includes the following key elements: ENHANCE STRONG LOCAL NEWS PRESENCE. The Company has the largest local news gathering resources in its Rhode Island and southeastern Massachusetts market. In 1995, the Company intensified its commitment to local news by reallocating resources to the Providence Journal's regional sections that target readers in seven geographic zones of its market. As a result of the Company's strategies to emphasize regionally-zoned news and information sections and to control costs, on June 5, 1995, the Company consolidated the morning and afternoon newspapers in order to reallocate resources to the regional editions and to reduce operating costs (the "Newspaper Consolidation"). A portion of the total annual savings from this consolidation is being used to enhance local news coverage. REORGANIZE SALES FORCE TO INCREASE CUSTOMER FOCUS. The Company emphasizes a targeted approach to its advertisers and has recently begun the reorganization of its sales force to enhance its effectiveness in attracting advertisers. The Company also intends to institute a new performance-based incentive compensation plan for its salespeople that rewards employees based on their contribution to EBITDA rather than to revenues. The Company believes that this reorganization will enable its sales force to better identify sales opportunities, be more responsive to advertiser needs, and operate more cost effectively. REDUCE OPERATING COSTS. Expenses of the Company's Publishing Business are closely monitored in an effort to control costs without sacrificing revenue opportunities. The Company seeks to reduce labor costs through investment in modern production equipment and the consolidation of operations and administrative activities. The Company has recently reduced operating costs through the Newspaper Consolidation and the Newspaper Restructuring (as defined herein), which together have resulted in an estimated $10 million in annual savings. The Company has also made efforts to reduce its newsprint costs through a variety of methods, including reducing the page width of the newspaper and strict control of newspaper waste. INCREASE REVENUES THROUGH RELATED PRODUCTS. The Company has introduced new informational products and services to generate revenue from sources other than newspaper publishing. These products and services seek to exploit the strong local brand recognition of the Providence Journal and include fax-on-demand products, voice information services, a news wire service, and telemarketing services. See "Business -- Publishing -- Business and Operating Strategy" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". PROGRAMMING AND ELECTRONIC MEDIA GENERAL; BUSINESS AND OPERATING STRATEGY. The Company produces cable television and satellite network programming and interactive and on-line electronic media services through its management role or ownership interests in a variety of content-driven entertainment and information businesses. The Company's approach to development of programming and interactive opportunities is to invest in or manage businesses that are extensions of its experience in the production of programming content or that build on existing media franchises. The Company's programming and electronic media strategy consists of the following key elements: LEVERAGE EXISTING EXPERTISE IN PROGRAMMING AND OTHER CONTENT DEVELOPMENT. The Company has invested in and operates certain businesses, such as the Television Food Network, America's Health Network and NorthWest Cable News, that capitalize on the Company's experience in television broadcasting and newspaper publishing. As additional opportunities arise, the Company expects to pursue such opportunities that best exploit or extend the capabilities of existing talent and resources. EMPHASIZE PROGRAMMING TOPICS WITH BROAD APPEAL. The Company's strategy in its programming businesses is to develop cable and satellite programming networks, such as the Television Food Network, America's Health Network and NorthWest Cable News, based on issues of interest to potential viewers such as food, health and local news. As the Company reviews additional opportunities, it plans to invest in such ventures that it believes have broad audience appeal. EXTEND AND ENHANCE EXISTING BRANDS AND CONTENT. The Company's strategy in developing cable network programming and interactive and on-line electronic media products has been to create products that are closely related to the Company's existing brands and franchises. For example, NorthWest Cable News builds on the leading local news franchises of the Stations in Washington, Oregon and Idaho, and Rhode Island Horizons, an on-line service, presents news, features and advertising displayed in the Providence Journal. The Company also believes that the success of these ventures will serve to enhance the Company's existing broadcast and newspaper properties. MINIMIZE RISK THROUGH STAGED INVESTMENTS IN NEW OPPORTUNITIES. The Company attempts to take a staged approach to investing in start-up ventures by committing financial and managerial resources upon reaching certain milestones in the businesses' development. Such milestones are dependent on the nature of the start-up business, but include identifying promising concepts, commissioning market research, establishing strategic relationships with other investors, negotiating contractual arrangements with key suppliers and evaluating early-stage financial results of specific projects. See "Business -- Programming and Electronic Media -- Business and Operating Strategy". THE OFFERINGS <TABLE> <S> <C> Class A Common Stock offered in the Underwritten Offering............... 7,125,000 shares(1) Class A Common Stock offered in the Direct Placement.................... 450,000 shares Common Stock to be outstanding after the Offerings: Class A Common Stock................ 24,911,700 shares(2)(3) Class B Common Stock................ 21,067,650 shares Total....................... 45,979,350 shares Use of Proceeds....................... The net proceeds from the Offerings will be used to repay a portion of the indebtedness outstanding under the Company's revolving credit facility. See "Use of Proceeds". Voting and Conversion Rights.......... The rights of the holders of the Common Stock are identical, except that each share of Class B Common Stock entitles the holder to four votes per share, while each share of Class A Common Stock entitles the holder to one vote per share. The Class A Common Stock and Class B Common Stock vote as a single class on substantially all matters, except as otherwise required by law. The Class B Common Stock is convertible at any time at the election of the holder on a share-for-share basis into Class A Common Stock, and automatically converts into Class A Common Stock under certain circumstances involving a transfer. See "Description of Capital Stock".

parsed_sections/prospectus_summary/1996/CIK0000083402_resource_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements and notes thereto appearing elsewhere in this Prospectus. Unless otherwise indicated, all information set forth herein (i) assumes that the Underwriters' overallotment option is not exercised, and (ii) gives effect to 6% stock dividends paid in January 1996 and April 1996 and a five-for-two stock split (effected in the form of a 150% stock dividend) in May 1996. References to the "Company" in this Prospectus include the Company and its consolidated subsidiaries, unless the context otherwise requires. THE COMPANY GENERAL The Company is a specialty finance company engaged in three lines of business: the acquisition and resolution of commercial real estate loans, "small ticket" commercial equipment leasing, and energy operations, including natural gas and oil production. For approximately 25 years prior to 1991, the Company was principally involved in the energy industry. Following the acquisition of a significant ownership position in the Company by new stockholders in 1988 and the appointment of new senior management (including the current Chairman, who has been a senior officer of banking and other financial institutions for the past 30 years), the Company evaluated alternative strategies to expand and diversify its operations (particularly in light of the declining attractiveness of the energy business to small investors following the 1986 changes to the federal tax law). Since 1991, the Company's business strategy has focused on locating and developing niche finance businesses in which the Company can realize attractive returns by targeting well-defined financial services markets and by developing specialized skills to service those markets on a cost-effective basis. To date, the Company has developed two business lines (asset acquisition and resolution, and equipment leasing) that it believes meet these criteria. The Company was organized in 1947. Its executive offices are located at 1521 Locust Street, Philadelphia, Pennsylvania 19102, and its telephone number is (215) 546-5005. ASSET ACQUISITION AND RESOLUTION The Company's asset acquisition and resolution business involves the purchase at a discount of relatively small (generally $1 million to $5 million in purchase price) troubled commercial real estate loans from private market sellers (primarily financial institutions), and the restructuring and refinancing of those loans. These loans typically involve legal and other disputes among the lender, the borrower and/or other parties in interest, and generally are secured by properties which are unable to produce sufficient cash flow to fully service the loans in accordance with the original lender's loan terms. Since entering this business in 1991, the Company's loan portfolio has increased to $100.5 million (before discounts) at September 30, 1996. During the fiscal years ended September 30, 1994, 1995 and 1996, the Company's yield on its net investment in loans acquired (including gains on refinancings and sales of participations) equalled 30.8%, 34.6% and 36.2%, respectively, while its gross profits from its loan activities (that is, revenues from loan activities minus costs attributable thereto and less depreciation, depletion and amortization, but without allocation of corporate overhead) for fiscal 1994, 1995 and 1996 were $2.3 million, $5.3 million and $6.7 million, respectively. The Company seeks to reduce the amount of its own capital invested in loans after their acquisition, and to enhance its returns, through prompt refinancing of the properties underlying its loans, or through sale at a profit of senior participations in its loans (typically on a recourse basis). At September 30, 1996, senior lenders held outstanding obligations of $38.7 million secured by properties with an aggregate appraised value of $68.2 million, resulting in a ratio of senior lien obligations-to-appraised value of property of 56.7%. Currently, the operating cash flow coverage on the required debt service on refinancings and participations (exclusive of proceeds from such refinancings or participations) is 160.8%. The balance of operating cash flow is, pursuant to agreements with the borrowers, retained by the Company as debt service on the outstanding balance of the Company's loans. See "Business -- Asset Acquisition and Resolution: Loan Status." EQUIPMENT LEASING In September 1995, the Company entered the commercial leasing business through its acquisition of the leasing subsidiary of a regional insurance company. This acquisition provided the Company with a servicing portfolio of approximately 520 individual leases held by six leasing partnerships which provided the Company with a servicing revenue stream of $1.1 million during fiscal 1996. More importantly, through this acquisition the Company acquired an infrastructure of operating systems, computer hardware and proprietary software (generally referred to as a "platform"), as well as personnel, which the Company is utilizing to develop a commercial leasing business for its own account. In order to develop this business, in early 1996 the Company hired a team of four experienced leasing executives, including the former chief executive officer of the U.S. leasing subsidiary of Tokai Bank, a major Japanese banking institution. The Company's strategy in developing its leasing business is to focus on leases with equipment costs of between $5,000 to $100,000 (with a targeted average transaction of approximately $15,000 per lease) ("small ticket" leasing) and to market its equipment leasing product through vendor programs with equipment manufacturers likely to generate $10 million or less annually in equipment leases, regional distributors and other vendors. The Company has currently entered into vendor program relationships with five vendors: Minolta Corporation (copiers), Celsis Incorporated (microbial testing systems), American Marabacom Communications (Teleco) (telephone systems), CSi (test equipment) and ATI Communications (telephone systems). The Company believes that this market is under-served by equipment lessors, banks and other financial institutions, affording the Company a niche market with significant growth potential. From the inception of leasing activity for its own account in June 1996 through September 30, 1996, the Company has received 271 lease proposals involving equipment with an aggregate cost of $6.5 million, approved 118 such proposals involving equipment with an aggregate cost of $2.5 million, entered into 39 transactions involving equipment with an aggregate cost of $711,000 and had 21 such proposals pending involving equipment with an aggregate cost of $1.3 million. According to the Equipment Leasing Association of America ("ELA"), a leading industry trade association, approximately 80% of all United States businesses lease some portion of their equipment. Leasing enables a company to obtain the equipment it needs, while preserving cash flow and often receiving favorable accounting and tax treatment. The Company believes that small businesses are becoming more aware of the economic benefits offered by equipment leasing, and that small business leasing will therefore become an increasingly important segment of the leasing market. ENERGY OPERATIONS The Company produces natural gas and, to a lesser extent, oil from locations principally in Ohio, Pennsylvania and New York. At September 30, 1996, the Company had a net investment of $11.3 million in its energy operations, including interests in 769 individual wells owned directly by the Company or through 52 partnerships and joint ventures managed by the Company. While the Company has focused its business development efforts on its specialty finance operations over the past several years, its energy operations historically have provided a steady source of revenues and tax benefits. THE OFFERING Common Stock offered....... 1,200,000 shares(1) Common Stock to be outstanding after the Offering................... 3,094,761 shares(1)(2) Use of Proceeds............ For general corporate purposes, including the acquisition of additional commercial real estate loans for the Company's portfolio and expansion of the Company's equipment leasing operations. See "Use of Proceeds." Nasdaq National Market Symbol..................... REXI Risk Factors............... An investment in the shares of Common Stock offered hereby involves a high degree of risk. See "Risk Factors" beginning on page 8 hereof for information that should be considered by prospective purchasers of the Common Stock offered hereby. - --------------- (1) Assumes that the Underwriters' over-allotment option to purchase up to 180,000 shares of Common Stock is not exercised. (2) Does not give effect to any future exercise of outstanding warrants to purchase up to 983,150 shares of Common Stock or employee stock options to purchase up to 348,316 shares of Common Stock. See "Description of Capital Stock -- Warrants" and "Security Ownership of Certain Beneficial Owners and Management."

parsed_sections/prospectus_summary/1996/CIK0000095626_centire_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This Prospectus contains certain statements of a forward-looking nature relating to future events or the future financial performance of the Company. Prospective investors are cautioned that such statements are only predictions and that actual events may differ materially. In evaluating such statements, prospective investors should specifically consider the various factors identified in this Prospectus, including the matters set forth under the caption "Risk Factors," which would cause actual results to differ materially from those indicated by such forward-looking statements. The following summary is qualified in its entirety by the more detailed information, including "Risk Factors" and the Consolidated Financial Statements and notes thereto, appearing elsewhere in this Prospectus. THE OFFERING <TABLE> <CAPTION> <S> <C> Securities........ 1,000,000 shares of Common Stock, $.001 par value per share, offered by the Selling Shareholders. Use of Proceeds... The Company will not receive any proceeds from this offering. Risk Factors...... Investment in the Company involves certain risks. See "Risk Factors." NASDAQ symbol Common Stock ........ ASIA The Company's Common Stock is quoted on the NASDAQ National Market. </TABLE> THE COMPANY Sunbase Asia, Inc., a Nevada corporation (the "Company," which term shall include, unless the context so requires, its subsidiaries and affiliates), is engaged in the design, manufacture and distribution of a broad range of bearing products in the People's Republic of China ("China" or the "PRC"), and the United States ("US"). The Company also distributes its bearing products in Europe, Asia, South America and Africa. The Company's subsidiary in China, Harbin Bearing Company, Ltd. ("Harbin Bearing"), employs approximately 13,000 employees. Harbin Bearing is the largest precision bearing manufacturer and the third largest bearing manufacturer overall in China. Harbin Bearing produces a wide variety of precision and commercial-grade rolling-element bearings in sizes ranging from 10mm to 1000mm (internal diameter). Rolling-element bearings use small metal balls or cylinders to facilitate rotation with minimal friction and are typically used in vehicles, aircraft, appliances, machine tools, general machinery and virtually any other product that contains rotating or revolving parts. Precision bearings are bearings that are produced to more exacting dimensional tolerances and to higher performance characteristics than standard commercial bearings. The manufacturing process for precision bearings generally requires the labor of highly-skilled machinists and the use of sophisticated machine tools. On January 16, 1996 (effective December 29, 1995), the Company acquired Smith Acquisition Company, Inc., d/b/a Southwest Products Company ("Southwest Products"), an engineering-intensive company located in Southern California, that produces precision spherical bearings for US, European and Asian aerospace and high tech commercial applications and the US military. Over 90% of Harbin Bearing's sales are made to the OEM and replacement markets in China. Based on low production costs in China and the on-going world-wide demand for bearings, management intends to create a substantial export business to complement the Company's strong domestic position in the Chinese markets. Historically, Harbin Bearing export sales have been made through trade intermediaries and by receiving customer orders that are placed directly to its offices in China. Southwest Products has commenced providing and will provide engineering and technical support, and has commenced to and will market and distribute Harbin Bearing products internationally, focusing on exports of the products to the US. In addition, Southwest Products has begun to and will assist Harbin Bearing in implementing US manufacturing methods, improving quality control procedures and in developing new products at Harbin Bearing's facilities in China. The Company's principal executive offices are located at 19/F First Pacific Bank Centre, 51-57 Gloucester Road, Wanchai, Hong Kong, telephone (852) 2865-1511. The following is a chart of the Company's organizational structure. [Chart Appears Here] SUMMARY CONSOLIDATED FINANCIAL INFORMATION The following summary financial data (expressed in thousands) have been derived from the audited financial statements of Harbin Bearing General Factory (the predecessor operating company to Harbin Bearing) for the year ended December 31, 1993 and the audited financial statements of the Company for the years ended December 31, 1994 and 1995, and the unaudited financial statements of the Company for the nine month periods ended September 30, 1995 and 1996. All U.S. dollar amounts have been converted from Renminbi based on the exchange rate on September 30, 1996 of $1.00 US to each Rmb 8.3 as quoted at the People's Bank of China. Due to the reorganization of the Harbin Bearing General Factory on January 1, 1994, the 1993 financial information was prepared on a pro-forma basis as if the acquisition of China Bearing and Harbin Bearing had occurred on January 1, 1993. (See the discussion after the table under the caption "Selected Consolidated Financial Information"). <TABLE> <CAPTION> OPERATIONS DATA Twelve Months Ended December 31 Nine Months Ended September 30 --------------------------------------------------- --------------------------------- (UNAUDITED) 1993 1994 1995 1995 1995 1996 1996 RMB RMB RMB US$ RMB RMB US$ PROFORMA <S> <C> <C> <C> <C> <C> <C> <C> Net sales 687,064 719,842 672,359 80,812 651,070 724,960 87,345 Cost of sales (439,417) (441,854) (381,377) (45,838) (397,584) (444,750) (53,584) Gross profit 247,647 277,988 290,982 34,974 253,486 280,210 33,761 Selling, general and administrative expense. (91,197) (95,218) (113,002) (13,582) (77,804) (91,731) (11,052) Interest expense, net (40,638) (43,446) (48,446) (5,822) (36,060) (46,047) (5,548) Foreign exchange gain/loss- - 725 - - - Reorganization expenses (7,307) (7,307) - - - - Income before income taxes 108,505 132,742 129,534 15,570 139,622 142,432 17,161 Provision for income taxes (16,700) (22,687) (20,472) (2,461) (21,497) (23,590) (2,842) Income before minority interests 91,805 110,055 109,062 13,109 118,125 118,842 14,319 Minority interests (50,495) (58,447) (54,967) (6,607) (59,168) (64,926) (7,823) Net income 41,310 51,608 54,095 6,502 58,957 53,916 6,496 BALANCE SHEET DATA AT SEPTEMBER 30, 1996 ------------------------------ RMB US$ Current Assets 1,224,827 147,571 Working Capital 488,671 58,876 Long-Term Debt 262,002 31,567 Minority Interests 408,068 49,165 Shareholders' Equity 419,880 50,587 Total Assets 1,826,106 220,014 </TABLE>

parsed_sections/prospectus_summary/1996/CIK0000098618_alanco_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information, including "

parsed_sections/prospectus_summary/1996/CIK0000202930_printpack_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary information is qualified in its entirety by, and should be read in conjunction with the more detailed information and Financial Statements, and the notes thereto contained elsewhere in this Prospectus. As used herein, "Printpack" or the "Company" refers to the Company and its subsidiaries unless the context otherwise requires. The Company's fiscal year ends on the last Saturday in June, and references to particular fiscal years of the Company refer to the 12 months ended on the last Saturday of June of the year indicated. See the Financial Statements and Notes thereto. THE COMPANY Printpack is one of the largest domestic manufacturers and converters of flexible packaging products used by leading salted snacks, confectionery, cookies/crackers, cereal, beverage and other food and consumer product companies. Management estimates, based in part upon trade and Flexible Packaging Association ("FPA") data as of 1995, that, prior to the Acquisition (as defined herein), the Company had the leading market share in several major end use categories of flexible packaging, including salted snack foods (approximately 30% market share), which includes packaging for such products as Lays(R) and Ruffles(R) potato chips; confectionery products (approximately 30% market share), which includes packaging for such products as Reese's(R) and Hershey's(R) candy bars; and cookies/crackers (approximately 17% market share), which includes packaging for such products as Fig Newtons(R) and Famous Amos(R) cookies. The Company's customer base, prior to the Acquisition included nationally recognized, brand-name food companies such as Frito-Lay, General Mills, Hershey, Mars, Nabisco, Nestle, Quaker Oats and Ralston. Printpack, founded in 1956, is headquartered in Atlanta, Georgia and is owned and managed by the founding family together with several long-term members of management. The Company manufactures a wide variety of high value-added flexible packaging products, including laminates made of various layers of plastic film, aluminum foil, metallized films, paper and specialized coatings, as well as cast and blown monolayer and co-extruded films. Printpack's sales and EBITDA (as defined herein and before certain charges) for fiscal year 1996 were $442.9 million and $60.0 million, respectively. Over the last five fiscal years ending June 1996, the Company has experienced compound annual growth of sales and EBITDA before certain charges of 5.2% and 8.9%, respectively, exclusively through internal growth. Printpack management estimates, based in part upon data prepared by the FPA and other trade and industry information, that the U.S. end use markets for the types of flexible packaging products produced by the Company (the "flexible packaging industry") had annual sales of approximately $7.5 billion in 1995 and has one of the highest historical growth rates in the packaging industry, generally. According to this data, the eight largest flexible packaging companies accounted for approximately 50% of total 1995 sales in the flexible packaging industry, with the balance shared by several hundred other competitors. Management believes recent industry growth has been and will continue to be driven principally by (i) the shift from rigid containers (paperboard, glass and plastic) to lower cost and lighter weight flexible packaging, (ii) changing demographic trends which have increased the demand for more convenient forms of packaging, including single servings and packaging that extends product shelf life, (iii) the growth in several major end use market segments (such as snack foods), (iv) the growth of low-fat and non-fat foods which require more complex packaging barriers, (v) concerns over waste and resource reduction, and (vi) increasing demands for specialized packaging with enhanced barrier properties and distinctive graphics. On August 22, 1996, Printpack closed (the "Closing") the transactions contemplated in an asset purchase agreement dated as of April 10, 1996, as amended (the "Acquisition Agreement"), with James River and acquired substantially all of the assets of JR Flexible. JR Flexible was also one of the largest domestic manufacturers and converters of flexible packaging products to leading food and consumer products companies, as well as a major supplier of high performance films to other converters. The Acquisition has further increased Printpack's leading position in the flexible packaging industry, and as a result, the Company has total annual combined sales of approximately $900 million, which is approximately 12% of total 1995 industry sales. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION OR THE "SEC"). THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED DECEMBER 18, 1996 PROSPECTUS (LOGO) PRINTPACK INC. OFFER TO EXCHANGE ITS 9 7/8% SENIOR NOTES DUE 2004, SERIES B WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OUTSTANDING 9 7/8% SENIOR NOTES DUE 2004, SERIES A AND 10 5/8% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OUTSTANDING 10 5/8% SENIOR SUBORDINATED NOTES DUE 2006, SERIES A --------------------- EACH EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON , 1996, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (THE "EXPIRATION DATE"). Printpack, Inc., a Georgia corporation (the "Company"), hereby offers (the "Exchange Offer"), upon the terms and subject to the conditions set forth in this Prospectus (the "Prospectus") and the accompanying Letters of Transmittal (the "Letters of Transmittal"), to exchange up to $100,000,000 aggregate principal amount of its 9 7/8% Series B Senior Notes due 2004 (the "Exchange Senior Notes") and $200,000,000 aggregate principal amount of its 10 5/8% Series B Senior Subordinated Notes due 2006 (the "Exchange Senior Subordinated Notes" and, collectively with the Exchange Senior Notes, the "Exchange Notes") for equal principal amounts of its outstanding 9 7/8% Series A Senior Notes due 2004 (the "Senior Notes") and 10 5/8% Series A Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes" and, collectively with the Senior Notes, the "Notes"), respectively. The Exchange Notes are substantially identical (including principal amount, interest rate, maturity and redemption rights) to the Notes for which they may be exchanged pursuant to this offer, except that (i) the offering and sale of the Exchange Notes will have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and (ii) holders of Exchange Notes will not be entitled to certain rights of holders under a Registration Rights Agreement of the Company dated as of August 22, 1996 (the "Registration Rights Agreement"). The Senior Notes have been, and the Exchange Senior Notes will be, issued under an Indenture dated as of August 22, 1996 (the "Senior Note Indenture"), between the Company and Fleet National Bank, as trustee (the "Senior Note Trustee"). The Senior Subordinated Notes have been, and the Exchange Senior Subordinated Notes will be, issued under an Indenture dated as of August 22, 1996 (the "Senior Subordinated Note Indenture" and, collectively with the Senior Note Indenture, the "Indentures"), between the Company and Fleet National Bank, as trustee (the "Senior Subordinated Note Trustee" and, collectively with its capacity as the Senior Note Trustee, the "Trustee"). The Company will not receive any proceeds from this Exchange Offer; however, pursuant to the Registration Rights Agreement, the Company will bear certain offering expenses. See "Description of Exchange Notes -- Registration Rights; Liquidated Damages." The Exchange Notes will bear interest at the same rate and on the same terms as the Notes. Consequently, interest on the Exchange Notes will be payable semi-annually in arrears on February 15 and August 15 of each year, commencing February 15, 1997. The Exchange Senior Notes will mature on August 15, 2004, and may be redeemed at the option of the Company, in whole or in part, at any time on or after August 15, 2000. The Exchange Senior Subordinated Notes will mature on August 15, 2006, and may be redeemed at the option of the Company, in whole or in part, at any time on or after August 15, 2001. See "Description of Exchange Notes." The Exchange Senior Notes will be general unsecured obligations of the Company ranking senior to all subordinated Indebtedness (as defined herein) of the Company, including the Exchange Senior Subordinated Notes, and pari passu with all existing and future senior Indebtedness of the Company, including borrowings under the New Credit Agreement. However, borrowings under the New Credit Agreement are secured by Liens (as defined herein) on substantially all of the assets of the Company and will, therefore, effectively rank senior to the Exchange Senior Notes. As of September 28, 1996, as a result of the Transactions (as defined herein) approximately $210.4 million principal amount of outstanding Indebtedness of the Company will be, by its terms, subordinated to the Exchange Senior Notes. The Exchange Senior Subordinated Notes will be general unsecured obligations of the Company and will be subordinated in right of payment to Senior Debt (as defined herein). As of September 28, 1996, as a result of the Transactions (as defined herein), and excluding receivables sold pursuant to the Receivables Securitization Facility (as defined herein) $318.0 million of Senior Debt was outstanding, $218.0 million of which was secured Indebtedness under the New Credit Agreement. The Indentures (as defined herein) will permit the Company and its subsidiaries to incur additional Indebtedness subject to certain limitations. See "Risk Factors -- Effective Subordination of Exchange Senior Notes" and "Description of Exchange Notes -- Certain Covenants." (Continued on inside front cover) The Company will accept for exchange any and all Notes validly tendered by eligible holders and not withdrawn prior to 5:00 P.M. Eastern time on , 1996, unless extended by the Company in its sole discretion (the "Expiration Date"). Tenders of Notes may be withdrawn at any time prior to the Expiration Date. The Exchange Offer is subject to certain customary conditions. The Notes may be tendered only in integral multiples of $1,000. See "The Exchange Offer." SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS WITH RESPECT TO THE NOTES AND THE EXCHANGE NOTES. ON A PRO FORMA COMBINED BASIS FOR ITS LATEST FISCAL YEAR ENDED JUNE 30, 1996, THE COMPANY'S EARNINGS WERE INADEQUATE TO COVER ITS FIXED CHARGES BY APPROXIMATELY $10.3 MILLION. FOR THE COMPANY'S FIRST FISCAL QUARTER ENDED SEPTEMBER 28, 1996, EARNINGS WERE APPROXIMATELY $5.1 MILLION LESS THAN FIXED CHARGES FOR THAT THREE-MONTH PERIOD. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is , 1996. "underwriter" within the meaning of the Securities Act. Such broker-dealer will also be deemed to represent and warrant to the Company that it is not participating in, and has no intent to participate in, any distribution of Exchange Notes, and has not entered into any arrangement or understanding with any person to distribute the Exchange Notes. In the event that any holder of Notes is prohibited by law or any policy of the Commission from participating in the Exchange Offer or any holder may not resell the Exchange Notes without delivering a prospectus and the Prospectus contained in this Registration Statement is inappropriate or unavailable for such resales by such holder or if such holder is a broker-dealer and holds Notes acquired directly from the Company or one of its affiliates, and such holder satisfies certain other requirements, the Company has agreed, pursuant to the Registration Rights Agreement, to file a registration statement in respect of such Exchange Notes and Notes pursuant to Rule 415 under the Securities Act. See "Prospectus Summary -- The Exchange Offer;" "The Exchange Offer;" and "Plan of Distribution." Any Notes not tendered and accepted in the Exchange Offer will remain outstanding. To the extent any Notes are tendered and accepted in the Exchange Offer, a holder's ability to sell untendered and unregistered Notes could be adversely affected. Following consummation of the Exchange Offer, the holders of Notes will continue to be subject to the existing restrictions upon transfer thereof and the Company will have fulfilled one of its obligations under the Registration Rights Agreement. Holders of Notes who do not tender their Notes generally will not have any further registration rights under the Registration Rights Agreement or otherwise. See "The Exchange Offer -- Consequences Of Failure To Exchange." The Company expects that similar to the Notes, and except as specifically requested by a holder on the Letter of Transmittal, the Exchange Notes will be issued only in the form of a Global Note (as defined herein), which will be deposited with, or on behalf of, The Depository Trust Company (the "Depository") and registered in its name or in the name of the Depository's nominee, Cede & Co. Beneficial interests in the Global Note representing the Exchange Notes will be shown on, and transfers thereof will be effected through, records maintained by the Depository and its participants. After the initial issuance of the Global Note, Exchange Notes in certificated form may be issued in exchange for the Global Note on the terms and conditions set forth in the Indentures. See "Description of Exchange Notes -- Book-Entry, Delivery and Form." The Company is not currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a result of the offering of the Exchange Notes, the Company will become subject to the informational requirements of the Exchange Act. So long as the Company is subject to the periodic reporting requirements of the Exchange Act, it is required to furnish the information required to be filed with the Commission to the Trustee and the holders of the Notes and the Exchange Notes. The Company has agreed that, even if it is not required under the Exchange Act to furnish such information to the Commission, it will nonetheless continue to furnish information that would be required to be furnished by the Company by Section 13 of the Exchange Act to the Trustee and the holders of the Notes or Exchange Notes as if it were subject to such periodic reporting requirements. "See "Available Information." In addition, the Company has agreed that, for so long as any of the Notes remain outstanding, it will make available to any prospective purchaser of the Notes or beneficial owner of the Notes in connection with any sale thereof the information required by Rule 144A(d)(4) under the Securities Act, until such time as the Company has either exchanged the Notes for the Exchange Notes or until such time as the holders thereof have disposed of such Notes pursuant to an effective registration statement filed by the Company. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission a registration statement on Form S-1 (together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act with respect to the securities offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto, as permitted by the rules and regulations of the Commission. For further information with respect to the Company, the Notes and JR Flexible, headquartered in Milford, Ohio, had leading market shares in various flexible packaging end use markets, including bakery, cookies/crackers, cereal, ream wrap (wrapping for reams of office paper), tissue/towel overwrap, coffee serving packs and dentifrice (plastic laminate materials for tooth paste tubes and other personal care products). JR Flexible manufactured many of the same product lines and materials as those manufactured by Printpack. JR Flexible's customer base also included many of the same brand name food companies as Printpack (General Mills, Nabisco, Nestle and Quaker Oats), as well as other major consumer products companies, such as Flowers, Kellogg, Kraft and James River. The Acquisition is expected to broaden Printpack's sales to certain existing customers, as well as provide new customer relationships and products. In recent years, JR Flexible has been an underperforming business; however, in late 1995, James River and JR Flexible management began various profitability improvement measures, including shedding certain lower margin businesses, reducing waste and related costs, improving product mixes and production processes and negotiating more favorable long-term raw materials contracts, especially for resins. As a result of these initiatives, JR Flexible's unaudited EBITDA for the 26 weeks ended June 30, 1996 was $15.9 million, compared to $3.8 million for the same period in 1995. JR Flexible's unaudited sales and EBITDA before certain charges for the latest 12 months ended June 30, 1996 were $467.0 million and $21.8 million, respectively. The Company's principal executive offices are located at 4335 Wendell Drive, S.W., Atlanta, Georgia 30336, and its telephone number is (404) 691-5830. BUSINESS STRATEGY Printpack focuses its sales and marketing efforts, technical development initiatives, and manufacturing capabilities on targeted end use markets for flexible packaging, with the goals of achieving critical mass and leading market shares. Printpack has achieved leadership positions in these markets by (i) making customer service its first priority, (ii) achieving economies of scale and manufacturing efficiencies to remain a low cost producer, (iii) investing in state-of-the-art equipment, and technological and production innovation, and (iv) providing high value-added flexible packaging structures and enhanced graphics. By focusing its equipment and facilities on specific market segments and product structures, the Company has been able to provide high quality products and service and realize production efficiencies. The Company leverages its strong customer relationships, market leadership and economies of scale to earn additional business from existing customers and to attract new customers. Printpack has developed mutually beneficial relationships with large food and consumer product companies and has benefited from the expanding market shares of such customers. The Company expects to continue this strategy. REASONS FOR THE ACQUISITION Printpack's management believes that the JR Flexible Acquisition is a significant strategic opportunity, consistent with the Company's long-term business strategy. The combination of Printpack (approximately 6% market share) and JR Flexible (approximately 6% market share) has created one of the largest U.S. companies focused on film-based flexible packaging products, with combined sales of approximately 12% of the industry's $7.5 billion of total 1995 sales. The Acquisition increased Printpack's leadership in several end use categories, extends its product lines with existing and new customers, helped diversify its customer base and created significant opportunities for cost savings and economies of scale. INDUSTRY LEADERSHIP Printpack management believes that as a result of the Acquisition, it has increased its leading share of the estimated $1.2 billion market for flexible packaging sales to the snack food industry to approximately 30%. Printpack also expects to increase its already leading shares of flexible packaging sales for each of the salted snack, confectionery and cookies/crackers products. Printpack also believes it obtained JR Flexible's leading market shares in several other products that use flexible packaging, including ream wrap, dentifrice, tissue/towel overwrap and bread bags. the Exchange Notes reference is hereby made to the Registration Statement, including the exhibits and schedules filed or incorporated as a part thereof. Statements contained herein concerning the provisions of any document are not necessarily complete and in each instance reference is made to the copy of the document filed as an exhibit or schedule to the Registration Statement. Each such statement is qualified in its entirety by reference to the copy of the applicable documents filed with the Commission. In addition, after effectiveness of the Registration Statement, the Company will file periodic reports and other information with the Commission under the Exchange Act, relating to the Company's business, financial statements and other matters. The Registration Statement, including the exhibits and schedules thereto, and the periodic reports and other information filed in connection therewith, may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: Seven World Trade Center, New York, New York 10048 and Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. In addition, the Commission maintains a site on the World Wide Web at http://www.sec.gov that contains reports, information statements and other information regarding Printpack, Inc. and other registrants that file electronically with the Commission. SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS Certain of the matters discussed under the captions "Prospectus Summary;" "Risk Factors;" "Summary Unaudited Pro Forma Condensed Combined Financial Data" (including EBITDA and EBITDA before certain charges); "Unaudited Pro Forma Condensed Combined Statement of Operations" (including EBITDA and EBITDA before certain charges); "Printpack Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations;" "Business" and elsewhere in this Prospectus may constitute forward-looking statements, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause the actual results, performance or achievements of the Company to differ materially from the Company's expectations are disclosed in this Prospectus ("Cautionary Statements"), including, without limitation, those statements made in conjunction with the forward-looking statements included under "Risk Factors" and otherwise herein. All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by the Cautionary Statements. EXTENSION OF PRODUCT LINES AND CUSTOMERS Management believes that the Acquisition provides Printpack with a wider range of flexible packaging capabilities and further diversification of its product offerings, enabling Printpack to better serve customers. The Acquisition is expected to increase Printpack's business with various existing major customers, including General Mills, Mars, Nabisco, Nestle, Quaker Oats and Ralston. In addition, Printpack's new customers include Flowers, Kellogg, Kraft and James River. COST SAVINGS AND ECONOMIES OF SCALE The Acquisition is expected to produce significant cost savings through the elimination of redundant corporate overhead and the reduction of personnel at JR Flexible's headquarters and plants. Printpack management expects to realize significant cost savings through the consolidation and rationalization of JR Flexible's manufacturing operations with Printpack's manufacturing facilities, including the conversion of JR Flexible's plants to Printpack's production strategy. Printpack has announced the closing of two former JR Flexible plants, one in San Leandro, California and one in Dayton, Ohio, which closures presently are expected to be completed by the end of the Company's fiscal year 1997. In addition, after the Acquisition, Printpack is now one of the largest domestic purchasers of certain key materials used for flexible packaging manufacturing such as extrusion grade resin, oriented polypropylene ("OPP") film and other types of plastic film, paper and foil, and its enhanced purchasing power is expected to result in greater cost savings and technical development support from its key raw materials suppliers. See "Printpack, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." THE ACQUISITION, FINANCING AND RELATED TRANSACTIONS THE ACQUISITION AND RELATED FINANCING The Company acquired JR Flexible for approximately $380 million (including the repayment of approximately $2.4 million of JR Flexible indebtedness on revenue bonds), subject to certain adjustments based upon, among other things, an audited closing date balance sheet that has not yet been completed. The initial offering of the Notes (the "Offering"), the refinancing pursuant to the New Credit Agreement and the transactions contemplated in the Acquisition Agreement were completed contemporaneously on August 22, 1996. The Acquisition, the Offering and the New Credit Agreement are referred to collectively herein as the "Transactions." The First National Bank of Chicago ("First Chicago"), together with a syndicate of lenders, has provided the Company with the New Credit Facilities, including a revolving credit facility (the "Revolving Credit Facility") of $155 million reduced pro rata by sales of accounts receivable pursuant to the Receivables Securitization Facility (as defined below) and a term loan (the "Term Loan") of $170 million. At Closing, the entire amount of the Term Loan and approximately $53.7 million of the Revolving Credit Facility was funded. A portion of the borrowings under the New Credit Facilities, together with the net proceeds to the Company from the Offering of the Notes, were applied against the purchase price of JR Flexible. Approximately $171.2 million of the New Credit Facilities were used at Closing to repay existing credit facilities and to pay prepayment penalties, fees and expenses associated with the Transactions. Approximately $51.3 million remained available under the New Credit Facilities for general corporate purposes, including working capital. See "Description of Certain Indebtedness" and "Receivables Securitization Facility." In addition, the Company entered into an asset-backed accounts receivable financing arrangement through a new special purpose, bankruptcy remote subsidiary of the Company, "Flexible Funding Corp." ("Receivables Funding"), a Delaware corporation. A special purpose bankruptcy remote subsidiary is a corporation which has been formed for a single purpose of (e.g. in the case of Receivables Funding, buying and selling receivables originated by the Company), which operates separately from its parent and other affiliated companies, and which has special charter provisions to assure its corporate separateness from its affiliates in an effort to avoid substantive consolidation in a bankruptcy proceeding involving its parent corporation or other affiliates. Receivables Funding has acquired and will continue to acquire accounts receivable generated by the Company, and sell them to Falcon Asset Securitization Corporation ("Falcon"), an asset-backed commercial paper conduit issuer sponsored by First Chicago, and to First Chicago and other investors. The receivables securitization facility (the "Receivables Securitization Facility") was established in an amount of up to approximately $50 million and, at the Closing, Printpack received approximately $23 million of proceeds from the initial sale of receivables under the Receivables Securitization Facility. See "Receivables Securitization Facility." SOURCES AND USES OF PROCEEDS Presented below are the sources and uses of funds in connection with the Acquisition and the other Transactions: <TABLE> <CAPTION> SOURCES OF FUNDS AMOUNT ------------------------------------------------------------------- ---------------------- (DOLLARS IN MILLIONS) <S> <C> New Credit Agreement: Revolving Credit Facility........................................ $ 53.7 Term Loan........................................................ 170.0 Receivables Securitization Facility................................ 23.0 9 7/8% Senior Notes due 2004....................................... 100.0 10 5/8% Senior Subordinated Notes due 2006......................... 200.0 ------ Total Sources of Funds................................... $546.7 ====== USES OF FUNDS JR Flexible purchase price......................................... $372.5 Repay existing Printpack debt...................................... 146.8 Estimated prepayment penalties, fees and transaction expenses...... 24.4 Working Capital.................................................... 3.0 ------ Total Uses of Funds...................................... $546.7 ====== </TABLE> THE REORGANIZATION The Company was reorganized to facilitate the Acquisition and its financing. Previously, the Company was owned and operated together with Printpack Enterprises, Inc. ("Enterprises"), a Georgia corporation that had elected to be taxed as a Subchapter S corporation under the Internal Revenue Code of 1986, as amended (the "Code"). Printpack and Enterprises were affiliated by common ownership and management. Following the Company's 1996 fiscal year, Printpack and Enterprises were reorganized into a holding company structure (the "Reorganization"). Printpack Holdings, Inc. ("Holdings"), a new Delaware corporation, was formed, and Enterprises contributed substantially all its assets and liabilities to Printpack. Following the Reorganization, Enterprises owns approximately 100% of the Company and Holdings owns approximately 97% of Enterprises. The remaining minority interests are held by members of the Love family and certain members of the Company's senior management who were not eligible to participate in the Reorganization. Prior to the Reorganization, Printpack and Enterprises had acquired and jointly owned approximately 95% of certain separately chartered flexible packaging operations ("Printpack Europe") located in the United Kingdom ("U.K."). Following the Reorganization, Holdings and Enterprises became holding companies that jointly own Printpack Europe, which is operated separately from the Company, except as permitted under the Indentures. See "-- United Kingdom Affiliates" and "Description of Exchange Notes." The Company has acquired all of JR Flexible's business and will conduct all North American operations previously carried on by the Company, Enterprises and JR Flexible, including the operations of various wholly-owned Mexican subsidiaries of the Company and JR Flexible. The Company also owns 100% of Printpack Illinois, Inc. ("Printpack Illinois"), which has been formed to own and operate Printpack's Elgin, Illinois plant, and the Company's patents, trademarks, trade secrets, knowhow and other intellectual property. See "Business -- Patents and Trademarks." UNITED KINGDOM AFFILIATES Printpack Europe began with the purchase of a separate U.K. company from a management and investor group in 1993, which previously had acquired such operations in a management buyout. In 1994, Printpack Europe acquired another U.K. flexible packaging company to become a larger competitor in the U.K. and Continental Europe. The U.K. operations were combined in an effort to assimilate and expand Printpack's European operations, which created one of the three largest flexible packaging companies in the U.K. After Printpack's purchases, Printpack Europe continued to be operated independently by its management, which was responsible for Printpack Europe's policies, operations and day-to-day management, including financial controls. In 1996, it became apparent to the Company that Printpack Europe management was not timely and appropriately recognizing expenses and rebates, and was capitalizing certain expenses, leading to the recognition of approximately $32.5 million of special charges in May 1996, of which approximately $10 million related to fiscal year 1995. As a result of these special charges and increased raw material costs and competition, Printpack Europe had net losses in fiscal years 1995 and 1996. In May 1996, certain former senior managers of Printpack Europe were terminated, and Mr. James J. Greco, a long-time senior Company manager, was sent to the U.K. to manage this unit. Improvements in financial controls and reports also have been made at Printpack Europe. Former credit agreements in existence prior to the effective time of the Acquisition pertaining to approximately $146.7 million of Company debt outstanding at June 29, 1996 contained various covenants related to the Company and Printpack Europe that were not amended to reflect the Reorganization, but these credit agreements were terminated as a result of the Transactions consummated on August 22, 1996. The Company has agreed not to merge, consolidate or otherwise acquire Printpack Europe's operations as a subsidiary of the Company, except as permitted under the Indentures. See "Risk Factors -- Foreign Operations; Losses incurred by Printpack Europe;" "Printpack, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations;" "Description of Exchange Notes -- Certain Covenants -- Transaction with Affiliates;" and "Management;" and Note 5 to the Printpack Financial Statements. THE EXCHANGE OFFER Securities Offered......... $100,000,000 aggregate principal amount of 9 7/8% Exchange Senior Notes due August 15, 2004. $200,000,000 aggregate principal amount of 10 5/8% Exchange Senior Subordinated Notes due August 15, 2006. The Exchange Offer......... $1,000 principal amount of the Exchange Senior Notes in exchange for each $1,000 principal amount of Senior Notes and $1,000 principal amount of the Exchange Senior Subordinated Notes in exchange for each $1,000 principal amount of Senior Subordinated Notes. As of the date hereof, all of the aggregate principal amount of Senior Notes and Senior Subordinated Notes are outstanding. The Company will issue the Exchange Notes to eligible holders on or promptly after the Expiration Date of the Exchange Offer. Based on interpretations by the staff of the SEC set forth in no-action letters issued to third parties, the Company believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than any holder which is a broker-dealer that holds Notes acquired for its own account as a result of market-making or other trading activities, or any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder's business and that such holder does not intend to participate and has no arrangement or understanding with any person to participate in a distribution of such Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer may be a statutory underwriter and must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letters of Transmittal state that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used for 180 days after the Expiration Date by a broker-dealer in connection with resales of Exchange Notes received in exchange for Notes where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that for a period of 180 days after the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." Any holder who is an affiliate of the Company, and any person who intends to, or is participating in a distribution of the Exchange Notes, will not be able to rely on the position of the staff of the SEC enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley & Co., Inc. (available June 5, 1991), and Shearman & Sterling (available July 2, 1993) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of the Exchange Notes. Failure to comply with such requirements in such instance may result in such holder incurring liability under the Securities Act for which the holder will not be indemnified by the Company. Expiration Date............ 5:00 p.m., Eastern Time, on , 1996, unless the Exchange Offer is extended by the Company in its sole discretion, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Interest on the Exchange Notes and the Notes........ The Exchange Notes will bear interest from August 15, 1996, the date of issuance of the Notes that are tendered in exchange for the Exchange Notes (or the most recent Interest Payment Date (as defined herein) to which interest on such Notes has been paid). Accordingly, holders of Notes that are accepted for exchange will not receive interest on the Notes that is accrued but unpaid at the time of tender, but such interest will be payable on the Exchange Notes issued therefor on the first Interest Payment Date after the Expiration Date. Conditions to the Exchange Offer.................... The Exchange Offer is subject to certain customary conditions, which may be waived, to the extent permitted by law, by the Company. See "The Exchange Offer -- Conditions" and "-- Procedures for Tendering." Procedures for Tendering Notes.................... Each eligible holder of Notes wishing to accept the Exchange Offer must complete, sign and date the accompanying Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with the Notes and any other required documentation to the Exchange Agent (as defined herein) at the address set forth in the Letter of Transmittal. The blue Letter of Transmittal should be used to tender Senior Notes and the yellow Letter of Transmittal should be used to tender Senior Subordinated Notes. By executing the Letter of Transmittal, each holder will represent to the Company that, among other things, the holder or the person receiving such Exchange Notes, whether or not such person is the holder, is acquiring the Exchange Notes in the ordinary course of business and that neither the holder nor any such other person has any arrangement or understanding with any person to participate in the distribution of such Exchange Notes, that neither the holder nor any such person is an "affiliate" (as defined under Rule 405 of the Securities Act) of the Company, and if such holder is a broker-dealer that holds the Notes as a result of market-making or other trading activities, it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Notes. In lieu of physical delivery of the certificates representing Notes, tendering holders may transfer Notes pursuant to the procedure for book-entry transfer as set forth under "The Exchange Offer -- Procedures for Tendering." Special Procedures for Beneficial Owners.......... Any beneficial owner whose Notes are held in book-entry form or are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to exchange such Notes for the Exchange Notes should contact such registered holder promptly and instruct such registered holder to tender the Notes for exchange on such beneficial owner's behalf. See "The Exchange Offer -- Procedures for Tendering." Guaranteed Delivery Procedures............... Holders of Notes who wish to tender their Notes and whose Notes are not immediately available or who cannot deliver their Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent (or comply with the procedures for book-entry transfer) prior to the Expiration Date must tender their Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures." Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00 P.M., Eastern Time, on the Expiration Date pursuant to the procedures described under "The Exchange Offer -- Withdrawals of Tenders." Acceptance of Notes and Delivery of Exchange Notes.................... The Company will accept for exchange any and all Notes that are properly tendered in the Exchange Offer, and not withdrawn, prior to 5:00 P.M., Eastern Time, on the Expiration Date. The Exchange Notes issued pursuant to the Exchange Offer will be delivered on the earliest practicable date following the Expiration Date. See "The Exchange Offer -- Terms of the Exchange Offer." Federal Income Tax Consequences............. The issuance of the Exchange Notes to holders of the Notes pursuant to the terms set forth in this Prospectus will not constitute an exchange for federal income tax purposes. Consequently, no gain or loss will be recognized by holders of the Notes upon receipt of the Exchange Notes. See "The Exchange Offer -- Certain Federal Income Tax Consequences of the Exchange Offer." Effect on holders of the Notes...................... As a result of the making of this Exchange Offer, the Company will have fulfilled certain of its obligations under the Registration Rights Agreement, and holders of Notes who do not tender their Notes will generally not have any further registration rights under the Registration Rights Agreement or otherwise. Such holders will continue to hold the untendered Notes and will be entitled to all the rights and subject to all the limitations, including, without limitation, transfer restrictions, applicable thereto under the Indentures, except to the extent such rights or limitations, by their terms, terminate or cease to have further effectiveness as a result of the Exchange Offer. Accordingly, if any Notes are tendered and accepted in the Exchange Offer, the trading market, if any, for the untendered Notes could be adversely affected. Exchange Agent............. Fleet National Bank is serving as exchange agent (the "Exchange Agent") with respect to the Senior Notes and the Senior Subordinated Notes. SUMMARY OF TERMS OF EXCHANGE NOTES The form and terms of the Exchange Notes are substantially identical to the form and terms of the Notes which they replace except that (i) the Exchange Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof and (ii) the holders of Exchange Notes generally will not be entitled to further registration rights under the Registration Rights Agreement, which rights generally will have been satisfied when the Exchange Offer is consummated. The Exchange Notes will evidence the same indebtedness as the Notes which they replace and will be issued under, and be entitled to the benefits of the Indentures. See "Description of Exchange Notes." Maturity........................ The Exchange Senior Notes will mature on August 15, 2004 and the Exchange Senior Subordinated Notes will mature on August 15, 2006. Interest........................ Interest on the Exchange Senior Notes will accrue at the rate of 9 7/8% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 1997. Interest on the Exchange Senior Subordinated Notes will accrue at the rate of 10 5/8% per annum, payable semiannually in arrears on February 15 and August 15 of each year, commencing on February 15, 1997. Optional Redemption............. The Exchange Senior Notes may be redeemed at the option of the Company, in whole or in part, at any time on or after August 15, 2000, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages (as defined herein), if any, thereon to the applicable redemption date. In addition, in the event of an Initial Public Offering (as defined herein) by the Company on or before August 15, 1999, the Company may use the proceeds from such Initial Public Offering to redeem up to 25% of the aggregate principal amount of Exchange Senior Notes originally issued at a redemption price equal to 108 7/8% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of redemption; provided, however, that at least $75.0 million in aggregate principal amount of Exchange Senior Notes remains outstanding following such redemption and, provided further, that such redemption occurs within 60 days of the closing of such Initial Public Offering. The Exchange Senior Subordinated Notes may be redeemed at the option of the Company, in whole or in part, at any time on or after August 15, 2001, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date. In addition, in the event of an Initial Public Offering of the Company on or before August 15, 1999, the Company may use the proceeds from such Initial Public Offering to redeem up to 35% of the aggregate principal amount of Exchange Senior Subordinated Notes originally issued at a redemption price equal to 109 5/8% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of redemption; provided, however, that at least $100.0 million in aggregate principal amount of Exchange Senior Subordinated Notes remains outstanding following such redemption and, provided further, that such redemption occurs within 60 days of the closing of such Initial Public Offering. Mandatory Redemption............ The Company will not be required to make any mandatory redemption or sinking fund payments with respect to the Exchange Notes. Change of Control............... Upon the occurrence of a Change of Control (as defined herein), each holder of Exchange Notes will have the right to require the Company to purchase all or any part (equal to $1,000 or an integral multiple thereof) of such holder's Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase. See, however, "Risk Factors -- Possible Inability to Repurchase Exchange Notes upon a Change of Control." Ranking......................... The Exchange Senior Notes will be general unsecured obligations of the Company, ranking senior to all subordinated Indebtedness of the Company, including the Exchange Senior Subordinated Notes, and pari passu with all existing and future senior Indebtedness of the Company, including borrowings under the New Credit Agreement. However, borrowings under the New Credit Agreement will be secured by Liens on substantially all of the assets of the Company and will, therefore, effectively rank senior to the Exchange Senior Notes. The Exchange Senior Subordinated Notes will be general unsecured obligations of the Company and will be subordinated in right of payment to Senior Debt. As of September 28, 1996, as a result of the Transactions and excluding receivables sold pursuant to the Receivables Securitization Facility, there was approximately $318.0 million of Senior Debt outstanding, $218.0 million of which was secured Indebtedness under the New Credit Agreement. See "Risk Factors -- Subordination of Exchange Senior Subordinated Notes" and "-- Effective Subordination of Exchange Senior Notes." Certain Covenants............... The Indentures contain certain covenants that, among other things, limit the ability of the Company and its subsidiaries to incur additional Indebtedness, to issue preferred stock, pay dividends or make other distributions, repurchase Equity Interests (as defined herein) or subordinated Indebtedness, engage in sale and leaseback transactions, create certain liens, enter into certain transactions with affiliates, sell assets of the Company or its subsidiaries, issue or sell Equity Interests of the Company's subsidiaries or enter into certain mergers and consolidations. In addition, under certain circumstances, the Company will be required to offer to purchase Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase, with the proceeds of certain Asset Sales (as defined herein). See "Description of Exchange Notes." Exchange Offer; Registration Rights.......................... If (i) the Exchange Offer is not permitted by applicable law or (ii) any holder of Transfer Restricted Securities (as defined herein) notifies the Company that (A) it is prohibited by law or Commission policy from participating in the Exchange Offer, (B) that it may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus is not appropriate or available for such resales or (C) that it is a broker-dealer and holds Notes acquired directly from the Company or an affiliate of the Company, and such holders timely notify the Company of such facts, the Company will be required to provide a shelf registration statement (the "Shelf Registration Statement") to cover resales of the Notes by the holders thereof. If the Company fails to satisfy these registration obligations, it will be required to pay liquidated damages ("Liquidated Damages") to such holders of Notes under certain circumstances. See "The Exchange Offer -- Registration Rights and Effect of Exchange Offer." PRINTPACK, INC. AND SUBSIDIARIES THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA The following table presents summary unaudited pro forma condensed combined financial information derived from the Unaudited Pro Forma Condensed Combined Financial Statements included elsewhere in this Prospectus. The summary pro forma condensed combined financial information gives effect to the Transactions as if they had occurred as of July 1, 1995 for purposes of the pro forma condensed combined statements of operations data and other financial data. The Unaudited Pro Forma Condensed Combined Financial Statements do not purport to present the actual financial position or results of operations of the Company or JR Flexible had the Transactions and events assumed therein in fact occurred on the dates specified, nor are they necessarily indicative of the results of the operations that may be achieved in the future. The Unaudited Pro Forma Condensed Combined Financial Statements are based on certain assumptions and adjustments described in the notes to the Unaudited Pro Forma Condensed Combined Financial Statements and should be read in conjunction therewith and with the historical financial statements of the Company, the historical combined financial statements of The Flexible Packaging Group of James River Corporation ("JR Flexible Combined Financial Statements"), and the related notes thereto; and the "Printpack, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations." <TABLE> <CAPTION> HISTORICAL PRO FORMA ----------------------------------- COMBINED PRINTPACK JR FLEXIBLE LATEST 12 LATEST 12 LATEST 12 MONTHS ENDED MONTHS ENDED MONTHS ENDED JUNE 30, JUNE 29, 1996(1) JUNE 30, 1996(2) 1996 ---------------- ---------------- ------------ (DOLLARS IN THOUSANDS) <S> <C> <C> <C> STATEMENT OF INCOME DATA: Net sales........................................... $442,931 $467,023 $909,954 Gross margin........................................ 79,840 34,197 113,327 Selling, administrative and research and development expenses.......................................... 44,581 37,799 57,965 Restructuring charges............................... -- 894 894 Amortization of intangible assets................... 169 732 5,993 Severance expense................................... 7,870 1,200 9,070 Write-off of equity investment...................... 200 -- 200 Income (loss) from operations....................... 27,189 (6,428) 39,205 Interest expense(3)(4).............................. 10,814 244 49,867 Income (loss) before provision for income taxes..... 16,316 (6,112) (9,992) (Provision) benefit for income taxes................ (3,080) 2,219 -- Net income (loss)................................... 13,236 (3,893) (9,992) BALANCE SHEET DATA: Working capital..................................... $ 9,086 $ 57,021 $ 86,477 Total assets........................................ 231,269 346,119 650,037 Total debt.......................................... 157,138 2,392 534,038 Shareholders' equity................................ 13,460 247,249 12,160 OTHER FINANCIAL DATA: EBITDA(3)(5)........................................ $ 52,033 $ 20,310(6) $ 96,758 EBITDA before certain charges(3)(7)................. 59,993 21,844 106,922 Capital expenditures................................ 25,786 29,454 55,240 Depreciation and amortization....................... 24,903 26,178 56,883 </TABLE> <TABLE> <CAPTION> HISTORICAL PRO FORMA ----------------------------------- COMBINED PRINTPACK JR FLEXIBLE LATEST 12 LATEST 12 LATEST 12 MONTHS ENDED MONTHS ENDED MONTHS ENDED JUNE 30, JUNE 29, 1996(1) JUNE 30, 1996(2) 1996 -------- -------- -------- (DOLLARS IN THOUSANDS) <S> <C> <C> <C> RATIOS: Ratio of EBITDA to interest expense(3)(5)........... 1.9x Ratio of EBITDA before certain charges to interest expense(3)(7)..................................... 2.1x Ratio of total debt to EBITDA before certain charges(3)(7)..................................... 5.0x Net income (loss)................................... $ 13,236 $ (3,893) $ (9,992) Ratio of earnings to fixed charges(3)(8)............ 2.2x -- 0.8x Earnings greater (less) than fixed charges.......... 16,013 (6,112) (10,295) </TABLE> - --------------- (1) Results of operations are for the 53 weeks ended June 29, 1996. (2) Results of operations are for the 53 weeks ended June 30, 1996. The results of operations for this 53 week period were calculated by adding the six months ended June 30, 1996 to the year ended December 31, 1995 and deducting the results for the six months ended June 30, 1995. (3) Interest expense, EBITDA and the ratio of earnings to fixed charges for JR Flexible are not necessarily indicative of JR Flexible on a stand-alone basis. See Note 2 to the JR Flexible Combined Financial Statements. (4) Pro forma interest expense has been calculated based upon various assumed interest rates on the Notes and under the New Credit Agreement. (5) EBITDA represents net income (loss) before interest expense, taxes, depreciation and amortization, but after deduction for restructuring charges, severance expense and write-off of equity investments. While EBITDA should not be construed as a substitute for operating income or a better indicator of liquidity than cash flows from operating activities, which are determined in accordance with generally accepted accounting principles, it is included herein to provide additional information with respect to the ability of the Company to meet its future debt service, capital expenditures and working capital requirements. EBITDA is not necessarily a measure of the Company's ability to fund its cash needs. EBITDA is included herein because management believes that it will be useful in measuring the Company's ability to service its debt consistent with the terms of such debt. (6) This includes resin price decreases beginning March 1, 1996, the shedding by JR Flexible of certain low margin business, reduction in waste and cost reduction efforts. (7) Pro forma combined EBITDA before certain charges, which adds back restructuring charges, severance expense and write-off of equity investment, would have been $106.9 million, and is provided, in part, because similar measures are included in the terms of the Indentures and the New Credit Agreement. Printpack management estimates that additional savings (not reflected in the pro forma combined statements of operations or other pro forma data) aggregating approximately $22.8 million can be achieved as a result of the following: (A) $7.8 million in anticipated additional savings as a result of the voluntary retirement program completed by Printpack in fiscal 1996 in which approximately 160 employees participated and which savings are not reflected in the Printpack Financial Statements. Total annual savings are expected to be $9.0 million. (B) $5.8 million in anticipated additional savings as a result of below market raw material contracts acquired by Printpack in conjunction with the Acquisition based on current 1996 volumes, and which savings are not reflected in the JR Flexible Combined Financial Statements or in the Printpack Financial Statements. Total annual savings are expected to be $7.6 million. See "Risk Factors -- Exposure to Fluctuations in Raw Material Prices." (C) $9.2 million in anticipated annual savings estimated as a result of the reduction of approximately 150 JR Flexible salaried plant personnel expected to occur shortly after the Closing of the Acquisition. If the above items had occurred at the beginning of Printpack's fiscal 1996, Printpack management estimates that the Company's pro forma combined EBITDA before certain charges would have been approximately $129.7. Accordingly, the pro forma ratio of EBITDA before certain charges to interest expense would have been approximately 2.5x and the ratio of total debt to EBITDA before certain charges would have been approximately 4.1x. See "Printpack, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations -- Certain Effects of the Acquisition," for a discussion of certain of these costs savings and certain charges related to the Acquisition. (8) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, "earnings" include operating income (loss) before income taxes, extraordinary items and cumulative effect of accounting change plus fixed charges. Fixed charges include interest, whether expensed or capitalized, amortization of debt expense and discount or premium relating to any indebtedness, whether expensed or capitalized and the portion of rental expense that is representative of the interest factor in these rentals. <TABLE> <CAPTION> HISTORICAL ----------------------------- PRO FORMA PRINTPACK(1) JR FLEXIBLE(2) COMBINED 3 MONTHS 53 DAYS 3 MONTHS ENDED ENDED ENDED SEPTEMBER AUGUST 22, SEPTEMBER 28, 1996 1996 28, 1996 ------------ -------------- --------- (DOLLARS IN THOUSANDS) <S> <C> <C> <C> STATEMENT OF INCOME DATA: Net Sales................................................. $ 150,787 $ 62,942 $ 213,729 Gross margin.............................................. 16,958 1,052 21,573 Selling, administrative and research and development expenses................................................ (15,202) (4,817) (16,474) Amortization of intangible assets......................... (307) (76) (1,101) --------- -------- --------- Income (loss) from operations............................. 1,449 (3,841) 3,998 Interest expense(3)(4).................................... (6,279) (31) (12,317) Loss before provision for income taxes.................... (4,837) (3,754) (8,208) (Provision) benefit for income taxes...................... (1,906) 1,404 (1,925) Income (loss) before extraordinary item................... (6,743) (2,350) (10,133) Extraordinary item -- loss on early extinguishment of debt (net of tax benefit of $999)............................ (1,631) -- (1,631) Net (loss)(7)............................................. $ (8,374) $ (2,350) $ (11,763) --------- -------- --------- OTHER FINANCIAL DATA: EBITDA(3)(5).............................................. 9,115 57 16,366 EBITDA before certain charges(3)(6)....................... 10,746 57 17,997 Capital expenditures...................................... 375,724 2,668 378,392 Depreciation and amortization............................. 9,304 3,780 13,887 RATIOS: Ratio of EBITDA to interest expense(3)(5)................. 1.3x Ratio of EBITDA before certain charges to interest expense(6).............................................. 1.5x Ratio of total debt to EBITDA before certain charges(6)... 30.6x Net income (loss)(7)...................................... $ (8,374) $ (2,350) $ (11,763) Ratio of earnings to fixed charges(3)(7).................. 0.3x 0.4x Earnings less than fixed charges.......................... (5,112) (3,754) (8,251) </TABLE> - --------------- (1) Results of operations are for the 13 weeks ended September 28, 1996. (2) Results of operations are for the 53 days ended August 22, 1996, the Closing Date of the Acquisition. (3) Interest expense, EBITDA and the ratio of earnings to fixed charges for JR Flexible are not necessarily indicative of JR Flexible on a stand-alone basis. See Note 2 to the JR Flexible Combined Financial Statements. (4) Pro forma interest expense has been calculated based upon various assumed interest rates on the Notes and under the New Credit Agreement. (5) EBITDA represents net income (loss) before interest expense, taxes, depreciation and amortization, but after deduction for restructuring charges and severance expense. While EBITDA should not be construed as a substitute for operating income or a better indicator of liquidity than cash flows from operating activities, which are determined in accordance with generally accepted accounting principles, it is included herein to provide additional information with respect to the ability of the Company to meet its future debt service, capital expenditures and working capital requirements. EBITDA is not necessarily a measure of the Company's ability to fund its cash needs. EBITDA is included herein because management believes that it will be useful in measuring the Company's ability to service its debt consistent with the terms of such debt. (6) Pro forma combined EBITDA before certain charges, which adds back restructuring charges, severance expense and write-off of equity investment, as well as extraordinary items such as the $1.6 million loss on early extinguishment of debt, would have been $18.0 million, and is provided primarily because similar earnings measures are included in the terms of the Indentures and the New Credit Agreement. Printpack management estimates that additional savings (not reflected in the pro forma combined statements of operations or other pro forma data) aggregating approximately $3.4 million for similar periods can be achieved as a result of the following: (A) Approximately $2.2 million in savings related to the voluntary retirement program completed by Printpack in fiscal 1996 in which approximately 160 employees participated have been reflected in the Printpack Financial Statements. Total annual savings are expected to be $9.0 million. (B) Approximately $1.1 million in anticipated additional savings as a result of below market raw material contracts acquired by Printpack in conjunction with the Acquisition based on 1996 volumes, and which savings are not reflected in the JR Flexible Combined Financial Statements. Total annual savings are expected to be $7.6 million. See "Risk Factors -- Exposure to Fluctuations in Raw Material Prices." (C) Approximately $2.3 million in anticipated additional savings estimated as a result of the reduction of approximately 150 JR Flexible salaried plant personnel which occurred after the Closing of the Acquisition. If the above items had occurred at the beginning of Printpack's fiscal 1997 on June 30, 1996, Printpack management estimates that the Company's pro forma combined EBITDA before certain charges would have been approximately $21.4. Accordingly, the pro forma ratio of EBITDA before certain charges to interest expense would have been approximately 1.7 and the ratio of total debt to EBITDA before certain charges would have been approximately 25.8. See "Printpack, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations -- Certain Effects of the Acquisition," for a discussion of certain of these costs savings and certain charges related to the Acquisition. (7) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, "earnings" include operating income (loss) before income taxes, extraordinary items and cumulative effect of accounting change plus fixed charges. Fixed charges include interest, whether expensed or capitalized, amortization of debt expense and discount or premium relating to any indebtedness, whether expensed or capitalized and the portion of rental expense that is representative of the interest factor in these rentals. PRINTPACK, INC. AND SUBSIDIARIES THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION SUMMARY HISTORICAL FINANCIAL DATA The summary historical financial data presented in the table below have been derived from the Printpack Financial Statements and the related notes thereto and the JR Flexible Combined Financial Statements and the related notes thereto included elsewhere in this Prospectus and should be read in conjunction therewith. Printpack's historical financial data for the three months ended September 23, 1995 and September 28, 1996 are unaudited, but have been prepared on the same basis as the audited financial statements and, in the opinion of Printpack management, include all adjustments, consisting only of normal recurring entries (except as resulted from the Transactions), necessary for the fair presentation of such statements. JR Flexible's historical financial data for the six months ended June 25, 1995 and June 30, 1996 are unaudited, but have been prepared on the same basis as the audited financial statements and, in the opinion of James River management, include all adjustments, consisting only of normal recurring entries, necessary for the fair presentation of such statements. See "Unaudited Pro Forma Condensed Combined Financial Statements;" and "Printpack, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations."

parsed_sections/prospectus_summary/1996/CIK0000277028_homegold_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and the Consolidated Financial Statements and Notes thereto appearing elsewhere herein. Unless otherwise indicated, all information in this Prospectus has been adjusted to reflect a one-for-three reverse stock split of the Common Stock effective June 9, 1995 and a two-for-one stock split effected in the form of a 100% stock dividend on the Common Stock effective March 1, 1996. Unless otherwise indicated, the information in this Prospectus assumes that the Underwriters' over-allotment option is not exercised. Unless the context requires otherwise, all references to the Company shall include the Company and all of its subsidiaries. Prospective investors should carefully consider the information set forth under the heading "Risk Factors." THE COMPANY Emergent Group, Inc. is a diversified financial services company headquartered in Greenville, South Carolina, that originates, services and sells residential mortgage loans ("Mortgage Loans"), small business loans ("Small Business Loans") and used automobile loans ("Auto Loans"). The Company makes substantially all of its loans to borrowers who have limited access to credit or who may be considered credit-impaired by conventional lending standards ("non-prime borrowers"). The Company commenced its lending operations in 1991 and has experienced significant loan growth over the past several years. During the years 1993, 1994 and 1995, the Company originated $63.6 million, $150.0 million and $249.5 million in loans, respectively. During the six months ended June 30, 1996, the Company originated $194.4 million in loans. Of the Company's loan originations in the first six months of 1996, $153.8 million were Mortgage Loans, $30.6 million were Small Business Loans and $10.0 million were Auto Loans. For the years ended December 31, 1993, 1994 and 1995, the Company's pre-tax income from continuing operations was $663,000, $2.4 million and $4.9 million, respectively. For the six months ended June 30, 1996, the Company's pre-tax income from continuing operations was $3.6 million. MORTGAGE LOAN DIVISION The Company's Mortgage Loan operation (the "Mortgage Loan Division") makes Mortgage Loans primarily to owners of single family residences who use the loan proceeds for such purposes as debt consolidation, home improvements and educational expenditures. Approximately 93% of the Company's Mortgage Loans are secured by first mortgages, with the balance being secured by second mortgages. The Mortgage Loans generally have initial principal balances ranging from $25,000 to $100,000 (with an average initial principal balance in the first six months of 1996 of approximately $41,500) and fixed rates of interest ranging from 9% to 16% per annum (with an average interest rate earned in the first six months of 1996 of 12.2%). The Mortgage Loan Division has experienced significant growth over the past several years. During 1993, 1994 and 1995, Mortgage Loan originations totaled $20.5 million, $99.4 million and $192.8 million, respectively. During the six months ended June 30, 1996, Mortgage Loan originations totaled $153.8 million. A majority of the Mortgage Loans are sold on a non-recourse basis to institutional investors. The Mortgage Loan Division originates Mortgage Loans on both a retail basis through regional offices and a wholesale basis through independent mortgage brokers and mortgage bankers (collectively, the "Mortgage Bankers"). The Company's retail lending operations were established in the second quarter of 1996, and currently operate through offices in Indianapolis, IN, Baton Rouge, LA and New Orleans, LA. The Company expects to open retail lending operations in Greenville, SC and Phoenix, AZ during the fourth quarter of 1996 and five new retail lending offices during the first quarter of 1997. Through its retail offices, the Company targets Mortgage Loan borrowers through a variety of marketing methods. During August and September 1996, retail originations totaled $5.0 million and $8.4 million, respectively. The Company also originates Mortgage Loans on a wholesale basis through approximately 225 Mortgage Bankers in approximately 12 states. The Company has established strategic alliance agreements with certain Mortgage Bankers (the "Strategic Alliance Mortgage Bankers"), which require the Strategic Alliance Mortgage Bankers to refer to the Company all of their loans up to specified levels which meet the Company's underwriting criteria, in exchange for delegated underwriting, administrative support and expedited funding. The Company currently has four Strategic Alliance Mortgage Bankers (one of which was added in October 1996) and plans to add two more during the remainder of 1996 and the first quarter of 1997. The Company has a minority equity interest in certain of the Strategic Alliance Mortgage Bankers. The Company believes that its use of retail and wholesale origination and strategic alliances is a unique strategy which enables the Company to penetrate the non-prime mortgage loan market through multiple channels. In the first six months of 1996, approximately 53% (or approximately $15 million per month) of the Company's Mortgage Loans by principal amount were originated through one Strategic Alliance Mortgage Banker, First Greensboro Home Equity, Inc. ("First Greensboro"). On June 1, 1996, First Greensboro terminated its agreement with the Company in connection with its sale to a third party. As a result of such termination, First Greensboro paid the Company $7.3 million in September 1996. Although First Greensboro generated a large percentage of the Company's Mortgage Loan originations, the Company believes that it will be able to replace such originations through its retail lending operations and through additional Strategic Alliance Mortgage Bankers, two of which entered into strategic alliance agreements with the Company in the second and third quarters of 1996. During August and September 1996, Mortgage Loan originations through these additional sources totaled $6.2 million and $9.9 million, respectively. SMALL BUSINESS LOAN DIVISION The Company's Small Business Loan operation (the "Small Business Loan Division") makes loans to small businesses primarily for the acquisition or refinancing of property, plant and equipment and working capital. During 1993, 1994 and 1995, Small Business Loan originations totaled $37.9 million, $43.1 million and $39.6 million, respectively. During the six months ended June 30, 1996, Small Business Loan originations totaled $30.6 million. A substantial portion of the Company's Small Business Loans are loans ("SBA Loans") which are guaranteed by the U.S. Small Business Administration (the "SBA"). The SBA Loans are secured by real or personal property and have initial principal balances ranging from $250,000 to $1.5 million (with an average initial principal balance in the first six months of 1996 of $650,000) and variable interest rates limited to a maximum of 2.75% over the prime rate. The SBA guarantees approximately 75% of the original principal amount of the SBA Loans, up to a maximum guarantee amount of $750,000. The Company sells participations representing the SBA-guaranteed portion of its SBA Loans (the "SBA Loan Participations") in the secondary market. In connection with such sales, the Company receives, in addition to excess servicing revenue, cash premiums of approximately 10% of the guaranteed portion being sold. SBA Loans are originated directly by the Company's loan officers in its six branch offices and are primarily generated through referral sources such as commercial loan and real estate brokers ("Commercial Loan Brokers") located in its market areas. Approximately 75% of the SBA Loans originated in the first six months of 1996 were originated through Commercial Loan Brokers. The Company believes that it was among the ten largest SBA Loan lenders in the United States, by principal amount of SBA Loans approved, for the SBA's fiscal year ended September 30, 1995. The Small Business Loan Division also provides working capital loans secured by accounts receivable, inventory and equipment to small- to medium-sized businesses in the southeastern United States ("Asset-based Small Business Loans"). The Company began its asset-based lending operation in April 1996 in Atlanta, GA. For the six months ended June 30, 1996, Asset-based Small Business Loans originated by the Small Business Loan Division totaled approximately $4.6 million. AUTO LOAN DIVISION The Company's Auto Loan operation (the "Auto Loan Division") makes loans to non-prime borrowers for the purchase of used automobiles. Substantially all of the Auto Loans are made directly by the Company to purchasers of automobiles who are referred to the Company by automobile dealers ("Dealers"). Less than 20% of the Auto Loans made in the first six months of 1996 were indirect loans purchased from Dealers. The Auto Loans generally have initial principal balances ranging from $3,000 to $10,000 (with an average initial principal balance in the first six months of 1996 of approximately $5,000), terms ranging from 24 to 48 months, and fixed interest rates ranging from 18% to 46% per annum (with an average yield in the first six months of 1996 of 27.4%). The Auto Loan Division operates through eight locations and originates Auto Loans in connection with approximately 200 Dealers. During 1993, 1994 and 1995, Auto Loan originations totaled $5.2 million, $7.5 million and $17.1 million, respectively. During the six months ended June 30, 1996, Auto Loan originations totaled $10.0 million. LOAN PORTFOLIO/LOAN SALES AND SECURITIZATIONS The Company's loan receivables held for investment at December 31, 1993, 1994 and 1995 totaled $66.3 million, $91.7 million, and $103.9 million, respectively. At June 30, 1996, loan receivables totaled $87.8 million, of which $55.0 million were Mortgage Loans, $24.0 million were Small Business Loans and $8.8 million were Auto Loans. Consistent with the Company's "high velocity" capital strategy described below, the Company has sold a substantial majority of the loans it has originated through whole Mortgage Loan sales, sales of SBA Loan participations and through the securitization of approximately $17.1 million of the unguaranteed portion of SBA Loans in June 1995 and $16.1 million of Auto Loans in March 1996. The Company plans to continue to pursue securitizations in the future, including the securitization of a majority of its Mortgage Loans beginning in 1997, principally because the Company believes that securitization is potentially more profitable than loan sales. BUSINESS AND GROWTH STRATEGY The Company's business strategy is to be a diversified financial services company that meets the credit needs of borrowers in what the Company believes to be under-served credit markets. Key elements of the Company's business strategy are to: -- Maintain a "high velocity" capital strategy whereby loans are generally sold within 10 to 40 days of origination, thereby enabling the Company to recognize cash gains on the sales of its loans and quickly redeploy its capital, as well as reduce its interest rate risk, default risk and borrowing costs. In addition, the Company plans to continue to pursue securitization transactions for all of its loan divisions in the future. -- Respond quickly to customer credit requests by utilizing a decentralized loan approval process, while ensuring consistent credit quality through uniform underwriting guidelines and procedures. -- Utilize a proactive underwriting process whereby the Company may restructure credit requests in order to cause them to meet the Company's underwriting criteria. -- Achieve profitability goals by maximizing interest margins and emphasizing effective monitoring and collection of loans. The Company's growth strategy is to continue to expand all areas of its lending operations, emphasizing profitability, rather than asset growth. Key elements of the Company's growth strategy are to: -- Increase Mortgage Loan originations by expanding its retail lending operations where the Company lends directly to the customer without using a Mortgage Banker. -- Increase wholesale Mortgage Loan originations from the Strategic Alliance Mortgage Bankers and enter into additional strategic alliances with other Mortgage Bankers, as well as increase the number of relationships with other referral sources such as Commercial Loan Brokers and Dealers. -- Expand its Small Business Loan operations by utilizing its "Preferred Lender" status with the SBA to minimize response time and maximize Small Business Loan production. -- Increase its penetration in existing markets and expand geographically by opening additional offices. -- Pursue the acquisition of businesses in the financial services industry (although no agreements or understandings relating to any acquisitions are presently pending). The Company was incorporated in 1968 and until 1990 engaged principally in railroad-related operations. Prior to 1990, the Company incurred significant losses which resulted in net operating losses. In December 1990, current management acquired control of the Company and implemented a strategic plan to acquire profitable businesses which could utilize such net operating losses. Pursuant to such strategy, the Company acquired certain financial services companies in 1991 and an apparel manufacturer in 1993. In 1994, the Company made a strategic decision to divest all non-financial operations and to focus exclusively on the financial services industry. In accordance with such strategy, the Company has completed its divestiture of its apparel-related and transportation-related operations. THE OFFERING <TABLE> <S> <C> Common Stock offered by the Company.......... 2,119,031 shares Common Stock offered by the Selling Shareholders....................... 880,969 shares Common Stock to be outstanding after the Offering............................... 8,741,130 shares(1) Use of proceeds.............................. To repay indebtedness under the Company's existing credit facilities(2). See "Use of Proceeds." Proposed Nasdaq National Market symbol....... EMER </TABLE> - --------------- (1) Excludes (i) 226,708 shares of Common Stock issuable upon the exercise of options granted pursuant to the Company's existing stock option plans, (ii) 102,167 shares of Common Stock issuable upon the exercise of outstanding warrants and (iii) 10,500 shares of Common Stock issuable pursuant to stock grants made pursuant to the Company's Restricted Stock Agreement Plan. See "Management." (2) At September 30, 1996, such indebtedness totaled $29.7 million. SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA <TABLE> <CAPTION> AT AND FOR THE SIX MONTHS AT AND FOR THE FISCAL YEAR ENDED DECEMBER 31, ENDED JUNE 30, ----------------------------------------------------------- -------------------------- 1991 1992 1993 1994 1995 1995 1996 -------- -------- --------- --------- --------- --------- ----------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF INCOME DATA: Revenues: Interest and servicing revenue....................... $ 4,064 $ 6,980 $ 7,983 $ 10,903 $ 15,639 $ 7,307 $ 9,937 Gain on sale of loans(1)........ -- 1,686 3,605 6,450 9,169 4,355 7,468 Other revenues.................. 96 342 458 842 1,470 692 904 -------- -------- --------- --------- --------- --------- ----------- Total revenues.............. 4,160 9,008 12,046 18,195 26,278 12,354 18,309 Expenses: Interest expense................ 2,399 4,315 5,073 5,879 8,527 3,780 5,576 Provision for credit losses(2)..................... 83 349 686 2,510 2,480 1,240 1,532 General and administrative expenses...................... 2,265 4,698 5,624 7,359 10,419 4,514 7,622 -------- -------- --------- --------- --------- --------- ----------- Total expenses.............. 4,747 9,362 11,383 15,748 21,426 9,534 14,730 Income (loss) from continuing operations(3)(4)................ (595) (249) 937 1,792 4,581 2,696 3,436 Income (loss) from discontinued operations(3)................... 344 685 260 546 (3,924) (751) -- -------- -------- --------- --------- --------- --------- ----------- Net income (loss)(3).............. $ (251) $ 436 $ 1,197 $ 2,338 $ 657 $ 1,945 $ 3,436 ========== ========== =========== =========== =========== =========== ============== Income (loss) per share from continuing operations(3)(4)..... $ (0.11) $ (0.04) $ 0.14 $ 0.27 $ 0.69 $ 0.40 $ 0.51 Income (loss) per share from discontinued operations(3)...... 0.06 0.12 0.04 0.08 (0.59) (0.11) -- -------- -------- --------- --------- --------- --------- ----------- Net income (loss) per share(3).... $ (0.05) $ 0.08 $ 0.18 $ 0.35 $ 0.10 $ 0.29 $ 0.51 ========== ========== =========== =========== =========== =========== ============== Weighted average outstanding equivalent shares (in thousands)...................... 5,660 5,639 6,552 6,689 6,668 6,691 6,728 Supplemental net income per share:(3)(5) Income per share from continuing operations.................... $ 0.52 $ 0.39 Income (loss) from discontinued operations.................... (0.45) -- --------- ----------- Net income per share............ $ 0.07 $ 0.39 =========== ============== OPERATING DATA: Total loans originated or purchased....................... $ 18,361 $ 57,282 $ 63,633 $ 150,044 $ 249,507 $ 104,977 $ 194,437 Total loans sold.................. -- 10,827 31,052 85,772 153,055 58,494 159,886 Total loans securitized........... -- -- -- -- 17,063 17,063 16,107 Total loans serviced (period end)(6)......................... 41,250 68,489 106,898 157,443 214,534 185,118 217,982 Total loans receivable (period end)............................ 39,870 56,785 66,279 95,398 126,458 98,969 103,265 Weighted average interest rate earned.......................... 14.23% 14.19% 12.83% 13.43% 13.94% 15.02% 15.76% Weighted average interest rate paid............................ 7.69 7.74 7.24 6.94 7.57 7.40 8.64 Loans receivable held for investment...................... $ 39,870 $ 56,785 $ 66,279 $ 91,736 $ 103,865 $ 88,842 $ 87,835 Allowance for credit losses as a % of loans receivable held for investment...................... 2.35% 1.92% 1.60% 2.07% 2.02% 1.59% 2.67% Allowance for credit losses as a % of nonperforming loans held for investment...................... 490.05 16.39 45.12 92.17 51.83 52.32 62.84 Allowance for credit losses as a % of nonperforming loans serviced for others(6)................... -- -- -- -- (8) (8) 308.94 Allowance for credit losses as a % of serviced loans (period end)(6)......................... 2.35 1.92 1.60 1.98 2.03 2.07 2.83 Net charge-offs as a % of average serviced loans(2)(6)............ 0.83 0.68 1.29 2.36 1.43 0.90 0.96 General and administrative expenses as a % of average serviced loans(6)............... 8.24 8.56 6.41 5.57 5.60 5.39 6.66 </TABLE> <TABLE> <CAPTION> AT JUNE 30, 1996 ------------------------ AS ACTUAL ADJUSTED(7) --------- ----------- <S> <C> <C> BALANCE SHEET DATA: Loans receivable................................................................................. $ 87,835 $ 87,835 Mortgage loans held for sale..................................................................... 15,430 15,430 Total assets..................................................................................... 146,657 149,787 Total indebtedness............................................................................... 128,334 108,073 Total shareholders' equity....................................................................... 13,535 36,925 </TABLE> - --------------- (1) These amounts represent gains recorded on the sale of Mortgage Loans and SBA Loan Participations. (2) Approximately 90% of the amount in 1994 relates to the writedown to market of certain foreclosed properties associated with speculative construction loans made by the Mortgage Loan Division prior to its acquisition by the Company. Speculative construction loans are no longer being made by the Company. (3) Includes the impact of the utilization of the Company's net operating loss carryforward, which totaled approximately $23 million and $18 million at December 31, 1995 and June 30, 1996, respectively. Absent the utilization of the NOL, for the year ended December 31, 1995 and the six months ended June 30, 1996 (i) income (loss) from continuing operations would have been $2.9 million and $2.2 million, respectively; (ii) income (loss) from discontinued operations would have been ($2.5 million) and $0, respectively; and (iii) the net income (loss) would have been approximately $448,000 and $2.2 million, respectively. (4) The amount set forth with respect to the year ended December 31, 1993 includes $113,000 ($0.01 per share) which reflects the cumulative effect of a change in the method of accounting for income taxes. (5) Supplemental net income per share (as adjusted) reflects the issuance of the 2,119,031 shares of Common Stock offered by the Company hereby, the proceeds of which are to be used to repay approximately $22 million in Company debt. These amounts were calculated based on total weighted average shares of 8,787,222 at December 31, 1995 and 8,846,704 shares at June 30, 1996. (6) Serviced loans includes all portfolio Mortgage Loans and Auto Loans, all securitized loans, and the Small Business Loans, but solely for purposes of calculating the allowance ratio and net charge-off ratio, excludes the guaranteed portion of the SBA Loans. Operating data stated as a percentage of serviced loans (except period end data) for the six month periods ended June 30, 1995 and 1996 have been annualized. (7) Adjusted to reflect the sale by the Company of 2,119,031 shares at an assumed public offering price of $12.00, the receipt by the Company of $242,000 in connection with the exercise of warrants by certain Selling Shareholders and the application of the estimated net proceeds thereof as described under "Use of Proceeds." (8) Allowance for credit losses on non-portfolio loans totaled $773,000 and $669,000 for December 31, 1995 and June 30, 1995, respectively, and there were no nonperforming loans serviced for others at these dates. RECENT DEVELOPMENTS The following table sets forth certain recent unaudited financial data of the Company on a consolidated basis. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial position and results of operations for such unaudited periods have been included. The financial position and results of operations for the three and nine month periods ended September 30, 1996, are not necessarily indicative of operations which may be expected for the entire year. <TABLE> <CAPTION> FOR THE THREE AT AND FOR THE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------- --------------------- 1995 1996 1995 1996 ------- ------- -------- -------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> STATEMENT OF INCOME DATA: Revenues: Interest and servicing revenue.................. $ 3,909 $ 5,143 $ 11,216 $ 15,081 Gain on sale of loans........................... 2,224 7,870 6,579 15,338 Other revenues.................................. 526 1,557 1,218 2,459 ------- ------- -------- -------- Total revenues.......................... 6,659 14,570 19,013 32,878 Expenses: Interest expense................................ 2,161 2,603 5,941 8,181 Provision for credit losses..................... 380 1,569 1,620 3,101 General and administrative expenses............. 2,620 6,058 7,134 13,680 ------- ------- -------- -------- Total expenses.......................... 5,161 10,230 14,695 24,962 Income from continuing operations................. 1,376 4,301 4,072 7,736 Income (loss) from discontinued operations........ (2,728) -- (3,479) -- ------- ------- -------- -------- Net income (loss)(1).............................. $(1,352) $ 4,301 $ 593 $ 7,736 ======= ======= ======== ======== Net income (loss) per share....................... $ (0.20) $ 0.63 $ 0.09 $ 1.14 ======= ======= ======== ======== Weighted average outstanding equivalent shares (in thousands)...................................... 6,706 6,777 6,706 6,774 OPERATING DATA: Total loans originated or purchased............. $63,290 $89,043 $168,268 $283,480 Total loans sold................................ 38,694 52,146 94,597 211,913 Total loans securitized......................... -- -- 17,063 16,107 Total loans serviced (period end)............... 197,512 238,737 Allowance for credit losses as a % of serviced loans (period end)(2)........................ 1.97% 2.81% Net charge-offs as a % of average serviced loans(2)..................................... 0.74 1.43 Total serviced loans past due 90 days or more as a % of total serviced loans(2)............... 2.10 4.03 BALANCE SHEET DATA: Loans receivable................................ $ 93,405 $105,700 Mortgage Loans held for sale.................... 14,348 23,111 Total assets.................................... 124,283 165,106 Total indebtedness.............................. 111,031 142,060 Total shareholders' equity...................... 9,743 17,834 </TABLE> - --------------- (1) Absent the utilization of the NOL, for the three months and nine months ended September 30, 1996, the net income (loss) would have been approximately $2.8 million and $5.0 million, respectively. (2) Serviced loans includes all portfolio Mortgage Loans and Auto Loans, all securitized loans, and the Small Business Loans, but solely for purposes of calculating the allowance ratio, net charge-off ratio, and delinquency ratio, excludes the guaranteed portion of the SBA Loans. Operating data stated as a percentage of average serviced loans (except period end data) for the periods indicated have been annualized. Revenues increased $7.9 million, or 118%, from $6.7 million for the three months ended September 30, 1995, to $14.6 million for the three months ended September 30, 1996. This increase in revenues was due principally to increases in interest and servicing revenue, gain on sale of loans, and loan fee income. Interest and servicing revenue increased $1.2 million, or 31%, from $3.9 million for the three months ended September 30, 1995, to $5.1 million for the same period in 1996. The increase in interest and servicing revenue was due principally to the increase in loan originations of $25.7 million, or 41%, from $63.3 million for the three months ended September 30, 1995, to $89.0 million for the same period in 1996. Gain on sale of loans increased $5.7 million, or 259%, from $2.2 million for the three months ended September 30, 1995, to $7.9 million for the same period in 1996. The increase in gain on sale of loans was principally from the recoupment by the Company of previously shared premiums received in connection with the settlement with First Greensboro. Other revenues, including loan fee income, increased $1.1 million, or 220%, from $500,000 for the three month period ended September 30, 1995, to $1.6 million for the same period in 1996. The increase in other revenues was due principally to increased loan-fee income generated by the Company's retail mortgage operation. Interest expense increased $400,000, or 18%, from $2.2 million for the three month period ended September 30, 1995, to $2.6 million for the same period in 1996. Interest expense increased due to the increased borrowings to fund the growth in loan originations. Provision for credit losses increased $1.2 million, or 300%, from $400,000 for the three months ended September 30, 1995, to $1.6 million for the same period in 1996. With this increased provision, the allowance for credit losses increased from 1.97% of average unguaranteed serviced loans at September 30, 1995, to 2.81% of average unguaranteed serviced loans at September 30, 1996. While total serviced loans past due 90 days or more as a percent of total serviced loans increased from 2.10% at September 30, 1995 to 4.03% at September 30, 1996, overall delinquencies of 30 days and greater decreased from 12.46% at September 30, 1995 to 11.37% at September 30, 1996. The increase in total serviced loans past due 90 days or more was principally due to the increase in loans past due 90 days or more in the Small Business Loan Division from .25% at September 30, 1995 to 4.65% at September 30, 1996. Management believes that the allowance for credit losses is adequate to cover possible losses. General and administrative expense increased $3.5 million, or 135%, from $2.6 million for the three months ended September 30, 1995, to $6.1 million for the same period in 1996. The increase in general and administrative expenses was due primarily to increased personnel, facilities, advertising, and operating costs related to new retail mortgage operations in Indianapolis and Baton Rouge, as well as increased loan servicing facilities and personnel to handle additional lending activities. Income from continuing operations for the three month period ended September 30, 1996, increased $2.9 million, or 207%, from $1.4 million for the three month period ended September 30, 1995, to $4.3 million for the three month period ended September 30, 1996. Absent the utilization of the NOL, income from continuing operations for the three month periods ending September 30, 1995 and 1996 would have been approximately $894,000 and $2.8 million, respectively. In October 1996, AmeriFund Group, Inc. ("AmeriFund"), a Strategic Alliance Mortgage Banker, terminated its strategic alliance agreement with the Company. During 1995 and the first nine months of 1996, approximately 7.0% and 14.5%, respectively, of the Company's total loans were originated through AmeriFund. For July, August and September 1996, AmeriFund originated $6.4 million, $2.6 million and $2.0 million in Mortgage Loans, respectively. Because of the Company's agreement with AmeriFund to share certain production costs, the Company's arrangement with AmeriFund was not as profitable for the Company as other Strategic Alliance Mortgage Bankers. For the nine months ended September 30, 1996, approximately $550,000 of the Company's pre-tax income resulted from its relationship with AmeriFund. The Company currently does not have any other arrangements with Strategic Alliance Mortgage Bankers which provide for shared production costs.

parsed_sections/prospectus_summary/1996/CIK0000312840_empire-of_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. Unless otherwise indicated, all information in this Prospectus assumes no exercise of the Underwriters' over-allotment option. See "Underwriting." THE COMPANY Empire of Carolina, Inc. designs, manufactures and markets a broad variety of toys and plastic decorative holiday products. The Company manages its business through four strategic business units ("SBUs") which are accountable for specific product categories: (i) ride-on products including Big Wheel(R) and Power Driver(R) brands; (ii) outdoor activities and games such as Snow Works(TM) winter sleds and Water Works(TM) water slides and pools (including Crocodile Mile(R) water slides); (iii) girls and boys toys featuring Buddy L(R) cars, trucks and other vehicles and Grand Champions(R) collectible horses; and (iv) holiday products featuring plastic decorative holiday display items, including the recently introduced Light Toppers(TM) outdoor lighting add-ons. The Company believes that it is the market share leader in non-powered ride-ons and in plastic water slides, winter sleds, collectible horses and outdoor decorative holiday products. Empire has been a toy manufacturer for approximately 40 years. The Company's business experienced significant change in 1993 when substantial non-toy operations were sold, and since mid-1994 the Company has undergone a change of control and management, established a new business strategy, and effected two acquisitions which added established core toy product lines to the Company's business. Following the divestitures of non-toy businesses, Empire's operations were focused on its toy business, including the Big Wheel(R) non-powered ride-on product line which has been sold throughout the United States since 1970, and its plastic decorative holiday products business. In the third quarter of 1994, current principal stockholders of the Company, led by Steven Geller, the current Chairman and Chief Executive Officer of the Company, acquired control of Empire as a base from which to build a diversified toy and plastic products manufacturing company. In October 1994, Empire acquired Marchon, Inc., a toy designer, marketer and manufacturer founded and managed by Marvin Smollar, the current President and Chief Operating Officer of the Company. Marchon's core toy products included Grand Champions(R) collectible horses and Crocodile Mile(R) water slides. In July 1995, Empire acquired the toy business and certain related liabilities of Buddy L Inc., one of the oldest toy brands in the United States whose core toy products included plastic and metal toy cars, trucks and other vehicles and battery-operated ride-ons. As a result of these recent transactions, the Company believes it is well-positioned to become a leading U.S. toy manufacturer. The Company's net sales were $41.4 million, $58.0 million and $153.7 million, respectively, for the years ended December 31, 1993, 1994 and 1995, and net sales from toy products contributed 51%, 57% and 79%, respectively, of the Company's consolidated net sales. The Company's goal is to become a leading supplier of toy and plastic decorative holiday products to retailers throughout the world. The Company believes it has distinct competitive advantages including: (i) a team of managers that, with one exception, has joined the Company since July 1994, and has extensive experience in the toy industry; (ii) a balanced line of stable core products with long histories of consumer appeal; (iii) manufacturing and sourcing flexibility through use of the Company's 1.2 million square foot facility in Tarboro, North Carolina and foreign sourcing expertise; and (iv) its decorative holiday product line, which has broad consumer appeal, has provided the Company with a consistent source of revenue while reducing the Company's dependence on major toy retailers and can be manufactured during off-peak periods throughout the year in anticipation of seasonal demand. According to the Toy Manufacturers' Association, total domestic shipments of toys, excluding video games, were approximately $13.4 billion in 1995. Management believes changing industry dynamics favor larger toy companies that can offer a broad selection of popular toy products, supported by consistent, high quality marketing programs to an increasingly concentrated distribution channel. Management also believes that there is significant potential for the Company to leverage its existing relationships with major retailers because many of such retailers are seeking to expand their relationships with suppliers like the Company in order to avoid becoming overly dependent on products from the largest domestic toy companies and to help <TABLE> <CAPTION> EXHIBIT NUMBER DESCRIPTION - ------ ------------------------------------------------------------------------------------ <C> <S> 10.31 Asset Purchase Agreement, dated as of March 3, 1995, by and among the Company, Buddy L and Buddy L (Hong Kong) Limited.(14) 10.32 Bid Protection Agreement, dated as of March 3, 1995, between the Company and Buddy L.(14) 10.33 Assignment and Assumption Agreement dated as of June 21, 1995 between the Company and EAC.(4) 10.34 Assignment dated as of May 22, 1995 between the Company and Carnichi Limited.(4) 10.35 Lease dated July 7, 1995 between Buddy L and EAC.(4) 10.36 Access Agreement dated as of July 7, 1995 between Buddy L, BLHK, SLM, and Buddy L Canada Inc., and EAC.(4) 10.37 Access Agreement dated as of July 7, 1995 between Buddy L, BLHK, SLM, and Buddy L Canada Inc., and EAC.(4) 10.38 Assignment and Assumption of Lease dated as of July 7, 1995 between Buddy L and EAC.(4) 10.39 Loan and Security Agreement dated as of June 30, 1995 between LaSalle National Bank, N. A. ("LaSalle") and EAC.(4) 10.40 Guaranty dated as of June 30, 1995 between LaSalle and the Company.(4) 10.41 Subordination Agreement dated as of June 30, 1995 between LaSalle and the Company.(4) 10.42 $7,580,000 Senior/Subordinated Term Loan Agreement dated July 7, 1995 among the Company as Borrower and the Lenders Listed therein ("Lenders").(4) 10.43 Form of the Company's 12% Senior/Subordinated Note due July 7, 1998.(4) 10.44 Form of Warrant to Purchase Common Stock of the Company issued to the Lenders.(4) 10.45 Amended and Restated Intercreditor Agreement dated July 7, 1995 by and among the Company, EII, Wachovia, the Lenders and the holders of certain debentures dated December 22, 1994 issued by the Company.(4) 10.46 Registration Rights Agreement dated July 7, 1995 by and between the Company and the Lenders.(4) 10.47 Form of Subscription Agreement executed in connection with subscription of Common Stock and Preferred Stock by WPG Corporate Development Associates IV (Overseas), L.P., Westpool Investment Trust PLC, Glenbrook Partners, L.P., and WPG Corporate Development Associates IV, L.P.(4) 10.48 Shareholders' agreement ("Shareholders' Agreement") dated December 22, 1994 among WPG Corporate Development Associates IV, L.P., WPG Corporate Development Associates IV (Overseas), Ltd., Weiss, Peck & Greer, as Trustee of Craig S. Whiting IRA, Peter Pfister, Weiss, Peck & Greer, as Trustee of Nora E. Kerppola IRA Westpool Investment Trust, PLC, Glenbrook Partners, L. P., Steve Geller, Neil Saul, Marvin Smollar and Champ Enterprises Limited Partnership.(17) 10.49 Amendment No. 2 to Shareholders Agreement dated as of June 29, 1995 among WPG Corporate Development Associates IV, L.P., WPG Corporate Development Associates IV (Overseas), Ltd., as the exempt transferee of WPG Corporate Development Associates IV (Overseas), Ltd., certain persons identified on Schedule I of Amendment No. 2 to the Shareholders' Agreement, Steven E. Geller ("Geller"), Neil B. Saul ("Saul") and The Autumn Glory Trust, a Cook Islands Registered International Trust ("Trust") as the permitted transferee of Champ Enterprises Limited Partnership.(4) 10.50 Registration Rights Agreement ("Registration Rights Agreement") dated as of December 22, 1994 by and between Empire of Carolina, Inc., WPG Corporate Development Associates IV, L.P. WPG Corporate Development Associates IV (Overseas), Ltd., Weiss Peck & Greer, as Trustee under Craig Whiting IRA, Peter B. Pfister, Weiss, Peck & Greer, as Trustee under Nora Kerppola IRA, Westpool Investment Trust PLC and Glenbrook Partners, L. P.(17) 10.51 Amendment No. 1 to Registration Rights Agreement.(4) </TABLE> assure that reliable supplies of quality products may be obtained at competitive prices. The following are the major elements of the Company's growth strategy: - Focus on core brands with long histories of broad consumer appeal, such as the Big Wheel(R) and Buddy L(R) product lines, which provide the Company with a base from which to build a diversified toy and plastic products manufacturing company. - Leverage existing manufacturing capabilities by upgrading the equipment, increasing the capacity and integrating all of the domestic manufacturing operations of the Buddy L product line at its manufacturing facility in Tarboro, North Carolina. - Offer value to toy retailers and consumers by utilizing the Company's diverse manufacturing capabilities and stable core product lines to offer high quality products and customer support at prices which enable the retailer to realize attractive gross margins. - Expand international presence, especially in Western Europe and Japan, which present significant growth opportunities for the Company. - Acquire new product lines and deepen and expand its core product lines with new licensing arrangements. - Extend core product lines through product innovation resulting from increased investment in research and development. - Develop additional countercyclical product lines to, in part, counterbalance the seasonality generally present in the toy industry and take advantage of additional manufacturing capacity available during off-peak production periods. THE OFFERING <TABLE> <S> <C> Common Stock Offered by the Company................. 1,400,000 shares Common Stock Offered by the Selling Stockholders (1)............................................... 1,723,908 shares Common Stock to be Outstanding Immediately After the Offering (2)...................................... 6,961,300 shares Use of Proceeds to the Company...................... To prepay senior subordinated notes, repay bank debt and for general corporate purposes. See "Use of Proceeds." American Stock Exchange Symbol...................... EMP </TABLE> - ------------------------------ (1) Includes 315,833 outstanding shares obtainable upon exercise of an option being sold to the Underwriters by a Selling Stockholder. See "Principal and Selling Stockholders." (2) Includes 356,100 shares of Common Stock to be issued upon the exercise by certain Selling Stockholders of stock options and warrants concurrently with this Offering, but does not include an aggregate of 6,849,224 shares (758,000 of which are subject to warrants which will lapse upon the application of the net proceeds to the Company from this Offering) comprised of (i) 1,397,500 shares issuable upon the exercise of stock options outstanding on the date of this Prospectus, (ii) 1,962,900 shares issuable upon the exercise of warrants outstanding on the date of this Prospectus, of which warrants for the purchase of 758,000 shares will lapse upon the application of the net proceeds to the Company from this Offering as described in "Use of Proceeds," (iii) 442,264 shares issuable upon the conversion of the Series A cumulative convertible preferred stock upon the affirmative vote of a majority of the shares represented at the Company's 1996 Annual Meeting of Stockholders, (iv) 2,000,000 shares issuable upon the conversion of the convertible subordinated debentures, (v) up to 454,000 shares which may be issuable as a contingent payment obligation in connection with the Buddy L acquisition in certain circumstances and (vi) 592,560 shares available for future grants under the Company's 1994 Employee Stock Option Plan. See "Use of Proceeds" and "Certain Transactions." Empire of Carolina, Inc. was incorporated in Delaware in 1979. Unless the context indicates otherwise, all references to "Empire" or the "Company" refer to Empire of Carolina, Inc. and its subsidiaries. The Company's principal executive offices are located at 5150 Linton Boulevard, Delray Beach, Florida 33484, and its telephone number is (407) 498-4000. <TABLE> <CAPTION> EXHIBIT NUMBER DESCRIPTION - ------ ------------------------------------------------------------------------------------ <C> <S> 10.52 Settlement and Termination Agreement with Neil Saul.(18) 10.53 Extension to Financing Agreement, dated February 12, 1996 between Empire and Wachovia.(18) 10.54+ Loan and Security Agreement between LaSalle National Bank and BT Commercial Corporation to Empire Industries, Inc., with exhibits and security instruments. 21+ Subsidiaries of the Company 23.1 Consent of Deloitte & Touche LLP 23.2+ Consent of Coopers & Lybrand LLP 23.3+ Consent of Wong Brothers & Co. 23.4+ Consent of Schwartz & Freeman (to be included in Exhibit 5.1) 24.1+ Powers of Attorney (included on signature page) 99.1+ Letter dated June 17, 1996 from Wong Brothers & Co. to the Members of Marchon Toys Limited </TABLE> - ------------------------------ + Previously filed (1) Previously filed as an exhibit to the Company's Registration Statement on Form S-1 (File No. 2-73208), dated July 13, 1981 and incorporated by reference herein. (2) Previously filed as an exhibit to Clabir's Current Report on Form 8-K, dated December 23, 1988 (File No. 1-7769) and incorporated by reference herein. (3) Previously filed as an exhibit to the Company's Registration Statement on Form S-4 (File No. 33-32186), dated November 17, 1989 and incorporated by reference herein. (4) Previously filed as an Exhibit to the Company's Current Report on Form 8-K dated July 21, 1995, and incorporated by reference herein. (5) Previously filed as an exhibit to the Company's Current Report on Form 8-K, dated October 6, 1992 and incorporated by reference herein. (6) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated by reference herein. (7) Previously filed as an exhibit to the Company's Current Report on Form 8-K, dated February 1, 1993 and incorporated by reference herein. (8) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 and incorporated by reference herein. (9) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated by reference herein. (10) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 and incorporated by reference herein. (11) Previously filed as an exhibit to the Company's Current Report on Form 8-K for September 30, 1994 and incorporated by reference herein. (12) Previously filed as an exhibit to the Company's Current Report on Form 8-K for December 22, 1994 and incorporated by reference herein. (13) Previously filed as an exhibit to Amendment No. 1 to Schedule 13D filed by the WPG Group, dated December 23, 1994 and incorporated by reference herein. (14) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated by reference herein. (15) Previously filed as an exhibit to Amendment No. 1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA) <TABLE> <CAPTION> THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ---------------------------------------------------------- ------------------ 1991(1)(2) 1992(1)(2) 1993(2) 1994(3) 1995(4) 1995 1996 ---------- ---------- ------- ------- -------- ------- ------- <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA: Net sales...................... $ 41,253 $ 42,882 $41,354 $57,964 $153,744 $19,088 $22,186 Gross profit................... 13,936 13,439 11,621 17,407 41,839 6,151 5,969 Nonrecurring restructuring and relocation charges........... -- -- -- -- 7,550 150 -- Operating income (loss)........ 983 1,267 (3,465) 965 (1,894) (803) (1,329) Interest expense............... 13,549 10,314 2,937 1,407 5,996 667 2,132 After-tax income (loss) from continuing operations before extraordinary items and cumulative effect of an accounting change............ (6,318) (2,696) (1,516) 589 (4,501) (1,006) (2,156) Net income (loss).............. 8,756 11,098 24,327 589 (4,501) (1,006) (2,156) Weighted average shares outstanding -- primary(5).... 10,536 10,537 14,670 12,159 4,681 4,191 5,201 Income (loss) per common share from continuing operations -- primary(5)................... $ (.60) $ (.26) $ (.10) $ .05 $ (.96) $ (.24) $ (.41) </TABLE> <TABLE> <CAPTION> MARCH 31, 1996 -------------------------- ACTUAL AS ADJUSTED(6) -------- -------------- <S> <C> <C> BALANCE SHEET DATA: Working capital............................................................ $ 5,978 $ 23,295 Total assets............................................................... 127,467 131,404 Total debt................................................................. 68,581 54,633 Stockholders' equity....................................................... 28,371 46,256 </TABLE> - ------------------------------ (1) Prior to 1992, the Company owned a minority interest in The Deltona Corporation, a real estate development corporation based in Florida. Income from continuing operations includes equity loss of The Deltona Corporation for 1991 of $1,613. Income from continuing operations for 1992 includes the gain on sale of common stock of, and notes receivable from, The Deltona Corporation of $2,000. (2) On October 6, 1992, the Company sold all of the stock of Wilbur Chocolate Co., Inc. In February 1993, the Company sold the assets used in the businesses of The Isaly Klondike Company and Popsicle Industries, Inc. These businesses had been acquired in 1989. As a result of the sale of these businesses, the results of operations and gains on sale from Wilbur, Isaly Klondike, and Popsicle have been included in income from discontinued operations. See Note 15 of Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." (3) The results of operations for 1994 reflect the results of operations of Marchon Inc. since its acquisition by the Company on October 13, 1994. See Note 3 of Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." (4) The results of operations for 1995 reflect the results of operations of substantially all of the toy business of Buddy L Inc. and its Hong Kong subsidiary since its acquisition by the Company on July 7, 1995. See Notes 3 and 14 of Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." (5) Fully diluted income (loss) per common share from continuing operations was $(.28), $(.06), $(.07), $.05 and $(.96), respectively, during the five years ending December 31, 1995 based on weighted average shares outstanding of 16,296, 16,297, 16,295, 12,159 and 4,681, respectively. Fully diluted loss per common share from continuing operations was $(.24) and $(.41) for the three month period ended March 31, 1995 and 1996, respectively, based on weighted average shares outstanding of 4,191 and 5,201, respectively. During September 1994, the Company repurchased approximately 11,800 shares in a treasury stock transaction. Weighted average shares outstanding in 1995 reflects 454 shares which may become issuable as a contingent payment obligation with respect to the acquisition of Buddy L in July 1995. See Notes 2, 3 and 11 of Notes to Consolidated Financial Statements. (6) Adjusted to give effect to (i) the sale by the Company of 1,400 shares of Common Stock offered (at the public offering price per share of $12.00) and the application of the net proceeds therefrom and (ii) the exercise by certain Selling Stockholders of stock options and warrants concurrently with this Offering to purchase an aggregate of 356 shares of Common Stock. See "Use of Proceeds" and "Capitalization."

parsed_sections/prospectus_summary/1996/CIK0000314733_host_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in this Prospectus. Unless the context otherwise requires, the term "Company" refers to Host Marriott Corporation and its subsidiaries and their combined operations. Unless otherwise indicated, the information in this Prospectus does not give effect to the exercise of the over-allotment option described in "Underwriting." References herein to "Smith Travel Research" are to industry data provided by Smith Travel Research. References herein to "Coopers & Lybrand" refer to the January 1996 Hospitality Directions Quarterly Research Journal published by Coopers & Lybrand LLP. THE COMPANY The Company is one of the largest owners of hotels in the world with 90 lodging properties as of December 29, 1995, primarily located in the United States. These properties generally are operated under Marriott brands and managed by Marriott International, Inc. ("Marriott International"), formerly a wholly owned subsidiary of the Company. The Marriott brand name is among the most respected and widely recognized brand names in the lodging industry. The Company's primary focus is on the acquisition of full-service lodging properties. During 1994 and 1995, the Company added 27 full-service hotels with approximately 11,300 rooms for an aggregate of approximately $915 million, bringing the Company's total full-service hotels to 55 at December 29, 1995. Based on data provided by Smith Travel Research, the Company believes that its full-service hotels consistently outperform the industry's average occupancy rate by a significant margin and averaged 75.5% occupancy for 1995 compared to 68.2% average occupancy for the upscale full-service segment of the lodging industry (the segment which is most representative of the Company's full- service hotels). The lodging industry as a whole, and the full-service hotel segment in particular, is benefiting from an improved supply and demand relationship in the United States. Management believes that recent demand increases have resulted primarily from an improved economic environment and a corresponding increase in business travel. In spite of increased demand for rooms, the room supply growth rate in the full-service segment has greatly diminished. Management believes that this decrease in the supply growth rate in the full- service segment is attributable to many factors including the limited availability of attractive building sites for full-service hotels, the lack of available financing for new full-service hotel construction and the availability of existing full-service properties for sale at a discount to their replacement value. Due to the relatively high occupancy rates of the Company's hotels, the limited supply of new rooms and the recent increase in business travel, the managers of the Company's hotels have increased average daily room rates by primarily replacing certain discounted group business with higher-rated group and transient business and by selectively increasing room rates. As a result, on a comparable basis, room revenues per available room ("REVPAR") for full-service properties increased approximately 7% for 1995 over the comparable period for the prior year. Furthermore, because lodging property operations have a high fixed cost component, increases in REVPAR generally yield greater percentage increases in operating profit. Accordingly, the approximate 7% increase in REVPAR resulted in a 25% increase in comparable full-service hotel operating profit for 1995. The Company expects this supply/demand imbalance, particularly in the upscale full-service segment, to continue, which should result in improved REVPAR and operating profits at its hotel properties in the near term. BUSINESS STRATEGY The Company's business strategy continues to focus on opportunistic acquisitions of full-service urban, convention and resort hotels primarily in the United States. The Company believes that the full-service segment of the market offers numerous opportunities to acquire assets at attractive multiples of cash flow and at substantial discounts to replacement value, including underperforming hotels which can be improved by conversion to the Marriott brand. The Company believes this segment is very promising because: . There is virtually no new supply of upscale full-service hotel rooms currently under construction. According to Smith Travel Research, from 1988 to 1990, upscale full-service room supply increased an average of approximately 5% annually, which resulted in an oversupply of rooms in the industry. However, this growth slowed to an average of approximately 1.7% from 1990 to 1995. Management believes that the lead time from conception to completion of a full-service hotel is generally five years or more in the types of markets the Company is principally pursuing, which will contribute to the continued low growth of supply. According to Coopers & Lybrand, hotel supply in the upscale full-service segment is expected to grow annually at 1.8% to 1.9% through 1998. Furthermore, because of the prolonged lead time for construction of new full-service hotels, management believes that growth in the full-service segment will continue to be limited at least through 2000. . Many desirable hotel properties are held by inadvertent owners such as banks, insurance companies and other financial institutions which are motivated and willing sellers. The Company has acquired several properties from these inadvertent owners at significant discounts to replacement cost. . Management believes that there are numerous opportunities to improve the performance of acquired hotels by replacing the existing hotel manager with Marriott International and converting the hotels to the Marriott brand. Nine of the 27 full-service hotels added in 1994 and 1995 were converted to the Marriott brand following their acquisition. These conversion properties (excluding the Marriott World Trade Center which was only partially open during 1995) experienced a 66.5% average occupancy rate during 1995 compared to an average occupancy rate of 75.5% for all of the Company's full-service hotels. The Company believes these nine conversion properties will experience improved operations as a result of increases in occupancy and room rates as the properties begin to benefit from Marriott's brand recognition, reservation system and group sales organization. The Company intends to pursue additional full- service hotel acquisitions, some of which may be conversion opportunities. The Company holds minority interests and serves as general partner in various partnerships that own, as of December 29, 1995, an aggregate of 262 additional properties, 42 of which are full-service properties, managed by Marriott International. Four of the properties added by the Company in the last two years were held by a partnership in which the Company holds a minority interest. As opportunities arise, the Company intends to pursue the acquisition of additional full-service hotels currently held by such partnerships and/or additional interests in such partnerships. The Company believes it is well qualified to pursue its acquisition strategy. Management has extensive experience in acquiring and financing lodging properties and believes its industry knowledge, relationships and access to market information provide a competitive advantage with respect to evaluating and acquiring hotel assets. In addition, the Company is well positioned to convert acquired properties to the high-quality Marriott brand name due to its relationship with Marriott International. For a description of the Company's relationship with Marriott International, see "Relationship Between the Company and Marriott International." RECENT ACQUISITIONS, PENDING ACQUISITIONS AND DIVESTITURES During 1994, the Company added 18 full-service hotels with approximately 7,400 rooms (including the Springfield Radisson Hotel, a 199-room hotel subsequently sold in 1995) for approximately $525 million. In 1995, the Company acquired nine full-service hotels with approximately 3,900 rooms in separate transactions for approximately $390 million. In 1996, through the date hereof, the Company has acquired one full-service hotel (374 rooms), controlling interests in three additional properties (2,269 rooms), one of which is currently under construction and is scheduled to be completed during the third quarter of 1996, and an 83% interest in the mortgage loans secured by a 250- room full-service property. See "Business and Properties--1996 Acquisitions." The Company has also entered into agreements to purchase two full-service properties (608 rooms) for approximately $51 million and a controlling interest in one full-service property (400 rooms) for approximately $18 million (together, the "Pending Acquisitions"). See "Business and Properties--Pending Acquisitions." Consistent with its strategy of focusing on the full-service segment of the lodging industry, the Company sold 26 of its 30 Fairfield Inns and all of its 14 senior living communities in 1994. In addition, the Company sold (subject to a leaseback) 37 Courtyard by Marriott ("Courtyard") properties to an unrelated real estate investment trust (the "REIT") in 1995. In 1995, the Company also sold its remaining four Fairfield Inns and the 199-room Springfield Radisson Hotel (which was acquired as part of a portfolio of lodging properties by the Company in 1994). Management believes that all of these sales were made at valuations that were attractive to the Company. In February 1996, the Company entered into an agreement with the REIT to sell and lease back 16 Courtyard properties and 18 Residence Inns (the "Pending Dispositions") for $349 million (10% of which would be deferred). The Pending Dispositions should be completed in the first and second quarters of 1996 and the Company intends to reinvest the proceeds in the acquisition of full-service lodging properties. See "Business and Properties--Pending Dispositions." SPECIAL DIVIDEND The Company previously operated food, beverage and merchandise concessions at airports, on tollroads and at stadiums and arenas and other tourist attractions (the "Operating Group"). On December 29, 1995, the Company distributed to its shareholders through a special dividend (the "Special Dividend") all of the outstanding shares of common stock of Host Marriott Services Corporation ("HM Services"), formerly a wholly owned subsidiary of the Company, which, as of the date of the Special Dividend, owned and operated the Operating Group business. The Special Dividend provided Company shareholders with one share of common stock of HM Services for every five shares of Company Common Stock held by such shareholders on the record date of December 22, 1995. The Special Dividend was designed to separate two types of businesses with distinct financial, investment and operating characteristics and to allow each business to adopt strategies and pursue objectives appropriate to its specific needs. The Special Dividend (i) facilitates the development of employee compensation programs custom-tailored to the operations of each business, including stock-based and other incentive programs, which will more directly reward employees of each business based on the success of that business, (ii) enables the management of each company to concentrate its attention and financial resources on the core businesses of such company, and (iii) permits investors to make more focused investment decisions based on the specific attributes of each of the two businesses. THE OFFERINGS <TABLE> <S> <C> Common Stock Offered U.S. Offering.......................... 20.0 million shares International Offering................. 5.0 million shares Total................................ 25.0 million shares(1) Common Stock to be Outstanding after the Offerings............................... 184.7 million shares(1)(2) NYSE Trading Symbol...................... HMT Use of Proceeds.......................... For the acquisition of lodging properties and for general corporate purposes </TABLE> - -------- (1) Assumes no exercise of the over-allotment option granted to the Underwriters by the Company. (2) Based on the number of shares of Common Stock outstanding on December 29, 1995. Does not include (i) up to 10.0 million shares of Common Stock subject to options held by current and former executive officers and certain employees of the Company, having a weighted average exercise price of $3.92 per share (certain of which options are subject to vesting requirements), (ii) up to 2.0 million shares of Common Stock held by current and former executive officers and certain employees under deferred stock incentive plans (certain of which shares are subject to vesting requirements), (iii) up to 7.5 million shares of Common Stock, issuable upon exercise of warrants having a current exercise price of $8.00 per share, issued or reserved for issuance by the Company to certain plaintiffs as part of a settlement of a class action suit, and (iv) up to 2.1 million restricted stock plan shares under the Comprehensive Stock Incentive Plan, approved by the Board of Directors in February 1996. See "Description of Capital Stock--Warrants" and "Management--Executive Officer Compensation." SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA The following table presents summary consolidated historical and pro forma financial data of the Company for the fiscal years ended December 29, 1995 and December 30, 1994. The historical financial data provided herein is derived from the Consolidated Financial Statements of the Company included in this Prospectus and the unaudited pro forma financial data provided herein is derived from the Pro Forma Condensed Consolidated Financial Data of the Company included in this Prospectus and includes the effect of the acquisitions, dispositions, bond offerings and Special Dividend discussed in this Prospectus. The pro forma financial data set forth below may not necessarily be indicative of the results that would have been achieved had such transactions been consummated as of the dates indicated or that may be achieved in the future. The information presented below should be read in conjunction with the Company's audited Consolidated Financial Statements and Notes thereto, the "Selected Historical Financial Data," "Management's Discussion and Analysis of Results of Operations and Financial Condition," and the "Pro Forma Condensed Consolidated Financial Data" included elsewhere herein. The Company's fiscal year ends on the Friday closest to December 31. <TABLE> <CAPTION> HISTORICAL PRO FORMA(1) ------------- -------------------------- FISCAL YEAR FISCAL YEAR 1995 1994 1995 1994 ----- ------ -------- ------ (IN MILLIONS) <S> <C> <C> <C> <C> INCOME STATEMENT DATA: Revenues........................... $ 484 $ 380 $565 $504 Operating profit before minority interest, corporate expenses and interest.......................... 114 152 114 152 Minority interest.................. 2 1 2 1 Corporate expenses................. 36 31 36 31 Interest expense................... 178 165 209 180 Interest income.................... 27 29 28 25 Loss from continuing operations.... (62) (13) (82) (25) Net loss(2)........................ (143) (25) N/A N/A OTHER DATA: EBITDA(3).......................... $311 $ 269 $306 $258 Depreciation and amortization...... 122 113 120 111 Cash from continuing operations.... 110 75 N/A N/A Cash used in investing activities from continuing operations ....... (156) (135) N/A N/A Cash from financing activities from continuing operations............. 204 24 N/A N/A Ratio of earnings to fixed charges(4)........................ -- -- N/A N/A Deficiency of earnings to fixed charges........................... 70 12 N/A N/A <CAPTION> AS OF DECEMBER 29, 1995 ---------------------------------- PRO PRO FORMA ACTUAL FORMA(5) AS ADJUSTED(5)(6) ------ -------- ----------------- <S> <C> <C> <C> BALANCE SHEET DATA: Cash and cash equivalents.......... $ 201 $ 387 $ 694 Total assets....................... 3,557 3,805 4,112 Total debt......................... 2,178 2,384 2,384 Shareholders' equity............... 675 675 982 </TABLE> (footnotes on following page) HOTEL PERFORMANCE The following table sets forth key performance statistics of the Company's properties: <TABLE> <CAPTION> FISCAL YEAR -------------------------- 1995 1994 ------- ------- <S> <C> <C> <C> COMPARABLE FULL-SERVICE HOTELS(7) Number of properties............................... 25 25 Number of rooms.................................... 12,881 12,869 Average daily rate................................. $113.08 $103.53 Occupancy %........................................ 76.6% 77.9% REVPAR(8).......................................... $86.56 $80.69 REVPAR % change.................................... 7.3% -- TOTAL FULL-SERVICE HOTELS Number of properties............................... 55 41 Number of rooms.................................... 25,932 19,492 Average daily rate................................. $110.30(9) $102.82(10) Occupancy %........................................ 75.5%(9) 77.4%(10) REVPAR(8).......................................... $83.32(9) $79.61(10) REVPAR % change.................................... 4.7%(9) -- COURTYARD HOTELS (54 properties with 7,940 rooms)(11) Average daily rate................................. $73.99 $68.86 Occupancy %........................................ 80.5% 80.4% REVPAR(8).......................................... $59.54 $55.37 REVPAR % change.................................... 7.5% -- RESIDENCE INNS (18 properties with 2,178 rooms) Average daily rate................................. $85.07 $79.58 Occupancy %........................................ 86.6% 85.6% REVPAR(8).......................................... $73.69 $68.12 REVPAR % change.................................... 8.2% -- </TABLE> - -------- (1) Pro forma for the 1994 addition of 18 full-service properties (one of which was sold in December 1995), the 1994 sale of 14 senior living communities, the 1994 sale of 26 Fairfield Inns, the 1995 acquisition of eight full-service properties (excluding the Marriott World Trade Center), the 1995 sale/leaseback of 37 Courtyard properties, the 1995 sale of the four remaining Fairfield Inns, the May 1995 Debt Offering (as defined herein), the December 1995 Debt Offering (as defined herein), the 1996 acquisition of a controlling interest in the San Diego Marriott Hotel and Marina, the 1996 acquisition of the Toronto Delta Meadowvale, the 1996 purchase of an 83% interest in the mortgage loans secured by the Newport Beach Marriott Suites, the Pending Acquisitions and the Pending Dispositions. See "Pro Forma Condensed Consolidated Financial Data." (2) For fiscal years 1995 and 1994, the Company recorded extraordinary losses on the extinguishment of debt of $20 million and $6 million, respectively, after taxes. For fiscal years 1995 and 1994, the Company recorded a loss from discontinued operations of $61 million and $6 million, respectively, after taxes. (3) EBITDA consists of the sum of consolidated net income (loss) from continuing operations, interest expense, income taxes, depreciation and amortization and certain other noncash charges (principally noncash write- downs of lodging properties and equity in earnings of affiliates, net of distributions received). The Company considers EBITDA to be an indicative measure of the Company's operating performance due to the significance of the Company's long-lived assets and because EBITDA can be used to measure the Company's ability to service debt, fund capital expenditures and expand its business; however, such information should not be considered as an alternative to net income, operating profit, cash flows from operations, or any other operating or liquidity performance measure prescribed by generally accepted accounting principles. Cash expenditures for various long-term assets, interest expense and income taxes have been, and will be, incurred which are not reflected in the EBITDA presentation. (4) The ratio of earnings to fixed charges is computed by dividing income (loss) from continuing operations before taxes, interest expense and other fixed charges by total fixed charges, including interest expense, amortization of debt issuance costs and the portion of rent expense which represents interest. The deficiency of earnings to fixed charges is largely the result of depreciation and amortization of $122 million for fiscal year 1995, and $113 million for fiscal year 1994. (5) Pro forma for the 1996 acquisition of a controlling interest in the San Diego Marriott Hotel and Marina, the 1996 acquisition of the Toronto Delta Meadowvale, the 1996 purchase of an 83% interest in the mortgage loans secured by the Newport Beach Marriott Suites, the Pending Acquisitions and the Pending Dispositions. See "Pro Forma Condensed Consolidated Financial Data." (6) As further adjusted to give effect to the Offerings. (7) Consists of the 25 properties owned by the Company for all of 1995 and 1994, except for the 255-room Elk Grove Suites hotel, which is leased to a national hotel chain through 1997 and the Sacramento property, which is operated as an independent hotel. (8) REVPAR represents room revenues generated per available room and excludes food and beverage and other ancillary revenues generated by the property. (9) Excludes the 820-room Marriott World Trade Center acquired in the last week of 1995. (10) Excludes six properties acquired in the last two weeks of fiscal year 1994 and the Detroit Airport Marriott included in the Special Dividend. (11) Includes the 37 properties which the Company sold (subject to a leaseback) to the REIT in 1995. CORPORATE STRUCTURE The chart below presents the organizational corporate structure of Host Marriott and certain of its subsidiaries, after giving effect to the Special Dividend (including the Company's properties and other material investments as of March 15, 1996). [FLOW CHART APPEARS HERE] (1) Excludes one full-service property under construction located in Mexico City, Mexico. (2) During February 1996, the Company entered into an agreement to sell and lease back 16 of the 17 Courtyard properties and 18 Residence Inns. See "Business and Properties--Pending Dispositions."

parsed_sections/prospectus_summary/1996/CIK0000315272_harcor_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary is qualified in its entirety by the more detailed information and the consolidated financial statements and notes thereto appearing elsewhere in this Prospectus. Unless otherwise indicated all information in this Prospectus assumes that the Underwriters' over-allotment option will not be exercised. Certain terms relating to the oil and gas industry are defined in the Glossary of Oil and Gas Terms included elsewhere in this Prospectus. Investors should carefully consider the information set forth in "Risk Factors." THE COMPANY GENERAL HarCor Energy, Inc. is an independent energy company engaged in the acquisition, exploitation and exploration of onshore crude oil and natural gas properties in the United States. Since 1987 when the present management group acquired control of the Company, HarCor has grown through selective acquisitions and development drilling, with estimated proved reserves increasing from 1.35 MMBOE as of January 1, 1990 to 29.9 MMBOE as of January 1, 1996, at an average replacement cost of $2.62 per BOE. The Company's operations are currently focused in the San Joaquin Basin of California, South Texas and the Permian Basin of West Texas. As of January 1, 1996, the Company's proved reserves, as estimated by the Company's independent petroleum engineers, consisted of 15.3 MMBbls of crude oil and NGLs and 87.6 Bcf of natural gas with a Pre-tax SEC 10 Value of $124.5 million, approximately 84% of which was attributable to net proved reserves located in the Lost Hills Field in the San Joaquin Basin. The Company conducts its exploration, development and production activities through strategic alliances with industry partners that are experienced and knowledgeable in the particular geologic basins of activity and that own a significant interest in the jointly owned properties. The industry partner is generally designated as the operator of the jointly owned properties, thereby allowing the Company to avoid the cost of maintaining the personnel and other resources necessary to be an operator. The Company believes, however, that its ownership of meaningful working interests in its properties, its contractual rights to approve drilling budgets or propose wells and its experienced team of oil and gas professionals allow the Company to control or significantly influence the operators' decisions affecting the magnitude and timing of exploration, development and production activities on its properties. Through geographic concentration and tight control over oil and gas operating and general and administrative expenses, the Company has maintained a relatively low cost structure. For the year ended December 31, 1995, the Company had an average production cost of $3.99 per BOE and general and administrative expenses of $1.80 per BOE. BUSINESS STRATEGY The Company's business objective is to increase its hydrocarbon reserves as economically as possible by: - Continuing to develop its San Joaquin Basin, South Texas and Permian Basin properties through additional drilling and secondary recovery activities; - Using the cash flow from its existing properties and the proceeds from the Offering to engage in exploration activities with experienced and technologically knowledgeable industry partners, initially onshore Texas and Louisiana; - Acquiring onshore oil and gas properties with significant development potential; and - Continuing to maintain relatively low production costs through geographic concentration and tight control over operating and general and administrative expenses. DEVELOPMENT ACTIVITIES San Joaquin Basin. Approximately 20.8 MMBOE, or 69.4%, of the Company's total proved reserves as of January 1, 1996 were classified as proved undeveloped by Ryder Scott Company ("Ryder Scott"). Substantially all of the Company's undeveloped reserves are located in the Lost Hills Field in the San Joaquin Basin. Bakersfield Energy Resources, Inc. ("Bakersfield Energy"), a company with extensive experience in the San Joaquin Basin, is the operator of substantially all of HarCor's oil and gas properties in the San Joaquin Basin. As of March 31, 1996, the Company had identified 173 new gross wells which it intends to drill during the next five years to fully develop the proved reserves on the properties, of which 48 are expected to be drilled in 1996. The Company also plans to commence a secondary recovery waterflood project in the fourth quarter of 1996 with respect to a portion of its properties in the Lost Hills Field. In addition, the Company has completed a horizontal well in the Lost Hills Field to test a possible extension of the current proved area of the field and to evaluate the use of horizontal wells to eliminate the need to drill certain infill vertical wells. The Company has identified 60 potential locations for future development of probable and possible reserves located on the San Joaquin Basin properties. The San Joaquin Basin properties produce a light (approximately 40() gravity), low sulfur crude oil that commands a substantial price premium to the heavier crude oils typically produced in California. The associated natural gas produced with the crude oil has a high Btu content (approximately 1,240 Btu) which yields in excess of 2 gallons of NGLs per Mcf of natural gas when processed in the Company's gas processing plant located in the San Joaquin Basin. Since acquiring the properties in June 1994, the Company has drilled 76 gross development wells on the San Joaquin Basin properties, through March 31, 1996. As a result of such drilling activity, the Company's average daily production has increased from 546 Bbls of oil and 7,195 Mcf of gas for the month ended June 30, 1994 to 1,336 Bbls of oil and 13,895 Mcf of gas based on the quarter ended March 31, 1996. The Company's net proved reserves from the San Joaquin Basin properties have increased from 14.4 MMBOE as of January 1, 1994, to 22.7 MMBOE as of January 1, 1996, at an average replacement cost of $1.65 per BOE. The Pre-tax SEC 10 Value of the Company's San Joaquin Basin properties as of January 1, 1996 was $105.2 million as estimated by Ryder Scott. In addition to the extensive development drilling program in the Lost Hills Field, the Company also plans to undertake a secondary oil recovery program to further increase reserves and production from the field. Using primary production techniques, it is estimated by Ryder Scott, as of January 1, 1996, that the Ellis Lease located in the Lost Hills Field has proved reserves net to the Company of approximately 9.0 MMBbls of crude oil. In addition to primary development, the Company intends to increase recovery rates by implementing a secondary recovery waterflood project in the Diatomite Zone on the Ellis Lease, which is similar to waterflood projects currently used by other oil and gas companies operating in the Lost Hills Field. The first phase of the Ellis Lease waterflood project is planned to be initiated in the fourth quarter of 1996, with expansion planned in 1997 and 1998 to cover the entire area currently estimated to cover proved reserves. Ryder Scott estimates that the Company's Ellis Lease will yield an additional 3.7 MMBbls of proved undeveloped secondary recovery crude oil reserves utilizing the waterflood recovery method. In addition, the Company will commence a feasibility study for waterflooding the Reef Ridge Shale and Antelope Shale formations on its San Joaquin Basin properties. During 1995, the Company and Bakersfield Energy completed a three-dimensional ("3-D") reservoir model of the Diatomite Zone on the Ellis Lease, the results of which are being used to examine various means of further optimizing its planned Ellis Lease waterflood, including the use of horizontal drilling on the property, as well as to assist the Company with additional computer simulation modeling of hot water, steam and CO(2) recovery techniques. In the fourth quarter of 1995, the Company undertook studies to evaluate the use of horizontal drilling technology on its San Joaquin Basin properties. As a result of these studies, the first of two horizontal wells planned for 1996 has been drilled and completed on the Ellis Lease in the Diatomite Zone at a vertical depth of approximately 3,450 feet with an approximate 2,000 foot lateral drilled outside of the Diatomite Zone's previous development to test a possible extension of the current proved area of the field and to evaluate the use of horizontal wells to eliminate the drilling of certain infill vertical wells on the Ellis Lease. During the five days of production tests, the well flowed at an average rate of 418 BOE per day. The second horizontal well is planned to evaluate its applicability to producing the deeper MacDonald Shale formation at a depth of AREAS OF 3-D CAEX ACTIVITY Three geological trend maps depicting cumulative natural gas production in the South Texas, West Texas and South Louisiana regions in which the Company intends to pursue its exploration prospects. THE PRODUCTION TREND MAPS DEPICT ESTIMATES OF CUMULATIVE NATURAL GAS PRODUCTION AS REPORTED BY THE OPERATORS IN THE REGIONS SHOWN. SUBSTANTIALLY ALL OF THE PRODUCTION SHOWN IN THESE REGIONS IS FROM COMPANIES OTHER THAN HARCOR ENERGY, INC. approximately 5,200 feet on the Ellis Lease. If these wells are successful, potential additional horizontal locations may be identified for future drilling on the Ellis Lease as well as in areas currently outside the proved areas of the Company's Truman and Tisdale Leases. The Company acquired its San Joaquin Basin properties from Bakersfield Energy in June 1994. Bakersfield Energy, which originally acquired these properties in 1990, retained a 25% working interest in these properties and has continued to serve as the operator. In addition, the Company entered into a joint acquisition agreement with Bakersfield Energy which gives each party the right through June 1997 to participate equally in any acquisition of oil and gas interests located within the state of California by the other party. Gas Plant. As part of the acquisition of the San Joaquin Basin properties, the Company purchased a modern, refrigeration liquid extraction facility with a rated inlet capacity of 23 MMcf of gas per day and a rated liquid fractionation capacity of 100,000 gallons of NGLs per day. Currently, the plant processes all of the gas produced from the Company's San Joaquin Basin properties as well as gas produced by third parties. The plant can deliver dry, residue gas into multiple pipeline systems allowing the Company to enter into contract and marketing arrangements that are not tied to the sometimes unfavorable and volatile California spot market. South Texas. In October 1992, the Company acquired an interest in nine gas fields located in South Texas for a total purchase price of approximately $5.3 million. Subsequent development activities have resulted in average daily production on the South Texas properties of 36 Bbls of crude oil and 4,068 Mcf of natural gas for the quarter ended March 31, 1996 and net proved reserves as estimated by Ryder Scott of 1.7 MMBOE at January 1, 1996. Approximately 51% of the Company's reserves in the South Texas properties is attributable to its interests in the Hostetter Field. The Company owns interests in 17 gross (four net) wells and owns approximately 2,525 gross (956 net) acres in the Hostetter Field. These wells are operated by Texaco Exploration and Production Company ("Texaco") and Cabot Oil and Gas Corporation ("Cabot"). The Company currently believes that there are opportunities for additional development and recompletion work in this field. Permian Basin (West Texas/New Mexico). Since 1989, the Company, in conjunction with Penroc Oil Corporation, has jointly identified and acquired interests in oil and gas properties located in the Permian Basin with total acquisition costs net to the Company of $3.4 million. Subsequent remedial work, development drilling activity and secondary recovery procedures have resulted in average daily production of 269 Bbls of crude oil and 416 Mcf of natural gas based on production in the quarter ended March 31, 1996. Ryder Scott's estimate of the Company's net proved reserves in the Permian Basin as of January 1, 1996 was 2.1 MMBOE. EXPLORATION ACTIVITIES Consistent with its core objective of increasing its reserves as economically as possible, the Company has commenced a program of identifying and developing exploratory prospects in areas where the Company or its partners have expertise. HarCor intends to manage its exploration and economic risks by (i) generating prospects with the assistance of strategic industry partners that are experienced in 3-D seismic and computer assisted exploration ("CAEX") technology, (ii) identifying and pursuing prospects with multiple potential productive zones, (iii) funding its exploration activities with proceeds from the Offering and internally generated cash flow and (iv) limiting its cash exposure to approximately $500,000 for each well. In addition, the Company intends to further manage the drilling risks associated with the exploration projects in South Texas and South Louisiana by drilling multipay prospects that combine shallower lower risk zones that have previously proven productive in the area with deeper potential target zones. In furtherance of this strategy, the Company has recently entered into an agreement with South Coast Exploration Company and its affiliated company Interactive Exploration Solutions, Inc. (collectively, "South Coast Exploration"), which have extensive experience utilizing 3-D seismic and CAEX techniques, to jointly pursue exploration projects on developed and undeveloped properties in South Texas, the Permian Basin of West Texas and South Louisiana. The Company and South Coast Exploration have jointly formed an experienced geologic team (the "GeoTeam") to work exclusively to pursue these joint projects. The following table sets forth certain information as of May 30, 1996 relating to the exploration prospects that the Company currently plans to pursue over the 18-month period ending December 31, 1997, including the estimated cost to the Company for 3-D seismic surveys, leasehold acquisitions and drilling of exploratory and development wells relating to such prospects through such date. <TABLE> <CAPTION> GROSS ACREAGE OWNED OR PROSPECTIVE PROSPECTIVE ESTIMATED COST TO COMPANY(3) UNDER SQUARE MILES OF GROSS ------------------------------------- PROSPECT AREA OPTION(1) 3-D SEISMIC DATA WELLS(2) SEISMIC LAND DRILLING TOTAL - ----------------------------------------------------- ---------------- ----------- ------- ------ -------- ------- (IN THOUSANDS) <S> <C> <C> <C> <C> <C> <C> <C> South Texas (Upper Wilcox Trend)........ 23,000 83 18 $ 720 $ 640 $ 8,900 $10,260 West Texas (Permian Basin).............. 80,320 210 4 330 480 900 1,710 South Louisiana (Terrebonne Parish)..... 5,529 46 4 235 240 1,300 1,775 -- ------- ---- ------ ------ ------- ------- Total........................... 108,849 339 26 $1,285 $1,360 $11,100 $13,745 ======= ==== == ====== ====== ======= ======= </TABLE> - --------------- (1) Includes acreage in which the Company currently has leases, options to acquire leases, contingent lease rights or fee interests. (2) Includes 10 exploratory wells and 16 development wells. (3) The estimated cost to the Company is based on (i) preliminary estimates of seismic survey costs, leasehold acquisition costs and drilling and completion costs and (ii) assumed levels of participation by the Company in the costs thereof. Actual costs and participation levels may vary from such estimates. The following sets forth a brief summary of each exploration prospect that the Company has in progress. This discussion only includes prospects on which the Company has acquired substantial leasehold interests, options to acquire leasehold interests or other contingent lease rights and has performed or is in the process of arranging related 3-D seismic surveys. See "Risk Factors -- Risk of Exploratory Drilling Activities" for a discussion of the risks associated with these exploration prospects. South Texas (Upper Wilcox Trend). HarCor has entered into an agreement with Cabot to participate in an 83 square mile 3-D seismic survey in southeast McMullen and northwest Duval Counties, Texas. The expanded and over-pressured Upper Wilcox Trend in the survey area has significant potential for the application of 3-D seismic technology due to complex faulting in the area and stacking of multiple pay zones in both the shallow normal-pressured zones such as the Cole Sand at 1,600 feet and the over-pressured zones such as the House Sand at approximately 12,000 feet. The 3-D seismic survey in the Upper Wilcox Trend commenced in April 1996 and is expected to be completed in July 1996. The survey is designed to evaluate prospects already identified and generate new drilling prospects with both development and exploration potential in the area of the Hostetter Field and the nearby Bonne Terre Field. The survey will evaluate approximately 40 geologic formations at depths ranging between 8,500 feet and 13,000 feet for the expanded over-pressured Upper Wilcox formation and as shallow as 1,500 feet for other intervals. HarCor has joined with Cabot to acquire, or to acquire options for, leasehold interests in 23,000 gross acres inside the 3-D survey area as of May 30, 1996. Production to date in the survey area, including production from the Hostetter Field and the Bonne Terre Field, is estimated to be approximately 450 Bcf of natural gas equivalent. On May 29, 1996, HarCor assigned to South Coast Exploration and one of its affiliates 40% of its rights in its agreement with Cabot in exchange for the interest it received in the South Louisiana project described below. West Texas (Permian Basin). In May 1996, the Company entered into an agreement to participate in a 210 square mile 3-D seismic survey in Reeves County, Texas with Penwell Energy, Inc. ("Penwell") which, along with its investment partner MCN Energy, has extensive recent experience in the Permian Basin. Penwell initially derived its rights to about half of the area in the Penwell survey (74,880 fee mineral acres held by Texaco) from an agreement dated September 1995 among Texaco, Penwell and Meridian Oil Inc. Production in the field within or adjoining gross acreage in which Penwell presently owns or has contingent lease rights is estimated to be 455 Bcf of natural gas equivalents, most of which has been produced from the Silurian/Devonian Fusselman formation at depths between 10,000 feet and 17,000 feet, where the Company intends to focus. South Louisiana (Terrebonne Parish). South Coast Exploration and its affiliate have acquired an interest in a 46 square mile 3-D seismic survey to be conducted in south Terrebonne Parish, Louisiana. To date, the Lapeyrouse Field, which is located in the survey area, has produced approximately 350 Bcf of natural gas equivalents. Based upon 2-D seismic surveys and reports from independent engineers, South Coast Exploration's joint venture preliminarily has identified potential exploration sites in the area to drill an estimated four test wells in the next 18 months. Two of these potential exploration sites have been identified in the Bourg Sands between 14,500 feet and 15,500 feet and the remaining two potential exploration sites have been identified in traps associated with faulting in a series of Upper Middle Miocene Sands between 15,000 feet and 17,000 feet. South Coast Exploration and its affiliate have each assigned to HarCor a portion of their interest in this survey. SELECTIVE OPPORTUNISTIC ACQUISITIONS The Company also intends to pursue selective strategic acquisitions of attractively priced, underexploited onshore oil and gas properties in the United States. As a consequence of its working relationship with South Coast Exploration, the Company will also pursue property acquisitions where it can utilize 3-D seismic and CAEX technology to identify additional potential reserves. Management intends to continue to be active in developing acquisition opportunities rather than pursuing opportunities in the auction market. Management believes that this strategy has resulted in lower acquisition prices for its oil and gas properties. THE OFFERING <TABLE> <S> <C> Shares of Common Stock Offered: By the Company(1)........................... 5,059,059 shares By the Selling Stockholders................. 1,340,941 shares Total............................... 6,400,000 shares Shares of Common Stock Outstanding(1)(2): Before the Offering......................... 8,696,207 shares After the Offering.......................... 13,755,266 shares Use of Proceeds............................... To redeem approximately $10.9 million of principal amount of, together with accrued interest and prepayment premium on, the Company's 14 7/8% Senior Notes due 2002; and to fund 3-D seismic and leasehold acquisitions, 3-D seismic and CAEX processing and interpretation, exploratory and development drilling expenditures and other general corporate purposes. Nasdaq National Market Symbol................. "HARC" </TABLE> - --------------- (1) Does not include up to 960,000 shares of Common Stock which may be sold by the Company pursuant to the Underwriters' over-allotment option. (2) Does not include (i) options to purchase 898,500 shares of Common Stock which have been granted under the Company's stock option plans and (ii) 1,697,772 shares of Common Stock issuable upon conversion of the Company's outstanding Series A, B, C and E Preferred Stock. Also does not include 2,289,791 shares of Common Stock issuable upon exercise of outstanding warrants of the Company. See "Description of Capital Stock and Other Securities." SUMMARY FINANCIAL DATA The following table presents summary historical consolidated financial data of the Company for the five years ended December 31, 1995, which have been derived from the Company's consolidated financial statements. The consolidated financial data of the Company for the three months ended March 31, 1995 and 1996 have been derived from the Company's interim consolidated financial statements which, in the opinion of management of the Company, have been prepared on the same basis as the annual consolidated financial statements and include all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the financial data for such periods. The information in this table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and the notes thereto included elsewhere herein. <TABLE> <CAPTION> THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ---------------------------------------------------- ------------------ 1991 1992 1993 1994 1995 1995 1996 ------- ------- ------- ------- ------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA(1): Revenues: Oil and gas revenues........................ $ 5,776 $ 6,162 $ 6,507 $10,982 $16,030 $ 3,683 $ 5,956 Gas plant revenues.......................... -- -- -- 1,978 6,362 1,786 1,624 Interest income and other................... 258 504 218 253 203 15 17 ------- ------- ------- ------- ------- ------- ------- Total revenues........................ 6,034 6,666 6,725 13,213 22,595 5,484 7,597 ------- ------- ------- ------- ------- ------- ------- Costs and expenses: Production costs............................ 2,670 2,676 2,249 3,610 5,263 1,263 1,437 Gas plant costs............................. -- -- -- 1,708 3,704 1,410 956 Dry hole, impairment and abandonment costs..................................... 1,287 402 41 75 4 -- -- Engineering and geological costs............ 770 536 188 254 307 89 101 Depletion, depreciation and amortization.... 2,222 2,142 2,641 3,897 5,973 1,346 1,707 General and administrative expenses......... 2,372 2,085 2,105 2,014 2,744 666 721 Interest expense(2)......................... 872 1,048 542 2,269 6,847 1,130 2,642 Other....................................... -- -- -- 203 483 -- 261 ------- ------- ------- ------- ------- ------- ------- Total costs and expenses.............. 10,193 8,889 7,766 14,030 25,325 5,904 7,825 ------- ------- ------- ------- ------- ------- ------- Loss before minority interests................ (4,159) (2,223) (1,041) (817) (2,730) (421) (228) Loss attributable to minority interests....... 2,698 809 -- -- -- -- -- Loss attributable to early extinguishment of debt........................................ -- -- -- (122) (1,888) -- -- ------- ------- ------- ------- ------- ------- ------- Net loss...................................... (1,461) (1,414) (1,041) (939) (4,618) (421) (228) Dividends on preferred stock.................. (40) (32) (246) (795) (1,000) (335) (132) Accretion on redeemable preferred stock....... -- -- -- (156) (2,147) (81) -- ------- ------- ------- ------- ------- ------- ------- Net loss applicable to common stock........... $(1,501) $(1,446) $(1,287) $(1,890) $(7,765) $ (837) $ (360) ======= ======= ======= ======= ======= ======= ======= Net loss applicable to common stock per common and common equivalent share................. $ (0.50) $ (0.41) $ (0.23) $ (0.29) $ (0.98) $ (0.12) $ (0.04) Weighted average number of common and common equivalent shares.................... 2,973 3,512 5,492 6,447 7,904 7,226 8,685 OTHER DATA: EBITDAX(3).................................... $ 992 $ 1,906 $ 2,371 $ 5,881 $10,884 $ 2,145 $ 4,483 Capital expenditures.......................... 2,593 4,237 4,283 45,608(4) 8,953 18 9,635(5) </TABLE> <TABLE> <CAPTION> MARCH 31, 1996 -------------------------- ACTUAL AS ADJUSTED(6) ------- -------------- (IN THOUSANDS) <S> <C> <C> BALANCE SHEET DATA: Cash and cash equivalents.............................................................. $ 3,977 $ 13,986 Total assets........................................................................... 86,770 96,007 Total debt............................................................................. 71,276 60,682 Stockholders' equity................................................................... 9,564 31,382 </TABLE> (1) Includes results of operations in 1991 and 1992 from HCO Energy, Ltd. ("HCO"), the Company's former Canadian affiliate. In December 1992, the Company deconsolidated HCO, and in January 1993 the Company sold all of its remaining shares of HCO common stock. (2) Interest expense includes $29,000, $42,000, $64,000, $220,000 and $709,000 in 1991, 1992, 1993, 1994 and 1995, respectively, and $117,000 and $240,000 in the three months ended March 31, 1995 and 1996, respectively, related to amortization of deferred financing costs. (3) EBITDAX represents income (loss) before provision for income tax and extraordinary items and before depletion, depreciation, amortization, interest expense, minority interests, non-recurring charges and exploration expenses. EBITDAX is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur indebtedness. However, EBITDAX should not be considered as an alternative to net income as a measure of operating results or to cash flows as a measure of liquidity. (4) Includes $42 million of cash acquisition costs incurred in connection with the acquisition of the San Joaquin Basin properties. (5) Includes $8.2 million relating to drilling costs which were accrued but unpaid at December 31, 1995 resulting from the Company's 1995 drilling program. (6) As adjusted to (i) reflect an assumed public offering price of $5.125 per share (the closing price on the Nasdaq National Market on July 3, 1996) and (ii) an extraordinary charge estimated at $2,175,000 relating to early extinguishment of debt. Does not include (i) options to purchase 898,500 shares of Common Stock which have been granted under the Company's stock option plans; (ii) 1,697,772 shares of Common Stock issuable upon conversion of the Company's outstanding Series A, B, C and E Preferred Stock; and (iii) 2,289,791 shares of Common Stock issuable upon exercise of outstanding warrants of the Company. See "Description of Capital Stock and Other Securities." The Company repaid $2 million of the outstanding balance under the Credit Facility subsequent to March 31, 1996 from cash flow generated by operations. Pending the use of proceeds from the Offering to fund certain exploration expenditures, the Company will use approximately $5.5 million to repay amounts outstanding under the Credit Facility. The Company will reborrow under the Credit Facility to fund capital expenditures and operations as necessary. See "Use of Proceeds." SUMMARY OIL AND GAS RESERVE DATA The following table sets forth summary information with respect to the Company's estimated proved oil and gas reserves. The estimates of the Company's proved reserves and future net revenues were primarily derived from reports prepared by Ryder Scott. As of December 31, 1993, 1994 and 1995, the average sales prices used for estimating the proved reserves and future net revenues were $11.65, $15.86 and $17.10 per Bbl of crude oil and $2.16, $2.11 and $2.35 per Mcf of natural gas, respectively (which prices with respect to natural gas reflect the effects of the Company's hedging activities). See "Risk Factors -- Reliance on Estimates of Proved Reserves," "-- Certain Business Risks" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." A summary report of Ryder Scott is included as Annex A hereto. <TABLE> <CAPTION> TOTAL PROVED RESERVES AS OF DECEMBER 31, -------------------------------- 1993 1994 1995 ------- ------- -------- (DOLLARS IN THOUSANDS) <S> <C> <C> <C> Estimated Proved Reserves: Liquids (MBbl)............................................. -- 2,908 2,979 Crude oil (MBbl)........................................... 1,724 10,581 12,358 Natural gas (MMcf)......................................... 17,169 69,802 87,637 Crude oil equivalents (MBOE)............................... 4,586 25,123 29,943 Pre-tax SEC 10 Value......................................... $20,780 $86,680 $124,498 Percent Proved Undeveloped Reserves (BOE).................... 39.8% 67.4% 69.4% </TABLE> SUMMARY OPERATING DATA The following table sets forth summary information with respect to the Company's operations for the periods indicated. <TABLE> <CAPTION> THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ------------------------ ---------------- 1993 1994 1995 1995 1996 ----- ----- ------ ------ ------ <S> <C> <C> <C> <C> <C> Average Net Daily Production: Crude oil and plant NGLs (Bbls)................. 505 1,128 1,834 1,657 2,450 Natural gas (Mcf)............................... 5,514 9,239 14,074 12,855 19,240 Crude oil equivalents (BOE)..................... 1,424 2,668 4,180 3,800 5,657 Average Sales Price(1): Crude oil (per Bbl)............................. $16.46 $15.79 $16.49 $16.15 $17.33 Natural gas (per Mcf)........................... $ 1.77 $ 1.82 $ 1.64 $ 1.62 $ 1.86 Cost Data (per BOE)(2): Average production costs(3)..................... $ 4.41 $ 4.13 $ 3.99 $ 4.14 $ 3.22 Depletion, depreciation and amortization........ $ 5.13 $ 4.26 $ 3.60(4) $ 4.26 $ 3.60 General and administrative expense.............. $ 4.13 $ 2.32 $ 1.80 $ 2.18 $ 1.61 Total Proved Reserves to Production Ratio......... 8.8 25.8 19.6 -- -- Crude Oil and NGLs as a Percentage of Total Proved Reserve Volumes................................. 37.6% 53.7% 51.2% -- -- Producing Wells (at end of period): Gross wells..................................... 334 379 424 379 431 Net wells....................................... 104 150 183 150 187 </TABLE> - --------------- (1) Calculation of average selling price per barrel of crude oil and condensate excludes certain revenues attributable to hydrocarbon liquids and plant product sales. All average price data reflect the effects of the Company's fixed-price sales and hedging contracts. See Note 10 of Notes to the Consolidated Financial Statements. (2) Excludes operating costs related to the gas plant. (3) Includes production and ad valorem taxes. (4) Excludes the effect of the impairment write-down pursuant to implementation of SFAS 121 ("Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"). See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

parsed_sections/prospectus_summary/1996/CIK0000315547_first_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a selective summary of certain information contained in this Prospectus and is qualified in its entirety by the information and financial statements appearing elsewhere herein. Prospective purchasers are urged to read the entire Prospectus carefully, and to give particular attention to the section entitled "RISK FACTORS" before making any decision to purchase any of the shares offered hereby. THE COMPANY AND THE BANK First Commercial Bancorp, Inc. (the "Company") is a Sacramento, California-based bank holding company which reincorporated in Delaware in 1990 and which conducts its operations through its sole subsidiary, First Commercial Bank, a California state-chartered bank (the "Bank"). The Bank commenced operations in 1979. The Bank operates a general commercial banking business through its headquarters and 6 branch offices located in Sacramento, Roseville (2 branches), San Francisco, Concord and Campbell, California. Deposits in the Bank are insured by the Federal Deposit Insurance Corporation ("FDIC") to the maximum extent permitted by law. The Company is operating under the terms of a Memorandum of Understanding ("MOU") with the Federal Reserve Bank of San Francisco (the "FRB"). The Bank is operating under the terms of a Cease and Desist order ("FDIC Cease and Desist Order") issued by the FDIC and a second amended final order ("SBD Final Order") issued by the California State Banking Department ("SBD") (collectively, the "Orders") and also is subject to capital impairment orders dated August 3, 1994, November 3, 1994, February 17, March 13, May 15 and August 7, 1995 issued by the SBD (the "Capital Impairment Orders"). The MOU and the Orders have placed significant operating and dividend restrictions on the Company and the Bank. In addition, the FDIC notified the Bank that as of July 30, 1995, the Bank was considered "critically undercapitalized" under the Prompt Corrective Action ("PCA") provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). However, as a result of the capital infusion represented by the First Debenture, the Bank was upgraded to "undercapitalized" as of October 31, 1995 and, as of December 31, 1995, as a result of the infusion of $1.5 million provided by First Banks' purchase of 15,000,000 shares of Common Stock and the proceeds of the Second Debenture, the Bank would be considered "adequately capitalized" under such law. The Company and the Bank remain subject to significant operating restrictions, however, including limitations on the payment of dividends. For a full description of the foregoing, see "RISK FACTORS - Failure to Meet Capital Adequacy Requirements and Regulatory Orders" and "REGULATORY AGREEMENTS AND ORDERS." The Company grew substantially during the 1980's, primarily through the acquisition of thirteen branches from California Canadian Bank and the acquisition of Citizens Bank of Roseville. Between 1988 and 1992, the Company focused its lending activities on real estate construction loans and through June of 1994, on loans to small and medium-sized businesses. For deposits, the Company focused on title insurance and escrow companies as well as on small-to-medium- sized business depositors. The focused lending and deposit-generation strategy which the Company pursued during this time period involved certain risk attributes generally not present in a more diversified lending and deposit strategy. See "RISK FACTORS - Recent Losses and Risk of Continued Losses." At December 31, 1993, the Company's assets reached $349,777,000 with $83,682,000 or 42.9% of the Company's gross loans in real estate construction and real estate secured loans, and with $86,549,000 or 26.73% of its deposits in title and escrow accounts, and $237,247,000 in all other deposits. As of December 31, 1994, the Company had consolidated total assets, deposits and stockholders' equity of $239,306,000, $233,536,000 and $4,355,000, respectively. At September 30, 1995, the Company had consolidated total assets, deposits and stockholders' equity of $172,923,000, $167,239,000 and $(1,435,000), respectively. The Company reported net losses in 1992, 1993 and 1994 of $(3,518,000), $(7,311,000) and $(18,190,000), respectively, due primarily to deterioration in its real estate lending portfolio and resultant write-downs and increased loan loss provisions. The Company reported a net loss of $(6,301,000) for the nine months ended September 30, 1995 due primarily to the continued write-down of, and other expenses associated with, real estate acquired through foreclosure or Other Real Estate Owned ("OREO"), further deterioration in the loan portfolio and the reduction in interest on loans resulting from the decrease in the amount of loans outstanding. As a result, at September 30, 1995, the Company's capital was reduced to $(1,435,000) and the Company and the Bank's Tier I leverage ratios declined to (0.83)% and 2.41%, respectively. During the second quarter of 1995, the Bank took substantial write-offs and write-downs of loans and other assets. The most significant write-off resulted from the bankruptcy of one of the Bank's largest borrowers. As a result, the Company's Tier I capital was reduced to (0.23)% at June 30, 1995, and the Bank's Tier I capital would have been reduced to 0.27%, but for the investment of $1.5 million in Bank nonvoting noncumulative preferred stock (the "Bank Preferred Stock") by James F. Dierberg, Chairman, President and Chief Executive Officer of First Banks, pursuant to the terms of the Standby Stock Purchase Agreement. See "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY." As discussed further below, Dierberg's investment was made under emergency circumstances to forestall possible closure of the Bank by its regulatory authorities. In response to these losses, the Company developed a restructuring plan to redirect the lending and deposit strategy of the Bank. The restructuring plan had six elements: (a) reduce total assets, (b) reduce operating expenses and staffing levels, (c) reduce nonperforming loans and increase reserve coverage of such loans, (d) maintain the commercial and industrial lending portfolio, but significantly reduce real estate construction lending, (e) eliminate volatile deposits and close non-strategic branch offices, and (f) maintain high levels of liquidity to facilitate the asset and deposit dispositions. Implementation of this plan began during the third quarter of 1994 and, as of September 30, 1995, has had the following results: - Total assets were reduced 51% from $349,777,000 at December 1993 to $172,923,000. - Nonperforming assets have been reduced 79% over the same period from $35,321,000 to $7,401,000 and the loan loss reserve coverage of nonperforming loans reached 90.48%. - The nonowner occupied construction loan portfolio was reduced by 86%, from $32,432,000 to $4,479,000. - Core monthly operating expenses were reduced 40% from $1,123,000 to $675,000. - Escrow and title industry deposits were reduced 99% from $86,549,000 at December 31, 1993 to $1,148,000. - Staffing has been reduced 48% from 185 to 97 employees as of September 30, 1995. By December 31, 1995, the FTE staff was reduced to 63 employees. - The Bank's liquidity ratio has been maintained above 30%. - The San Diego branch office was sold in January of 1995, and the Santa Rosa branch office was closed during April 1995. At December 31, 1995, the Company's loan portfolio was concentrated in twenty (20) loans, one (1) of which exceeded the Bank's secured and unsecured lending limit at that date. Commitments to these borrowers represent $31.2 million or 42% of the Bank's total loan portfolio at December 31, 1995. Outstanding balances to these borrowers at December 31, 1995 were $23.6 million or 32% of the Bank's loan portfolio. Four (4) of these loans, representing $7.4 million or 10% of the Bank's total loan portfolio, have been classified by the Bank as "Substandard." One (1) loan in the amount of $754,000 is on nonaccrual status. At December 31, 1995 the Bank's unsecured lending limit was approximately $2.5 million and its combined secured and unsecured lending limit was approximately $4.1 million. At December 31, 1995, the Bank had one (1) loan, representing $3.8 million, which exceeded its unsecured lending limit and one (1) loan, representing $5.5 million that exceeded the secured and unsecured lending limit. The Company intends to be able to continue to satisfy its larger customer's borrowing needs by participating loan amounts above its lending limit with other banks until such time as the Bank becomes recapitalized. On August 7, 1995, the Company entered into an Amended and Restated Stock Purchase Agreement (the "Stock Purchase Agreement") with First Banks, Inc., a Missouri corporation ("First Banks"), pursuant to which First Banks has acquired 65,000,000 shares of Common Stock of the Company at a total purchase price of $6,500,000. Previously, James F. Dierberg, Chairman, President and Chief Executive Officer of First Banks, provided interim financing for the Company's subsidiary, First Commercial Bank (the "Bank"), by purchasing $1.5 million of nonvoting, noncumulative preferred stock of the Bank (the "Bank Preferred Stock") on June 30, 1995, thus forestalling possible closure of the Bank by the FDIC. However, notwithstanding Dierberg's $1.5 million investment in Bank stock, the Bank's Tier I capital ratio at June 30, 1995 remained below 2.0% and, as a result, the Bank was classified as "critically undercapitalized" at July 30, 1995 and became subject to the FDIC's PCA regulations for critically undercapitalized institutions. The Company and the Bank thus were required by FDICIA to seek sufficient capital to bring the Bank's Tier I capital ratio above 2% or face the possible imposition of a conservatorship or receivership within 90 days. Dierberg's investment occurred pursuant to a Standby Stock Purchase Agreement entered into between the Company, the Bank, Dierberg and First Banks as of June 30, 1995 (the "Standby Stock Purchase Agreement"), which was later amended and restated to become the Stock Purchase Agreement. Subsequently, and pursuant to the Stock Purchase Agreement, on August 23, 1995, First Banks purchased 116,666,666 shares of common stock of the Bank (the "Bank Common Stock") at a price of $0.03 per share, the book value of the Bank Common Stock on August 22, 1995, for a total purchase price of $3.5 million. On August 22, 1995, Dierberg transferred to First Banks all of the shares of Bank Preferred Stock owned by him. The shares of Bank Preferred Stock and Bank Common Stock were exchanged by First Banks for 50,000,000 shares of Company Common Stock on December 28, 1995, pursuant to the terms of the Stock Purchase Agreement. The infusion by First Banks of $3.5 million on August 23, 1995 raised the Bank's Tier I capital level to 2.60%, as a result of which the Bank would have been considered "significantly undercapitalized." As described further below, at October 31, 1995, the Bank used the $1.5 million proceeds from sale of a 12% convertible debenture to raise its Tier I capital level above 3.0% and, as a result, the Bank would have been considered "undercapitalized" under the PCA regulations. Pursuant to the Stock Purchase Agreement, which was amended by the Additional Investment Agreement dated October 31, 1995 (the "Additional Investment Agreement"), First Banks has loaned to the Company a total of $6,500,000, in exchange for the issuance of two 5-year 12% convertible debentures (the "Debentures"), pursuant to which the Company agrees to issue to First Banks a total of 65,000,000 shares of Common Stock in respect of the principal amount of the Debentures and pursuant to which any unpaid and accrued interest amount is convertible into up to additional 39,000,000 shares of Common Stock at the rate of $0.10 per share. The Debentures are secured by all of the shares of Bank common stock held by the Company. The initial Debenture (the "First Debenture") was issued on October 31, 1995 and conversion of the principal and any unconverted interest amount is due on October 31, 2000. The subsequent Debenture (the "Second Debenture") was issued on December 28, 1995 and will mature on December 28, 2000, at which time conversion of the principal amount and any unconverted interest amount is due. The principal and interest amounts of each of the First and Second Debentures is payable in shares of Common Stock or cash. However, cash can be paid only when in the sole and absolute discretion of the Board of Directors of the Company, the Company has sufficient funds to make such payment of interest or principal and can make such a payment in accordance with all applicable regulatory requirements, including receipt of all necessary approvals. Management believes it is unlikely that approval for such cash payments would be received from the FRB in the foreseeable future. The Company must give First Banks 10 days prior written notice of any intention to make a payment on the Debentures. The Company contributed all but $250,000 of the proceeds of the Debentures to the Bank. On December 28, 1995, pursuant to the Stock Purchase Agreement, which was amended by the Standby Agreement dated December 28, 1995 (the "Standby Agreement," Additional Investment Agreement and the Stock Purchase Agreement, are collectively referred to herein as the "Stock Purchase Agreement"), after issuance of the Second Debenture and in order to raise the Bank's Tier I capital to the level required by the Orders, First Banks purchased 15,000,000 shares of Company Common Stock at a price of $0.10 per share, for a total of $1.5 million. As a result of First Banks' purchase of 15,000,000 shares and the issuance of the Second Debenture, at December 31, 1995, the Bank's Tier I capital level reached 6.58% and, accordingly, the Bank would continue to be considered "adequately capitalized" under the FDIC's PCA regulations. As of that date, the Bank would have been considered "well capitalized" under the PCA regulations but for the existence of the Orders, which while outstanding limit the Bank to being considered "adequately capitalized." See "SUPERVISION AND REGULATION." However, the Company and the Bank remain subject to significant operating restrictions and no assurance can be given that the Bank will not suffer future additional losses which will erode the capital condition of the Bank. The Company contributed all of the proceeds of the stock sale to the Bank. See "RISK FACTORS," "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY" and "REGULATORY AGREEMENTS AND ORDERS." As of December 31, 1995, while the Bank met the 6.5% Tier I capital requirement of the FDIC Cease and Desist Order, differences in the method of calculating capital for purposes of the SBD's regulations resulted in the Bank attaining a Tier I capital level, as calculated by the SBD, of 6.45%, thus falling short of the 7.0% capital requirement of the SBD Final Order. On a pro forma basis, at December 31, 1995, the Bank would have required approximately an additional $1,009,000 in capital in order to meet the 7.0% capital requirement of the SBD Final Order. However, the SBD has allowed the Bank to attain the 7.0% capital requirement through the proceeds of this Offering. Unless specified, the Tier I capital numbers for the Bank presented herein have been calculated in accordance with the FDIC's regulations and methodology. See "REGULATORY AGREEMENTS AND ORDERS" and "SUPERVISION AND REGULATION." As a result of the foregoing, as of the date of this Prospectus, First Banks owns 65,000,000 shares of Company Common Stock, or 93.29% of the outstanding shares. Assuming the sale to the Rights Holders and Dividend-Eligible Stockholders of all of the Underlying Shares and Dividend Exchange Shares offered hereby, First Banks would control approximately 50.25% of the outstanding shares of Common Stock of the Company and may acquire up to a total of 104,000,000 additional shares upon conversion of the principal and interest amounts subject to the Debentures. Assuming that all of the principal and interest amounts of the Debentures is converted to Company Common Stock on October 31, 2000 and December 28, 2000, and assuming the sale of all the shares offered hereby to the aforementioned purchases and no interim issuances of Common Stock by the Company, First Banks would control approximately 72.42% of the then outstanding shares of Common Stock. See "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY." Additionally, as a result of the consummation of the transactions contemplated by the Stock Purchase Agreement, as of December 31, 1995, the Tier I leverage capital levels of the Company and the Bank were 2.14% and 6.58%, respectively. As of that date, the Company and the Bank had risk-based capital levels of 4.99% and 12.66%, respectively. First Banks has agreed that, upon the conclusion of the Rights Offering and any Public Offering, First Banks will purchase, if necessary, as a Standby Purchaser and at the Subscription Price, such number of shares of Common Stock remaining unsold in the Offering as may be required to increase the Bank's Tier I capital level to 7.0%. Such issuance of Common Stock may further dilute the voting power and earnings per share, if any, of the Company's stockholders, other than First Banks. See "RISK FACTORS -- Potential Dilution of Voting Power and Earnings Per Share." However, no assurance can be given that the Bank will not experience further operating losses which will erode the capital levels of the Bank or that the Bank will be able to maintain such capital levels at any time after December 31, 1995. See "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY." As of December 31, 1995, the Company believes it has achieved substantial compliance with the requirements of the Company's MOU, the FDIC Cease and Desist Order and the SBD Final Order, except for compliance with the 7.0% Tier I capital requirement of the SBD Final Order. Further compliance with the Company's MOU and the Orders is contemplated to occur through this Offering, including any necessary participation by First Banks. As of December 31, 1995, the Bank had not complied with the Capital Impairment Orders, subjecting the Bank Common Stock to assessment. See "REGULATORY AGREEMENTS AND ORDERS." On December 27, 1995, the stockholders of the Company approved an amendment to the Company's Certificate of Incorporation authorizing an increase in the number of authorized shares of Common Stock to 250,000,000. The Company currently has 69,675,110 shares of Common Stock outstanding. If all shares of Common Stock offered pursuant to the Rights Offering, Public Offering and Dividend Exchange Offering (collectively, the "Offering") are sold, the resulting outstanding Common Stock would be 129,363,985 shares. Additionally, if the maximum number of shares are converted pursuant to the Debentures, the resulting outstanding Common Stock would be 233,363,985 shares. Stockholders other than First Banks, whether or not exercising their Stockholder Rights, may experience substantial dilution in the voting power and earnings per share, if any, of their Common Stock holdings. See "RISK FACTORS - Potential Dilution of Voting Power and Earnings Per Share" and "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY." THE OFFERING The Rights Offering <TABLE> <S> <C> General........................................... Each record holder (a "Rights Holder") of Common Stock at the close of business on October 6, 1995 (the "Rights Record Date") will receive non-transferable subscription rights (the "Stockholder Rights") to purchase shares of Common Stock. The Stockholder Rights will entitle the Rights Holder to purchase from the Company 10.695 shares of Common Stock (the "Underlying Shares") for each share of Common Stock held on the Rights Record Date, at a cash price of $0.10 per share (the "Subscription Price") on the terms and conditions of the Offering. The number of shares of Common Stock issuable upon exercise of Stockholder Rights will be rounded up to the nearest whole number. See "THE OFFERING." The ratio of 10.695 Underlying Shares per share of Common Stock (the "Rights Ratio") was determined by the Board of Directors based on the recently consummated Stock Purchase Agreement, the financial condition of the Company and the Bank, the trading history and per share book value of the Common Stock and other relevant information. See "DETERMINATION OF OFFERING PRICE." After April 12, 1996 (the "Rights Expiration Date"), the Stockholder Rights will no longer be exercisable and will have no value, unless terminated earlier or extended by the Company's Board of Directors in its sole discretion for up to two (2) consecutive periods of up to 30 days each, or until not later than June 11, 1996. Basic Subscription Privilege...................... Rights Holders are entitled to purchase, at the Subscription Price, 10.695 Underlying Shares per share of Common Stock held on the Rights Record Date, subject to reduction by the Company under certain circumstances (the "Basic Subscription Privilege"). No fractional shares will be issued in connection with the Rights Offering. See "THE OFFERING." Oversubscription Privilege........................ Each Rights Holder who elects to exercise its, his or her Basic Subscription Privilege in full may also subscribe at the Subscription Price for additional Underlying Shares (the "Excess Shares") available after satisfaction of the Basic Subscription Privilege (the "Oversubscription Privilege"), up to the greater of (a) an additional one million shares, or $100,000, or (b) an additional 10.695 shares for each share of Common Stock held on the Rights Record Date. Shares subscribed for pursuant to the Oversubscription Privilege are subject to proration and reduction by the Company under certain circumstances. </TABLE> <TABLE> <S> <C> There can be no assurance that there will be Excess Shares sufficient to satisfy all exercises of the Oversubscription Privilege. If an insufficient number of Excess Shares is available to satisfy fully all exercises of the Oversubscription Privilege, then the Excess Shares will be prorated among Rights Holders who exercise their Oversubscription Privilege based upon the number of shares held on the Rights Record Date. See "THE OFFERING." Procedure For Exercising Stockholder Rights................................ The Basic Subscription Privilege and the Oversubscription Privilege may be exercised by properly completing the appropriate Subscription Right Certificate and forwarding it (or following the Guaranteed Delivery Procedures), with payment of the Subscription Price for each Underlying Share subscribed for, to the Subscription Agent, which must receive such Subscription Right Certificate or Notice of Guaranteed Delivery and payment at or prior to the Rights Expiration Date. If Subscription Right Certificates are sent by mail, Rights Holders are urged to use insured, registered mail. See "THE OFFERING - How to Subscribe." The Public Offering............................... Upon the expiration of the Rights Offering, and provided that sufficient shares of Common Stock are available, the Company may offer and sell to the public only in California at the Subscription Price up to 10,000,000 Underlying Shares not sold pursuant to the Basic or Oversubscription Privileges. The expiration date of the Public Offering is April 12, 1996, unless extended in the sole discretion of the Board of Directors of the Company for up to two (2) consecutive periods of up to 30 days each, or no later than June 11, 1996. Shares may be subscribed for in the Public Offering by properly completing the General Subscription Application and Agreement and forwarding it (or following the Guaranteed Delivery Procedures), with payment of the Subscription Price for each Underlying Share subscribed for, to the Subscription Agent, which must receive such General Subscription Application and Agreement or Notice of Guaranteed Delivery and payment at or prior to the Public Offering Expiration Date. See "THE OFFERING - How to Subscribe." Participation by First Banks...................... First Banks has committed to purchase in the Offering and at the Subscription Price, upon completion of the Rights Offering and any Public Offering, if necessary, such number of shares as would be required to raise the Bank's Tier I capital level to 7.0%, as calculated by the SBD. First Banks will only purchase such shares as a "Standby Purchaser" if the proceeds received from the Rights Offering and any Public Offering are insufficient to raise the Bank's Tier I capital level to 7.0%. Any such additional purchase by First Banks may result in substantial further dilution of the voting power and earnings per share, if any, of the Company's stockholders, other than First Banks. See "RISK FACTORS - Potential Dilution of Voting Power and Earnings Per Share." The Offering will remain open for five (5) business days after the later of the Rights Expiration Date and the Public Offering Expiration Date to allow First Banks to make any purchases as "Standby Purchaser." </TABLE> <TABLE> <S> <C> The Dividend Exchange Offer Dividend Rights and Dividend Exchange Shares .................................. Each person who was a record holder of Common Stock at the close of business on June 15, 1992 or September 14, 1992 (the "Dividend Record Dates") will receive a transferable dividend subscription right (the "Dividend Right") exchangeable for shares of Common Stock valued at $0.10 per share (the "Dividend Exchange Shares"). Each Dividend Right will entitle the holder (the "Dividend Rights Holder") to receive one share of Common Stock for each $0.10 of dividend and accrued interest amount exchanged (the "Dividend Right Exchange Ratio"). In lieu of fractional shares, the number of shares issued on exercise of Dividend Rights will be rounded up to the nearest whole number. The Dividend Exchange Shares are being offered in exchange for two dividends, declared by the Board of Directors during 1992, each in the amount of $0.08 per share, which remain unpaid as of the date of this Prospectus, together with accrued interest thereon, (the "1992 Dividends"), which, on December 31, 1995, aggregated $968,887.44, or $0.2073 per share. Dividend-Eligible Stockholders may elect to receive a portion only of their Dividend Rights in the form of Dividend Exchange Shares. See "THE OFFERING - General - The Dividend Exchange Offer" and "FEDERAL INCOME TAX CONSEQUENCES." Procedure For Exercising Dividend Rights............................................ Dividend Rights may be exercised by properly completing the Exchange Offer Certificate and forwarding it (or following the Guaranteed Delivery Procedures) to the Subscription Agent, which must receive such Exchange Offer Certificate or Notice of Guaranteed Delivery at or prior to the Dividend Rights Expiration Date. If Exchange Offer Certificates are sent by mail, Dividend Rights Holders are urged to use insured, registered mail. See "THE OFFERING - How to Subscribe." General Subscription Price................................ $0.10 per share for each Underlying Share. Common Stock Outstanding prior to the Offering...................................... 69,675,110 shares at December 31, 1995. </TABLE> <TABLE> <S> <C> Preferred Stock Outstanding prior to the Offering................................... None. Common Stock to be Outstanding upon Completion of the Offering................... 129,363.985 shares. Common Stock to be Outstanding upon Maximum Conversion of Debentures into Common Stock ..................... 233,363,985 shares, assuming no interim issuances of Common Stock. See "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY." Expiration Dates.................................. The Rights Expiration Date, the Dividend Rights Expiration Date and the Public Offering Expiration Date (the "Offering Expiration Date") is April 11, 1996, unless terminated or extended by the Company's Board of Directors, in its sole discretion for up to two (2) consecutive periods of up to 30 days each, or not later than June 11, 1996. See "THE OFFERING." Information Agent................................. Carpenter & Company 2600 Michelson Drive, Suite 300 Irvine, CA 92715 Attention: Edward Carpenter or John Flemming Tel: (800) 528-8580 Transfer Agent and Subscription Agent............................................. The First National Bank of Boston 435 Tasso, Suite 250 Palo Alto, CA 94301 Tel: (415) 853-0404 See "THE OFFERING -- Subscription Agent." </TABLE> USE OF PROCEEDS The Company intends to use the net proceeds from the Offering to increase its regulatory capital levels and the regulatory capital levels of the Bank. Such proceeds are expected to constitute Tier I capital for Bank regulatory purposes. The Bank will use the proceeds contributed to it from the Company for general corporate purposes. See "USE OF PROCEEDS." No assurance can be given, however, that the capital of the Bank will not be eroded thereafter if the Bank continues to experience operating losses. See "RISK FACTORS." The Company intends to retain the remaining net proceeds of the Offering, if any, for general corporate purposes, including payment of operating expenses. The Company estimates that the expenses of the Offering will total $444,000. See "USE OF PROCEEDS." STOCK PURCHASE AGREEMENT; CHANGE IN CONTROL; POTENTIAL DILUTION OF VOTING POWER AND EARNINGS PER SHARE On August 7, 1995, the Company entered into the Stock Purchase Agreement pursuant to which First Banks has purchased from the Company at the Subscription Price 65,000,000 shares of Common Stock and has loaned to the Company an additional $1.5 million and $5.0 million in exchange, respectively, for issuance of two the Debentures. Certain provisions of the Stock Purchase Agreement were amended on October 31, 1995 by the Additional Investment Agreement and on December 28, 1995 by the Standby Agreement (collectively, the "Stock Purchase Agreement"). On June 30, 1995, James F. Dierberg provided emergency interim financing for the Bank pursuant to the Standby Stock Purchase Agreement through the purchase of $1.5 million in shares of Bank Preferred Stock. On August 22, 1995, First Banks received approval for a change in control of the Company and the Bank from the Federal Reserve Bank of St. Louis and the SBD. On August 22, 1995, Dierberg sold the shares of Bank Preferred Stock to First Banks. Subsequently, First Banks also purchased 116,666,666 shares, or $3.5 million, of Bank Common Stock on August 23, 1995. The terms of the Stock Purchase Agreement and the Debentures are fully described at "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY." The stockholders of the Company approved the terms of the Stock Purchase Agreement at the 1995 Special Meeting. Pursuant to the Stock Purchase Agreement, on December 28, 1995, First Banks exchanged the shares of Bank Preferred Stock originally acquired by Dierberg and the $3.5 million in shares of Bank Common Stock acquired by First Banks pursuant to the Stock Purchase Agreement for 50,000,000 shares of Company Common Stock. In addition, First Banks has loaned to the Company a total of $6,500,000 in exchange for the issuance of the Debentures. The Company may issue to First Banks a total of 65,000,000 shares of Common Stock in respect of the principal amount of the Debentures and up to an additional 39,000,000 shares of Common Stock in respect of any unpaid and accrued interest amount. The Debentures are convertible at any time at the option of First Banks into a maximum of 104,000,000 shares if the total principal and interest amounts of the Debentures are converted by First Banks into Common Stock. Finally, on December 28, 1995, First Banks purchased an additional $1,500,000 of Company Common Stock at the Subscription Price, or 15,000,000 shares, which enabled the Bank to meet the 6.5% Tier I capital requirement of the FDIC Cease and Desist Order as of December 31, 1995. For a complete description of the terms of the Stock Purchase Agreement, see "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY." The foregoing issuances of Common Stock and the Debentures to First Banks pursuant to the Stock Purchase Agreement have significantly diluted the percentage of ownership of the Company held by holders of the Company's Common Stock, other than First Banks. However, while consummation of the Stock Purchase Agreement resulted in such dilution, one purpose of this Offering is to mitigate such dilution by providing the stockholders, other than First Banks, with the opportunity to subscribe for additional shares of Common Stock. Notwithstanding this Offering, however, the voting power the Company's stockholders will be subsequently materially diluted through the issuance of between 65,000,000 and 104,000,000 additional shares of Common Stock upon conversion of the principal and/or interest amounts of the Debentures, respectively, and through the possible issuance of additional shares to First Banks acting as "Standby Purchaser." See "RISK FACTORS - Potential Dilution of Voting Power and Earnings Per Share" and "THE STOCK PURCHASE AGREEMENT AND CHANGE IN CONTROL OF THE COMPANY."

parsed_sections/prospectus_summary/1996/CIK0000319085_compressio_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information, including "Risk Factors" and the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Prospectus. The discussion in this Prospectus contains forward-looking statements that involve risk and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" as well as those discussed elsewhere in this Prospectus. THE COMPANY Compression Labs, Incorporated (the Company or CLI) is a leader in the development, manufacture and marketing of visual communication systems based on Compressed Digital Video (CDV) technology. The Company's systems use proprietary and industry standard algorithms to compress the amount of data required to transmit digital video and audio signals, thereby significantly reducing the cost of transmitting these signals over terrestrial, microwave, cable or satellite networks. The Company's strategy is to use its expertise in CDV technology to enhance its position in videoconferencing and to monitor new markets such as the desktop and personal video markets. CLI's group and desktop videoconferencing systems permit users at different locations to conduct full-color motion videoconferences ranging from two-way informal meetings between individuals to formal meetings between large groups at multiple locations. The Company's present families of videoconferencing systems include Rembrandt II/VP and Radiance videoconferencing systems, the eclipse family of mid-range videoconferencing systems, and the CLI Desktop Video family. Videoconferencing systems operate worldwide over a broad range of transmission speeds from 56 kilobits per second (kbps) to 2.048 megabits per second (mbps) for the Rembrandt and Radiance Systems, 768 kbps for the eclipse, and 384 kbps for the desktop. All of CLI's current videoconferencing systems are compliant with the International Telecommunication Union-Telecommunication (ITU-T) H.320 videoconferencing standard, and most also provide customer-selectable proprietary algorithms. The videoconferencing market has grown as a result of improvements in the price/performance of videoconferencing systems, decreases in transmission costs and increased availability of switched digital transmission services. However, there can be no assurance that this market growth will continue in the future. The Company has been a leader in video compression technology and believes that its large worldwide installed base of videoconferencing systems affords the Company significant competitive advantages. The Company's strategy is to strengthen its position as a leading supplier of a full range of high-performance quality group and desktop videoconferencing systems. CLI's development efforts are primarily directed at achieving greater levels of compression, improving picture quality and system functionality, continuing to reduce system costs, and supporting and improving industry standards. The Company's continued success in its chosen markets is dependent in part on the results of its ongoing technology and product development efforts. The Company's executive offices are located at 350 East Plumeria Drive, San Jose, California 95134, and its telephone number at that location is (408) 435-3000. PROSPECTUS 2,799,242 SHARES COMPRESSION LABS, INCORPORATED ------------------------ COMMON STOCK ------------------------ This Prospectus relates to a total of 2,799,242 shares of Common Stock (the "Shares"), with a par value of $0.001 per share (the "Common Stock") of Compression Labs, Incorporated (the "Company" or "CLI") which are being offered and sold by Infinity Investments Limited ("Infinity"), Seacrest Capital Limited ("Seacrest"), Brown Simpson LLC and Alpine Capital Partners, Inc. (collectively, the "Selling Securityholders"). Of such Shares (i) 2,424,242 shares are issuable upon the exercise of 350,000 shares of Series C Convertible Preferred Stock ("Series C Stock") which were sold by the Company to Infinity and Seacrest in a private financing pursuant to a Convertible Preferred Stock Purchase Agreement dated as of October 24, 1996 (the "Financing") and (ii) 375,000 shares are issuable pursuant to the exercise of warrants held by Selling Securityholders which were issued in connection with the Financing (the "Warrants"). The Warrants have an exercise price of $5.70 per share. The Common Stock is listed on the Nasdaq National Market under the symbol "CLIX." On November 22, 1996, the last reported sale price of the Common Stock on the Nasdaq National Market was $4.25 per share. The Shares may be offered by the Selling Securityholders from time to time in transactions on the Nasdaq National Market, in privately negotiated transactions or a combination of such methods of sale, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Securityholders may effect such transactions by selling the Shares to or through broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Securityholders or the purchasers of the Shares for whom such broker-dealers may act as agent or to whom they sell as principal or both (which compensation to a particular broker-dealer might be in excess of customary commissions). See "Principal and Selling Securityholders" and "Plan of Distribution." The Company received all of the proceeds from the sale of the Series C Stock issued by the Company in the Financing and will receive any proceeds from the exercise of the Warrants if and when exercised by the Selling Securityholders but will not receive any of the proceeds from the sale of the Shares by the Selling Securityholders hereof. See "Plan of Distribution."

parsed_sections/prospectus_summary/1996/CIK0000319240_iris_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including notes thereto, appearing elsewhere in this Prospectus. Unless otherwise indicated, all figures assume no exercise of the Underwriters' over-allotment option. THE COMPANY The Company designs, develops, manufactures and markets in vitro diagnostic ("IVD") imaging systems based on its patented and proprietary "Automated Intelligent Microscopy" ("AIM") technology for automating microscopic procedures performed in clinical laboratories. AIM combines the Company's capabilities in automating specimen presentation, including its patented slideless microscope, as well as its proprietary high-speed digital processing hardware and software to rapidly capture, classify and visually present images of microscopic particles in easy-to-use displays. The Company's IVD imaging systems are designed to provide customers with consistent, more precise and timely results and labor cost-savings over manual methods of performing microscopy. The Company markets its products primarily to hospitals and clinical reference laboratories and has an installed base of over 500 customers. The Company estimates that at least three-quarters of all IVD microscopic procedures are performed manually and require trained medical specialists. Manually performed diagnostic tests are costly, labor-intensive, cumbersome, inefficient and often imprecise. Furthermore, there are pressures to reduce costs while improving operating efficiencies in hospitals and clinical reference laboratories. As a result, the Company believes there is a movement in such laboratories to automate microscopic procedures including slide presentation, testing and processing. The Company pioneered its first IVD imaging application in 1983 with the introduction of the first of The Yellow IRIS(R) workstations for urinalysis. The Company believes that it is still the only supplier of laboratory systems which fully automate a complete urinalysis, and it recently introduced its fourth generation models which incorporate significant advancements in speed, utility and ease of use. Earlier this year, the Company received clearance from the Food and Drug Administration ("FDA") and began to market the Model 900UDx(TM) urine pathology system designed especially for the high-volume testing requirements of larger laboratories. The Company is expanding into new applications of IVD imaging. The Company recently developed The White IRIS(R) leukocyte differential analyzer for the field of hematology. The FDA cleared The White IRIS(R) for marketing in May 1996, and the Company expects to initiate sales of this system in late 1996 or early 1997. The Company entered the field of genetics in July of this year with the acquisition (the "PSI Acquisition") of the IVD imaging business of Perceptive Scientific Instruments, Inc. ("PSI"), which included the PowerGene(TM) family of analyzers. PowerGene(TM), an IVD imaging system for karyotyping, DNA probe analysis and comparative genomic hybridization, has experienced average annual worldwide revenue growth of 35% over the last two fiscal years. The Company also acquired significant foreign operations from PSI which are expected to enable the Company to expand in international markets with its other IVD imaging systems and products. The Company also provides significant ongoing sales of supplies and service necessary for operation of The Yellow IRIS(R) workstations and the PowerGene(TM) analyzers and also plans to sell comparable supplies and service for The White IRIS(R). IRIS(R), The Yellow IRIS(R), The White IRIS(R), Model 900UDx(TM), PowerGene(TM), IRIStrip(TM), StatSpin(R), Cen-Slide(R) and Biovation(R) are trademarks of the Company. This Prospectus also contains trademarks and tradenames of other companies. IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMEX, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Company's goal is to achieve global leadership in automated IVD imaging by pursuing the following strategies: - Introducing New IVD Imaging Applications. The Company believes AIM technology has a number of potential applications in the clinical laboratory and is expanding beyond the field of urinalysis into other fields, including hematology and genetics. - Continuing Market Penetration for Current Applications of IVD Imaging Technology. The Company estimates that it has penetrated less than 20% of the potential market in the United States for The Yellow IRIS(R) urinalysis workstations and plans to continue expanding sales in this segment with its recently introduced fourth generation models of The Yellow IRIS(R) family, including the Model 900UDx(TM) urine pathology system. - Expanding in New Geographic Markets. The PSI Acquisition added significant international operations which are expected to enable the Company to expand the geographic market for its other IVD imaging systems and products. - Increasing Sales of Supplies and Service. The Company seeks to enhance the revenue stream from sales of supplies and service by installing more IVD imaging systems as well as increasing its product offering of supplies for each system. - Adding Complementary Product Lines. The Company has added several complementary lines of small instruments and supplies which appeal to smaller laboratories and respond to the desire of integrated healthcare providers to purchase products for a variety of clinical settings from one supplier. - Maintaining Technological Edge. The Company has an active research and development program to continually enhance its IVD imaging systems and explore other potential IVD imaging applications for its AIM technology. The Company's principal executive offices are located at 9162 Eton Avenue, Chatsworth, California 91311 and its telephone number is (818) 709-1244. THE OFFERING <TABLE> <S> <C> Common Stock offered by the Company.......... 3,000,000 shares Common Stock to be outstanding after the Offering................................... 8,908,392 shares(1) Use of Proceeds.............................. To repay $11.9 million of outstanding indebtedness incurred to finance the PSI Acquisition, to repurchase shares of the Company's Common Stock and warrants to purchase Common Stock, and for working capital and general corporate purposes. American Stock Exchange symbol............... IRI </TABLE> - --------------- (1) Excludes an aggregate of 2,542,810 shares of Common Stock reserved for issuance upon exercise of outstanding options and warrants and an aggregate of 199,554 additional shares reserved for issuance pursuant to the Company's stock option plans and its stock purchase plan. Also excludes 469,413 shares of Common Stock and warrants to purchase an additional 250,000 shares of Common Stock to be purchased with the proceeds of the Offering. See "Use of Proceeds." SUMMARY CONSOLIDATED FINANCIAL DATA <TABLE> <CAPTION> YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30, --------------------------------------------- -------------------------------- HISTORICAL PRO FORMA HISTORICAL PRO FORMA ----------------------------- --------- ------------------- --------- 1993 1994 1995 1995(2) 1995 1996 1996(2) ------- ------- ------- --------- ------- ------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA(1): Revenues Sales of IVD imaging systems.................. $ 5,029 $ 4,559 $ 4,870 $ 9,526 $ 2,150 $ 2,593 $ 5,830 Sales of supplies and service.................. 3,995 5,024 6,738 7,466 3,167 4,166 4,495 Sales of small instruments and supplies............. 3,369 2,886 3,414 3,424 1,566 2,370 2,456 ------- ------- ------- ------- ------- ------ ------- Net sales........... 12,393 12,469 15,022 20,416 6,883 9,129 12,781 Gross margin................. 6,051.. 5,970 7,661 10,702 3,445 4,634 6,827 Operating income (loss)...... 1,313 1,495 (1,549)(5) (2,743)(5) (2,696)(5) 879 520 Income (loss) before income taxes...................... 1,381 1,701 (1,171)(5) (2,717)(5) (2,491)(5) 1,042 472 Net income (loss)............ $ 1,323 $ 1,622 $ 2,357(6) $ 860(6) $(2,519) $ 867 $ 411 ======= ======= ======= ======= ======= ====== ======= Net income (loss) per share...................... $ 0.25 $ 0.28 $ 0.37 $ 0.09 $ (0.46) $ 0.13 $ 0.04 ======= ======= ======= ======= ======= ====== ======= Weighted average shares and share equivalents outstanding................ 5,355 5,699 6,419 9,419 5,486 6,915 9,915 </TABLE> <TABLE> <CAPTION> PRO FORMA HISTORICAL PRO FORMA AS ADJUSTED --------------------- --------- ----------- DECEMBER JUNE 30, JUNE 30, JUNE 30, 1995 1996 1996(3) 1996(3)(4) -------- -------- --------- ----------- (IN THOUSANDS) <S> <C> <C> <C> <C> BALANCE SHEET DATA(1): Cash and cash equivalents............................. $ 1,511 $ 1,229 $ 1,229 $ 7,279 Working capital....................................... 11,465 11,431 8,164 17,914 Total assets.......................................... 22,470 23,676 38,064 43,841 Total debt............................................ 311 -- 16,117 4,267 Total shareholders' equity............................ 19,172 20,366 16,726(7) 34,353(7) </TABLE> - --------------- (1) On February 1, 1996, the Company acquired StatSpin, Inc. (formerly known as StatSpin Technologies) ("StatSpin"). This transaction was accounted for as a pooling of interests and, accordingly, the consolidated financial statements and summary financial data have been retroactively restated for all periods presented to include the financial position, results of operations and cash flows of StatSpin. (2) Represents the unaudited pro forma results of operations for the year ended December 31, 1995 and the six months ended June 30, 1996 giving effect to the PSI Acquisition and related financing and the sale of 3,000,000 shares of Common Stock offered hereby and the application of the net proceeds therefrom as if each were consummated at the beginning of the periods presented. See "Pro Forma Condensed Combined Financial Statements." (3) Reflects the PSI Acquisition and related financing as if each had been consummated on June 30, 1996. See "Pro Forma Condensed Combined Financial Statements." (4) Reflects the sale of 3,000,000 shares of Common Stock offered hereby and the application of the net proceeds therefrom. See "Use of Proceeds." (5) Includes a nonrecurring charge against operations of $2.9 million for 1995 and $3.2 million for the second quarter of 1995 (prior to final purchase price allocation) for the acquisition of in-process research and development for a product prototype not cleared by the FDA in connection with the Company's acquisition of LDA Systems, Inc. ("LDA"). (6) In the fourth quarter of 1995, the Company recognized a deferred tax benefit of $3.6 million resulting from a reduction in its deferred tax asset valuation allowance. See Note 8 to the Consolidated Financial Statements. (7) Includes a nonrecurring charge of $4.6 million for in-process research and development in conjunction with the PSI Acquisition which will be reflected in the Company's statement of operations for the quarter ended September 30, 1996. See "Pro Forma Condensed Combined Financial Statements."

parsed_sections/prospectus_summary/1996/CIK0000700892_laser_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS, INCLUDING INFORMATION UNDER "RISK FACTORS". THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. THE COMPANY Laser Master International, Inc. ("Laser Master" or the "Company") is a New York Corporation, incorporated on May 5, 1981, originally under the name Lasercraft Industries, Inc. Prior to said date, and in October 1980, in accordance with a specific plan or reorganization of companies under common control and exchange of stock, the Company was organized as a holding company for purposes of acquiring all the issued and outstanding Common Stock of Flexo-Craft Prints, Inc., Utmost Office Supplies, Inc., 185 Front Street Realty Corp, and Harrison Realty Corp. The Company, through its wholly-owned subsidiaries, is engaged in the use of a computerized laser system to accomplish Flexographic printing for industrial and commercial printing and engraving and counts among its customers large corporations, some of which are listed on the New York Stock Exchange. The principal process of Flexo-Craft is the use of a Zed laser in the manufacturing of its products. The Zed laser process emits a "coherent" wave length (color). A large degree of control is afforded and as a consequence, exceptionally high density of power can be delivered to a well defined area by focusing the light energy. Using a computer driven system, the laser beam makes grooves in the form of designs and patterns on to a rubber material. The rubber material is then sealed on a steel or aluminum cylinder which is then placed on a printing press. In the heat transfer printing process, the ink is injected into the grooves using a computer driven process and then the rubber coated cylinder prints on heat transfer paper. The heat transfer paper is sold to manufacturers who then seal it onto textile materials. The same process is used for gift wrap paper, except the paper itself is the final product. One of the Company's six color presses prints heat transfer paper, the Company's eight color press also prints gift wrap paper. The principal parts of the laser system are the scanning mechanism, rotating cylinders and axial scanning platform. In operation, artwork is mounted on a cylinder. As the artwork cylinder rotates, the helium neon laser scanning head reads tonal or line values of a single circumferential scan. A memory stores the data and matches it to the 360 degree rotation of the printing roller. The controlled output of the Everlase Co2 Laser is optically deflected from the laser enclosure through metal tubes to the engraving head. The collimated laser beam can be safely projected over large distances without distortion or inaccuracy. As the cylinder rotates, the scanning-engraving heads move axially between the grooves. The laser receives appropriate commands from the micro-processor insert. A control panel integrates the controls of the Co2 laser with the engraving mechanism. The patterns and designs as created and prepared by artists on multi-colored photographic film segments are fed into the computer, which is an integral part of the laser system. Colored photographic film segments are fed into the computer (this service is contracted out by the Company) and thereafter engraves, on a fully automated basis, each dedicated groove of the design simultaneously, yet separately, for each color. The Company, by this method, is able to service many diverse industries that require material in their own production. Due to the exactness of the engraving by the laser ray, the grooves of the design are so true that the impregnation of specific colored inks in the subsequent printing process produce perfect images. To the best of the Company's knowledge, there is only one major and three minor competitors in the continental United States that operate a comparable version of the laser concept and a subliflex flexographic printing press which accommodates fewer colors and produces material of a substantially narrower width. The Company acquired a new eight ink color press which was put into full operation in July 1996. The new eight color press can print on either heat transfer or gift wrap paper. The new eight color press also allows the Company to print for the wallpaper, home furnishings and carpet industries. The eight color press is three times faster than the newest six color presses. The Company receives patterns from customers and also designs its own patterns using a computerized color separating system. The Company has an extensive inventory of rubber coated cylinders and designs with engravings that can be continually reused in its process. THE OFFERING <TABLE> <S> <C> Common Stock Offered by the Company.......... 4,597,372 shares of Common Stock $.01 par value per share Common Stock to be Outstanding after the Offering................................... 10,297,028 shares(1) Use of Proceeds.............................. The Company will not receive any proceeds from the sale of Common Stock by Selling Stockholders, unless options or warrants are exercised. In the event options or warrants are exercised, the company will use the proceeds received for general working capital purposes. NASDAQ OTC Bulletin Board-Registered Trademark- Symbol......... LMTI </TABLE> SUMMARY FINANCIAL DATA The summary historical consolidated financial data presented below for each of the five fiscal years in the period ended November 30, 1995 have been derived from audited Consolidated Financial Statements. The summary historical data presented below for the six months ended May 31, 1995 and May 31, 1996 were derived from Laser Master International Inc.'s Unaudited Condensed Consolidated Financial Statements which contain all accruals and adjustments (consisting only of normal recurring adjustments) which management considers necessary for a fair presentation of the financial information for such periods. The results of operations for the six months ended May 31, 1996 are not necessarily indicative of the operating results that may be expected for the full fiscal year. This financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations", the Consolidated Financial Statements and Notes thereto, the Unaudited Condensed Consolidated Financial Statements and Notes thereto and the other financial information included elsewhere in this Prospectus. <TABLE> <CAPTION> SIX MONTHS ENDED (UNAUDITED) ---------------------- FISCAL FISCAL FISCAL FISCAL FISCAL MAY 31, MAY 31, 1991 1992 1993 1994 1995 1995 1996 --------- --------- --------- ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> <C> <C> <C> INCOME STATEMENT DATA: Net Sales............................ $6,375,654 $7,268,413 $9,237,340 $8,158,051 $8,432,284 $4,244,770 $4,515,260 Gross Profit......................... $1,824,865 $2,000,118 $2,887,103 $2,391,675 $2,510,644 $1,325,076 $1,776,714 Net Income (loss) from Operations.... $ 633,686 $ 521,376 $ 771,837 $ 276,471 $ (178,957) $ 16,398 $ (116,604) Net Income (loss) Per Share.......... $ .111 $ .091 $ .129 $ .05 $ (.03) $ .00 $ (.01) Total Assets......................... $6,779,570 $7,269,019 $8,183,489 $14,801,853 $13,861,245 $14,826,779 $16,097,770 Total Long Term Liability............ $2,912,042 $3,028,919 $2,756,620 $8,172,928 $5,946,837 $8,134,699 $5,923,503 Total Liabilities.................... $3,745,436 $3,713,509 $3,779,141 $10,123,744 $9,359,383 $10,129,562 $8,212,512 </TABLE> - ------------------------ (1) Excludes 20,000,000 shares of Common Stock reserved for issuance under the Company's proposed Stock Option Plans (the "Plans"). Also, does not include an aggregate of 1,725,000 stock options exercisable at $1.00 per share awarded and or to be awarded to Messrs. Dov, Hershel and Abraham Klein under their respective employment agreements. Additionally, does not include 1,200,000 options awarded and or to be awarded to Mr. Mendel Klein, exercisable at $1.00 per share. Also, does not include a convertible debenture in the sum of $200,000 with interest payable at 5% per annum convertible into Common Stock. The debenture is convertible into shares of stock at a 30% discount to market, based upon the previous five day market average price. The debenture expires June 29, 1998. Additionally, excludes 800,000 shares of Common Stock underlying 800,000 warrants in the within offering, of which 300,000 warrants are exercisable at $1.00 per share expiring May 10, 1999, and 500,000 warrants are exercisable at $2.00 per share expiring May 10, 1999. Additionally, does not include 375,000 shares of Common Stock underlying options in the within offering, of which 100,000 options are exercisable at $1.00 per share expiring May 27, 1997; 100,000 options exercisable at $2.00 per share expiring May 27, 1998, and 175,000 options exercisable at $1.00 per share expiring May 8, 2001.

parsed_sections/prospectus_summary/1996/CIK0000708818_nextgen_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial data appearing elsewhere in this Prospectus. Unless otherwise indicated, all information in this Prospectus assumes that the Underwriters' over-allotment option is not exercised. THE COMPANY Quality Systems, Inc. ("QSI" or the "Company") develops and markets health care information systems that automate medical and dental group practices, physician hospital organizations ("PHOs"), management service organizations ("MSOs"), health maintenance organizations ("HMOs") and community health centers. In response to the growing need for more comprehensive, cost-effective information solutions for physician and dental practice management, the Company's systems provide clients with the ability to redesign patient care and other workflow processes, to improve productivity and reduce information processing and administrative costs and to provide multi-site access to patient information. The Company's proprietary software systems include general patient information and summary medical records, appointment scheduling, billing, insurance claims submission and processing, managed care implementation and referral management, treatment outcome studies, treatment planning, drug formularies, word processing and accounting. In addition to providing fully integrated information solutions to its clients, the Company provides comprehensive hardware and software installation, maintenance and support services, system training services and electronic claims submission services. The Company is also introducing patient medical records automation for medical and dental practices utilizing proprietary software developed by Clinitec International Inc. ("Clinitec"), a developer of electronic medical records software systems. The Company currently has an installed base of more than 475 operating health care information systems serving PHOs, MSOs, HMOs and other health care organizations, each of which consists of one to 120 physicians or dentists. According to Medical Data International, it is estimated that the physician practice management information systems market is currently $1.8 billion. The Company believes that as health care providers are increasingly required to reduce costs while maintaining the quality of health care, the Company will be able to capitalize on its strategy of providing fully integrated information systems and superior customer service. The Company was founded in 1974, with an early focus on providing information systems and services primarily for dental group practices. The Company's initial "turnkey" systems were designed to improve productivity while reducing information processing costs and personnel requirements. In the mid-1980's, the Company capitalized on the opportunity presented by the increasing pressure of cost containment on physicians and health care organizations and further expanded its information processing systems into the broader medical market. Today, the Company develops and provides integrated UNIX-based health care information systems for both the medical and dental markets. These systems operate on a stand-alone basis or in a networked environment and are expandable to accommodate client needs. Augmenting its practice management software, the Company added electronic medical records software to its product line in 1995 through a strategic relationship with Clinitec. The Company currently holds a 25% interest in Clinitec and a unilateral right to increase its interest to 51%, and has entered into an agreement in principle (the "Clinitec Agreement in Principle") to acquire Clinitec as a wholly-owned subsidiary. Clinitec's principal product, NextGen, permits scanning, annotation, retrieval and analysis of medical records in all formats, from documents to photographs and X-rays. NextGen has been developed using a client/server platform, a graphical user interface for compatibility with UNIX, Microsoft Windows, Windows NT and Windows 95 operating systems, and a relational database for flexibility in screen customization and logic flow. The Company is also in the process of developing an alternative client/server version of its "back office" products utilizing a graphical user interface with screens and templates similar to those in the NextGen product to enable a more seamless integration of the QSI and NextGen applications. With the addition of NextGen, the Company is able to provide its clients with a comprehensive information management solution. NextGen, in conjunction with the Company's practice management software, was first installed at a beta site in August 1995 and is currently being installed in two additional sites. General release of the combined systems is expected to occur in the quarter ending June 30, 1996. LOGO Quality Systems' health care [PHOTO] [PHOTO] information systems automate medical and dental practices and improve efficiency in such areas as billing, patient scheduling and insurance processing. These systems also permit enhanced quality of care by giving the health care professional [PHOTO] access to treatment and outcome data. The Company's health care information systems automate both medical and dental physician group practices, management services organizations ("MSOs"), physician hospital organizations ("PHOs"), health maintenance organizations ("HMOs") and community health centers with a focus on improving overall practice efficiency. These systems offer a broad range of applications for a wide variety of health care organizations. [PHOTO] QSI provides hardware and software system support to its clients seven days a week, 24 hours a day. The Company offers a selection of other client services including training, consulting and custom software development. ------------------------------ IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMPANY'S COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING." IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE OFFERING <TABLE> <S> <C> Common Stock offered By the Company................................ 1,000,000 shares By the Selling Shareholders................... 500,000 shares Total...................................... 1,500,000 shares Common Stock to be outstanding after the offering................................... 5,653,491 shares(1) Use of proceeds................................. For the acquisition of an increased ownership interest in Clinitec and for general corporate purposes, including the financing of product sales growth, development of new products, working capital requirements and potential other acquisitions. See "Use of Proceeds." Nasdaq National Market symbol................... QSII </TABLE> - --------------- (1) Excludes 132,125 shares of Common Stock which were subject to outstanding options as of February 12, 1996 at a weighted average exercise price of $4.61 per share under the Company's 1989 Stock Option Plan (the "1989 Plan"). See "Directors and Executive Officers -- 1989 Stock Option Plan" and Note 6 to Notes to Financial Statements. SUMMARY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT FOR PER SHARE DATA) <TABLE> <CAPTION> NINE MONTHS ENDED YEAR ENDED MARCH 31, DECEMBER 31, --------------------------- ---------------- 1993 1994 1995 1994 1995 ------- ------- ------- ------ ------- <S> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS: Net revenues: Sales of computer systems, upgrades and supplies................................. $ 6,274 $ 6,146 $ 5,681 $3,895 $ 7,162 Maintenance and other services............. 5,377 5,606 6,368 4,727 5,159 ------- ------- ------- ------ ------- 11,651 11,752 12,049 8,622 12,321 Cost of products and services................. 6,992 6,527 6,060 4,498 5,865 ------- ------- ------- ------ ------- Gross profit.................................. 4,659 5,225 5,989 4,124 6,456 Earnings from operations...................... 517 855 986 433 2,488 Net earnings.................................. $ 623 $ 906 $ 962 $ 524 $ 1,670 ======= ======= ======= ====== ======= Net earnings per share(1)..................... $ 0.15 $ 0.21 $ 0.21 $ 0.11 $ 0.35 ======= ======= ======= ====== ======= Weighted average shares used in computation... 4,187 4,342 4,606 4,641 4,709 ======= ======= ======= ====== ======= </TABLE> <TABLE> <CAPTION> AT DECEMBER 31, 1995 ----------------------------------- PRO FORMA AS ADJUSTED ------------------------- 51% OF 100% OF ACTUAL CLINITEC(2) CLINITEC(3) ------- ----------- ----------- <S> <C> <C> <C> BALANCE SHEET DATA: Cash and cash equivalents and short-term investments.......... $ 7,662 $25,606 $22,210 Working capital............................................... 9,302 27,513 24,117 Total assets.................................................. 15,386 33,438 37,001 Shareholders' equity.......................................... 11,681 28,365 32,907 </TABLE> - --------------- (1) Net earnings per share reflects primary earnings per share for all periods indicated. Primary and fully diluted net earnings per share were the same for all periods except for the year ended March 31, 1994, for which fully diluted net earnings per share was $0.20. (2) Gives pro forma effect to the acquisition of an additional interest in Clinitec, providing the Company with a 51% ownership interest in Clinitec as if such acquisition had occurred on December 31, 1995, and adjusted to reflect the sale of 1,000,000 shares of Common Stock by the Company in the offering at an assumed public offering price of $20.75 per share and the application of the estimated net proceeds therefrom. See "Use of Proceeds." (3) Gives pro forma effect to the acquisition of all of Clinitec for $4.9 million in cash and $6.9 million in value of the Company's Common Stock as if such acquisition had occurred on December 31, 1995, and adjusted to reflect the sale of 1,000,000 shares of Common Stock by the Company in the offering at an assumed public offering price of $20.75 per share and the application of the estimated net proceeds reflect additional shares therefrom. See "Use of Proceeds."

parsed_sections/prospectus_summary/1996/CIK0000715355_gulfstream_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS (I) GIVES EFFECT TO THE REPURCHASE OF ALL OF THE OUTSTANDING PREFERRED STOCK AND THE EXCHANGE, REDESIGNATION AND 1.5-FOR-1 STOCK SPLIT OF THE COMPANY'S COMMON STOCK, WHICH WILL OCCUR IMMEDIATELY PRIOR TO, OR SIMULTANEOUSLY WITH, THE CLOSING OF THE OFFERINGS (COLLECTIVELY, THE "1996 RECAPITALIZATION") DESCRIBED UNDER "DESCRIPTION OF CAPITAL STOCK", (II) ASSUMES THAT THE OVER-ALLOTMENT OPTIONS GRANTED TO THE UNDERWRITERS ARE NOT EXERCISED, (III) ASSUMES THE ISSUANCE AND SALE OF COMMON STOCK IN THE OFFERINGS AT $23.00 PER SHARE (THE MID-POINT OF THE RANGE OF THE INITIAL PUBLIC OFFERING PRICES SET FORTH ON THE COVER PAGE OF THIS PROSPECTUS) AND (IV) ASSUMES THE ISSUANCE OF 1,956,520 SHARES OF COMMON STOCK BY THE COMPANY TO CERTAIN SELLING STOCKHOLDERS PURSUANT TO THE EXERCISE OF OUTSTANDING OPTIONS AND THE SALE OF SUCH SHARES IN THE OFFERINGS (WHICH AMOUNTS ARE SUBJECT TO CHANGE PENDING FINAL CONFIRMATION OF SELLING STOCKHOLDER PARTICIPATION IN THE OFFERINGS, PRIOR TO PRICING OF THE OFFERINGS). UNLESS THE CONTEXT REQUIRES OTHERWISE, REFERENCES TO THE COMPANY OR GULFSTREAM REFER TO GULFSTREAM AEROSPACE CORPORATION, ITS PREDECESSORS AND ITS SUBSIDIARIES AND REFERENCES TO "COMMON STOCK" REFER TO THE COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF GULFSTREAM AEROSPACE CORPORATION AFTER GIVING EFFECT TO THE 1996 RECAPITALIZATION. REFERENCES IN THIS PROSPECTUS TO (I) MILES ARE TO NAUTICAL MILES; ONE NAUTICAL MILE IS EQUAL TO 1.15 STATUTE MILES; AND (II) FISCAL YEARS ARE TO THE FISCAL YEAR OF THE COMPANY ENDED DECEMBER 31 OF THE YEAR SPECIFIED (e.g., "FISCAL 1995" REFERS TO THE YEAR ENDED DECEMBER 31, 1995). THE COMPANY Gulfstream Aerospace Corporation is recognized worldwide as a leading designer, developer, manufacturer and marketer of the most technologically advanced intercontinental business jet aircraft. Since 1966, when the Company created the large cabin business jet category with the introduction of the Gulfstream II, the Company has dominated this market segment, capturing a cumulative market share of 60%. The Company has manufactured and sold over 950 large business aircraft since the introduction of the Gulfstream product line in 1958. Since 1990, the Company has been owned by certain partnerships formed by Forstmann Little & Co., a private investment firm ("Forstmann Little"). The Company has developed a broad range of aircraft products to meet the aviation needs of its targeted customers (which include national and multinational corporations, governments and governmental agencies, heads of state and wealthy individuals). See "Business--Customers and Marketing". The Company's current principal aircraft products are the Gulfstream IV-SP, the Gulfstream V, Gulfstream Shares-TM- (fractional ownership interests in Gulfstream IV-SPs) and pre-owned Gulfstream aircraft. As an integral part of its aircraft product offerings, the Company offers aircraft completion (exterior painting of the aircraft and installation of customer selected interiors and optional avionics) and worldwide aircraft maintenance services and technical support for all Gulfstream aircraft. In addition, the Company's financial services subsidiary, Gulfstream Financial Services Corporation, through its private label relationship with a third-party aircraft financing provider, offers customized products to finance the worldwide sale of Gulfstream aircraft. BUSINESS STRATEGY Beginning in 1993, the Company implemented a major restructuring and refocusing of its business in order to improve profitability, increase market share and build backlog. Theodore J. Forstmann, who assumed the position of Chairman of the Company in November 1993, recruited a new senior management team (including over 20 senior executives with aviation and aerospace industry experience) and established a five member Management Committee, chaired by Mr. Forstmann and comprised of four other key executives who share responsibility for strategic decisions, management and oversight of the Company's operations. In addition, Mr. Forstmann assembled both a Board of Directors and an International Advisory Board comprised of prominent business executives and senior statesmen to counsel the Company and assist in its refocused sales and operating initiatives. Under the leadership of Mr. Forstmann and the new management team, the Company (i) recapitalized its balance sheet, thereby reducing the Company's annual interest expense by approximately $38 million, (ii) reduced the Company's cost structure, yielding over $50 million in annual savings, while increasing the Company's aircraft production rate, (iii) strengthened the Company's market position and aircraft order growth, resulting in a contract backlog of approximately $3.0 billion of revenues and executed contracts with financing contingencies of approximately $295 million of potential revenues, representing total revenues and potential revenues of approximately $3.3 billion at September 30, 1996, (iv) expanded and improved the Company's product offerings and (v) increased the Company's completion order rate and expanded its worldwide service and support business. The most significant aspects of the restructuring were: RECAPITALIZATION AND SIGNIFICANT REDUCTION OF INTEREST EXPENSE In late 1993, a partnership formed by Forstmann Little exchanged approximately $469 million of the Company's subordinated debentures (including accrued interest) for preferred stock, thereby reducing the Company's annual interest expense by approximately $38 million. See "Certain Transactions -- The Acquisition; Subsequent Events". This recapitalization and the resulting increase in cash flow (together with the cost reductions and manufacturing efficiencies discussed below) enabled the Company to dedicate additional resources to significantly enhance the design of the Gulfstream V, the Company's new ultra-long range business jet. COST REDUCTIONS AND INCREASED PRODUCTION RATE The Company initiated a restructuring that significantly reduced its cost structure and product manufacturing cycle times. The restructuring program included a voluntary reduction in the Company's work force of approximately 15%, the outsourcing of certain manufacturing activities, the renegotiation of major supplier contracts and the termination of certain leases, which, in the aggregate, have yielded over $50 million in annual savings. Additionally, the Company has reduced final assembly time of an aircraft by more than 50% from over 67 days to approximately 30 days and has reduced aircraft completion time from approximately 35 weeks to approximately 21 weeks. As a result of these cycle time reductions, the use of common tooling and selected outsourcing, the Company expects to increase its production rate from an average of 2.4 aircraft per month in 1996 to an average of 3.5 to 4.0 aircraft per month in 1997. NEW MARKETING INITIATIVES AND SIGNIFICANTLY INCREASED BACKLOG The Company developed and implemented a new, proactive marketing strategy to substantially broaden the markets for its products. In addition to the Company's historical practice of targeting its existing customer base, the Company (a) initiated an aggressive marketing campaign focused on companies and individuals that have not previously owned Gulfstream aircraft, (b) significantly expanded international sales activities, (c) introduced its Gulfstream Shares-TM- program and (d) offered its customers access to customized financing to support the sale of new and pre-owned Gulfstream aircraft. The Company has also redirected its sales and marketing effort to focus on high level decision makers through increased involvement of the Company's Board of Directors, International Advisory Board and senior management in the selling process and restructured its sales commission program to more effectively support the Company's strategic goals. As a result of these new marketing initiatives, the Company has experienced strong growth in aircraft orders and backlog and believes that it has substantially strengthened its market position. At September 30, 1996, the Company had a contract backlog of approximately $3.0 billion of revenues plus executed contracts with financing contingencies of approximately $295 million of potential revenues, representing a total of 69 contracts for Gulfstream Vs and 30 contracts for Gulfstream IV-SPs. Contracts with financing contingencies are converted to backlog upon receipt of financing by the purchaser, which generally occurs within 120 days. In addition, at September 30, 1996, the Company had letters of intent with deposits for a total of 1 Gulfstream V and 4 Gulfstream IV-SPs, representing approximately $140 million of additional potential revenues. In total, approximately 50% of the Gulfstream V contracts in backlog have scheduled deliveries beyond 1997. EXPANDED PRODUCT OFFERINGS The Company expanded its product offerings to provide multiple aircraft products in contrast to its historical strategy of offering only one new aircraft model at a time. In addition, the Company began marketing its products as an integrated whole, offering completion and worldwide maintenance services and technical support for all Gulfstream aircraft. The Company's current product offerings include the following: GULFSTREAM V. The Company significantly enhanced the design and performance characteristics of the Gulfstream V, which was in the early stage of development in 1993, and accelerated the pace of its development. The Gulfstream V is targeted at the market for ultra-long range business jet aircraft (6,500 nautical miles) which is a new market segment for the business jet industry. The Gulfstream V is in the advanced stages of flight testing and is on schedule to obtain certification by the Federal Aviation Administration ("FAA") in the last quarter of 1996, at least 12 months prior to the targeted certification date of any other ultra-long range business jet aircraft. The Company believes the Gulfstream V provides the longest range, fastest cruising speed and most technologically advanced avionics of any ultra-long range business jet aircraft in operation. GULFSTREAM IV-SP. In 1993, the Company introduced the Gulfstream IV-SP, which offers significantly improved performance and upgraded avionics as compared to its predecessor, the Gulfstream IV. The Company believes that the Gulfstream IV-SP offers the best combination of large cabin size, long range (4,220 nautical miles), fast cruising speed and technologically advanced avionics of any large business jet aircraft currently available. GULFSTREAM SHARES-TM-. In 1995, the Company introduced a Gulfstream IV-SP fractional share ownership program (Gulfstream Shares-TM-) in conjunction with Executive Jet International, Inc.'s ("EJI") NetJets-Registered Trademark- Program. Gulfstream Shares-TM- provides customers with the benefits of Gulfstream aircraft ownership at a substantially lower cost than full aircraft ownership and significantly increases the Company's potential customer base. To date, the Company has contracted to deliver 16 Gulfstream IV-SPs and 2 Gulfstream Vs to EJI in connection with this program, 8 of which have been delivered and 10 of which will be delivered through 1999. EJI also has an option to purchase 5 additional Gulfstream IV-SPs in 1998. PRE-OWNED GULFSTREAM AIRCRAFT. The Company assembled a new, experienced management team for its pre-owned aircraft sales operations and introduced a number of initiatives that have enhanced the marketability of pre-owned Gulfstream aircraft. See "Business--Principal Products--Premium Pre-Owned Gulfstream Aircraft and Other Pre-Owned Aircraft". In addition, the Company has been successful in using pre-owned Gulfstream aircraft as a significant tool to expand the Company's potential market and to compete against other manufacturers of lower priced, new aircraft products. As a result of the Company's competitive success in marketing pre-owned aircraft, the Company has reduced its inventory of pre-owned aircraft available for sale to approximately $23.6 million and $35.0 million as of June 30, 1995 and 1996, respectively, as compared with approximately $125.8 million at October 31, 1993. IMPROVED COMPLETION, SERVICE AND SUPPORT The Company's new marketing strategy has resulted in substantial improvements in the Company's completion business. Gulfstream currently completes approximately 95% of all new Gulfstream aircraft sold to customers as compared to 70% in 1990. Further, the Company has significantly expanded its worldwide maintenance services and technical support for Gulfstream aircraft, including opening a new 200,000 square foot service center in 1996 to increase its ability to provide high quality service to Gulfstream customers. These service and support activities provide the Company with ongoing customer contact, which the Company believes enhances its opportunity to sell new aircraft to existing service and support customers. SUCCESSFUL CO-PRODUCTION OF GULFSTREAM V AND GULFSTREAM IV-SP AIRCRAFT The Company is currently manufacturing both the Gulfstream V and Gulfstream IV-SP. Upon FAA certification of the Gulfstream V, which is expected to occur in the last quarter of 1996, the Company will begin delivering Gulfstream V aircraft to customers. Given the Company's increased manufacturing volume and large backlog of orders, the Company expects to deliver aircraft in 1997 at rates substantially in excess of those experienced in the recent past. Assuming FAA certification in the last quarter of 1996, the Company expects to deliver approximately 46 new aircraft in 1997, including 19 Gulfstream IV-SP and 27 Gulfstream V aircraft, representing a 59% increase over the Company's expected deliveries in 1996. Certain partnerships formed by Forstmann Little (the "Forstmann Little Partnerships") own substantially all of the shares of the Company's currently outstanding common stock (87.1% of the common stock on a fully diluted basis). Shares of Common Stock to be sold pursuant to the Offerings will be sold by the Company and by the Forstmann Little Partnerships, as well as by certain other holders of the Company's common stock and certain option holders (collectively, the Forstmann Little Partnerships and such holders of common stock and options are the "Selling Stockholders"). After the consummation of the Offerings, the Forstmann Little Partnerships will beneficially own approximately 61.1% of the Common Stock (55.2% on a fully diluted basis) or 55.6% (50.6% on a fully diluted basis), assuming that the Underwriters' over-allotment options are exercised in full. See "Certain Transactions -- The Acquisition; Subsequent Events" and "Principal and Selling Stockholders". THE OFFERINGS (1) <TABLE> <S> <C> Common Stock offered by the Company: (2) United States Offering........ 3,826,100 shares International Offering........ 956,500 shares Total....................... 4,782,600 shares Common Stock offered by the Selling Stockholders: (2) United States Offering........ 18,573,900 shares International Offering........ 4,643,500 shares Total....................... 23,217,400 shares Common Stock to be outstanding after the Offerings............ 71,963,882 shares (2)(3) Use of proceeds by the Company.. Together with proceeds of $400 million from new bank borrowings, proceeds of expected stock option exercises in connection with the Offerings, and funds generated from operations, to repurchase the outstanding Series A 7% cumulative preferred stock of the Company (the "7% Cumulative Preferred Stock") at its stated value for a purchase price of $450 million, plus approximately $7.9 million of unpaid dividends, to repay outstanding indebtedness under existing credit facilities (which was $119.8 million at June 30, 1996) and to pay the fees and expenses incurred in connection with the Offerings and the refinancing of the Company's indebtedness. The Company will not receive any of the proceeds from the sale of shares by the Selling Stockholders. See "Use of Proceeds". Proposed NYSE symbol............ GAC </TABLE> - -------------- (1) The offering of 22,400,000 shares of Common Stock initially being offered in the United States (the "U.S. Offering") and the offering of 5,600,000 shares of Common Stock initially being offered outside the United States (the "International Offering") are collectively referred to as the "Offerings". The underwriters for the U.S. Offering (the "U.S. Underwriters") and the underwriters for the International Offering (the "International Underwriters") are collectively referred to as the "Underwriters". (2) Assumes that the Underwriters' over-allotment options are not exercised. See "Underwriting". (3) Includes 1,956,520 shares of Common Stock to be issued simultaneously with or immediately prior to the consummation of the Offerings upon exercise of outstanding stock options, which shares will be sold in the Offerings. Does not include 7,697,124 shares issuable upon the exercise of additional outstanding stock options. See "Management -- Stock Options".

parsed_sections/prospectus_summary/1996/CIK0000715428_american_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the detailed information, financial statements, including the notes thereto, and other data set forth elsewhere in this Prospectus. Unless the context indicates otherwise, (i) "American Exploration" or the "Company" refers to American Exploration Company, a Delaware corporation, and its consolidated subsidiaries, (ii) all information in this Prospectus has been adjusted to reflect the one-for-ten reverse split of the Common Stock effected in June 1995 and (iii) all information in this Prospectus assumes that the Underwriters' over-allotment options will not be exercised. The pro forma information presented in this Prospectus gives effect to the acquisition by the Company of certain properties in March and September 1996 (the "March 1996 Acquisition" and "September 1996 Acquisition," respectively), the proposed sales of certain properties in connection with the liquidation of oil and gas partnerships for which the Company acts as a co-general partner (the "NYLOG Programs") and of certain related properties (collectively, the "1996 Sales") and the application of the net proceeds of the offering made by this Prospectus (the "Offering"). See "--Recent Developments and Results," "Capitalization" and the Notes to the Pro Forma Condensed Consolidated Financial Statements included elsewhere herein. For definitions of certain oil and gas terms used in this Prospectus, see "Glossary of Certain Oil and Gas Terms." THE COMPANY American Exploration is an independent company engaged in the exploration, development, acquisition and production of oil and natural gas. The Company's operations are conducted in the United States with exploration, development and acquisition activities primarily concentrated in the Gulf of Mexico, South Texas and the Smackover Trend in southwestern Arkansas. On a pro forma basis as of June 30, 1996, the Company's proved reserves totaled 13 MMBbls of oil and 145 Bcf of natural gas, or an aggregate of 37 MMBOE, with an SEC-10 Value of $225 million. Approximately 70% of these reserves are developed, and approximately 62% are attributable to properties operated by the Company. The Company also holds in excess of 200,000 net acres of undeveloped properties and owns approximately 1,300 square miles of 3-D seismic data and approximately 79,000 linear miles of 2-D seismic data. On a pro forma basis, the Company's net production for the month of September 1996 averaged 5,100 Bbls of oil and 80,100 Mcf of natural gas per day, representing a 28% increase over average daily BOE production for the second quarter of 1996. Over the past four years, the Company has implemented a series of steps that has resulted in a significant improvement in its oil and gas operating and exploration capabilities, overhead and production costs, financial position and cash operating margins. These steps include (i) hiring experienced personnel in key management and operating positions, (ii) focusing exploration and development activities in areas in which the Company believes it has competitive advantages, (iii) acquiring properties held by certain institutional oil and gas partnerships formed by the Company in the 1980s and (iv) disposing of over 250 properties, including the sale of the Company's interest in the Sawyer Field in West Texas for $64 million in July 1995. Largely as a result of these steps, the Company's operating margin has increased from $2.72 per BOE for the year ended December 31, 1992 to $6.02 per BOE for the nine months ended September 30, 1996. In addition, the Company's ratio of total debt to total capitalization has decreased from 60% at December 31, 1992 to 32% on a pro forma basis at September 30, 1996. BUSINESS STRATEGY American Exploration's strategy is to increase per share reserves, production, cash flow and earnings through exploration, development and selective acquisitions within its core operating areas. The Company's strategy is designed to capitalize on its competitive strengths, including the experience and technical expertise of its operating personnel, a substantial seismic database and a concentration of developed and undeveloped acreage in its core operating areas. The principal features of this strategy follow. GEOGRAPHIC FOCUS. The Company's exploration, development and acquisition activities are primarily focused in the Gulf of Mexico (with an emphasis on the Texas State Waters area), South Texas (with an emphasis on the Wilcox Trend) and the Smackover Trend in southwestern Arkansas. The Company believes that by focusing its operations, it can achieve cost efficiencies and enhance its ability to add new reserves. For 1996, over 90% of the Company's exploration and development budget and all of its acquisition activities have been concentrated in its core operating areas. The Company is also in the process of divesting certain properties that are not consistent with its geographic focus (see "-- Recent Developments and Results") and is reviewing the feasibility of divesting various additional non-strategic properties. ACTIVE DRILLING PROGRAM. The Company is engaged in an active drilling program and attempts to maintain a project portfolio consisting of both high risk, high potential exploration prospects and lower risk development projects. The Company's exploration activities are generally concentrated in areas where in-house geological knowledge and 2-D seismic data can be used to identify prospect leads. The Company then attempts to establish large lease positions and generally initiates or acquires 3-D seismic data to confirm prospects prior to drilling. The Company typically shares the risks associated with its exploration prospects with industry partners. In addition to internally generated exploration prospects, the Company selectively participates in exploration prospects initiated by other oil and gas companies. For 1996, the Company has budgeted approximately $40 million for exploration and development and intends to drill approximately 40 exploratory wells and 45 development wells. During the first nine months of 1996, the Company spent approximately $18 million on exploration and drilled 16 gross (7.0 net) wells, 31% of which were successfully completed. During the same period, the Company spent approximately $12 million on development and drilled 34 gross (11.7 net) wells, 85% of which were successfully completed. SELECTIVE ACQUISITIONS. The Company's acquisition strategy is to acquire producing properties within its core operating areas that enhance its competitive position, offer economies of scale and provide further development and/or exploration potential. The Company seeks to acquire properties in which it can obtain a significant ownership percentage and become the operator. Through September 1996, the Company has invested $53 million, net of interests being sold to a third party, to acquire interests in seven Gulf of Mexico fields, four of which are operated by the Company. See "-- Recent Developments and Results" and the Pro Forma Condensed Consolidated Financial Statements. ADVANCED TECHNICAL CAPABILITIES. The Company makes extensive use of advanced technologies, most notably 3-D seismic, computer-aided exploration and specialized drilling applications such as short radius horizontal wells, to better delineate or produce oil and gas reserves. The Company's experienced staff of geologists and geophysicists performs all interpretation and seismic mapping on in-house 3-D seismic workstations. FINANCIAL FLEXIBILITY. The Company is committed to maintaining financial flexibility in order to pursue its existing exploration and development projects and to take advantage of future opportunities. The Company has taken a number of steps over the past few years to reduce debt and improve its liquidity and financial flexibility. As a result, the Company's ratio of total debt to EBITDA (see Note 4 to "-- Summary Financial Data") for the prior 12 months decreased from 5.2 as of December 31, 1992 to 1.4 on a pro forma basis as of September 30, 1996. The Company intends to use the net proceeds from the Offering to reduce its outstanding bank debt. After giving effect to the proceeds from the Offering, the Company's pro forma ratio of total debt to total capitalization as of September 30, 1996 is expected to be 32%. See "Use of Proceeds," "Capitalization" and the Pro Forma Condensed Consolidated Financial Statements. RECENT DEVELOPMENTS AND RESULTS SEPTEMBER 1996 ACQUISITION. On September 27, 1996, the Company acquired interests in two blocks in the Gulf of Mexico, High Island Block 116 and East Cameron Block 328 (the "Zilkha II Properties"), for a purchase price of $39 million, net of interests being sold to a third party. The acquisition was funded through borrowings under the Company's revolving bank credit agreement (the "Credit Agreement"). The acquired properties added estimated proved reserves (as estimated by the Company as of the date of acquisition) totaling 3.6 MMBbls of oil and 16.9 Bcf of natural gas. In September 1996, production from the acquired interests was approximately 700 Bbls of oil and 17,000 Mcf of natural gas per day. The Company plans to initiate a multi-well development drilling program on East Cameron Block 328 before year-end 1996 and believes that both blocks have additional unproved reserve potential through higher primary reserve recovery and additional drilling. MARCH 1996 ACQUISITION. On March 15, 1996, the Company and a subsidiary of Dominion Resources, Inc. ("Dominion") acquired interests in five offshore blocks in the Gulf of Mexico for a purchase price of approximately $56 million. The Company's $14 million (25%) share of the March 1996 Acquisition was funded through borrowings under the Credit Agreement. The acquired properties (the "Zilkha I Properties") added estimated proved reserves (as estimated by the Company as of the date of acquisition) totaling 600 MBbls of oil and 11.3 Bcf of natural gas, net to the Company's interest. Three of the acquired properties, High Island Block 45, South Marsh Island Block 133 and East Cameron Block 129, which together represent substantially all of the proved reserve value, are operated by the Company. In September 1996, the acquired properties produced an average of approximately 670 Bbls of oil and 7,400 Mcf of natural gas per day, net to the Company's interest. During the third quarter of 1996, the Company completed the installation of production facilities on South Marsh Island Block 133 and a development well on East Cameron Block 129. The Company believes that the acquired properties have additional reserve potential through higher primary reserve recovery and the installation of gas compression. PROPOSED 1996 SALES. The Company is in the process of selling interests in approximately 70 properties, including those properties owned by the NYLOG Programs. Proved reserves and production attributable to these properties have not been included in the pro forma amounts set forth in this Prospectus. The Company intends to use the estimated $8.6 million proceeds from the proposed sales to reduce amounts outstanding under the Credit Agreement. The Company believes that these sales, which are expected to be completed by year-end 1996, will provide additional operating efficiencies. THIRD QUARTER 1996 RESULTS. For a description of the Company's results of operations for the quarter and nine months ended September 30, 1996, see "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Quarter and Nine Months Ended September 30, 1996 Compared to Quarter and Nine Months Ended September 30, 1995." PRIMARY OPERATING AREAS GULF OF MEXICO. The Gulf of Mexico is the Company's most significant area of exploration, development and acquisition activity and represents approximately 60% of the Company's 1996 exploration and development budget. On a pro forma basis, approximately 40% of total oil and gas production during September 1996 and approximately 29% of the Company's total proved reserves at June 30, 1996 were attributable to properties in the Gulf of Mexico. As of June 30, 1996, the Company held working interests in 41 offshore blocks covering 76,515 gross (28,788 net) undeveloped acres. The Company's principal offshore exploration and development focus is the Texas State Waters area. Beginning with a successful redevelopment program that increased Brazos 440 Field gross production from 5,000 Mcf of natural gas per day in February 1994 to over 25,000 Mcf of natural gas per day in October 1994, the Company has developed a large area-wide project in which it holds 29,300 gross (18,200 net) acres. In 1995, the Company participated in a 400 square mile 3-D survey covering the Brazos area and has confirmed a number of prospect leads previously identified using 2-D seismic data. Since January 1, 1994, the Company has drilled five wells on its Brazos acreage, three of which were successful, and as of September 30, 1996 it was drilling a sixth well. The Company intends to further expand its Texas State Waters acreage and participate in additional 3-D seismic surveys. SOUTH TEXAS. Approximately 30% of the Company's 1996 exploration and development budget is allocated to its South Texas operating area. On a pro forma basis, South Texas represented approximately 10% of total oil and natural gas production during September 1996 and approximately 7% of the Company's total proved reserves at June 30, 1996. American Exploration's principal exploration focus in South Texas is the Yoakum Gorge project, located in Lavaca County, where the Company controls over 55,000 acres, holds a 52.5% working interest and is nearing completion of a 152 square mile proprietary 3-D survey. The initial phase of the 3-D data has confirmed over 20 prospects in the shallow Frio and Yegua formations as well as the deeper Upper and Lower Wilcox formations. The Company plans to commence drilling 16 of these prospects in the fourth quarter of 1996. SMACKOVER TREND. American Exploration's operations in the Smackover Trend of southwestern Arkansas are focused primarily in the Midway and Buckner fields, both of which are operated by the Company. The Company's ongoing strategy in this area is to capitalize on the horizontal drilling expertise it has developed in exploiting the Midway Field by applying this technology to other Smackover fields. In 1995, the Company acquired various interests in the Buckner Field, which is located approximately 11 miles from Midway. The Buckner Field, which is geologically similar to Midway, has never been unitized and waterflooded. The Company is working to unitize the field and plans to initiate a horizontal drilling and waterflood project in 1997. OTHER OPERATING AREAS. The Company's most significant properties outside of its primary operating areas are the Bowdoin Field located in Montana, the Bradshaw Field located near the Hugoton Field in Kansas and the Henderson Canyon Field located in West Texas. During the first nine months of 1996, the Company completed 11 gross (8.7 net) development wells in the Bradshaw Field and increased net gas production by approximately 56% from an average of approximately 8,000 Mcf per day in January 1996 to approximately 12,500 Mcf per day in September 1996. In addition, the Company has a large number of development locations in the Bowdoin Field that it intends to drill as necessary to maintain production capacity at current levels. THE OFFERING <TABLE> <S> <C> Common Stock Offered: By the Company............................................ 3,000,000 shares By the Selling Stockholders............................... 579,229 shares Total............................................. 3,579,229 shares Common Stock to be Outstanding After the Offering (1)....... 14,807,741 shares Use of Proceeds............................................. To reduce amounts outstanding under the Credit Agreement. The Company will not receive any part of the proceeds from the sale of shares by the Selling Stockholders. See "Use of Proceeds." AMEX Symbol................................................. AX </TABLE> - --------------- (1) Excludes (i) up to approximately 1.8 million shares issuable upon conversion of the Company's $450 Cumulative Convertible Preferred Stock, Series C, par value $1.00 per share (the "Convertible Preferred Stock"), at a conversion price of $15.00 per share, subject to adjustment in certain circumstances, (ii) approximately 1.0 million shares issuable upon exercise of stock options outstanding at September 30, 1996 at prices ranging from $11.50 to $40.00 per share at a weighted average exercise price of $13.29 per share and (iii) approximately 1.5 million shares issuable upon exercise of warrants outstanding at September 30, 1996 at a weighted average exercise price of $16.94 per share. SUMMARY FINANCIAL DATA The following table sets forth certain summary historical and pro forma financial data for the Company. The historical financial data was derived from the consolidated financial statements of the Company. The pro forma summary of operations data gives effect to the March 1996 Acquisition, the September 1996 Acquisition and the expected sale of certain assets acquired therein, the 1996 Sales and the application of the net proceeds from the Offering as if such transactions had occurred on January 1, 1995. The pro forma balance sheet data gives effect to the expected sale of certain assets acquired in the September 1996 Acquisition, the 1996 Sales and the application of the net proceeds from the Offering as if such transactions had occurred on September 30, 1996. The pro forma data for the year ended December 31, 1995 does not include results from the High Island 116 well acquired in the September 1996 Acquisition because the well did not produce during the period. Similarly, the pro forma data for the nine months ended September 30, 1996 includes only two months of results from the High Island 116 well. The well commenced production in August 1996 at a net production rate of 300 Bbls of oil per day and 17,100 Mcf of natural gas per day. The data in the following table should be read in conjunction with the Pro Forma Condensed Consolidated Financial Statements, Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and related Notes thereto appearing elsewhere herein. <TABLE> <CAPTION> PRO FORMA NINE MONTHS NINE PRO FORMA ENDED MONTHS YEAR ENDED DECEMBER 31, YEAR ENDED SEPTEMBER 30, ENDED -------------------------------- DECEMBER 31, ----------------- SEPTEMBER 30, 1993(1) 1994(2) 1995(2)(3) 1995 1995 1996 1996 -------- -------- ---------- ------------ ------- ------- ---------- (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS) <S> <C> <C> <C> <C> <C> <C> <C> SUMMARY OF OPERATIONS DATA: Revenues: Oil and gas sales................... $ 49,589 $ 50,033 $ 70,768 $ 65,238 $55,049 $52,263 $ 52,928 Other, net.......................... 8,569 1,326 11,166 772 10,352 912 912 -------- -------- ------- -------- ------- ------- ------- Total revenues.................. 58,158 51,359 81,934 66,010 65,401 53,175 53,840 -------- -------- ------- -------- ------- ------- ------- Costs and Expenses: Production and operating............ 15,998 21,302 24,515 19,377 19,079 15,421 14,482 Depreciation, depletion and amortization...................... 23,635 29,616 30,726 30,909 22,446 20,871 22,656 General and administrative.......... 7,413 10,035 7,472 7,528 4,683 4,450 4,450 Taxes other than income............. 4,601 5,710 5,760 4,956 4,413 4,254 3,862 Exploration......................... 7,554 2,559 4,826 4,826 3,269 9,152 9,152 Impairment.......................... 10,975 33,570 1,822 1,822 43 1,841 1,841 -------- -------- ------- -------- ------- ------- ------- Total costs and expenses........ 70,176 102,792 75,121 69,418 53,933 55,989 56,443 -------- -------- ------- -------- ------- ------- ------- Income (loss) from operations......... (12,018) (51,433) 6,813 (3,408) 11,468 (2,814) (2,603) Interest expense...................... (6,847) (6,638) (5,481) (3,336) (4,853) (2,894) (2,984) Other income (expense), net........... (321) (2,164) 145 147 (105) (63) (63) -------- -------- ------- -------- ------- ------- ------- Income (loss) before extraordinary item................................ (19,186) (60,235) 1,477 (6,597) 6,510 (5,771) (5,650) Extraordinary gain on debt extinguishment...................... -- 5,419 2,456 2,456 2,456 -- -- -------- -------- ------- -------- ------- ------- ------- Net income (loss)..................... (19,186) (54,816) 3,933 (4,141) 8,966 (5,771) (5,650) Preferred stock dividends............. (75) (1,800) (1,800) (1,800) (1,350) (1,350) (1,350) -------- -------- ------- -------- ------- ------- ------- Net income (loss) to common stock..... $(19,261) $(56,616) $ 2,133 $ (5,941) $ 7,616 $(7,121) $ (7,000) ======== ======== ======= ======== ======= ======= ======= Net income (loss) per common share: Primary and fully diluted: Loss before extraordinary item.... $ (2.77) $ (7.70) $ (0.03) $ (0.57) $ 0.43 $ (0.60) $ (0.47) Net income (loss)................. (2.77) (7.02) 0.18 (0.40) 0.64 (0.60) (0.47) OTHER FINANCIAL DATA: EBITDA(4)............................. $ 37,224 $ 10,583 $ 33,981 $ 34,588 $27,493 $28,186 $ 30,182 Operating cash flow(5)................ 26,813 4,838 27,514 29,573 21,714 24,285 25,848 Total capital expenditures (6)........ 24,167 49,889 44,215 N/A 31,229 92,116 N/A </TABLE> <TABLE> <CAPTION> PRO FORMA SEPTEMBER 30, SEPTEMBER 30, 1996 1996 ------------- -------------- <S> <C> <C> SUMMARY OF BALANCE SHEET DATA: Working capital (deficit).......................................................... $ (1,623) $(16,007) Total assets....................................................................... 233,363 218,979 Long-term debt, excluding current obligations...................................... 105,000 56,833 Total stockholders' equity......................................................... 87,506 121,289 </TABLE> - --------------- (1) The Company received aggregate proceeds of approximately $35 million for the conveyance of approximately 40% of its interest in the Henderson Canyon Field in March 1993 and the sale of its Canadian assets in mid-1993. (2) The Company purchased investors' interests in certain institutional oil and gas partnerships formed by the Company in the 1980s (the "APPL Programs") in 1994 and 1995 for 4.6 million shares of Common Stock and $40.1 million in cash (the "APPL Consolidation"). (3) The Company sold its interest in the Sawyer Field for $64 million in July 1995. (4) EBITDA is defined for this purpose as net income (loss) plus interest, income taxes, depreciation, depletion and amortization, exploration expense, impairment expense and loss on sales of oil and gas properties, less gain on sales of oil and gas properties and extraordinary gain from extinguishment of debt. EBITDA should not be considered as an alternative to earnings (loss) as an indicator of the Company's financial performance or to cash flow as a measure of liquidity. See the Consolidated Statements of Operations included in the Consolidated Financial Statements appearing elsewhere herein. (5) Cash flow from operations before working capital changes and after preferred dividends. (6) Excludes the acquisition of properties in exchange for the issuance of Common Stock, principally relating to the APPL Consolidation. SUMMARY OPERATING DATA The table below sets forth certain operating information of the Company for the periods presented. <TABLE> <CAPTION> NINE MONTHS YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, ---------------------------------- ------------------- 1993(2) 1994(3) 1995(3)(4) 1995(3) 1996 ------- ------- ---------- ------- ------- <S> <C> <C> <C> <C> <C> AVERAGE SALES PRICE(1): Gas ($/Mcf)........................... $ 1.92 $ 1.90 $ 1.74 $ 1.70 $ 1.88 Oil ($/Bbl)........................... 16.01 15.39 16.83 16.87 16.87 BOE ($/BOE)........................... 12.99 12.67 12.30 12.05 13.17 PRODUCTION DATA: Gas (MMcf)............................ 15,336 16,241 24,450 19,866 15,772 Oil (MBbls)........................... 1,261 1,241 1,680 1,258 1,340 MBOE.................................. 3,817 3,948 5,755 4,569 3,969 UNIT DATA ($/BOE): Oil and gas sales..................... $ 12.99 $ 12.67 $ 12.30 $ 12.05 $ 13.17 Production and operating costs........ 4.19 5.40(5) 4.26 4.18 3.89 Taxes other than income............... 1.21 1.45 1.00 0.97 1.07 General and administrative expense.... 1.94 2.54(6) 1.30 1.02 1.12 Interest expense...................... 1.79 1.68 0.95 1.06 0.73 Preferred stock dividends............. 0.02 0.46 0.31 0.30 0.34 ------- ------- ------- ------- ------ Operating margin...................... $ 3.84 $ 1.14 $ 4.48 $ 4.52 $ 6.02 ======= ======= ======= ======= ====== </TABLE> - --------------- (1) Prices reflect impact of hedging gains and losses. (2) The Company received aggregate proceeds of approximately $35 million for the conveyance of approximately 40% of its interest in the Henderson Canyon Field in March 1993 and the sale of its Canadian assets in mid-1993. (3) The Company purchased investors' interests in the APPL Programs in 1994 and 1995 for 4.6 million shares of Common Stock and $40.1 million in cash. (4) The Company sold its interest in the Sawyer Field for $64 million in July 1995. (5) Includes $2.4 million, or $.61 per BOE, for remediation and restoration costs incurred in 1994. (6) Includes $2.0 million, or $.51 per BOE, for severance costs incurred in 1994. SUMMARY RESERVE DATA The following table sets forth summary data with respect to the estimated proved oil and gas reserves and related present value of estimated future net revenues of the Company's properties as of June 30, 1996 on a historical basis and on a pro forma basis after giving effect to the September 1996 Acquisition and the 1996 Sales. Such estimates on a historical basis are based upon (i) the quantities of reserves set forth in a reserve report prepared by Netherland, Sewell & Associates, Inc., independent petroleum engineers, as of December 31, 1995 with respect to the properties owned by the Company as of such date, (ii) adjustments to such December 31, 1995 reserves made by the Company to reflect production and drilling activity after such date, which adjustments have been audited by Netherland, Sewell & Associates, Inc. as set forth in their report dated October 8, 1996 and included in Appendix A hereto, and (iii) reserve estimates set forth in a reserve report prepared by William M. Cobb & Associates, Inc., petroleum engineering consultants, as of June 30, 1996, a copy of which is included in Appendix A hereto (the "Cobb Report"), with respect to the properties acquired in the March 1996 Acquisition. Such estimates on a pro forma basis are based on (i) the historical basis estimates as of June 30, 1996 as described above, (ii) adjustments to such June 30, 1996 estimates made by the Company to remove reserves attributable to the 1996 Sales and (iii) reserve estimates set forth in the Cobb Report with respect to the properties acquired in the September 1996 Acquisition. The estimates of the SEC-10 Value of the reserves are based upon prices as of June 30, 1996, except in those instances in which fixed and determinable gas price escalations are covered by contracts. The prices used as of June 30, 1996 averaged $18.19 per Bbl of oil and $2.25 per Mcf of natural gas. There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and in projecting future rates of production and future net cash flows, and reserve estimates may differ significantly from the quantities of oil and gas that are ultimately recovered. See "Risk Factors -- Estimates of Reserves and Future Net Revenues" and "Business -- Reserves."

parsed_sections/prospectus_summary/1996/CIK0000720481_cerner_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including notes thereto, appearing elsewhere in this Prospectus. Unless otherwise indicated, all financial information and share data in this Prospectus (i) have been adjusted to reflect the conversion of all outstanding shares of the Company's Series A Preferred Stock into 968,750 shares of Common Stock and all outstanding shares of the Company's Series B Preferred Stock into 3,750,000 shares of Common Stock concurrently with the consummation of this Offering, and (ii) assume no exercise of the Underwriters' over-allotment option. Investors should carefully consider the information set forth under the heading "Risk Factors." THE COMPANY Dynamic Healthcare Technologies, Inc. ("Dynamic" or the "Company") is a leading provider of enterprise-wide, patient-centered healthcare information systems. These systems enable hospitals, physician practice groups and integrated delivery networks to capture, store, archive and retrieve clinical, financial and administrative patient information. The Company's products enhance productivity, reduce costs and improve the quality of patient care by providing on-line access to patient information previously maintained on a variety of media, including paper, X-ray film, magnetic disk, and video and audio recordings. The Company's current product lines include clinical information systems for use in laboratory, radiology, anatomic pathology and anesthesiology applications, and imaging and electronic health record solutions. The Company provides support for all of its systems and provides systems integration and other consulting services. The Company currently serves over 250 customers in 44 states. Key customers include the University of California at Los Angeles Medical Center, University of Illinois at Chicago Medical Center, Methodist Hospital of Memphis, Memorial Sloan-Kettering Cancer Center, Ohio State University Hospital, Columbia/HCA, Greater Dayton Area Hospital Association, Advocate Health Care, Temple University Hospital, UniHealth and Orlando Regional Health System. Utilizing the Company's healthcare information experience, imaging technologies and customer input, the Company is focusing on a new product strategy for electronic health records. The Company's new electronic health record product, DynamicVision, provides connectivity and enabling technologies that integrate clinical and imaging information systems to create an open architecture, multi-media clinical workstation. DynamicVision provides prompt and simultaneous on-line access to information stored in various systems and data repositories located at multiple sites. This information can include documents, medical images such as X-rays, MRIs and CAT scans, and video and audio recordings. DynamicVision is currently being beta-tested and is scheduled for general availability by the end of 1996. The healthcare information industry is undergoing rapid and significant change. Cost containment pressures, industry consolidation, the movement toward managed care and rising standards of healthcare quality represent fundamental trends in today's healthcare operating environment. Increasingly, the key to effective cost control and quality management lies in the collection, availability and analysis of medical records in order to assess treatment patterns, resource utilization and outcomes. As a result, the information demands in the healthcare industry are rapidly increasing for caregivers, managers and third party payors. Total healthcare information technology spending in the United States was estimated to be $8.5 billion in 1994, and is projected to reach $13.0 billion by 1997 and $20.0 billion by 2000. The Company's new product development, including DynamicVision, employs technical designs based on open architecture at all levels of data capture, information management and workflow, application software and connectivity, which permits platform independence and plug and play capability. Dynamic's strategy to utilize open architecture leverages its own technology with capabilities of leading technology companies, enabling the Company to focus its research and development on healthcare software applications. The Company has entered into strategic relationships with several leading technology developers, including International Business Machines Corporation ("IBM"), Wang Laboratories, Inc. ("Wang") and others, to gain access to certain technologies that are integrated into the Company's systems. The Company's platform independent systems run on a variety of operating systems, including UNIX, Windows 95/NT, IBM AS/400 and other proprietary platforms. Dynamic's systems are developed using Internet/Intranet standards and protocols, are fully scaleable and preserve the customers' investment in existing systems. The Company believes its technical designs and strategic relationships enable it to respond more rapidly to changes in core technologies at a lower cost than companies utilizing proprietary information systems. The Company's objective is to be the leading provider of enterprise-wide, patient-centered healthcare information systems that enable the efficient capture, storage, archival and retrieval of electronic health information and the secure sharing of this information across the continuum of care throughout a patient's lifetime. To achieve this objective, the Company intends to employ the following strategies: (i) aggressively expand its position in the rapidly growing electronic health record market through the commercial availability of DynamicVision; (ii) focus on cross-selling additional applications and services to existing and new customers; (iii) provide solutions utilizing open architecture that offer cost-effective and flexible information solutions; (iv) maintain its technological advantage by investing in proprietary research and development for healthcare software applications while integrating state-of-the-art technology through strategic relationships with industry leading technology companies; and (v) acquire complementary businesses, products and technologies. The Company was originally incorporated in California in 1977, reincorporated in Nebraska in 1982 and subsequently reincorporated in Florida in 1996. The Company's executive offices are located at 101 Southhall Lane, Suite 210, Maitland, Florida 32751, its telephone number is (407) 875-9991 and its World Wide Web address is http://www.dht.com. THE OFFERING <TABLE> <S> <C> Common Stock Offered by the Company..................... 4,000,000 shares Common Stock Offered by the Selling Shareholders........ 1,000,000 shares Common Stock to be Outstanding after the Offering....... 15,400,536 shares(1) Use of Proceeds......................................... Repayment of indebtedness; expansion of sales, marketing and distribution; research and development; general corporate purposes, including working capital; and potential acquisitions. See "Use of Proceeds." Nasdaq Symbol........................................... DHTI </TABLE> - --------------- (1) Does not include 1,908,190 shares issuable upon the exercise of outstanding options and warrants. SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA) <TABLE> <CAPTION> YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30, ---------------------------------------- --------------------------------- 1995 1995 1996 --------------------- ------ ------------------------ 1993 1994(1) ACTUAL PRO FORMA(2) ACTUAL ACTUAL(3) PRO FORMA(2) ------ ------- ------ ------------ ------ --------- ------------ <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA: Total operating revenues... $9,688 $6,987 $8,886 $ 14,150 $4,502 $ 6,317 $7,323 Operating income (loss).... 253 (3,559) (162) (219) (503) (417) (1,537) Net earnings (loss)........ 246 (4,307) (513) (646) (706) (522) (1,632) Earnings (loss) per common share.................... $0.05 $(0.78) $(0.08) $(0.10) $(0.11) $ (0.08) $(0.25) Weighted average common shares outstanding....... 5,363 5,536 6,443 6,443 6,295 6,619 6,619 </TABLE> <TABLE> <CAPTION> JUNE 30, 1996 ---------------------------- ACTUAL AS ADJUSTED(4) ----------- -------------- <S> <C> <C> BALANCE SHEET DATA: Cash and cash equivalents........................................... $771 $ 19,950 Working capital..................................................... 122 19,301 Total assets........................................................ 11,040 30,219 Long-term obligations, net of current maturities.................... 2,922 234 Series A preferred stock............................................ 10 -- Series B preferred stock............................................ 38 -- Total shareholders' equity.......................................... 3,597 25,537 </TABLE> - --------------- (1) Includes the operating results and related financial information since the acquisition of Dynamic Technical Resources, Inc. on August 23, 1994, accounted for by the purchase method. (2) Gives effect to the acquisition of Dimensional Medicine, Inc. ("DMI") as if the acquisition occurred on January 1, 1995. See "Pro Forma Condensed Consolidated Statements of Operations." (3) Includes the operating results and related financial information since the acquisition of DMI on May 1, 1996, accounted for by the purchase method. (4) Adjusted to give effect to the sale of 4,000,000 shares of Common Stock offered by the Company at an assumed offering price of $6.00 per share and the application of the estimated net proceeds therefrom. See "Use of Proceeds."

parsed_sections/prospectus_summary/1996/CIK0000723906_miracor_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Unless otherwise expressly set forth herein to the contrary, all per share data in this Prospectus gives effect to the Company's 1-5 reverse stock split in September, 1981, its 1-30 reverse stock split in November, 1990, its 1-6 reverse stock split in January, 1994, and its 1-2 reverse stock split in June, 1996. In addition, unless otherwise expressly set forth herein to the contrary, all references to the Company's % Series A Cumulative Convertible Preferred Stock assumes the conversion of all 247,500 shares of the Company's Series I Convertible Preferred Stock issued in the Company's 1996 Private Placement into 247,500 shares of the Company's % Cumulative Convertible Series A Preferred Stock on a one-for-one basis on the date hereof. See "Business--Corporate History" and "The Company--Recent Financings--1996 Private Placement." THE COMPANY Medical Device Technologies, Inc. (the "Company") is a development stage company engaged in identifying, developing and bringing to market patented technologies in the medical device field. The Company's strategy is to identify technologies that it believes have commercial viability, license or acquire the technologies, complete product development, obtain regulatory clearances and initiate marketing and sales. The Company directs its efforts towards patented technologies that it believes can be commercially developed into medical devices which are innovative, represent improvements over existing products, or are responsive to a presently unfulfilled need in the market place. To date, the Company has licensed the exclusive worldwide rights to commercialize three medical devices: (1) the PERSONAL ALARM SYSTEM ("PAS"), which is designed to immediately alert healthcare professionals when their surgical gloves and garments are torn or punctured or become saturated with fluids and therefore no longer effectively provide protection from infection. The spread of the Human Immunodeficiency Virus ("HIV") that causes Acquired Immune Deficiency Syndrome ("AIDS"), and the spread of Hepatitis and other infections transmitted through bodily fluids has increased the need to protect health care workers and patients, especially in emergency and operating rooms. The Company received clearance from the Food and Drug Administration ("FDA") to sell the PAS in August of 1995, and commenced manufacturing and marketing the PAS in January of 1996; (2) the CELL RECOVERY SYSTEM ("CRS"), which is an automated biopsy brush system that collects specimen cells for cancer diagnosis, offers two distinct advantages over current techniques: it is minimally invasive and is less costly to administer. On March 20, 1996, the Company received clearance from the FDA to market the CRS for the urology market. The Company intends to launch the CRS in the fourth quarter of 1996. Prior to the market launch of the CRS, the Company intends to complete certain clinical trials for a follow-up submission to the FDA to establish that the device assists with the detection of certain urological diseases, such as bladder cancer, and at the same time commence manufacturing for the system's instrumentation and disposables; and (3) the INTRACRANIAL PRESSURE MONITORING SYSTEM ("ICP"), which is a diagnostic device that monitors pressure inside the human skull without having to drill holes in the skull. Presently, the only method by which intracranial pressure can be monitored is to drill a hole in the skull. The Company's development strategy for the ICP involves two specific versions of the device. The first generation ICP device will monitor the direction and rate of change in intracranial pressure. The second generation of the ICP will provide categories of intracranial pressure levels as well. It is presently anticipated that clinical trials for the first generation ICP device will continue through the third quarter of 1996 and clinical trials for the second generation of the device will continue through the third quarter of 1997. The Company believes there exists non-overlapping markets for each generation of the device. <PAGE> At present, the Company does not intend to engage in the manufacture of its products, and in January 1996, it engaged a third party to manufacture the first PAS systems. The Company is currently exploring two strategies in connection with the marketing of its medical devices. The Company will either assemble a network of independent distributors who have proven to be effective in introducing new products in the medical device field, or form an alliance with a strategic corporate partner with a strong presence in the applicable medical device market. The Company was incorporated on February 6, 1980 under the laws of the State of Utah and is located at 9171 Towne Centre Drive, Suite 355, San Diego, California 92122, telephone number (619) 455-7127. 2 <PAGE>

parsed_sections/prospectus_summary/1996/CIK0000726712_sulcus_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS CONTAINED ELSEWHERE IN THIS PROSPECTUS. INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER THE HEADING "RISK FACTORS." EXCEPT AS OTHERWISE SPECIFIED, THE INFORMATION CONTAINED IN THIS PROSPECTUS ASSUMES THAT (I) THE PREFERRED STOCK HAS NOT BEEN CONVERTED INTO SHARES OF COMMON STOCK, (II) THE WARRANTS HAVE NOT BEEN EXERCISED, AND (III) THE OVER-ALLOTMENT OPTION AND THE UNDERWRITER'S WARRANTS HAVE NOT BEEN EXERCISED. SEE "UNDERWRITING." THE COMPANY Sulcus provides automation solutions to the worldwide hospitality and tourism market and to the domestic U.S. real estate industry and legal professions. The Company develops, manufactures, markets and installs integrated microcomputer systems designed to automate the creation, handling, storage and retrieval of information and documents. The Company sells computer systems, which include a network of hardware, software and cabling as well as stand-alone turnkey systems. Sulcus sells 24-hour customer support to the hospitality industry and regular business hour support to the real estate industry and the legal profession with each new system sold. This provides a recurring revenue stream beyond the original system sale. The Company's turnkey computer systems provide all of a customers needs to automate segments of its business. Sulcus believes that this approach is critical in the vertical markets in which it competes. Some competitors can automate a specific task, most are unable to automate as broad a range of a customer's business applications as Sulcus. Customers include hotels, motels, restaurants, resorts, cruise lines, country clubs, condominiums, real estate related businesses and law offices. In 1988, the Company conceived a vision to build a leadership position in turnkey computer systems for the hospitality, and real-estate industries and developed a strategic plan to achieve that vision. The strategic plan envisioned internal growth by way of expanded research and development, as well as growth through acquisitions, mergers, joint ventures and similar alliances. In order to fulfill that vision, the Company has made numerous acquisitions, alliances and joint ventures which created additional market opportunities for existing products, created or obtained products that complement or expand existing product lines, and created additional product distribution channels. The Company has assembled a comprehensive product line that includes approximately 800 programs contained in 55 business applications with over 255 interfaces for automatic integration with third party software or hardware systems. Sulcus has built a worldwide distribution system with over 80 locations in over 20 countries and has installed its systems on all continents except Antarctica. See "Business--Historical Development." The Company was incorporated under the laws of the Commonwealth of Pennsylvania on November 5, 1979, under the name "Ragtronics, Inc." and adopted its present name in December 1982. The principal offices of Sulcus are located at Sulcus Centre, 41 N. Main Street, Greensburg, Pennsylvania 15601. Its telephone number at such address is (412) 836-2000. Unless the context indicates otherwise, all references herein to the Company or Sulcus refer to Sulcus Computer Corporation and its wholly owned subsidiaries. PROSPECTUS SUBJECT TO COMPLETION DATED OCTOBER , 1996 SULCUS COMPUTER CORPORATION 200,000 Units Each Unit Consisting of One Share of Preferred Stock and Four Class A Warrants Sulcus Computer Corporation, a Pennsylvania corporation (the" Company" or "Sulcus") hereby offers for sale 200,000 Units (the "Unit"). Each Unit consists of one share of the Company's Series A Redeemable Convertible Preferred Stock, no par value per share, (the "Preferred Stock") and four Class A Warrant (the "Warrants") to purchase Preferred Stock. The shares of Preferred Stock and Warrants included in each Unit will be immediately detachable and separately transferrable. Each share of Preferred Stock may be converted into_____________ shares of Common Stock, no par value per share, of the Company (the "Common Stock") commencing on__________________ , 1997, (six months from the date of this Prospectus). The Preferred Stock is redeemable by the Company any time commencing_________________ , 1997, (15 months from the date of this Prospectus), upon not less than thirty (30) days' notice, at a price of $_________ per share. Two Warrants will entitle the registered holder thereof to purchase one share of Preferred Stock at a price of $__________ if exercised on or before_______________ , 1996, (75 days from the date of this Prospectus). Thereafter, four Warrants shall entitle the registered holder thereof to purchase one share of Preferred Stock at a price of $_____________ , if exercised on or before______________ , 1997, (one year from the date of this Prospectus), the Warrant expiration date. See "Description of Securities" and "Risk Factors." Prior to this Offering, there has been no public market for the Preferred Stock or the Warrants and there can be no assurance that such a market will develop after the completion of this Offering or, if developed, that it will be sustained. It is currently estimated that the initial public offering price will be between $10.00 and $11.00 per Unit. For information regarding the factors considered in determining the initial public offering price of the Units and the terms of the Preferred Stock and Warrants, see "Risk Factors," "Underwriting" and "Description of Securities." The Common Stock of the Company is traded on the American Stock Exchange ("AMEX") under the symbol SUL. The closing price for the Common Stock 21/4 on October 21, 1996. See "Price Range of Common Stock." It is anticipated that the Preferred Stock and Class A Warrants will be traded on the AMEX under the symbols SULP and SULW, respectively. THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS" LOCATED ON PAGE 7 AND "DILUTION." THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION OF THE CONTRARY IS A CRIMINAL OFFENSE. <TABLE> <CAPTION> Price Underwriting Proceeds to Public Discounts(1) to Company(2) <S> <C> <C> <C> Per Unit . . . . . . . . . . . . . . . . $ $ $ Total(3) . . . . . . . . . . . . . . . $ $ $ </TABLE> (Footnotes appear on inside front cover.) The Units are offered by the Underwriter on a "firm commitment" basis, when as and if delivered to and accepted by the Underwriter, and subject to the right of the Underwriter to reject any order in whole or in part and to certain other conditions. It is expected that delivery of certificates representing the Preferred Stock and Warrants comprising the Units will be made at the offices of Joseph Stevens & Company, L.P., 33 Maiden Lane, New York, NY 10038 on or about ____________ , 1996. Joseph Stevens & Company, L.P. The date of this Prospectus is_____________ , 1996 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. THE OFFERING Securities Offered: 200,000 Units, each Unit consisting of one share of Series A Redeemable Convertible Preferred Stock ("Preferred Stock") and four Class A Warrants. Offering Price: $ 10.50 per Unit Terms of Preferred Stock: Conversion Rights. Unless previously redeemed (see below), each share of Preferred Stock is convertible into ______________shares of Common Stock, subject to adjustment in certain events, at any time after six months from the date of issuance. No fractional shares will be issued, nor will cash in lieu thereof be paid. Redemption. The Preferred Stock may be redeemed by the Company upon payment of $___________ per share at any time on or after 15 months from the date of this Prospectus, upon 30 days' prior written notice. Dividends. Payable only to the same extent as dividends are paid on the Common Stock. Liquidation Preference. In the event of any liquidation of the Company, holders of Preferred Stock are entitled to a liquidation preference of $___________ per share (the public offering price). Voting Rights. Non-voting, except with respect to matters that alter or change the powers, preferences and rights of the Preferred Stock. Terms of Class A Warrants: During the 75 day period commencing on the date of this Prospectus, two Class A Warrants entitle the holder to purchase one share of Preferred Stock for $__________. Thereafter, and prior to____________ , 1997, (one year from the date of this Prospectus), the Class A Warrant expiration date, four Class A Warrants entitle the holder to purchase one share of Preferred Stock for $____________. Warrantholders will only be entitled to exercise Class A Warrants to purchase whole shares of the Company's Preferred Stock. Common Stock Outstanding and to be Outstanding after Offering: 15,359,625 shares of Common Stock(1) Preferred Stock to be Outstanding After Offering: 200,000 shares of Preferred Stock(2) Warrants Outstanding After the Offering: 800,000 Class A Warrants Use of Proceeds: The net proceeds of the Offering will be used for working capital and general corporate purposes. Risk Factors: The Offering involves certain risks. See "Risk Factors." AMEX Symbol: Common Stock SUL Proposed AMEX Symbols: Preferred Stock SULP Class A Warrants SULW (1) Does not include (i) 2,678,631 shares reserved for issuance under the Company's stock option plans for employees; (ii) 605,000 shares reserved for issuance upon exercise of options granted to directors, consultants and advisors; (iii) 64,500 shares reserved for issuance under various "earn out" provisions in connection with recent acquisitions; (iv)____________ shares reserved for issuance upon conversion of the Preferred Stock and the conversion of the Preferred Stock issuable to the Underwriter upon exercise of the Underwriter's Warrant; and (v) 327,726 shares of Common Stock issued in connection with "earn out" provisions to the former shareholders of JBA and subsequently cancelled by the Company. See "Business--Historical Development-JBA," "The Company," "Management--Stock Option Plan," "Description of Securities," and Note 15 of Notes to Consolidated Financial Statements. (2) Does not include shares reserved for issuance upon the exercise of the Class A Warrants and the exercise of the Class A Warrants issuable to the Underwriter upon the exercise of the Underwriter's Warrant.

parsed_sections/prospectus_summary/1996/CIK0000737755_metromail_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and the financial statements and pro forma information (and the notes related thereto) included elsewhere in this Prospectus. Unless otherwise indicated, all information in this Prospectus assumes no exercise of the U.S. Underwriters' over-allotment option. See "Underwriters." THE COMPANY Metromail Corporation ("Metromail" or the "Company") is a leading provider of marketing-oriented consumer information and reference services which it supplies to a wide variety of organizations engaged in direct mail, telephone and target marketing, as well as to clients who need specific reference and information services. In providing these information services, Metromail utilizes its proprietary database, which it believes is one of the most comprehensive and accurate databases in the United States, containing geographic, demographic and other marketing information on over 143 million individuals and over 90% of the households in the United States. The Company has assembled this database over almost 50 years from a wide variety of publicly available and proprietary, third-party sources and acquired databases. The markets in which the Company participates are experiencing increasing demand for high-quality consumer information. In 1995, Metromail generated net sales and earnings from operations of $237.2 million and $30.6 million, respectively. The Company offers two general categories of products and services: direct marketing services and reference services. To its direct marketing clients the Company provides: (i) targeted lists of potential customers; (ii) value-added enhancements of pre-existing customer lists; (iii) processing and mail services; and (iv) proprietary marketing database software for personal computers used to access marketing data from a client's customer database. The Company's reference services include: (1) a National Directory Assistance ("NDA") database for on-line or operator-assistance providers; (2) an on-line look-up/skip-locate service for collection agencies, consumer finance companies and credit card issuers; and (3) the Cole directories, which list households in sequence, by telephone number or address, in approximately 150 markets in the United States and Canada, delivered in printed form or on CD-ROM. Metromail's innovative marketing and distribution programs are important elements of the Company's success to date. Metromail uses a multi-channel distribution strategy to target a broad base of potential clients. The Company has its own sales force, which the Company believes to be the largest direct sales force in its industry, to call primarily on large national accounts. The Company also sells its products and services through direct mail, telemarketing and sales through third-party resellers such as advertising agencies and list brokers. In addition, the Company has invested in the development of sophisticated database marketing software applications which enable clients to create and manage their own databases as well as gain more efficient access to the data available through Metromail's proprietary database. Metromail is consolidating all of its existing databases into a single universal file through an advanced technology initiative. The Company believes that this consolidation will enable it to reduce the costs and time of updating its database and accelerate the speed at which information can be retrieved from the database. Metromail expects to benefit from continued growth in its markets resulting from the ongoing shift from "mass" marketing to "information-driven" targeted marketing, increased access to data and growth in several existing end markets and industries, as well as the emergence of new end markets. The Company believes that its competitive strengths will enable it to continue to compete effectively in its markets. These strengths include the Company's (i) comprehensive proprietary database and expertise in gathering data; (ii) ability to leverage its database into a wide range of information products and services; (iii) large base of established clients and comprehensive, multi- channel sales network; (iv) advanced technological capabilities in database management and software development; and (v) experienced management team and employees. The Company's principal strategy is to capitalize on its competitive strengths to provide high value-added information and information services to an expanding universe of clients. Key elements of the Company's strategy include: . Maintaining, integrating and expanding its proprietary database; . Developing new products and services and targeting new markets; . Developing technologies to analyze, package and distribute information more efficiently; and . Selectively acquiring data, distribution channels and businesses available as a result of ongoing consolidation in the industry. R. R. Donnelley & Sons Company ("R.R. Donnelley") is currently the sole stockholder of the Company and upon completion of the Offering will own approximately 41.7% of the outstanding Common Stock (approximately 38.4% if the over-allotment option granted by the Company to the U.S. Underwriters is exercised in full). While R.R. Donnelley in the future may reduce its ownership interest in the Company, R.R. Donnelley has advised the Company that it has no plans to do so. In connection with the Offering, R.R. Donnelley has agreed not to offer, pledge, sell or otherwise dispose of, directly or indirectly, any shares of Common Stock (or any security convertible into or exercisable or exchangeable for Common Stock) for a period of 180 days after the date of this Prospectus without the prior written consent of Morgan Stanley & Co. Incorporated. See "Relationship with R.R. Donnelley" and "Underwriters." THE OFFERING <TABLE> <S> <C> Common Stock offered by the Company: U.S. Offering.......................... 9,600,000 shares International Offering................. 2,400,000 shares Total................................ 12,000,000 shares Common Stock to be outstanding immediately after the Offering.......... 20,600,000 shares(1) Use of Proceeds.......................... The net proceeds to the Company from the Offering are estimated to be ap- proximately $219.6 million ($252.8 million if the U.S. Underwriters ex- ercise their overallotment option in full) (assuming an initial public of- fering price of $19.50 per share, af- ter deducting estimated underwriting discounts and offering expenses pay- able by the Company). The net pro- ceeds from the Offering together with, to the extent necessary, borrowings under a bank credit facil- ity to be entered into by the Company prior to consummation of the Offering will be used to repay the debt and advances owed to R.R. Donnelley and its subsidiaries, which as of March 31, 1996 totalled approximately $249.5 million. See "Use of Proceeds." NYSE Symbol.............................. ML </TABLE> - -------- (1) Excludes 1,600,000 shares of Common Stock reserved for issuance under the Company's 1996 Stock Incentive Plan and 1996 Broad-Based Employee Stock Plan, including 34,000 shares of restricted Common Stock and options to purchase approximately 1,300,000 shares of Common Stock (at the initial public offering price set forth on the cover page of this Prospectus) that the Company expects to grant to employees in connection with the Offering. See "Management--Stock Plans," "Management--Employment Agreements" and Notes to Consolidated and Combined Financial Statements of Metromail. SUMMARY CONSOLIDATED AND COMBINED FINANCIAL AND OTHER DATA The following table summarizes selected historical consolidated and combined financial and other data of the Company. Statement of operations data for each of the three years in the period ended December 31, 1995 have been derived from the audited consolidated and combined financial statements of the Company contained herein. Statement of operations data for the three month periods ended March 31, 1995 and 1996, respectively, and balance sheet data as of March 31, 1996 have been derived from the unaudited consolidated and combined financial statements of the Company contained herein. Statement of operations data for each of the two years in the period ended December 31, 1992 and other data are derived from unaudited information. The information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Financial Information" and Consolidated and Combined Financial Statements of Metromail and notes thereto included elsewhere in this Prospectus. <TABLE> <CAPTION> THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ----------------------------------------------- ---------------- 1991 1992 1993 1994(1) 1995(1) 1995 1996 -------- -------- -------- -------- -------- ------- ------- (IN THOUSANDS) <S> <C> <C> <C> <C> <C> <C> <C> STATEMENT OF OPERATIONS DATA: Direct marketing sales................. $114,871 $120,364 $127,683 $156,806 $189,713 $38,860 $41,894 Reference sales........ 30,394 33,317 36,032 38,665 47,474 10,972 12,475 -------- -------- -------- -------- -------- ------- ------- Total net sales...... 145,265 153,681 163,715 195,471 237,187 49,832 54,369 Database and production costs...... 88,945 86,184 95,016 108,806 134,361 30,279 33,606 Amortization of goodwill.............. 6,054 6,054 6,054 6,608 7,446 1,790 1,889 Selling expenses....... 26,211 26,252 29,625 37,107 45,913 10,345 11,821 General and administrative expenses.............. 15,919 13,232 12,372 14,408 16,645 3,898 4,909 Provisions for doubtful accounts..... 1,584 1,798 1,959 1,848 2,180 425 419 -------- -------- -------- -------- -------- ------- ------- Earnings from operations.......... 6,552 20,161 18,689 26,694 30,642 3,095 1,725 Interest expense-- related party......... 22,898 21,337 22,112 18,999 21,329 4,968 5,345 Interest expense....... -- -- -- -- 80 -- 60 Other expense (income)--net......... (120) (57) (138) 24 (87) (10) (5) -------- -------- -------- -------- -------- ------- ------- Earnings (loss) before income taxes. (16,226) (1,119) (3,285) 7,671 9,320 (1,863) (3,675) Income taxes........... (4,069) 2,034 1,181 5,684 6,585 (130) (788) -------- -------- -------- -------- -------- ------- ------- Net income (loss) from operations before cumulative effect of accounting change.............. (12,157) (3,153) (4,466) 1,987 2,735 (1,733) (2,887) Cumulative after-tax effect of change in accounting for post retirement benefits other than pensions... -- -- 4,388 -- -- -- -- -------- -------- -------- -------- -------- ------- ------- Net income (loss).... $(12,157) $ (3,153) $ (8,854) $ 1,987 $ 2,735 $(1,733) $(2,887) ======== ======== ======== ======== ======== ======= ======= </TABLE> <TABLE> <CAPTION> AS OF MARCH 31, 1996 ----------------------- ACTUAL AS ADJUSTED(2) -------- -------------- (IN THOUSANDS) <S> <C> <C> BALANCE SHEET DATA: Total assets.......................................... $375,678 $375,678 Total debt............................................ 253,290 34,222 Total shareholders' equity............................ 82,603 302,233 </TABLE> <TABLE> <CAPTION> THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, --------------------------------------- --------------- 1991 1992 1993 1994(1) 1995(1) 1995 1996 ------- ------- ------- ------- ------- ------- ------- (IN THOUSANDS, EXCEPT WHERE NOTED) <S> <C> <C> <C> <C> <C> <C> <C> OTHER DATA (FOR OR AT END OF PERIODS): Capital expenditures... $ 7,699 $ 3,117 $13,426 $ 9,940 $28,459 $ 6,877 $ 7,860 Depreciation and amortization.......... 12,780 11,596 13,143 14,781 20,851 4,774 5,437 Computer processing capacity (in MIPS).... 112 123 185 280 396 280 396 Number of individuals in database........... 132,839 130,122 138,709 146,276 146,579 143,156 143,770 Number of households in database.............. 92,268 92,362 92,859 95,130 94,958 95,465 95,770 </TABLE> - -------- (1) In 1994, the Company purchased Customer Insight Company for approximately $20.0 million. In 1995, an affiliate of R.R. Donnelley acquired International Communication & Data Plc for approximately $15.3 million. See Notes 1 and 14 of Notes to Consolidated and Combined Financial Statements of Metromail. (2) Adjusted to give effect to the Offering being consummated and the assumed net proceeds of the Offering together with, to the extent necessary, borrowings under a bank credit facility to be entered into by the Company prior to consummation of the Offering being applied, as of March 31, 1996, to the repayment of the debt and advances due to R.R. Donnelley and its subsidiaries. See "Use of Proceeds." SUMMARY UNAUDITED PRO FORMA CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS The unaudited pro forma consolidated and combined statements of operations for the year ended December 31, 1995 and the three months ended March 31, 1996 set forth below illustrate: (i) the effects of the historical estimated results of operations (under the Company's accounting policies) of International Communication & Data Plc ("ICD") for the period from January 1, 1995 to April 30, 1995, the date on which ICD was acquired by an affiliate of the Company; (ii) the estimated net operating effects resulting from the Company being a public entity, which include pricing of certain services the Company will provide to and receive from R.R. Donnelley after the Offering under certain intercompany agreements, as well as other incremental public company expenses; and (iii) the Offering being consummated and the assumed net proceeds therefrom together with, to the extent necessary, borrowings under a bank credit facility to be entered into by the Company prior to consummation of the Offering being used to repay the debt and advances owed to R.R. Donnelley and its subsidiaries at January 1, 1995, resulting in (a) the elimination of interest expense associated with the debt and advances owed to R.R. Donnelley and its subsidiaries and (b) additional interest expense related to borrowings under such bank credit facility described in clause (a) and to finance operating and investing activities in 1995 and in the first three months of 1996. The pro forma adjustments are based on available information and upon certain assumptions the Company believes are reasonable. The pro forma statements of operations do not purport to represent what the Company's results of operations would actually have been or to project the Company's results of operations for any future period. <TABLE> <CAPTION> THREE MONTHS YEAR ENDED ENDED DECEMBER 31, 1995 MARCH 31, 1996 ------------------ ---------------- AS AS ACTUAL ADJUSTED(1) ACTUAL ADJUSTED(1) -------- -------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> Direct marketing sales.............. $189,713 $194,768 $41,894 $41,894 Reference sales..................... 47,474 47,474 12,475 12,475 -------- -------- ------- ------- Total net sales.................... 237,187 242,242 54,369 54,369 Database and production costs (2)... 134,361 135,197 33,606 33,431 Amortization of goodwill............ 7,446 7,571 1,889 1,889 Selling expenses (2)................ 45,913 47,407 11,821 11,946 General and administrative expenses (2)................................ 16,645 20,183 4,909 5,409 Provisions for doubtful accounts.... 2,180 2,281 419 419 -------- -------- ------- ------- Earnings (loss) from operations.... 30,642 29,603 1,725 1,275 Interest expense--related party..... 21,329 -- 5,345 -- Interest expense.................... 80 814 60 456 Other expense (income)--net......... (87) (87) (5) (5) -------- -------- ------- ------- Earnings (loss) before income taxes............................. 9,320 28,876 (3,675) 824 Income taxes........................ 6,585 14,485 (788) 1,030 -------- -------- ------- ------- Net income (loss).................. $ 2,735 $ 14,391 $(2,887) $ (205) ======== ======== ======= ======= Pro forma net income (loss) per share (3)......................... $ .70 $ (.01) ======== ======= </TABLE> - -------- (1) For a detailed description of the adjustments to these unaudited pro forma consolidated and combined statements of operations, see "Unaudited Pro Forma Financial Information."

parsed_sections/prospectus_summary/1996/CIK0000740622_microenerg_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary is qualified in its entirety by the more detailed information, financial statements and notes thereto appearing elsewhere in this Prospectus. All references herein to a number of shares of Common Stock have been adjusted to reflect the 1-for-360 reverse stock split of the Company's Common Stock on May 13, 1996. THE COMPANY MicroENERGY, Inc. ("MicroENERGY" or the "Company") has been engaged since 1984 in the business of designing and manufacturing high-frequency power supplies and DC-to-DC converters for original equipment manufacturers ("OEMs") who are engaged in the telecommunications, computer, and instrumentation segments of the electronics industry. Each of the Company's products is custom designed to meet the specific needs of a customer within a power output range of 25 watts to 2500 watts. During the Company's eleven years of operations, the Company has acquired a reputation in the marketplace for making timely deliveries of high-quality power supplies which incorporate state-of-the-art engineering. In recent years, however, the Company's growth has been stagnant, as the Company's ability to attract new customers has been hampered by the Company's high debt-to-assets ratio, which has caused some potential customers to question the Company's financial stability. Since a typical customer order anticipates deliveries over an extended period of time--often years--to meet the customer's manufacturing schedule, OEM customers avoid any supplier whose ability to deliver over the long term is in doubt. Thus, despite eleven years of timely deliveries, customer doubts about MicroENERGY's financial stability continue to hinder sales growth. During the second and third quarters of fiscal 1996, two events occurred which indicate that the Company may now enter a period of significant growth. First, the Company received pre-production orders for new product designs from eight OEM customers. While none of these orders create binding obligations on the customers, the Company expects to receive production orders from each. If all eight customers give the Company the production orders they have quoted, the eight new products will represent $10.2 Million in annual sales beginning in July, 1996. See "BUSINESS OF THE COMPANY--Marketing." The second favorable recent event was the agreement of AT&T Global Information Systems, which was the holder of $2.33 Million of the Company's long-term debt, to accept an immediate payment of $1.33 Million in satisfaction of the debt. The Company was able to effectuate that debt compromise by raising approximately $1.0 Million in debt financing and $330,000 in equity financing from the officers of the Company and the Selling Securityholders. In exchange for payment of these sums to AT&T, AT&T forgave the remaining $1 Million of the debt. See "CAPITALIZATION--Debt Compromise." The effect of the debt compromise and related financing was to reduce the Company's total debt by $1.34 Million, reduce the Company's debt-to-assets ratio from .88-to-1 as of December 31, 1995 to .68-to-1, and increase the Company's net worth by $1.3 Million, resulting in a positive shareholders equity for the first time in several years. The Company intends to use the net proceeds of this offering to finance the expansion of operations necessitated by the expected new orders and to repay some of its debt. See "USE OF PROCEEDS." Management believes that the financial improvements brought about by this offering and the anticipated sales it will finance will enable the Company to compete more effectively and facilitate a period of growth. CROSS-REFERENCE SHEET Pursuant to Item 501(b) Form S-1 Item Number and Heading Prospectus Heading - -------------------------------- ------------------ 1. Forepart of the Registration State- Front Cover of Prospec- ment and Outside Front Cover Page of tus Prospectus 2. Inside Front and Outside Back Cover Inside Front and Outside Pages of Prospectus Back Cover of Prospectus 3. Summary Information, Risk Factors, Prospectus Summary, Risk Ratio of Earnings to Fixed Charges Factors 4. Use of Proceeds Use of Proceeds 5. Determination of Offering Price Underwriting 6. Dilution Not Applicable 7. Selling Security Holders Selling Securityholders 8. Plan of Distribution Underwriting 9. Description of the Securities to be Description of the Registered Company's Securities 10. Interest of Named Experts and Counsel Legal Matters; Experts 11(a) Description of Business Business of the Company 11(b) Description of Property Business of the Company 11(c) Legal Proceedings Not Applicable 11(d) Market Price, Dividends Price Range of Common Stock, Dividends 11(e) Financial Statements Financial Statements 11(f) Selected Financial Data Selected Financial Infor- mation 11(g) Supplementary Financial Information Not Applicable 11(h) Management's Discussion Management's Discussion 11(i) Changes in and Disagreements With Accountants Not Applicable 11(j) Directors and Executive Officers Management 11(k) Executive Compensation Management 11(l) Security Ownership Principal Shareholders 11(m) Certain Relationships and Related Transactions Certain Transactions 12 Disclosure of Commission Position on Indemnification Underwriting The Company's executive offices are located at 350 Randy Road, Carol Stream, Illinois. Telephone: 708-653-5900. Capitalization............ Currently Outstanding: Common Stock: 415,143 shares; Series A Preferred Stock: 350,000 shares THE OFFERING BY THE COMPANY Securities Offered........ 494,500 shares of Series A Preferred Stock, $7.00 par value and 247,250 Class A Warrants. The Securities may be purchased separately and will be separately transferable immediately upon issuance. See "DESCRIPTION OF SECURITIES." Representative's Compensation............. I.A. Rabinowitz & Co. (the "Representative") will receive as compensation for its services in this offering a 10% discount on the purchase price of the Securities, a 3% non-accountable expense allowance and an option to purchase Securities equal to ten percent of the Securities sold in this offering. As part of the underwriting arrangements, the Company will enter into an agreement retaining the Representative as a financial consultant to the Company for a two-year period commencing as of the close of the sale of the securities offered hereby at an annual fee of $24,000, for a total of $48,000 payable in full at the closing of the Offering, and will pay an investment banking fee with respect to any transaction introduced and consummated, and a 4% warrant solicitation fee. See: "UNDERWRITING." PREFERRED STOCK Payment of Dividends...... Dividends are cumulative from the date of issue of shares of Preferred Stock and are payable semi- annually at a rate of 8% per annum. The Company may, at its sole discretion, pay each dividend either in cash or in shares of Common Stock valued at the average closing bid price for the ten days preceding the record date for the dividend or in a combination of cash and Common Stock. In addition, if the Company pays any dividend with respect to a share of its Common Stock, it will pay twice that amount as an additional dividend on each share of Preferred Stock. See "RISK FACTORS--Restrictions on Payment of Dividends." Tax Consequences of Dividends................ To the extent that Common Stock is distributed as dividends on the Preferred Stock, the amount distributed for federal income tax purposes (and consequently, subject to certain exceptions, the amount of dividend income) to the holder of the Preferred Stock would equal the fair market value of such Common Stock on the date of distribution and, accordingly, may be greater or less than the value of the dividend as calculated in the preceding section. See "RISK FACTORS--Income Tax Considerations--Distribution of Common Stock as Dividends" and "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS TO INVESTORS." Redemption................ The Preferred Stock is not redeemable. Conversion................ The Preferred Stock is not convertible into any other security. Liquidation Preference.... Upon any liquidation, before distribution is made to the holders of Common Stock, holders of the Preferred Stock will be entitled to receive $7.00 per share, plus accrued and unpaid dividends to the date of distribution. Holders of the Preferred Stock will then participate with the holders of the Common Stock in the Company's net assets on a 2-to- 1 basis, such that each share of Preferred Stock will receive twice as much of the net assets as each share of Common Stock. Voting.................... The holders of Preferred Stock will be entitled to one vote per share at any meeting of the Company's shareholders. WARRANTS Terms of Class A Warrants................. Each Class A Warrant entitles the holder to purchase one share of the Company's Series A Preferred Stock at a price of $7.00, subject to adjustment, during the three year period beginning one year after the date of this Prospectus. After , 1997, the Class A Warrants are subject to redemption by the Company at any time during the exercise period on not less than 30 days' notice at $.01 per Warrant provided the average closing price of the Preferred Stock exceeds $9.00 per share for 5 consecutive trading days ending within 15 days prior to the notice. Proposed NASDAQ SmallCap Preferred Stock--MICRP; Class A Warrants--MICRW Market Symbols: Risk Factors.............. The securities are subject to a high degree of risk. See: "RISK FACTORS." SELECTED FINANCIAL INFORMATION <TABLE> <CAPTION> NINE MONTHS ENDED MARCH 31 ----------------------- 1996 1995 ----------- ----------- <S> <C> <C> INCOME DATA: Revenues.............................................. $10,718,611 $10,996,535 Operating Income...................................... 392,630 395,125 Net Income............................................ 1,151,869 146,170 Net Income Per Share.................................. $ 3.29 $ .46 </TABLE> <TABLE> <CAPTION> YEARS ENDED JUNE 30 ----------------------------------- 1995 1994 1993 ----------- ----------- ----------- <S> <C> <C> <C> INCOME DATA: Revenues.................................. $14,588,844 $12,771,067 $15,886,279 Operating Income.......................... 581,685 426,419 433,280 Net Income................................ 249,894 204,845 40,806 Net Income Per Share...................... $ .79 $ .65 $ .14 </TABLE> <TABLE> <CAPTION> AS ADJUSTED TO REFLECT: ----------------------------------- --- AT MAR. 31, 1996(1) PUBLIC OFFERING ------------------- --------------- <S> <C> <C> BALANCE SHEET DATA: Working Capital/(Deficit) ........... $ (623,869)(2) $ 2,213,733(2) Total Assets......................... 7,243,714 10,081,316 Long-Term Debt, Net.................. 969,514 969,514 Stockholders Equity.................. 543,389 3,380,991 </TABLE> - -------- (1) Reflects the effect of $1 Million reduction in debt to AT&T and related financing transactions from January through March of 1996. See "CAPITALIZATION--Debt Compromise."

parsed_sections/prospectus_summary/1996/CIK0000742246_matewan_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is not intended to be complete and is qualified in its entirety by the more detailed information and the consolidated financial statements and the related notes thereto appearing elsewhere in this Prospectus. All per share data of Matewan included in this Prospectus have been restated to reflect a 300% stock dividend paid in May 1993, a 300% stock dividend paid in May 1994 and a 10% stock dividend paid by Matewan in June 1995. Unless otherwise specified in this Prospectus, the term "Offering" as used herein refers to the Company's Offering of 600,000 shares of Convertible Preferred Stock at $25.00 per share, and does not include the exercise of the Underwriter's over-allotment option. MATEWAN BANCSHARES, INC. Matewan, a bank holding company headquartered in Williamson, West Virginia, provides through the Bank, organized in 1913, and the Thrift, organized in 1994, a broad range of financial services. Matewan has 13 offices located in southwestern West Virginia and eastern Kentucky. At September 30, 1995, Matewan had total assets of $389.5 million, total deposits of $324.0 million and total shareholders' equity of $44.5 million. Matewan ranked third in its Market based on total deposits. Matewan's strategy is to become the leading provider of financial services in its Market by offering customers innovative products through convenient delivery systems and a well-trained, sales-oriented work force. Management believes that effective employment of technology in providing financial services, coupled with a commitment to customer service, affords Matewan with a distinct competitive advantage in its Market. In implementing its strategy, management emphasizes the following: . Technology to enhance products and delivery systems. The Company uses sophisticated technology to enhance its delivery systems. Matewan offers its retail customers 24-hour banking by touch-tone phone by means of an interactive voice response system, and in 1996, Matewan will offer its retail customers the ability to access account information, transfer funds and pay certain bills via personal computer. The Company currently utilizes personal computer technology to enable its commercial customers to access cash management services via interlinks with Matewan's mainframe system. The Company also maintains an integrated PC-based server network system that provides immediate interaction among all operating functions of the Banking Subsidiaries, thereby enhancing internal communication and customer service. In addition, the Company's sophisticated credit rating and pricing models enable the Banking Subsidiaries to price their loan products to reflect credit risk more accurately. . Customer service and convenience. Through extended lobby and drive-up hours, Saturday and Sunday banking hours and alternative delivery systems, Matewan offers convenient service to customers. Because the Banking Subsidiaries have integrated consumer platforms, customers of Matewan can obtain full banking services at any branch office. All but one of the 13 branch offices of the Company are open on Saturdays, and its two supermarket branches are open 363 days a year. No other bank in its Market offers comparable extended service hours. . Dedicated, sales-oriented work force. Matewan has historically devoted significant resources to training its work force and instilling a sales- oriented culture to promote customer service and market penetration. In addition to extensive orientation and training of new employees with an emphasis on the individual's job assignment, the Company also provides regular continuing education and training to all employees. To further promote customer service, the Company emphasizes performance-based compensation, as an increasing percentage of employees have their total compensation, and all employees have at least a portion of their compensation, based on incentive programs. The Company's strategy has enabled it to enjoy a compound annual asset growth rate of 16.9% over the last decade, with assets increasing from $72.8 million on December 31, 1984, to $389.5 million at September 30, 1995. The Company's utilization of technology and commitment to cost control has resulted in an average efficiency ratio of 54.20% for the five years ended December 31, 1994. The Company's returns on average assets were 1.40% and 1.28% (annualized) for the year ended December 31, 1994, and the nine months ended September 30, 1995, respectively. PENDING ACQUISITION Matewan has entered into a stock purchase agreement (the "Purchase Agreement") with Banc One, providing for Matewan's purchase of 100% of the outstanding capital stock of Pikeville, a national bank subsidiary of Banc One, for $28.6 million in cash (the "Acquisition"). Following the Acquisition, Matewan will operate Pikeville as a separate subsidiary under the name "Matewan National Bank/Kentucky." At September 30, 1995, Pikeville had total assets of $221.0 million, total deposits of $181.5 million and total shareholder's equity of $19.4 million. The proceeds of the Offering will be used to fund approximately one-half of the $28.6 million purchase price of the Acquisition. Consummation of the Acquisition is not a condition to closing of the Offering. In the event that the Acquisition is not consummated, Matewan will use the net proceeds from the Offering for general corporate purposes. See "Use of Proceeds." REASONS FOR THE ACQUISITION The following summarizes the major reasons for the Acquisition and the benefits Matewan expects will accrue to its operations from the Acquisition: . Appeal of Pikeville Market. Management views Pikeville and Pike County, Kentucky as the most attractive segments in Matewan's Market. Pikeville, Kentucky is a regional hub of economic activity and provides the area with financial, medical, legal and retail services. Pike County has the largest population of any county in its Market. . Increased Market Share. Following the Acquisition, Matewan will increase its market share of deposits from fourth to second in Pike County and from third to first in its Market. Management believes that economic growth in its Market will continue to provide a favorable climate in which to conduct Matewan's business. . Increased Operating Efficiencies. After the Acquisition, Matewan will be able to realize operating efficiencies by consolidating certain branches, combining data processing operations and leveraging the capabilities of its existing back-office support functions. Management estimates that, within one year following the Acquisition, it can realize expense savings of $1.2 million, or 15% of Pikeville's 1994 non- interest expense, which will reduce Pikeville's efficiency ratio to levels approximating Matewan's. See "Risk Factors--Integration of Pikeville" and "Management's Discussion and Analysis of Financial Condition and Results of Operations--Anticipated Operating Effect of Acquisition on Matewan." . Revenue Enhancement Opportunities. Pikeville's profitability levels are below those being realized by Matewan. The Acquisition will provide Matewan with increased revenue enhancement opportunities through expanded customer service and convenience for Pikeville's customer base. Matewan will extend its existing alternative delivery systems and extended banking hours to Pikeville's operations. The Acquisition will also permit Matewan to apply its existing training programs to Pikeville's work force to develop a sales-oriented culture to promote customer service and further Pikeville's market penetration. For a discussion of the potential risks to Matewan inherent in the Acquisition, see "Risk Factors--Negative Effect of Acquisition on Regulatory Capital" and "--Integration of Pikeville."

parsed_sections/prospectus_summary/1996/CIK0000745597_interlink_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This Prospectus contains certain statements of a forward-looking nature relating to future events or the future financial performance of the Company. Prospective investors are cautioned that such statements are only predictions and that actual events or results may differ materially. In evaluating such statements, prospective investors should specifically consider the various factors identified in this Prospectus, including the matters set forth under the caption "Risk Factors," which would cause actual results to differ materially from those indicated by such forward-looking statements. The following summary is qualified in its entirety by the more detailed information and financial statements, including notes thereto, appearing elsewhere in this Prospectus. Certain terms used in this Prospectus are defined in the Glossary beginning on page 61. THE COMPANY Interlink Computer Sciences, Inc. ("Interlink" or the "Company") is a supplier of high-performance solutions for enterprise networked systems management. Interlink provides software and services which enable customers to use their IBM and IBM-compatible MVS mainframes as "enterprise servers" in distributed, heterogeneous client/server network environments. The Company's products and services enable customers to transport, access and manage mission- critical data and applications across distributed network environments. The Company develops and markets network transport products which provide for enterprise server TCP/IP connectivity, fault tolerance and network file transfer. Interlink also develops and markets systems management applications for network backup, archive and restore, distribution of applications, data and software, network printing and other tools which expand the functionality of the enterprise server. Many large organizations depend on centralized mainframe computer systems to manage mission-critical software applications and to serve as the repository for essential business data. Recently, advances in hardware, software and networking technologies have led to the deployment of client/server systems, in which computing tasks are distributed throughout a network of computers. Organizations are now seeking the technology to integrate mainframe computers into client/server networks as "enterprise servers" which, like other servers on the client/server network, have a specialized purpose and function. Specifically, the enterprise server and the systems management applications associated with its use are capable of providing reliable and efficient systems management, data security, and distribution of data and applications. Improvements in the cost-effectiveness of mainframe systems have significantly increased the use of mainframe computers as enterprise servers. With almost ten years of experience in the enterprise networked systems management industry, Interlink provides networking solutions that build upon its expertise in the integration of the MVS operating system with TCP/IP and its reputation for high-performance, efficient products. Interlink's objective is to become the leading supplier of high-performance solutions for enterprise networked systems management. Key elements of the Company's strategy include: supplying a suite of products that expand the functionality of the enterprise server; capitalizing on new sales and cross-selling opportunities resulting from its recent acquisition; employing a consultative sales approach to build long-term customer relationships; differentiating its networking solutions through superior customer support; and leveraging strategic marketing and development relationships in order to provide complete solutions to its customers' evolving network systems management needs. As of June 30, 1996, the Company had approximately 1,200 customers worldwide. The Company markets and sells its software and services primarily through its direct sales organization in North America and Europe and, to a lesser extent, through resellers and international distributors. The Company's major customers include, among others, the Internal Revenue Service, MACIF, U.S. Sprint, W.R. Grace & Co. and Wells Fargo Bank. The Company recently formed a strategic relationship with Legato Systems, Inc. ("Legato") to develop products which will enable the companies to provide enterprise-class storage management solutions. Pursuant to the terms of the agreement, Interlink intends to develop a new product called HARBOR Agent for Networker (Legato's client/server storage management product) which will be distributed by Legato. Interlink will be an authorized reseller of Legato's storage management products, including HARBOR Agent for Networker. On December 29, 1995, the Company acquired New Era Systems Services Ltd. ("New Era") and its HARBOR systems management product line in exchange for cash and notes payable totaling $12.4 million and warrants to purchase 350,000 shares of its Common Stock with additional contingent earnout payments totaling up to $5.2 million due January 31, 1997 and 1998. Prior to the acquisition, the Company distributed the HARBOR products in certain countries in Europe for more than one year. Interlink was incorporated under the laws of the state of California in December 1985. The Company will reincorporate in Delaware prior to the completion of this offering. Unless the context otherwise requires, references in this Prospectus to "Interlink" and the "Company" refer to Interlink Computer Sciences, Inc., a California corporation, and its Delaware successor, together with their subsidiaries. The Company's principal executive offices are located at 47370 Fremont Boulevard, Fremont, California 94538, and its telephone number is (510) 657-9800. THE OFFERING <TABLE> <C> <S> Common Stock Offered by the Company............. 2,000,000 shares Common Stock Outstanding after the Offering..... 5,811,231 shares (1) Use of Proceeds................................. For repayment of indebtedness, capital expenditures, working capital and other general corporate purposes. Nasdaq National Market symbol................... INLK </TABLE> SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA) <TABLE> <CAPTION> PRO FORMA FOR YEAR ENDED JUNE 30, ACQUISITION (2) ---------------------------------------- --------------- YEAR ENDED 1992 1993 1994 1995 1996 JUNE 30, 1996 ------- ------- ------- ------- ------- --------------- <S> <C> <C> <C> <C> <C> <C> STATEMENTS OF OPERATIONS DATA: Revenues............... $23,326 $21,185 $21,875 $27,079 $34,002 $36,491 Gross profit........... 16,995 17,119 18,065 20,470 25,995 28,197 Purchased research and development and prod- uct amortization...... -- -- -- -- 10,479 642 Operating income (loss)................ (4,935) 2,167 844 104 (6,995) 3,757 Net income (loss)...... (5,864) 2,902 1,667 1,647 (7,616) 2,765 ======= ======= ======= ======= ======= ======= Net income (loss) per share (3)............. $ (5.47) $ 1.17 $ 0.44 $ 0.34 $ (2.44) $ 0.56 ======= ======= ======= ======= ======= ======= Shares used in per share calculation (3). 1,073 2,474 3,808 4,814 3,127 4,954 ======= ======= ======= ======= ======= ======= </TABLE> <TABLE> <CAPTION> JUNE 30, 1996 --------------------- AS ACTUAL ADJUSTED (4) ------- ------------ <S> <C> <C> BALANCE SHEET DATA: Working capital (deficit)................................ $(6,371) $14,019 Total assets............................................. 25,925 41,315 Long-term debt, less current portion..................... 2,892 2,892 Total stockholders' equity (deficit)..................... (4,585) 15,805 </TABLE> - ------- (1) Represents shares outstanding as of June 30, 1996. Reflects the issuance of 98,320 shares of Common Stock immediately subsequent to the offering upon the net exercise of certain outstanding warrants and excludes as of June 30, 1996: (i) options outstanding to purchase up to 1,018,503 shares of Common Stock at a weighted average exercise price of $1.82 per share under the Company's 1992 Stock Option Plan; (ii) 468,750 shares of Common Stock issuable upon exercise of warrants outstanding at a weighted average exercise price of $3.23 per share; and (iii) 870,463 shares of Common Stock reserved for issuance under the Company's 1992 Stock Option Plan. See "Management--Stock Plans," "Description of Capital Stock" and Note 7 of Notes to Consolidated Financial Statements. Also excludes 350,000 shares reserved prior to June 30, 1996 and an additional 300,000 shares reserved subsequent to June 30, 1996 for issuance under the 1992 Stock Option Plan, the 1996 Director Option Plan and the 1996 Employee Stock Purchase Plan. (2) Pro forma to give effect to the Company's acquisition of New Era Systems Services Ltd. in December 1995 as if such acquisition had taken place as of July 1, 1995. See Notes 1 and 2 of Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Statements. (3) See Note 1 of Notes to Consolidated Financial Statements for a discussion of the computation of net income (loss) per share. (4) Adjusted to reflect the sale of the 2,000,000 shares of Common Stock offered by the Company hereby at an assumed initial public offering price of $11.50 per share, and after deducting underwriting discounts and commissions and the estimated expenses of the offering, and the anticipated application of the estimated net proceeds therefrom. See "Use of Proceeds" and "Capitalization." -------------- Enterprise Print Services, SNS and the Interlink logo are registered trademarks of the Company and TCPaccess, TCPaccess Fault Tolerant, Interlink 3762 Network Controller, SNS/NFS, SNS/TCPaccess, Interlink 3700 Series Network Controller, CICS Programmers Toolkit, HARBOR and the HARBOR logo are trademarks of the Company. This Prospectus also contains trademarks and tradenames of other companies. -------------- Except as otherwise indicated, all information contained in this Prospectus (i) assumes that the Underwriters' over-allotment option is not exercised, (ii) reflects an increase in the authorized shares of Common Stock to 25,000,000 shares which will occur prior to this offering, (iii) reflects the one-for-two reverse stock split of the Company's capital stock which will occur prior to this offering, (iv) gives effect to the reincorporation of the Company from California to Delaware which will occur prior to this offering, (v) reflects the conversion of all outstanding shares of Preferred Stock into 1,229,714 shares of Common Stock, which will occur automatically upon the closing of this offering, (vi) reflects the filing, upon the closing of this offering, of the Company's Restated Certificate of Incorporation authorizing 5,000,000 shares of undesignated Preferred Stock, and (vii) reflects the issuance of 98,320 shares upon the net exercise of outstanding warrants, including the reduction of an outstanding warrant to purchase 75,000 shares to 62,500 shares, which will both occur upon the closing of this offering. See "Description of Capital Stock,"

parsed_sections/prospectus_summary/1996/CIK0000751968_galoob_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by reference to, and should be read in conjunction with, the more detailed information (including the consolidated financial statements and the notes thereto) appearing elsewhere in this Prospectus. Each prospective investor is urged to read this Prospectus in its entirety and should carefully consider the matters set forth in 'Risk Factors.' Except for the historical information contained herein, the discussion in this Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled 'Risk Factors' and elsewhere in this Prospectus. Unless otherwise indicated, all information in this Prospectus assumes no exercise of the Underwriters' over-allotment option. See 'Underwriting.' THE COMPANY Founded in 1957, the Company is a leading international toy company that designs, develops, markets and sells a variety of high-quality toy products in an expanding number of product categories. The Company believes it is a leading innovator in the toy industry as evidenced by: its award-winning Sky Dancers, the world's first flying doll, introduced in late 1994; its Double Takes line of Micro Machines transforming playsets, introduced in 1995; its line of Star Wars Action Fleet toys representing a new scale in the male action category; and Dragon Flyz, the world's first fully articulated flying male action figure. The Company's Micro Machines line, introduced in 1987, is the most comprehensive line of miniature scale play for boys in the United States, embracing traditional vehicle, military and male action play patterns. The Company's Sky Dancers line has been the number-one selling mini-doll in the United States in 1995 and 1996, and Dragon Flyz became the second best selling male action assortment in the United States within weeks of its national introduction in June. The Company's 1996 product offerings consist of six product lines: Micro Machines, Star Wars Action Fleet, Dragon Flyz, Jonny Quest, Sky Dancers, and Pound Puppies. In addition to extensions of these product lines, the Company's 1997 product offerings are expected to include new product lines based on three entertainment properties: Men In Black, a new science fiction adventure comedy film scheduled to be released by Sony in the summer of 1997; Starship Troopers, a new science fiction adventure film scheduled to be released by Sony in the summer of 1997; and Anastasia, a new animated film scheduled to be released by Fox in the fall of 1997. In connection with the scheduled re-release of the Star Wars movie trilogy in early 1997, the Company plans to introduce new Star Wars Micro Machines and Action Fleet toys. In addition, the Company intends to aggressively pursue licensing rights in connection with the release of the new Star Wars movie trilogy scheduled to start in 1999. The Company's products are sold in more than 50 countries worldwide. These products are principally sold direct to retailers in the United States and to toy distributors outside of the United States. Since 1993, the Company's revenues have grown approximately 64% from approximately $134 million in 1993 to approximately $220 million in 1995. In 1995, approximately one-third of the Company's revenues were derived from international sales which have increased by approximately 77% since 1993. Although the Company's sales have increased significantly since 1993, its market share in 1995 was only approximately one percent of the total $13.4 billion U.S. wholesale toy shipments and, therefore, management believes there is substantial opportunity for continued growth. The recent consolidations among both toy companies and toy retailers have also provided increased growth opportunities for the Company. The Company believes that the consolidation of the industry into a smaller group of larger toy companies combined with the Company's proven success in developing and marketing licensed products make the Company a relatively more attractive licensee to toy inventors and other licensors. In addition, as a result of industry concentration, the Company has become a relatively more attractive supplier to retailers that do not wish to be dependent on a few dominant toy companies. Toy retailer concentration has also been advantageous to the Company as it has reduced the need to support a large, expensive sales and distribution organization to service numerous small customers. This also enables the Company to ship product, manage account relationships and track retail sales as effectively as much larger competitors. These industry trends and developments, combined with the successful implementation of the Company's growth strategy, lead the Company to believe that it is well positioned for future growth. The key elements of the Company's growth strategy are as follows: o Build The Company's Core Brand--Micro Machines. The Company seeks to continue expanding its Micro Machines brand as the most comprehensive universe of miniature scale play for boys. The Company intends to accomplish this by extending Micro Machines into additional play patterns, such as the Micro Machines Exploration line for 1997, and to continue acquiring and exploiting new entertainment licenses to keep Micro Machines at the leading edge of boys' play. o Enter New Product Categories. The Company has entered and intends to continue to enter into new toy categories. Entering 1993, the Company competed primarily in only one category of the toy industry (excluding video games)--miniature vehicles, which generated approximately $240 million of total U.S. wholesale toy shipments in that year. Currently, the Company competes in four categories that generated approximately $2.1 billion of the total U.S. wholesale toy shipments in 1995. The Company considers entering new categories which have the following characteristics: (i) low barriers to entry such that there is no dominant competitor; and (ii) potential to create product lines that can become multi-year brands based upon collectibility and thematic extendability. o Expand Profit Margins On Rising Sales. A key goal of the Company is to expand profit margins while continuing to increase sales, thereby increasing the rate of profit growth faster than the rate of sales growth. The Company seeks to increase profit margins by: (i) increasing gross margins; (ii) achieving economies of scale on increasing sales volume, thereby reducing operating expenses as a percentage of sales; and (iii) leveraging its investments in product development, tooling and marketing over the longer life spans of its multi-year brands. o Develop Strategic Alliances With Major Content Providers. Over the past three years, the Company has developed important relationships with four major entertainment companies, Lucasfilm, Fox, Sony and Turner, which have licensed to the Company the rights to make toys based on certain of their properties. The Company intends to continue to aggressively pursue opportunities to expand its relationships with these entertainment companies and to form additional alliances with other entertainment companies in order to assure access to a continuous flow of quality entertainment properties that have potential to generate successful toy product lines. o Leverage International Distribution Networks. The Company believes it has developed a strong network of distributors in its key markets outside the United States and through such network has the ability to increase its international sales. While Europe has traditionally accounted for the highest percentage of the Company's international sales, the Company continues to build its worldwide distribution network and sees the potential for growth in new markets such as Mexico and Latin America, the Pacific Rim and the Middle East. The Company, which commenced operations in 1957, was incorporated under the laws of the State of California in 1968. The Company was reincorporated in the State of Delaware in 1987 and recently changed its name to Galoob Toys, Inc. The Company's principal executive offices are located at 500 Forbes Boulevard, South San Francisco, California 94080 and its telephone number is (415) 952-1678. THE OFFERING <TABLE> <S> <C> Common Stock Offered by the Company.......................... 2,000,000 Common Stock Offered by the Selling Stockholder...................... 392,866 shares Common Stock to be Outstanding after the Offering(1)............ 17,544,435 shares NYSE Symbol for the Common Stock... GAL Use of Proceeds to the Company..... To repay indebtedness under its short-term credit facility and the mortgage on the Company's headquarters building and to provide funds necessary to support acquisition of license rights and working capital requirements for future toy products, properties and businesses. </TABLE> - ------------------ (1) Excludes (i) 1,506,250 shares of Common Stock reserved for issuance upon exercise of stock options outstanding at October 31, 1996 and (ii) 75,000 shares of Common Stock reserved for issuance upon exercise of warrants outstanding at October 31, 1996. See 'Capitalization,' 'Management' and 'Description of Capital Stock.' SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA) The information set forth below should be read in conjunction with 'Selected Consolidated Financial Data,' 'Management's Discussion and Analysis of Financial Condition and Results of Operations' and the Company's consolidated financial statements and related notes thereto included elsewhere in this Prospectus. <TABLE> <CAPTION> NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------------------- -------------------- 1993 1994 1995 1995 1996 -------- -------- -------- -------- -------- <S> <C> <C> <C> <C> <C> STATEMENTS OF OPERATIONS DATA: Net revenues............................ $134,334 $178,792 $220,044 $137,078 $175,270 Gross margin............................ 59,187 83,636 99,210 53,977 82,229 Earnings (loss) from operations......... (9,215) 9,322 12,989 723 9,407 Net proceeds from Nintendo award........ -- 12,124 -- -- -- Interest expense........................ (1,836) (2,609) (3,429) (2,357) (2,665) Earnings (loss) before income taxes..... (10,915) 19,202 9,999 (1,421) 6,927 Net earnings (loss)..................... (10,924) 18,424 9,399 (1,421) 5,541 Preferred stock dividends............... 3,127 3,127 3,127 2,345 21 Charge related to exchange of preferred stock for common...................... -- -- -- -- 24,279 Net earnings (loss) applicable to common shares................................ $(14,051) $ 15,297 $ 6,272 $ (3,766) $(18,759) -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Common shares and common share equivalents outstanding-- average..... 9,548 10,111 10,451 10,068 13,565 Net earnings (loss) per common share(1): Primary............................... $ (1.47) $ 1.51 $ 0.60 $ (0.37) $ (1.38) -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Fully diluted......................... $ (1.47) $ 1.41 $ 0.60 $ (0.37) $ (1.38) -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- </TABLE> <TABLE> <CAPTION> DECEMBER 31, SEPTEMBER 30, 1996 --------------- ----------------------------- 1995 ACTUAL AS ADJUSTED(2) --------------- ----------- -------------- <S> <C> <C> <C> BALANCE SHEET DATA: Working capital.......... $ 54,670 $ 56,450 $107,616 Total assets............. 120,084 164,955 167,812 Short-term debt.......... 19,493 48,309 -- Long-term debt........... 14,000 -- -- Shareholders' equity..... 54,172 72,608 123,774 </TABLE> - ------------------ (1) For a discussion of the impact on net earnings of certain unusual, non-recurring items, see 'Management's Discussion and Analysis of Financial Condition and Results of Operations.' (2) Adjusted to reflect the sale of 2,000,000 shares of Common Stock offered by the Company in this offering based on an assumed offering price of $26 5/8 per share, the last reported sale price of the Common Stock on November 7, 1996 (after deducting the underwriting discounts and estimated offering expenses payable by the Company), the proceeds from the exercise of warrants by the Selling Stockholder and the anticipated application of the estimated net proceeds therefrom. See 'Use of Proceeds' and 'Capitalization.'

parsed_sections/prospectus_summary/1996/CIK0000753081_raster_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Prospectus. THE COMPANY Raster Graphics, Inc. ("Raster Graphics" or the "Company") develops, manufactures and markets high-performance, large format color printing systems and sells related consumables for the on-demand, large format digital printing ("LFDP") market. The LFDP market consists of color print jobs with run lengths ranging from one to 200 copies and output sizes of 20-inches by 30-inches or larger. Applications include point of purchase ("POP") signs, trade show exhibit graphics, banners, billboards, courtroom graphics and backlit signage. The primary users of the Company's products are color photo labs, reprographic houses, graphic arts service bureaus, exhibit builders, digital color printers, screen printers and in-house print shops. The Company's Digital Color Station ("DCS") printing system, consisting of the DCS Printer and PosterShop system software, allows users to print short runs of high quality color graphics on demand at substantial time and cost savings relative to traditional printing methods. According to IT Strategies, the LFDP printers and consumables market is projected to grow from annual sales of approximately $319 million in 1995 to approximately $1.9 billion in 1998. The rapid growth in this market is being driven primarily by the increasing desire and need for customized, large format color graphics, as well as significant advances in short-run printing and desktop publishing technologies. Traditional graphics printing methods, consisting of photographic, screen and offset printing, do not meet the requirements for production short-run print jobs due to the time consuming, multi-step processes and set up costs involved. As a result, digital printing was developed to fulfill the unmet demand of short-run users by allowing graphics to be printed directly from desktop publishing systems to paper. Raster Graphics offers a complete printing solution, consisting of its DCS printers, integrated image processing software and related consumables, to meet the performance, cost, versatility and quality demands of the on-demand production LFDP market. With a production printing speed of 600 to 1,000 square feet per hour, the DCS printing system can produce 50 to 60, full-color, 36- by 48-inch posters in one hour, which the Company believes is significantly faster than comparable digital printers. DCS printing systems are more cost-effective for short-run print jobs in comparison to traditional methods which have high set-up and labor costs. Using digital printing technology, DCS systems allow content to be customized on a print-by-print basis. DCS printing systems also offer two printing resolution modes, which allow the user to adjust the quality level depending on the application. The Company also markets a line of consumables, including specialized inks and print media, which the Company believes will continue to generate increasing recurring revenues to the extent that the installed base of DCS printing systems expands. Raster Graphics' objective is to build on its position as a market leader in sales of digital printing systems and related consumables and services, for the on-demand production LFDP market. In August 1995, as part of the Company's strategy to provide a complete system solution, the Company acquired Onyx Graphics Corporation ("Onyx"), a leading developer of image processing software. In addition to being used in the Company's DCS printers, Onyx's image processing software is available for printers manufactured by other companies. The Company was established in 1987 initially to develop low-cost electrostatic printers for computer aided design ("CAD") applications. In 1993, the Company identified the on-demand production LFDP market as a new opportunity to develop a product based on its proprietary high-speed print head technology. The Company introduced its initial DCS printer, the DCS 5400 in July 1994 and introduced its second generation product, the DCS 5442 in January 1996. The Company currently sells DCS products to a wide range of customers both domestically through direct and independent sales forces, original equipment manufacturers ("OEMs") and value-added resellers ("VARs") and internationally through distributors, OEMs and VARs. Raster Graphics has received five highly acclaimed industry awards for its contribution to digital printing technology, including Digital Printing and Imaging Association's 1994 Product of the Year; Top 10 New Repro Products for 1994 by Modern Reprographics; Hot Product for 1994 by Electronic Publishing; 1994 Editor's Choice from Computer Graphics World; and 1994 Industry Excellence Award by IEEE Computer Graphics and Applications. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Raster Graphics logo, ColorStation(R) and PrimaScript(R) are registered trademarks of the Company. PosterShop(TM) and DuraPrint(TM) are trademarks of the Company. This Prospectus also contains the trademarks of other companies. THE OFFERING <TABLE> <S> <C> COMMON STOCK OFFERED BY THE COMPANY.............. 2,000,000 shares(1) COMMON STOCK OFFERED BY THE SELLING STOCKHOLDERS................................... 1,000,000 shares COMMON STOCK TO BE OUTSTANDING AFTER THE OFFERING....................................... 8,341,350 shares(2) USE OF PROCEEDS.................................. General corporate purposes including working capital, capital expenditures, research and development and potential acquisitions of businesses and technologies. See "Use of Proceeds." NASDAQ NATIONAL MARKET SYMBOL.................... RGFX </TABLE> SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA) <TABLE> <CAPTION> YEARS ENDED SIX MONTHS ENDED ---------------------------------------------------- ------------------- DEC. 27, DEC. 25, DEC. 31, DEC. 30, DEC. 31, JUNE 30, JUNE 30, 1991 1992 1993 1994 1995 1995 1996 -------- -------- -------- -------- -------- -------- -------- <S> <C> <C> <C> <C> <C> <C> <C> STATEMENTS OF OPERATIONS DATA: Net revenues.................. $ 7,770 $ 8,525 $ 14,719 $ 13,235 $ 26,045 $ 11,652 $ 18,151 Gross profit.................. 1,659 2,410 4,777 3,531 9,447 3,951 7,165 Operating income (loss)....... (1,919) (1,725) 106 (2,229) 111 550 1,322 Net income (loss)............. $ (1,963) $ (2,061) $ 41 $ (2,128) $ 77 $ 275 $ 1,201 Net income (loss) per share(3)................... $ 0.01 $ 0.04 $ 0.16 Shares used in per share calculation................ 7,187 7,095 7,412 </TABLE> <TABLE> <CAPTION> JUNE 30, 1996 ------------------------ ACTUAL AS ADJUSTED(4) ------- -------------- <S> <C> <C> CONSOLIDATED BALANCE SHEET DATA: Cash and cash equivalents........................................... $ 1,775 $ 19,525 Total assets........................................................ 16,052 33,802 Long-term debt...................................................... 318 318 Total stockholders' equity.......................................... 7,942 25,692 </TABLE> - --------------- (1) Excludes up to 450,000 shares of Common Stock that may be sold by the Company pursuant to the Underwriters' over-allotment option. See "Underwriting." (2) Excludes 167,789 shares of Common Stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $2.18 per share and 1,355,652 shares of Common Stock issuable upon exercise of outstanding options at a weighted average exercise price of $2.33 per share at June 30, 1996. See "Management--Stock Options and Incentive Plans and note 7 of Notes to Consolidated Financial Statements." (3) See note 1 of Notes to Consolidated Financial Statements for an explanation of the determination of shares used in computing net income (loss) per share. (4) Adjusted to reflect the sale of shares of Common Stock offered hereby at an assumed initial public offering price of $10.00 per share and the receipt of the estimated proceeds therefrom. See "Use of Proceeds" and "Capitalization." ------------------------------------ Except as otherwise noted, all information in this Prospectus (i) assumes a 1-for-5 reverse stock split of the Common Stock and Preferred Stock to be effective prior to this offering, (ii) assumes the conversion of all outstanding shares of Preferred Stock into Common Stock upon the closing of this offering, (iii) reflects the reincorporation of the Company from California to Delaware prior to the closing of the offering and (iv) assumes no exercise of the Underwriters' over-allotment option. See "Description of Capital Stock" and "Underwriting."

parsed_sections/prospectus_summary/1996/CIK0000758722_paracelsus_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS AND THE DOCUMENTS REFERRED TO HEREIN. UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES HEREIN TO "PARACELSUS" REFER TO PARACELSUS HEALTHCARE CORPORATION PRIOR TO THE MERGER OF CHAMPION HEALTHCARE CORPORATION ("CHAMPION") WITH AND INTO A WHOLLY OWNED SUBSIDIARY OF PARACELSUS (THE "MERGER"). REFERENCES TO THE "COMPANY" REFER TO PARACELSUS AFTER THE MERGER AND INCLUDE THE COMBINED OPERATIONS OF PARACELSUS AND CHAMPION. IN ADDITION, ALL REFERENCES TO PROCEEDS FROM THE NOTES OFFERING OR THE OFFERINGS (EACH AS DEFINED BELOW) AND, EXCEPT AS OTHERWISE PROVIDED, THE OTHER INFORMATION IN THIS PROSPECTUS ASSUME (I) NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION WITH RESPECT TO SHARES OF COMMON STOCK BEING OFFERED BY THE COMPANY AND (II) THE PURCHASE OF $75.0 MILLION PRINCIPAL AMOUNT OF PARACELSUS' 9 7/8% SENIOR SUBORDINATED NOTES DUE 2003 (THE "EXISTING SENIOR SUBORDINATED NOTES") IN THE DEBT TENDER OFFER (AS DEFINED BELOW). CERTAIN STATEMENTS UNDER THIS CAPTION "PROSPECTUS SUMMARY" CONSTITUTE "FORWARD-LOOKING STATEMENTS" UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT (THE "REFORM ACT"). SEE "RISK FACTORS -- FORWARD-LOOKING STATEMENTS." THE COMPANY Paracelsus is a leading healthcare company that owns and operates acute care and specialty hospitals and related healthcare businesses serving selected markets in the United States. Paracelsus currently owns and operates 18 acute care hospitals with a total of 1,685 licensed beds in California, Utah, Tennessee, Texas, Florida, Georgia and Mississippi. Paracelsus' acute care hospitals provide a broad array of general medical and surgical services on an inpatient, outpatient and emergency basis. In addition, certain hospitals and their related facilities offer rehabilitative medicine, substance abuse treatment, psychiatric care and Acquired Immune Deficiency Syndrome ("AIDS") care. In California, Paracelsus also owns and operates three psychiatric hospitals with 218 licensed beds, four skilled nursing facilities with 232 licensed beds and a 60-bed rehabilitative hospital. In addition, Paracelsus owns and operates 11 home health agencies and 16 medical office buildings adjacent to certain of its hospitals. For the 12 months ended March 31, 1996 on a pro forma basis after giving effect to acquisitions and dispositions, Paracelsus would have had total operating revenues of $516.9 million, Adjusted EBITDA (as defined below) of $55.8 million and a net loss of $3.1 million. The net loss includes an unusual charge recorded in March 1996 of $22.4 million related to the settlement of two lawsuits ($13.2 million, net of income tax benefit). On April 12, 1996, Paracelsus entered into an Agreement and Plan of Merger, as amended and restated on May 29, 1996 (the "Merger Agreement"), with Champion pursuant to which Champion will become a wholly owned subsidiary of the Company. Champion currently owns and operates five acute care hospitals with a total of 722 licensed beds in Utah, Texas and Virginia and owns a 50% interest in, and operates, a partnership that owns two additional acute care hospitals with a total of 341 licensed beds in North Dakota under the name "Dakota Heartland Health System" ("DHHS"). Champion's acute care hospitals generally offer the same types of services provided by Paracelsus' acute care hospitals. Champion also owns and operates two psychiatric hospitals with a total of 219 licensed beds in Missouri and Louisiana. For the 12 months ended March 31, 1996 on a pro forma basis after giving effect to acquisitions and dispositions, Champion would have had net revenue of $198.2 million, Adjusted EBITDA of $32.2 million and net income of $3.9 million. Following the Merger, the Company will operate 31 hospitals in 11 states, including 25 acute care hospitals with 2,748 licensed beds, five psychiatric hospitals with 437 licensed beds and a rehabilitative hospital with 60 licensed beds. On a pro forma combined basis for the 12 months ended March 31, 1996, after giving effect to the Offerings, the Company would have had total operating revenues of $714.8 million, Adjusted EBITDA of $88.1 million and a net loss of $6.9 million. The net loss includes the unusual charge related to the settlement of two lawsuits. These pro forma combined results do not give effect to any cost savings that management believes will be realized as a result of the Merger due to the combination of the corporate operations of Paracelsus and Champion and the elimination of certain corporate consulting contracts of Paracelsus. In addition, the combined entity should benefit from economies of scale in such areas as purchasing, marketing, information systems, risk management, acquisitions and development, accounting, reimbursement, corporate finance and quality assurance. The Company believes that the Merger represents a unique opportunity to integrate the operations of two companies that have a complementary portfolio of hospitals. Upon completion of the Merger, 22 of the 31 hospitals owned or operated by the Company will be located in markets where a hospital or hospital network operated by the Company is a preeminent provider. On a pro forma combined basis (excluding the PHC Salt Lake Hospital (as defined below) and the two hospitals owned by DHHS), the remaining 19 hospitals would have accounted for approximately 71% and 89% of the 28 remaining hospitals' operating revenues and Adjusted EBITDA, respectively, for the 12 months ended March 31, 1996. Following the Merger, the Company believes that it will be better positioned to implement its business strategy due to its greater scale and diversity of operations, expanded geographic presence and enhanced access to the public capital markets and other financing sources. The Company also believes that it will benefit from the addition to Paracelsus' management team of three key Champion executives who, following the Merger, will have primary responsibility for day to day management of the Company. These Champion executives have an average of 29 years of hospital industry experience and a proven track record in operating and growing publicly held hospital companies. Over the past five years, these executives grew Champion's net revenue at a compounded annual growth rate of 62.0%, from $24.3 million in 1991 to $167.5 million in 1995, while improving its Adjusted EBITDA margins from 9.4% in 1991 to 15.8% in 1995 and 19.2% for the three months ended March 31, 1996. After the Merger, the Company's principal executive offices will be located at 515 West Greens Road, Suite 800, Houston, Texas 77067. Its telephone number will be (713) 873-6623. BUSINESS STRATEGY The Company's strategic objective is to establish each of its hospitals or hospital networks as the provider of choice in its market. To accomplish this, the Company first seeks to establish a presence in geographic locations that are best suited to developing a preeminent market position. These locations primarily include small to mid-sized markets with more favorable demographics and lower levels of penetration by managed care plans and alternative niche competitors than larger metropolitan areas. Moreover, the competing hospitals in the Company's target markets frequently will be not-for-profit facilities that the Company believes have higher cost structures than its hospitals. Second, the Company focuses on implementing operating strategies developed by the Company for positioning each of its hospitals or hospital networks as providers of measurably higher quality and lower cost healthcare services than competing providers. The key elements of the Company's operating strategies are as follows: EXPAND STRATEGICALLY THROUGH SELECTED ACQUISITIONS The Company plans to continue to pursue expansion opportunities through the strategic acquisition of hospitals and complementary healthcare businesses in existing or new markets. The Company has demonstrated this strategy most recently by successfully acquiring four hospitals and a home health agency in the Salt Lake City market. The Company believes that its primary sources of acquisitions will be unaffiliated not-for-profit hospitals and facilities being divested by hospital systems for strategic, regulatory or performance reasons. INCREASE MARKET PENETRATION The Company seeks to increase the market penetration of its hospitals by offering a full range of hospital and related healthcare services and by gaining market share from local competitors by providing measurably higher quality and lower cost services. For example, this strategy has been successfully demonstrated by the addition of obstetrics programs at each of The Medical Center of Mesquite and Westwood Medical Center during the past 12 months. In addition, over the past 24 months the Company has acquired or established five home health agencies that cover 26 counties in Tennessee, providing a large referral base for the Company's four hospitals in that market. ESTABLISH A COMPETITIVE COST ADVANTAGE The Company seeks to position each of its hospitals as the low cost provider in its market by monitoring and controlling fixed and variable operating expenses. Champion's executives have demonstrated an ability to reduce costs as indicated by the improvement in Champion's Adjusted EBITDA margins from 9.4% in 1991 to 15.8% in 1995 and 19.2% for the three months ended March 31, 1996. Labor costs are a primary focus of such efforts, and Champion's executives have reduced salaries, wages and benefits as a percentage of net revenue at Champion's hospitals (including DHHS) from 38.2% in 1994 to 37.9% in 1995 and 35.4% for the three months ended March 31, 1996. The Company believes that a low cost provider is better able to succeed in the current healthcare environment by aggressively pricing its managed care contracts and direct employer arrangements and by maintaining profitability under fixed payment systems. IMPLEMENT A COMPETITIVE QUALITY ADVANTAGE The Company believes that preventing errors in the treatment process can improve quality and lower the cost of care by reducing the risk of adverse events to patients and the consequential costs of such events. For the past two years, the Company has piloted a proprietary program in four of its hospitals designed to identify and measure the incidence of patient treatment errors in 225 separate clinical categories. The Company believes the capability to quantify data regarding the quality of care in its hospitals will enable the Company to reduce the cost of care and will enhance the ability of its hospitals to win and profit from managed care contracts. DEVELOP A COMPETITIVE SERVICE ADVANTAGE The Company believes that bureaucratic and impersonalized customer service is a historical structural deficiency within the hospital industry caused by service systems, policies and procedures that are designed for the convenience of physicians and hospitals rather than patients, payors and employers. The Company is developing a proprietary customer service system that it believes will differentiate its hospitals and facilities from those of its competitors and provide a competitive advantage. REQUIRE LOCAL MANAGEMENT ACCOUNTABILITY The provision of high quality healthcare services is primarily a local business, and the Company's business strategy and operating programs emphasize local management initiative, responsibility and accountability combined with corporate support and oversight. REFINANCINGS IN CONNECTION WITH THE MERGER The Company has filed a registration statement with respect to $325,000,000 aggregate principal amount of % Senior Subordinated Notes due 2006 (the "Notes") that it plans to offer (the "Notes Offering") concurrently with the offering (the "Equity Offering" and, together with the Notes Offering, the "Offerings") of the shares of the Company's common stock, no stated value per share (the "Common Stock"), made hereby. The Company currently intends that a portion of the estimated aggregate net proceeds to the Company from the Offerings of $364.6 million (consisting of $49.8 million from the Equity Offering and $314.8 million from the Notes Offering) will be used by Champion to prepay an estimated $170.6 million of outstanding Champion indebtedness (plus $6.6 million of prepayment premiums) as of June 30, 1996. The remaining net proceeds to the Company from the Offerings will be used to reduce outstanding indebtedness under either the existing Paracelsus credit facility (the "Existing Paracelsus Credit Facility") or the new credit facility (the "New Credit Facility") that the Company intends to establish as soon as practicable at or after the effective time of the Merger (the "Effective Time"), as applicable. In addition, the Company has commenced a tender offer to purchase up to $75.0 million aggregate principal amount of outstanding Existing Senior Subordinated Notes for $1,027.50 per $1,000 principal amount of Existing Senior Subordinated Notes (the "Debt Tender Offer"). The Debt Tender Offer will expire on August 22, 1996 and, as of August 8, 1996, $66.7 million aggregate principal amount of the Existing Senior Subordinated Notes has been tendered in the Debt Tender Offer. A portion of the remaining net proceeds of the Offerings will be used to purchase Existing Senior Subordinated Notes tendered pursuant to the Debt Tender Offer and to pay consent payments of up to $1.5 million in the aggregate to be made in connection with the related consent solicitation to amend the terms of the indenture relating to the Existing Senior Subordinated Notes. Neither the Equity Offering nor the Notes Offering is contingent upon the consummation of the other. See "Risk Factors -- Significant Leverage," "The Merger and Financing" and "Use of Proceeds." The Company currently intends to refinance as soon as practicable at or after the Effective Time, through borrowings under the New Credit Facility, all amounts outstanding under the Existing Paracelsus Credit Facility (the "Credit Facility Refinancing"). The New Credit Facility will provide for borrowings of up to $400.0 million, of which $135.9 million would have been outstanding as of June 30, 1996 on a pro forma basis after giving effect to the Offerings and the Credit Facility Refinancing and the application of the net proceeds therefrom. THE EQUITY OFFERING <TABLE> <S> <C> COMMON STOCK OFFERED BY THE COMPANY (1)............. 5,200,000 shares COMMON STOCK OFFERED BY THE SELLING SHAREHOLDERS(1).................................... 229,000 shares TOTAL........................................... 5,429,000 shares COMMON STOCK OUTSTANDING AFTER THE EQUITY OFFERING(2)........................................ 54,647,167 shares USE OF PROCEEDS BY THE COMPANY...................... The aggregate net proceeds to the Com- pany from the Offerings are estimated to be $364.6 million (consisting of $49.8 million from the Equity Offering and $314.8 million from the Notes Offering). The Company intends that a portion of the net proceeds from the Offerings will be used by Champion to prepay an estimated $170.6 million of outstanding Champion indebtedness (plus $6.6 million of prepayment premiums) as of June 30, 1996. The remaining estimated net proceeds of $187.4 million will be used to purchase up to $75.0 million of Existing Senior Subordinated Notes in the Tender Offer (plus approximately $3.9 million of tender and consent fees and other related expenses) and to reduce outstanding indebtedness under the Existing Paracelsus Credit Facility or the New Credit Facility, as applicable. See "Risk Factors -- Significant Leverage," "The Merger and Financing" and "Use of Proceeds." NEW YORK STOCK EXCHANGE ("NYSE") SYMBOL............. "PLS" </TABLE> - ------------------------ (1) Does not include up to 814,350 shares of Common Stock subject to the Underwriters' over-allotment option. The over-allotment option may be granted by the Selling Shareholders or the Company. (2) Does not include 7,515,740 shares of Common Stock issuable upon conversion or exercise of options, warrants, subscription rights or convertible securities outstanding as of July 10, 1996.

parsed_sections/prospectus_summary/1996/CIK0000765803_magicworks_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY. UNLESS OTHERWISE NOTED, THE INFORMATION IN THIS PROSPECTUS GIVES EFFECT TO THE CONSUMMATION OF THE CONSOLIDATION AND THE MERGER DESCRIBED UNDER "CONSOLIDATION TRANSACTIONS AND S CORPORATION DISTRIBUTIONS." THE COMPANY Magicworks Entertainment Incorporated (the "Company") acquires domestic and international stage and ancillary rights to theatrical productions, produces and promotes live entertainment, manages and books performances and shows, and merchandises a broad range of products associated with its productions and performers. The Company is also involved in the management of performing arts facilities. The Company has experienced significant growth over the past several years. Revenues and pre-tax income have increased from $7.5 million and $1.0 million, respectively, in 1992 to $42.7 million and $3.7 million, respectively, in 1995. However, the Company had pre-tax income of $2,026,725 for the nine months ended September 30, 1996 compared to $4,113,332 for the nine months ended September 30, 1996. The Company's strategy has been to integrate the financing, production, booking and ancillary exploitation of live entertainment, which allows the Company to exercise control over all aspects of its productions, including theatrical production, booking, marketing and merchandising. Prior to 1992, the Company focused primarily on, and derived the majority of its profits from, the worldwide production of "The Magic of David Copperfield," as well as its management and booking agency and its merchandising business, and was not involved in other large scale productions. However, because artists and producers wishing to gauge the market's receptivity to their productions typically approached the Company in its capacity as booking agent early in a show's development process, the Company perceived an opportunity to participate in additional roles beyond its traditional management, booking agency and merchandising operations. In 1992, the Company began to act as producer and co-producer of productions for which the Company believed market demand was strong, based on the responses to its booking inquiries. In some cases, in addition to production rights, the Company obtained other rights associated with the show, such as the ability to present the show in certain venues. The Company's successful productions since 1992 have included "Ken Hill's The Phantom of the Opera" and "South Pacific," starring Robert Goulet, and its major current productions include "Jesus Christ Superstar," "The Magic of David Copperfield," "Hello, Dolly!" starring Carol Channing and "Deathtrap," starring Elliot Gould and Mariette Hartley. In addition, the Company has the rights to produce and anticipates producing "Singin' in the Rain," "Gershwin on Ice" and "The Hunchback of Notre Dame." The Company plans to continue to seek to acquire touring rights for well-established star musicals, and to utilize its management and booking division to determine the demand for live entertainment productions. Since the determination of demand is made in advance of any significant commitment by the Company, the Company believes that its success has been related in part to its ability to produce only those shows which appear prospectively to have limited risk and the potential for significant reward. After obtaining the production rights to a show, the Company typically casts the lead role with recognized talent, and then solicits commitments from promoters in various locations in which the show could be presented. The promoters guarantee the Company a minimum amount of weekly revenues (which guarantee is often secured by a letter of credit) as well as a share of any profits above the guaranteed amount. The Company frequently receives a deposit from the local promoters, the amount of which is based on the Company's past relationship with the individual promoter. For foreign productions, the deposit is generally equivalent to the total amount of the guarantee. In this manner, the Company seeks to further minimize its production risk. In addition to its production business, the Company acts as the management and booking agent for a variety of live entertainment events. As management and booking agent, the Company is retained by producers to arrange bookings for the tours of various theatrical presentations, musical acts and one person shows. The Company then markets the productions to presenters throughout the world, and is paid either a fixed fee or a percentage of proceeds for such bookings. These arrangements preclude the need for the Company to invest any of its own capital in its capacity as management and booking agent. The Company currently acts as exclusive management and booking agent for over 23 shows, including "The Magic of David Copperfield," "Nutcracker on Ice," "Jesus Christ Superstar," by Andrew Lloyd Webber and Tim Rice, "The Pointer Sisters' Ain't Misbehavin'," "Hello, Dolly!" starring Carol Channing, "Three Tall Women," "She Loves Me," "Deathtrap," "Mame" and the national touring company of "A Chorus Line;" musical acts such as the Newport Jazz All-Stars and the Preservation Hall Jazz Band; and one-person shows such as Hal Holbrook in "Mark Twain Tonight," James Whitmore in "Will Rogers USA," Amanda Plummer in "The Belle of Amherst" and Kevin McCarthy in "Give 'Em Hell Harry!" In addition, the Company has recently entered into an exclusive agreement to represent the musical "Big" for all U.S. and Canadian tour bookings (excluding New York, Los Angeles and Toronto). The Company plans to continue to exploit its experience and contacts with performers, venues, presenters and sponsors by expanding its operations, as opportunities arise, in the areas of sports, speakers' bureaus, music, movies and television. Further, the Company believes that its relationships in the entertainment industry will facilitate its expansion into other areas, particularly with respect to facility management, production and presentation opportunities. In addition, the Company perceives an opportunity to grow through the acquisition of local and regional entertainment producers, presenters, facilities owners and management companies. The Company believes that there are significant acquisition opportunities available due to the highly fragmented nature of the live entertainment industry. In keeping with its strategy to further broaden its own business by acquiring entertainment related businesses, on August 28, 1996, the Company acquired all of the issued and outstanding capital stock of Movietime Entertainment, Inc. ("Movietime") in exchange for 1,199,999 shares of Common Stock. Movietime has developed and implemented an interactive telecommunications service that provides digital telephone delivery systems to movie theaters. Movietime's digital-based delivery system replaces the analog recording machines now in use at movie theaters with an interactive digital voicemail system that provides customized, site specific theater information such as show times, ticket prices, location and travel directions. The Company believes that the Movietime system enables a theater to increase ticket sales through improved customer service by significantly increasing the number of telephone calls able to reach the theater simultaneously. If Movietime achieves significant market penetration, the Company hopes to generate revenues by selling advertising time on the recorded announcements. COMPANY BACKGROUND The Company was incorporated under the laws of the State of Utah in February 1985 under the name "Marino Investments, Inc." In April 1988, the Company changed its name to "Rattlesnake Gold, Inc." and changed its state of domicile from Utah to Delaware. In June 1995, the Company changed its name to Shadow Wood Corporation. The Company was formed for the purpose of raising capital and acquiring suitable property, assets or business by means of completing a merger with, or acquisition of, any privately-held business enterprise. The Company had no material operations until July 1996. In July 1996, Magicworks Entertainment Incorporated, a Florida corporation ("MEI"), was merged (the "Merger") into the Company and the Company changed its name to "Magicworks Entertainment Incorporated." MEI was formed in June 1996 as a holding company to facilitate the consolidation of the operations of each of Diamond Bullet Merchandising, Inc., a Florida corporation, Touring Artists Group, Inc., an Ohio corporation ("TAGO"), Touring Artists Group, Inc., a Florida corporation, Performing Arts Management of North Miami, Inc., a Florida corporation, Magic Promotions, Inc., a Florida corporation, and Magic Promotion, Inc., an Ohio corporation ("MPIO"), all of which shared common control, but which had operated previously as independent corporations (the foregoing corporations are referred to herein collectively as the "Constituent Corporations"). Concurrently with the initial closing of the Private Placement, 100% of the capital stock of each of the Constituent Corporations was acquired by the Company (the "Consolidation"). See "Consolidation Transactions and S Corporation Distributions" and "Certain Transactions." The Company was the surviving corporation in the Merger. Pursuant to the Merger, each outstanding share of common stock, $.001 par value per share, of MEI was converted into the right to receive one share of Common Stock. The Board of Directors and management of MEI were elected to corresponding positions with the Company. Simultaneously with the consummation of the Merger, the Company issued and sold 400.06 Units in connection with which it received net proceeds of $8,919,350. On September 27, 1996, the Company issued and sold an additional 14.8 Units pursuant to the Private Placement in connection with which it received additional net proceeds of $333,000. Subsequent to the Merger, on August 28, 1996, the Company acquired (the "Movietime Acquisition") all of the outstanding capital stock of Movietime, pursuant to the merger (the "Movietime Merger") of MT Acquisition Sub Inc. ("MT Sub"), a newly-formed, wholly-owned subsidiary of the Company, with and into Movietime. The Movietime Acquisition was consummated pursuant to that certain Agreement and Plan of Merger dated August 28, 1996 (the "Movietime Agreement") among the Company, MT Sub, Movietime and all of the stockholders of Movietime (the "Movietime Stockholders"). Movietime was the surviving corporation in the Movietime Merger. Pursuant to the Movietime Merger, each share of Movietime common stock, par value $1.00 per share, was converted into the right to receive 2,962.96 shares of Common Stock, rounded to the nearest whole number, resulting in the issuance of 1,199,999 shares of Common Stock to the Movietime Stockholders. Unless the context requires otherwise, all references in this Prospectus to the Company shall mean the Company as successor by merger to the business of MEI and shall include its wholly-owned subsidiaries. The Company's executive offices are located at 930 Washington Avenue, Miami Beach, Florida 33139 and its telephone number is (305) 532-1566. THE OFFERING Securities Offered.................... 26,226,465 shares of Common Stock, including 22,763,179 outstanding shares of Common Stock which may be sold by Selling Securityholders and up to 3,463,286 Note Shares, Placement Agent Warrant Shares and Redeemable Warrant Shares which may be sold by the holders, respectively, of outstanding Notes, outstanding Placement Agent Warrants and Redeemable Warrants which may be issued in the future. 1,981,643 Warrants, including 500,000 Placement Agent Warrants which may be sold by the Selling Securityholders and up to 1,481,643 Redeemable Warrants that may be issued upon the prepayment of the Notes in certain circumstances. Quotation............................ The Common Stock is listed on the OTC Bulletin Board. The Company has applied for the listing of the Common Stock on NMS. Trading Symbol....................... "MAJK" SUMMARY FINANCIAL DATA The summary financial information set forth below has been derived from the audited financial statements of the Company, giving effect to the Consolidation and the Merger, which occurred effective July 30, 1996, and to the Movietime Acquisition which occurred on August 28, 1996 and should be read in conjunction with such financial statements and the notes thereto appearing elsewhere in this Prospectus. MPIO was deemed to be the acquiring entity in the Consolidation.(1) <TABLE> <CAPTION> YEAR ENDED DECEMBER 31, --------------------------------------------------- 1991 1992 1993 1994 ----------- ---------- ----------- ---------- STATEMENT OF OPERATIONS DATA: <S> <C> <C> <C> <C> Revenues: Production .................. $ 0 $ 662,222 $18,250,149 $23,346,244 Promotion ................... 4,299,717 3,663,269 10,009,734 6,268,273 Total revenues........................ 7,284,234 7,525,156 32,167,251 33,416,193 Total operating expenses.............. 6,113 678 6,889 895 27,610,205 30,239,412 Income from operations................ 1,170,556 635,261 4,557,046 3,176,781 Net income............................ 1,295,027 1,003,866 3,020,557 2,128,198 Pro forma net income(2) .............. 789,966 612,358 1,842,540 1,298,201 </TABLE> <TABLE> <CAPTION> DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30, -------------------------- ------------------------ ---------- 1995 1995 1995 1996 1996 ---------- ----------- ---------- ---------- ---------- STATEMENT OF OPERATIONS DATA: ACTUAL PROFORMA(3) ACTUAL ACTUAL PROFORMA(3) <S> <C> <C> <C> <C> <C> Revenues: Production .................. $31,638,078 $31,638,078 $20,665,310 $21,773,945 $21,773,945 Promotion ................... 6,668,672 6,668,672 4,738,992 7,412,528 7,412,528 Total revenues........................ 42,734,099 42,734,099 27,702,101 32,213,330 32,213,330 Total operating expenses.............. 38,440,260 38,596,482 23,881,534 29,936,188 30,053,354 Income from operations................ 4,293,839 4,137,617 3,820,567 2,277,142 2,159,976 Net income............................ 3,281,845 2,607,048 2,596,033 1,736,790 1,230,693 Pro forma net income(2) .............. 2,001,925 1,590,299 1,583,580 667,270 750,723 </TABLE> SEPTEMBER 30, 1996 ------------------ BALANCE SHEET DATA: Working capital.............. $ 6,234,223 Total assets................. 13,043,003 Total liabilities............ 8,729,999 Total shareholders' equity... 4,313,004 - ---------------------------- (1) The Consolidation complies with the requirements of Staff Accounting Bulletin No. 48 ("SAB 48") and has therefore been accounted for at the historical cost bases of the transferors. The Movietime Acquisition has been accounted for as a pooling-of-interests in accordance with APB No. 16. See Note 1 to the Historical Supplemental Pooled Financial Statements of Magic Promotion, Inc. and Movietime Entertainment, Inc. appearing elsewhere herein. (2) Reflects the effect of an adjustment for income taxes on historical statement of operations data, assuming the Constituent Corporations had been treated as C corporations for income tax purposes, and assuming an effective income tax rate of 39% for the periods presented and the income tax expense of the Company's switch in tax basis from cash to accrual in connection with the Company's S Corporation status as opposed to the C Corporation status of the Constituent Corporations. See "Consolidation Transactions and S Corporation Distributions."

parsed_sections/prospectus_summary/1996/CIK0000774055_transaxis_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary is qualified in its entirety by the more detailed information and financial statements and related notes appearing elsewhere in this Prospectus. See "Risk Factors" for a discussion of certain factors to be considered in evaluating the Company and its business. The Company DataMark Holding, Inc. (the "Company" or "DataMark") provides highly targeted business to consumer advertising for its clients. The medium for such targeted advertising has been direct mail and is being expanded to include an advertiser funded online network, ValuOne Online. The Company utilizes sophisticated consumer profiling techniques to target advertising to the persons most likely to purchase the specific product or service being marketed. The Company's advertising programs provide highly predictable and measurable advertising campaigns. Some of the features of the Company's services include: * Analysis - The DataMark direct advertising strategy includes an exhaustive analysis of the defining lifestyle characteristics of the client's existing customer base. The Company specifically identifies who is most likely to respond to the client's offer. * Identification - DataMark uses the results of the marketing research and analysis and performs a computerized database compilation. From this, DataMark creates a list of cluster groups or profiled individuals which match the identified demographic, socio-economic, lifestyle and behavior characteristics, and who have the highest propensity to buy the client's product. * Implementation - DataMark implements a strategically designed program of systematic advertising to the targeted potential customers on the customized database list. * Measurement - DataMark conducts a thorough analysis after each advertising campaign to understand exactly what has been accomplished and where the results are leading. This critical information allows the targeting of the marketing program to be consistently fine tuned. Systematized feedback allows accurate adjustments and targeting refinement for maximum efficiency and increased positive results. * Turn-key Services - DataMark offers a turn-key operation to which the client can outsource its entire targeted advertising including targeting, creating, producing, delivering and analyzing the campaign. Online Advertising Services The Company is completing the development of the first interactive promotional national marketing network, ValuOne Online, which is entirely advertiser funded. ValuOne Online incorporates highly successful direct mail strategies and methodologies. The strategy is to offer a leading edge advertising medium by incorporating direct advertising methodologies that can produce predictable and measurable results. ValuOne Online's primary mission is to provide, free to the consumer end-user, technologically superior, interesting, entertaining and convenient interactive promotional advertising information. ValuOne Online intends to stimulate mass use by an initial 1.5 million targeted profiled end-user households. ValuOne Online's initial 1.5 million targeted end-user households have been specifically segmented from the 9.5 million potential online households based on the lifestyle and consumer buying habits most desired by advertisers. This will create significant value and numerous benefits for advertisers who have their <PAGE> products on ValuOne Online. ValuOne Online consumer end-users participate in interactive, money saving, advertising messages. These end-users will be able to find products and services they want, when they want them, free of user fees. ValuOne Online will provide local telephone access for its targeted metropolitan areas through the Sprint Telnet network. This major telecommunication network is used by other major national data providers. The network will connect the end user to the ValuOne Online server in Salt Lake City, Utah. The proprietary network avoids the security risks and delays of using the Internet. National advertising is typically placed through national media representation groups, the oldest and largest of which is Katz Media Group ("Katz") (NYSE:KTZ). The Company and Katz have entered into an exclusive representation agreement whereby Katz is the exclusive agent to represent ValuOne Online to national advertisers and Katz agrees not to represent competitive online services. Katz states that it is the only full service media representative firm serving all types of media, with leading market shares in the representation of radio and television stations and cable television systems. The Company's principal executive offices are located at 488 E. Winchester Street, #100, Salt Lake City, Utah 84107. Its telephone number is 801-268-1001. The Offering Common Stock outstanding prior to offering 8,110,407 shares (1) Common Stock offered by Selling Shareholders (excluding Selling Warrantholders) 2,541,357 shares (2) Common Stock offered by Selling Warrantholders 431,125 shares Use of Proceeds The Company will not receive any proceeds from the sale of Shares by the Selling Shareholders and Selling Warrantholders. The Company may receive up to $3,497,469 in proceeds for exercise of the Warrants if all Warrants are exercised. The Company intends to use any proceeds received on exercise of the Warrants to market ValuOne Online and for working capital and general corporate purposes. See "Use of Proceeds" and "Business of the Company." Trading Symbol DTAM (OTC Bulletin Board)(3) <PAGE> (1) Includes 214,500 shares which have been subscribed for. Of the currently outstanding Common Stock, 7,638,811 shares are "restricted securities" which may not be readily resold into the market. Since only 471,596 shares are believed to be readily tradable, there can be no assurance that the market for the Common Stock will be sufficiently liquid to absorb the shares being offered hereby. (2) Two Selling Shareholders each beneficially own more than 5% of the Company's common stock. See "Principal Stockholders" and "Selling Shareholders." No other Selling Shareholder is an affiliate of the Company. (3) The Company has applied to Nasdaq for listing in the Nasdaq SmallCap Market. There is no assurance Nasdaq listing will be granted. - -------------------- Capitalization The following table sets forth certain information regarding the Company's equity securities outstanding prior to and after the offering: Number of Shares Capital Stock outstanding as of September 30, 1996: Common Stock: 8,110,407 Preferred Stock: 0 Capital Stock to be outstanding after Offering(1): Common Stock: 8,541,532 Preferred Stock: 0 - --------------- (1) Includes 214,500 subscribed shares which the Company has commited to issue to certain of the Selling Stockholders prior to the offering, which are also included in Capital Stock outstanding as of September 30, 1996. Assumes exercise of all Warrants. Excludes 1,047,215 shares of Common Stock which may be issued upon vesting and exercise of options outstanding at September 30, 1996 other than the Warrants, including options for 451,623 shares pursuant to the Company's Omnibus Stock Option Plan. Transactions with Related Parties There have been related party transactions between the Company and it affiliates. See "Certain Transactions with Related Parties." <PAGE> Summary Financial Information Summary Financial Data Set forth below are summary consolidated historical financial data for the Company as of and for the periods indicated. The following information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's Consolidated Financial Statements and Notes thereto appearing elsewhere in this Prospectus. <TABLE> <CAPTION> Year Ended June 30, Three Months Ended September 30, ------------------- -------------------------------- <S> <C> <C> <C> <C> <C> 1994 1995 1996 1995 1996 ---- ---- ---- ---- ---- Statement of Operations Data: Net sales $3,017,805 $3,443,965 $4,256,887 $1,074,559 $1,481,171 Cost of Sales Postage 1,133,710 1,360,976 1,580,484 433,766 524,499 Materials and printing 790,744 1,035,954 1,310,184 282,438 514,266 Selling expense 440,236 446,181 700,429 164,369 391,490 Research and development 89,250 560,915 1,565,718 164,350 679,447 General and administrative 456,039 268,765 1,094,375 145,965 373,463 Compensation expense - - 1,484,375 - - Net income (loss) 62,998 (264,270) (3,433,081) (120,696) (840,501) Net income (loss) per common share $ .01 $ (.06) $ (.58) $ (.02) $ (.10) Weighted average common shares outstanding 4,282,299 4,713,028 5,917,491 5,539,953 8,110,407 </TABLE> June 30, September 30, -------- --------- 1995 1996 1996 ---- ---- ---- (unaudited) Balance Sheet Data: Working capital $ 794,156 $12,774,113 $11,242,948 Total assets 1,631,445 16,543,253 15,447,230 Long-term debt, less current portion 25,332 - - Stockholders' equity 1,073,225 15,541,624 14,740,871 <PAGE>

parsed_sections/prospectus_summary/1996/CIK0000782145_playnet_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by reference to the more detailed information and the consolidated financial statements and notes thereto appearing elsewhere in this Prospectus. Each prospective investor is urged to read this Prospectus in its entirety. Unless otherwise indicated, all share and per share data and information in this Prospectus relating to the number of shares outstanding assume no exercise of the Underwriters' over-allotment option to purchase 300,000 additional shares from the Company. See "Underwriting." THE COMPANY The Company designs and develops location-based, pay-per-play electronic game and entertainment units and music juke boxes which are networked through the Internet. The Company's products utilize the Internet to enhance traditional video game products and juke boxes through innovations such as linking multiple players in remote locations and offering competitive tournament prize play. The Company intends to initially market these products to location-based venues such as sports bars and "theme" restaurants. The Company plans to introduce three products in the next six months: the PlayNet Music juke box and the TeamNet and TouchNet electronic game systems. The Company's products are designed to utilize the Internet as a communications network and an entertainment medium in a social setting, allowing users to play networked games, compete in local or national tournaments and contests, browse the World Wide Web, participate in chat room discussions and use credit cards to purchase merchandise. The Company's business reflects the growing trend to connect people via computer networks and, as a result, to create new forms of interactive entertainment in a social setting. According to the Vending Times 1996 Census, total coin-drop revenue in the U.S. in 1995 for all amusements was $6.3 billion, and the U.S. electronic pay per play video game business (which excludes pinball and redemption machines) generated $2.0 billion of that revenue. The Company has designed an open, PC-based system architecture which blends proprietary game development, secure communications protocol, and operations software in a client/server environment. Communications take place over the Internet utilizing standard Internet protocols. This integrated system allows the Company to offer networked, location-based entertainment that can be remotely updated with the latest games or entertainment content. The Company's initial product line is expected to consist of the following location-based entertainment systems: PlayNet Music -- A juke box which will provide access to thousands of music titles via an Internet connection to the Company's music database servers, thereby providing significantly greater choices than a standard juke box. In addition to providing the ability to select songs from an extensive library, PlayNet Music will allow customers to purchase merchandise from their favorite bands. TouchNet -- A compact game system engineered to sit on a counter top and accommodate 8 to 12 different games, including trivia, parlor, strategy and action games. Touch Net allows users to choose which game to play and then to choose whether to play against the computer or against other players through an Internet connection. In addition to playing games and participating in contests and prize events, customers can choose to browse the Internet, use e-mail and participate in chat room discussions using attached telephone handsets. TeamNet -- An interactive system which allows two teams of up to four players each to compete against each other in sports simulations and other games. Both teams may be physically present in the same location, competing on the same game system, or may be in separate locations competing through an Internet connection. The TeamNet system has been specifically designed to support tournament play. The Company plans to distribute its location-based entertainment systems through a well-established network of third-party national and local distributors for resale to operators that install, operate and maintain the products, primarily in hospitality locations, including restaurants, bars and hotels, and secondarily in arcades and malls. Certain members of the Company's management have long-standing relationships with many of the major distributors in the United States and internationally. The Company anticipates that tournament play and certain other revenues will be shared among the Company, the distributor and the operator. The Company also intends to distribute its entire product line in international markets through a variety of distribution arrangements. It is contemplated that products will be localized for each territory as appropriate. Aristo is currently in the process of acquiring the rights to the libraries of various music publishers and record labels for use on its PlayNet Music system. Concurrently, the Company is negotiating to enter into sponsorship and advertising programs for its sports games, tournaments and prize contests with high-profile consumer goods and beverage companies. The Company also intends to establish various contractual arrangements, joint ventures and other mutually advantageous programs with technology providers, equipment manufacturers, distributors, major hospitality chains, consumer products companies, music-related companies, content providers and others, to develop broader, more efficient, more profitable and higher-profile products and services. STRATEGY The Company's primary strategic objective is to establish and rapidly grow an installed customer base of its location-based Internet-enabled entertainment units. The Company believes that its products and system architecture will enable it to expand the variety of content and services available beyond that which is available in existing products, as well as to increase the range of locations at which such networked entertainment units can be profitably located. The Company believes that the breadth of entertainment choices which its products will deliver, coupled with a highly diverse range of public locations, will extend the demographic universe of its potential users beyond that of adolescent males who currently dominate the coin-operated video game market. The Company's primary strategies can be summarized as follows: Enhancement of the Location-Based Entertainment Experience -- The Company intends to offer networked entertainment content with multi-player, multi-location and tournament prize play which it believes will result in significantly more compelling entertainment experiences than are possible with existing stand-alone location-based, pay-per-play machines. Unlike most competing entertainment systems, which are primarily based on proprietary hardware platforms, the Company's entertainment units will offer touch screen-operated access to a wide variety of video games including parlor, trivia, strategy and action games and prize tournament play. Additional features will include access to Internet content and thousands of music titles, the ability to purchase general entertainment and music-related merchandise, and ancillary features such as e-mail and "real-time chat" with other users of the system. Hospitality Focus and Penetration Beyond Traditional Locations -- The Company intends to focus its efforts on the hospitality sector which, according to the 1996 Vending Times Census of the Industry comprises 60% of the location-based entertainment industry. This sector primarily includes bars, restaurants and hotels and is distinguished from the remainder of the industry, which is made up of specialized game arcades and locations such as movie theaters. The Company believes that the greater variety of entertainment content offered on its products could significantly expand the number of potential locations in the hospitality sector and allow it to enter non-traditional locations such as airports, railroad stations and shopping malls. The Company intends to accelerate the distribution of its products by forming strategic alliances with major hospitality companies, both in the United States and internationally. Expansion of Potential User Base -- The Company intends to offer a range of entertainment products, including parlor, trivia, strategy and action games, expected to appeal to a broader user base than existing arcade offerings which are increasingly targeting the adolescent male demographic segment. The Company will initially target hospitality locations, especially bars and chain restaurants, for distribution of its products. Networked and prize tournaments and promotions will be aimed at a broad array of consumers who are interested in social interactive entertainment and competitive tournament prize play. The Company believes that its broad-based strategy will allow it to increase average revenue per unit and the number of potential locations for its networked machines. Product Innovation and Improvement -- The Company believes that its flexible system architecture will allow it to update and continually improve its game and entertainment offerings on a cost effective basis through remote downloads from central servers, based on customer feedback and demand. The Company expects to be able to regularly update its musical offerings on PlayNet Music based on the popularity of songs in each location. The Company also expects to augment and improve its game content and add new features on both TouchNet and TeamNet based on customer feedback. Downloading will permit TouchNet games to be updated and new games to be added to optimize choice at each unit. TeamNet sports offerings will be changed based on sport seasons and game popularity. The Company also intends to support usage through tournament prize offerings and promotions. Recurring Revenue Streams -- The Company believes that location-based entertainment product manufacturers only receive revenue from the sale of machines. The Company believes that it will be able to demonstrate that its products will result in increased coin-drop from location-based entertainment units and expects that it will be able to share in incremental revenues, thus creating recurring revenue streams for the Company. The Company intends to promote, arrange sponsorship for, and organize national and local game tournaments with cash and other prizes. The Company believes that the limited tournament features of certain existing location-based entertainment units have demonstrated an increase in machine usage and revenues, especially since such tournaments require higher game fees. Ancillary Revenue Opportunities -- Sponsorship and advertising revenue will be generated from on-screen advertisements and tournaments. The Company also expects to collect fees on merchandise sales made through its Internet-enabled entertainment units. The Company plans to re-market data collected from user polls, music selections and other similar usage to content providers, advertisers and product and service vendors. The Company's principal executive office is located at 152 West 57 Street, New York, New York 10019-3310, and its telephone number is (212) 586-2400. The Company is a Delaware corporation which is the surviving corporation of its merger with a New York corporation (see "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Overview"). References herein to the "Company" or "Aristo" are to the Company (including, for periods prior to the merger, the predecessor New York corporation) and, unless the context otherwise requires, its subsidiaries. THE OFFERING <TABLE> <S> <C> Common Stock offered......................... 2,000,000 shares Common Stock to be outstanding after the offering................................... 16,966,661 shares(1) Use of Proceeds.............................. The Company intends to use the net proceeds of this offering for system and product development, capital expenditures, product launches, software licensing and general corporate purposes. See "Use of Proceeds." Risk Factors................................. The shares offered hereby involve a high degree of risk. See "Risk Factors." Nasdaq SmallCap Market Symbol................ ATSP Proposed Nasdaq National Market Symbol....... </TABLE> - --------------- (1) Does not include (i) an aggregate of 500,000 shares of Common Stock reserved for issuance pursuant to options available for grant under the Company's 1994 Stock Option Plan, of which options to purchase 395,000 shares have been granted as of the date of this Prospectus; (ii) an aggregate of 1,000,000 shares of Common Stock reserved for issuance pursuant to options available for grant under the Company's 1995 Stock Option Plan, of which options to purchase 1,000,000 shares have been granted as of the date of this Prospectus; (iii) an aggregate of 1,500,000 shares of Common Stock reserved for issuance pursuant to options available for grant under the Company's 1996 Stock Option Plan, of which options to purchase 1,425,067 shares have been granted as of the date of this Prospectus; (iv) 433,728 shares of Common Stock issuable in accordance with the terms of certain of the Company's convertible promissory notes; (v) 60,000 shares of Common Stock issuable upon exercise of certain options granted to certain lenders; and (vi) 448,101 shares of Common Stock issuable upon exercise of the Company's outstanding warrants. SUMMARY CONSOLIDATED FINANCIAL INFORMATION The following summary consolidated financial information has been derived from and should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere in this Prospectus. The summary consolidated financial data set forth below should be read in conjunction with the Consolidated Financial Statements and the Notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere herein. The consolidated statements of operations data set forth below with respect to the three years ended October 31, 1995 are derived from the consolidated financial statements included elsewhere in this Prospectus, which consolidated financial statements have been audited by Coopers & Lybrand L.L.P. The data as of July 31, 1996 and for the nine month periods ended July 31, 1995 and 1996 was derived from unaudited consolidated financial statements that have been prepared on the same basis as the audited financial statements and, in the opinion of management, contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of operations for such period. The historical results are not necessarily indicative of the results to be expected in the future. <TABLE> <CAPTION> NINE MONTHS YEARS ENDED OCTOBER 31, ENDED JULY 31, ------------------------------------------------------------------- -------------------------------- 1991 1992 1993 1994 1995 1995 1996 ----------- ----------- ----------- ----------- ----------- ------------ ----------------- <S> <C> <C> <C> <C> <C> <C> <C> CONSOLIDATED OPERATIONS DATA: Total Revenue.......... $ -- $ 33,333 $ 58,334 $ 16,005 $ 157,627 $ 4,749 $ 198,349 Total Operating Expenses............. 1,462,158 1,487,728 1,659,837 2,188,605 4,281,956 2,246,438 7,499,101 Net Loss............... (1,478,158) (1,480,812) (1,636,310) (2,228,644) (4,116,457) (2,210,086 ) (7,429,529) Net Loss per Share..... $ (0.29) $ (0.23) $ (0.21) $ (0.24) $ (0.40) $ (0.23 ) $ (0.55) Weighted Average Outstanding Common Shares............... 5,122,222 6,450,298 7,723,767 9,244,593 10,388,926 9,714,981 13,554,091 </TABLE> <TABLE> <CAPTION> JULY 31, 1996 ---------------------------------------------- ACTUAL PRO FORMA(1) AS ADJUSTED(1)(2) ----------- ------------ ----------------- <S> <C> <C> <C> <C> <C> <C> <C> CONSOLIDATED BALANCE SHEET DATA: Cash......................................................................... $ 544,104 $ 6,104,749 $22,104,749 Working Capital (Deficit).................................................... (2,152,225) 3,728,420 19,728,420 Total Assets................................................................. 10,478,933 16,039,578 32,039,578 Total Liabilities............................................................ 5,685,191 5,365,191 5,365,191 Stockholders' Equity (Deficit)............................................... 4,793,742 10,924,337 26,924,337 </TABLE> - --------------- (1) Reflects on a pro forma basis as at July 31, 1996 the private placements of 1,256,400 shares of Common Stock, the repayment of a $450,000 promissory note of the Company, the issuance of a $130,000 convertible promissory note and the payment in Common Stock of $250,000 of compensation to a senior executive. Assumes full conversion of shares of Astro-Stream Corporation into shares of Common Stock. (2) Also reflects on an as adjusted basis as at July 31, 1996 the sale of the 2,000,000 shares of Common Stock offered hereby and the application of the estimated net proceeds therefrom.

parsed_sections/prospectus_summary/1996/CIK0000787648_texas_prospectus_summary.txt

@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. CONTEMPORANEOUSLY WITH THE CLOSING OF THE OFFERING MADE BY THIS PROSPECTUS, THE COMPANY WILL ACQUIRE BY MERGER TWO BANKS USING A PORTION OF THE PROCEEDS OF THE OFFERING. SEE "PROPOSED MERGERS" AND "TEXAS REGIONAL BANCSHARES, INC. PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION" REGARDING THE EFFECTS ON THE COMPANY OF THE CONSUMMATION OF SUCH MERGERS. THE COMPANY Texas Regional Bancshares, Inc. ("Texas Regional" or the "Company") is a registered bank holding company whose wholly-owned subsidiary bank, Texas State Bank ("Texas State Bank" or the "Bank"), conducts a commercial banking business in the Rio Grande Valley of Texas. At March 31, 1996, Texas Regional had consolidated assets of $655.9 million, loans outstanding (net of unearned discount) of $467.1 million, total deposits of $586.0 million, and total shareholders' equity of $64.6 million. For the three months ended March 31, 1996 and 1995, the Company earned net income of $2.6 million and $2.0 million, respectively, for a return on average assets for these periods of 1.57% and 1.52%, respectively. At March 31, 1996, the Company had nonperforming assets (including loans 90 days or more past due and still accruing) of $4.9 million, representing 1.0% of period-end loans and other nonperforming assets (primarily other real estate). At December 31, 1995, Texas Regional had consolidated assets of $646.8 million, loans outstanding (net of unearned discount) of $450.9 million, total deposits of $579.7 million, and total shareholders' equity of $62.7 million. For the years ended December 31, 1995 and 1994, the Company earned net income of $8.7 million and $7.2 million, respectively, for a return on average assets for these periods of 1.51% and 1.43%, respectively. At December 31, 1995, the Company had nonperforming assets (including loans 90 days or more past due and still accruing) of $4.2 million, representing 0.9% of period-end loans and other nonperforming assets (primarily other real estate). Texas State Bank operates a total of nine full service banking locations in the Rio Grande Valley. The market area served by Texas State Bank has been recognized as among the fastest growing areas in the nation. The McAllen-Edinburg-Mission area has a projected population growth rate of 23.8% between 1994 and 2000, and the Brownsville-Harlingen area has a projected population growth rate of 16.0% during that same period. The business strategy of Texas Regional is for the Bank to provide its customers with the financial sophistication and breadth of products of a regional bank, while retaining the local appeal and service level of a community bank. Management believes that the Company is well positioned in its market due to its responsive customer service, the strong community involvement of Texas State Bank management and employees, recent trends in the Texas banking environment and the economy of the Rio Grande Valley. Management's strategy is to provide a business culture in which individual customers and small and medium sized businesses are accorded the highest priority in all aspects of the Company's operations. Management believes that individualized customer service will allow the Company to increase its market share in lending volume and deposits. As part of its operating and growth strategies, the Company is working to attract business from, and provide service to, small to medium sized businesses, and expand its operations in McAllen, Harlingen and other strategic areas in the Rio Grande Valley. Consistent with this strategy, during 1995, Texas State Bank acquired banking locations in Rio Grande City and Roma, Texas, and in January 1996 it entered into definitive agreements to acquire two banks headquartered in Mission and Hidalgo, Texas. See "The Company" and "Proposed Mergers." At March 31, 1996, Texas Regional employed 351 full time equivalent employees. The address of Texas Regional's principal executive office is Kerria Plaza, Suite 301, 3700 North 10th Street, McAllen, Texas 78501, and its telephone number is (210) 631-5400. THE MERGERS Texas State Bank has for some time sought appropriate acquisitions to permit the Bank to expand within the market areas served by Texas State Bank and into adjacent market areas in the Rio Grande Valley. In January 1996, the Company entered into definitive agreements to acquire through merger First State Bank & Trust Co., Mission, Texas ("First State Bank") and The Border Bank, Hidalgo, Texas ("Border Bank") (the "Mergers"). First State Bank and Border Bank had combined total assets of approximately $545.5 million at March 31, 1996. Assuming consummation of the Mergers, on a pro forma basis at March 31, 1996, Texas Regional would have had total assets of $1.170 billion, which would have made Texas Regional the largest bank holding company headquartered in the Rio Grande Valley. At March 31, 1996, First State Bank had total assets of $426.1 million, loans outstanding (net of unearned discount) of $192.8 million and stockholders' equity of $61.6 million. At March 31, 1996, Border Bank had total assets of $119.9 million, loans outstanding (net of unearned discount) of $51.0 million and stockholders' equity of $17.2 million. First State Bank and Border Bank had combined total assets of approximately $524.0 million at December 31, 1995. Assuming consummation of the Mergers, on a pro forma basis at December 31, 1995, Texas Regional would have had total assets of $1.143 billion. At December 31, 1995, First State Bank had total assets of $404.5 million, loans outstanding (net of unearned discount) of $188.4 million and stockholders' equity of $59.4 million. At December 31, 1995, Border Bank had total assets of $119.5 million, loans outstanding (net of unearned discount) of $47.3 million and stockholders' equity of $17.1 million. Elliot B. Bottom is the Chairman of the Board of both First State Bank and Border Bank, and the banks have substantial common ownership. The purpose of the Mergers is to further strengthen Texas State Bank's branch network and banking business in the Rio Grande Valley by adding six new banking locations in Mission, Penitas, McAllen and Hidalgo, Texas. The purchase price for the Mergers is estimated to be $99.5 million, approximately $40.0 million of which will be paid from the proceeds of the offering made hereby. The Company intends to fund the balance of the purchase price principally from liquidation of cash equivalents and, to the extent necessary, selected investment securities on a consolidated basis. See "Proposed Mergers" and "Use of Proceeds." Management of Texas State Bank believes that the Mergers will expand the Company's community banking network into contiguous markets, substantially increasing its market share and enabling the Bank to compete more effectively with other financial institutions in the Rio Grande Valley. Because of the proximity of Mission to McAllen, there is a substantial overlap in the markets served by Texas State Bank and First State Bank. For this reason and because the banks serve a similar customer base, First State Bank is considered by Texas State Bank management to be a direct competitor of Texas State Bank, particular as to loan customers. The new or expanded services to be offered to First State Bank and Border Bank customers include enhanced data processing services, additional automated teller facilities and other services now offered to Texas State Bank customers. Texas State Bank management believes that First State Bank, Border Bank and Texas State Bank customers will benefit from the expansion of Texas State Bank's branch network from nine to 15 banking locations. Texas State Bank expects to realize certain operating and administrative efficiencies as a result of the Mergers; however, because of the relatively low employee-to-asset ratio at First State Bank and Border Bank, cost savings is not a principal motivating factor for the Mergers. The operating efficiencies which are expected include the use by all banking locations of the existing Texas State Bank data processing facility, operation of a single human resources department, and economies of a combined advertising program. THE OFFERING <TABLE> <S> <C> Common Stock offered hereby................. 2,200,000 shares(1)(2) by the Company.......................... 2,180,000 shares(1) by the Selling Shareholder.............. 20,000 shares Common Stock to be outstanding after the offering.................................. 8,376,791 shares(1)(2) Use of proceeds............................. Approximately $40.0 million of the net proceeds to be received by the Company from the sale of Common Stock will be used to fund part of the consideration payable by Texas State Bank upon consummation of the Mergers. The remainder of the net proceeds, if any, will be used for general corporate purposes. See "Proposed Mergers" and "Use of Proceeds." Nasdaq National Market symbol............... TRBS </TABLE> - ------------ (1) An additional 330,000 shares may be sold pursuant to an over-allotment option granted by the Company to the Underwriters. See "Underwriting." (2) The shares of Common Stock offered hereby will be sold contemporaneously with the consummation of the Mergers. TEXAS REGIONAL BANCSHARES, INC. SUMMARY CONSOLIDATED FINANCIAL INFORMATION The summary consolidated financial information under the captions "Summary of Operations" and "Period-End Balance Sheet Data" below for, and as of, each of the years in the five-year period ended December 31, 1995 has been derived from the consolidated financial statements of the Company, which financial statements have been audited by KPMG Peat Marwick LLP, independent auditors. The consolidated financial statements of the Company at December 31, 1995 and 1994 and for each of the years in the three-year period ended December 31, 1995 are included elsewhere in this Prospectus. The data presented at March 31, 1996 and 1995 and for each of the three-month periods then ended are derived from unaudited consolidated interim financial statements of the Company and include, in the opinion of management, all adjustments necessary to present fairly the data for such periods. <TABLE> <CAPTION> THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31, ----------------------- ----------------------------------------------------- 1996 1995 1995 1994 1993 1992 1991 ------------ --------- --------- --------- --------- --------- --------- <S> <C> <C> <C> <C> <C> <C> <C> (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) SUMMARY OF OPERATIONS: Net Interest Income......... $ 7,689 $ 6,450 $ 27,540 $ 22,941 $ 19,197 $ 16,861 $ 11,773 Net Income.................. 2,554 1,987 8,725 7,185 6,011 4,519 2,824 PER SHARE DATA: Net Income.................. $ 0.41 $ 0.32 $ 1.40 $ 1.16 $ 1.16 $ 0.92 $ 0.79 Book Value.................. 10.42 9.26 10.12 9.00 7.73 6.42 5.22 Cash Dividends Declared on Common Stock.............. 0.10 0.10 0.40 0.24 -- -- -- Average Shares Outstanding (in thousands)............ 6,295 6,201 6,227 6,035 5,170 4,890 3,578 PERIOD-END BALANCE SHEET DATA: Total Assets................ $ 655,886 $ 539,005 $ 646,769 $ 531,834 $ 473,263 $ 414,331 $ 297,256 Loans....................... 467,059 354,410 450,854 339,939 290,500 252,118 179,853 Deposits.................... 585,994 475,985 579,731 472,108 429,521 375,016 271,540 Shareholders' Equity........ 64,563 57,341 62,720 55,731 39,983 34,318 19,366 PERFORMANCE RATIOS: Return on Average Assets.... 1.57% 1.52% 1.51% 1.43% 1.34% 1.23% 1.00% Return on Average Shareholders' Equity...... 16.01 14.16 14.69 14.11 16.15 15.23 15.85 ASSET QUALITY RATIOS: Nonperforming Assets to Loans and Other Nonperforming Assets...... 0.92% 0.97% 0.79% 1.41% 1.69% 2.31% 4.27% Allowance for Loan Losses as a Percentage of: Loans................... 1.05 1.13 1.01 1.03 1.18 1.16 1.42 Nonperforming Assets.... 113.12 115.33 126.62 72.96 69.39 49.43 32.44 </TABLE> SEE "PROPOSED MERGERS" AND "TEXAS REGIONAL BANCSHARES, INC. PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION" REGARDING THE PRO FORMA COMBINED EFFECT ON THE COMPANY ASSUMING CONSUMMATION OF THE MERGERS AT MARCH 31, 1996 AND DECEMBER 31, 1995. EXCEPT AS OTHERWISE SPECIFIED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. SEE "UNDERWRITING."