1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
- --- Securities Exchange Act of 1934. For the quarterly period ended
September 29, 1996.
Transition report pursuant to Section 13 or 15(d) of the
- --- Securities Exchange Act of 1934. For the transition period from
to . ------
------
Commission file number: 0-24020
GROUP TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 59-2948116
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10901 Malcolm McKinley Drive
Tampa, Florida 33612
(Address of principal executive offices, including zip code)
(813) 972-6000
(Registrant's telephone number, including area code)
_________________________________
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /.
As of November 8, 1996 there were 16,220,629 shares of the Registrant's Common
Stock outstanding.
2
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations for the Three Months and
Nine Months ended September 29, 1996 and October 1, 1995............. 3
Consolidated Balance Sheets at September 29, 1996 and December
31, 1995............................................................. 4
Consolidated Statements of Cash Flows for the Nine Months ended
September 29, 1996 and October 1, 1995............................... 5
Notes to Interim Consolidated Financial Statements................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 9
Part II. Other Information
Item 3. Defaults Upon Senior Securities............................ 13
Item 5. Other Information.......................................... 13
Item 6. Exhibits and Reports on Form 8-K........................... 13
Signatures........................................................... 14
Exhibit Index........................................................ 15
3
Part I. Financial Information
Item 1. Financial Statements
GROUP TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
Three Months Ended Nine Months Ended
September 29, October 1, September 29, October 1,
1996 1995 1996 1995
------- ------- -------- --------
(Unaudited) (Unaudited)
Revenue $48,190 $71,554 $180,380 $208,521
Cost of operations 47,376 68,446 170,549 199,941
------- ------- -------- --------
Gross profit 814 3,108 9,831 8,580
Selling, general and
administrative expense 2,393 3,510 8,597 14,023
Research and development 2 585 296 2,508
------- ------- -------- --------
Operating (loss)
income (1,581) (987) 938 (7,951)
Interest expense 756 590 2,682 1,970
Other expense (income),
net 93 (116) 166 298
------- ------- -------- --------
Loss before income
taxes (2,430) (1,461) (1,910) (10,219)
Income tax expense
(benefit) 388 (682) 845 (3,955)
------- ------- -------- --------
Net loss $(2,818) $ (779) $ (2,755) $ (6,264)
======= ======= ======== ========
Net loss per share:
Primary $ (0.17) $ (0.05) $ (0.17) $ (0.40)
Fully diluted $ (0.17) $ (0.05) $ (0.17) $ (0.40)
Shares used in computing per share amounts:
Primary 16,221 15,690 16,135 15,680
Fully diluted 16,221 15,690 16,135 15,680
The accompanying notes are an integral part of the consolidated financial
statements.
4
GROUP TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
September 29, December 31,
1996 1995
-------- --------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,224 $ 2,143
Accounts receivable, net 21,192 31,167
Inventories, net 25,990 46,499
Other current assets 3,780 7,965
-------- --------
Total current assets 52,186 87,774
Property and equipment, net 22,256 24,090
Other assets 934 1,242
-------- --------
$ 75,376 $113,106
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,146 $ 37,789
Accrued liabilities 15,153 17,892
Note payable 804 0
Current portion of long-term debt 14,813 8,171
-------- --------
Total current liabilities 47,916 63,852
Long-term debt 1,923 23,050
Other liabilities 310 364
-------- --------
Total liabilities 50,149 87,266
Shareholders' equity:
Preferred Stock, $.01 par value, 1,000,000
shares authorized; no shares issued and
outstanding 0 0
Common Stock, $.01 par value, 40,000,000
shares authorized; 16,220,629 and
15,828,707 shares issued and outstanding
in 1996 and 1995, respectively 162 158
Additional paid-in capital 24,675 22,537
Retained earnings 390 3,145
-------- --------
Total shareholders' equity 25,227 25,840
-------- --------
$ 75,376 $113,106
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
5
GROUP TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 29, October 1,
1996 1995
-------- --------
(Unaudited)
Cash flows from operating activities:
Net loss $ (2,755) $ (6,264)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 3,887 3,425
Other 230 (262)
Changes in operating assets and
liabilities, net of dispositions:
Accounts receivable 7,097 (7,419)
Inventories 13,264 11,604
Other current and non-current assets 1,888 (3,091)
Accounts payable (19,655) (4,162)
Accrued and other liabilities (998) 738
-------- --------
Net cash provided by (used in) operating
activities 2,958 (5,431)
Cash flows from investing activities:
Capital expenditures (2,376) (7,567)
Proceeds from disposal of assets 11,561 0
-------- --------
Net cash provided by (used in) investing
activities 9,185 (7,567)
Cash flows from financing activities:
Net (repayments) proceeds under revolving
credit agreement (8,511) 13,804
Repayments of notes payable and long-term
debt (5,551) (988)
Net proceeds from issuance of common stock 1,000 75
-------- --------
Net cash (used in) provided by financing
activities (13,062) 12,891
-------- --------
Net decrease in cash and cash equivalents (919) (107)
Cash and cash equivalents at beginning of
period 2,143 1,328
-------- --------
Cash and cash equivalents at end of period $ 1,224 $ 1,221
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
6
GROUP TECHNOLOGIES CORPORATION
Notes to Interim Consolidated Financial Statements
(1) Organizational Structure
Group Technologies Corporation (the "Company") is a leading provider of
advanced manufacturing, engineering and testing services to original equipment
manufacturers (OEMs) of electronic products. The Company custom manufactures
complex circuit card assemblies, subsystems and end-user products for use in a
wide variety of markets, including avionics, gaming, network products, personal
computer, photography, space, telecommunications, utility, workstation and
government systems.
The consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries (hereinafter collectively referred to as the
"Company"). The Company's operating subsidiaries are Group Technologies, S.A. de
C.V. ("GTC Mexico") and Group Technologies Suprimentos de Informatica Industria
e Comercio Ltda. ("GTC Brazil"). Substantially all of the assets of Metrum,
Inc. ("Metrum"), which remains a wholly owned subsidiary of the Company, were
sold on February 9, 1996 (see Note 6); however, certain non-operating assets and
liabilities were retained.
(2) Basis of Presentation
The unaudited consolidated financial statements and related notes have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission and on substantially the same basis as the annual
consolidated financial statements. The consolidated financial statements include
the accounts of the Company and its subsidiaries. All significant intercompany
transactions and accounts have been eliminated.
In the opinion of management, the consolidated financial statements reflect
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the financial position, operating results, and cash flows
for those periods presented. Operating results for the three and nine month
periods ended September 29, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements, and notes thereto, for the year ended December 31, 1995 as
presented in the Company's annual report on Form 10-K.
(3) Net Loss Per Share
Net loss per share is computed using the weighted average number of common
shares outstanding during the applicable period.
7
(4) Inventories
Inventories consist of the following:
September 29, December 31,
1996 1995
-------- --------
(Unaudited)
Raw materials $ 17,767 $ 34,469
Work in process 4,320 6,840
Finished goods 409 330
Costs relating to long-term contracts
and programs, net of amounts
attributed to revenue recognized to
date 19,402 25,766
Progress payments related to long-term
contracts and programs (8,438) (12,300)
Reserve for inactive, obsolete and
unsalable inventories (7,470) (8,606)
-------- --------
$ 25,990 $ 46,499
======== ========
The amounts detailed above include inventories valued under the last-in,
first-out ("LIFO") method totaling $5,318,000 at December 31, 1995, which
approximates replacement cost at that date. No inventories were valued under
LIFO at September 29, 1996.
(5) Note Payable and Long-Term Debt
On March 29, 1996, the Company entered into a financing agreement (the
"1996 Credit Agreement") with its bank to replace the revolving credit agreement
entered into on November 24, 1994. The 1996 Credit Agreement provides the
Company with a two-year revolving line of credit facility (the "Revolver"), a
$3,300,000 two-year facility (the "Term Note") and an additional $5,000,000
facility (the "1996 Note") for the period through December 31, 1996. Borrowings
under the 1996 Credit Agreement are secured by substantially all of the assets
of the Company. Under the terms of the 1996 Credit Agreement, the Company will
pay interest monthly on outstanding borrowings at the prime rate (8.25% at
September 29, 1996) plus a spread (between 1.0% and 2.0%). The Company will be
provided credit availability on the Revolver equal to the lesser of $27,500,000
or the applicable amount of its eligible accounts receivable and inventories
through December 31, 1996. Effective January 1, 1997 through the maturity date
of March 1998, the Company's credit availability on the Revolver will equal the
lesser of $22,500,000 or the applicable amount of its eligible accounts
receivable and inventories. Principal payments on the Term Loan are due monthly
commencing in the fourth quarter of 1996. The balance on the 1996 Note at
September 29, 1996 was $804,000, which was fully paid as of October 3, 1996.
The Company, in conjunction with the 1996 Credit Agreement, paid a $250,000
fee and issued warrants to purchase 1,200,000 shares of common stock at $0.01
per share to the lender in consideration for execution of the financing
agreement. At September 29, 1996, 200,000 of the warrants were exercisable and
the balance of the warrants become exercisable in quarterly increments of
250,000 beginning March 1997. The warrants will expire 5 years following the
issue date. The lender will forfeit any unvested warrants in the event the
Company repays all debt outstanding under the 1996 Credit Agreement prior to any
warrant vesting date. The Company recorded an original issue discount for the
1996 Credit Agreement equal to the fair market value of the exercisable options
and is amortizing this discount over the 12 month period beginning April 1996.
8
Long-term debt consists of the following:
September 29, December 31,
1996 1995
-------- --------
(Unaudited)
Revolver $ 8,321 $ 25,583
Term Note 3,300 0
Other 5,355 5,638
-------- --------
Total long-term debt 16,976 31,221
Unamortized original issue discount
related to issuance of warrants
exercisable on date of issuance (240) 0
Current portion of long-term debt (14,813) (8,171)
-------- --------
$ 1,923 $ 23,050
======== ========
Available borrowings on the Revolver at September 29, 1996 were
approximately $4,643,000. The interest rate on all debt outstanding under the
1996 Credit Agreement at September 29, 1996 was 10.25%. As a result of the
Company's early repayment of the 1996 Note on October 3, 1996, the interest
rate was reduced to 9.5%.
The 1996 Credit Agreement requires maintenance of certain financial ratios
and contains other restrictive covenants, including prohibiting the Company from
paying dividends. At September 29, 1996 the Company was not in compliance with
certain covenants, including minimum earnings before interest, income taxes,
depreciation and amortization ("EBITDA"). The bank has waived its rights with
regard to such items of non-compliance through November 30, 1996. Management
believes the Company may be in non-compliance with similar covenants within
twelve months and has, therefore, classified the debt as current.
(6) Dispositions
On February 9, 1996, the assets of the instrumentation products business
unit of Metrum were sold to Bell Technologies, Inc. ("Bell"), formerly F.W.
Bell, Inc., for $10,104,000 cash and an earn-out provision which provides for
additional payments to the Company, up to $3,000,000 in the event annual
earnings before interest and taxes exceeds defined amounts through December 31,
2001. The Company and Bell are both majority owned subsidiaries of Group
Financial Partners, Inc. (the "Parent"). Due to the common ownership interest of
the Parent in the Company and Bell, the Company requested and obtained an
independent opinion, which indicated that the consideration received by the
Company for the sale of the instrumentation products business was fair, from a
financial point of view, to the unaffiliated shareholders of the Company. In
addition, due to the common ownership, the amount by which the sales price
exceeds the net book value of assets and liabilities transferred has been
recorded by the Company as a contribution to its capital of $613,000.
On March 22, 1996, the Company sold substantially all of the assets related
to its Badger name brand product business unit for its carrying value of
$1,457,000.
9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The following tables set forth certain data, expressed as a percentage of
revenue, from the Company's Consolidated Statement of Operations for the three
and nine month periods ended September 29, 1996 and October 1, 1995.
Three Months Ended Nine Months Ended
September 29, October 1, September 29, October 1,
1996 1995 1996 1995
------ ------ ------ ------
(Unaudited) (Unaudited)
Revenue 100.0% 100.0% 100.0% 100.0%
Cost of operations 98.3 95.7 94.5 95.9
------ ------ ------ ------
Gross profit 1.7 4.3 5.5 4.1
Selling, general and
administrative expense 5.0 4.9 4.8 6.7
Research and development 0.0 0.8 0.2 1.2
------ ------ ------ ------
Operating (loss) income (3.3) (1.4) 0.5 (3.8)
Interest expense 1.5 0.8 1.5 1.0
Other expense (income),
net 0.2 (0.2) 0.1 0.1
------ ------ ------ ------
Loss before income taxes (5.0) (2.0) (1.1) (4.9)
Income tax expense
(benefit) 0.9 (0.9) 0.4 (1.9)
------ ------ ------ ------
Net loss (5.9)% (1.1)% (1.5)% (3.0)%
====== ====== ====== ======
Revenue for the third quarter of 1996 was $48.2 million, a decrease of
$23.4 million or 32.7% from $71.6 million for the third quarter of 1995. Revenue
for the first nine months of 1996 was $180.4 million, a decrease of $28.1
million or 13.5% from $208.5 million for the first nine months of 1995. The
overall decrease in revenue reflects several changes in the Company's business
which occurred during 1995 and in the first nine months of 1996. The composition
of revenue for the comparable year-to-year periods varied primarily as a result
of the Company's expansion into Latin America and its reduced domestic
operations, including the disposition of its name brand products business units
during 1995 and in the first quarter of 1996. The net decrease of $28.1 million
for the nine month period is comprised of an increase in foreign operations of
$23.7 million offset by a reduction in Tampa based operations of $26.5 million,
and a $25.3 million decrease in revenue associated with the disposition of
substantially all of the assets of Metrum, Inc. and the Badger business unit.
The increase in revenue from the Company's foreign operations in the first
nine months of 1996 was generated by the growth in the Company's Mexican and
Brazilian manufacturing services operations of $16.8 million and $6.9 million,
respectively. The principal increase in revenue from the Mexican operation was
provided by a turnkey contract which began in the second half of 1995 and which
was completed during the third quarter of 1996. The increase in Brazilian
revenues was principally due to the fact that the Company initially commenced
operations in Brazil during the third quarter of 1995 whereas it operated in
Brazil for a full nine months during 1996. The Company also commenced operations
at a facility located in Campinas, Brazil, in August, 1996.
10
Revenue for the Company's domestic manufacturing and engineering services
businesses decreased by $24.0 million and $2.5 million, respectively, over the
first nine months of the prior year. The majority of the domestic manufacturing
services revenue decrease was related to a reduction in customer demand and to
periodic cancellations of non-profitable contracts during the first nine months
of 1995.
The Company significantly reduced the fixed costs of its Tampa facility
during 1995, thus lowering the break-even point of its manufacturing services
operation. While the Company continued to strategically lower both fixed and
variable costs during the first nine months of 1996, the revenue base for the
Tampa facility was not sufficient to enable it to report an operating profit in
the third quarter. Additionally, the completion of a contract has created
additional under-utilized production capacity at the Company's Tampa
manufacturing facility. While a near term replacement of this business is not
foreseen, the Company is actively pursuing new business opportunities with both
its existing customer base and new customers.
To enhance the Company's prospects for achieving an adequate revenue load
in future periods, management has structured the marketing and sales function to
optimize the Company's capabilities toward the achievement of new business
generation. The Company's marketing efforts for its domestic manufacturing
services operations are focused to identify high product mix and advanced
packaging demands, and are designed to attract and win profitable contracts
which will utilize the Company's value added engineering capability. Management
has also consolidated certain manufacturing support and materials functions to
improve the Company's performance on its existing programs. If the Company is
unable to attract new business which will generate profitable revenue for its
Tampa facility during the remainder of 1996 and in 1997, its financial
performance during these periods may be adversely affected. Management will
closely monitor the progress of these activities and will take additional
actions to minimize the impact of any potential revenue shortfall.
Revenue for the name brand products business units was $6.1 million for the
first nine months of 1996, which includes $4.1 million of revenue derived from a
favorable contract claim settlement. The instrumentation products business unit
of Metrum and the Company's Badger business unit were sold during the first
quarter of 1996. The aggregate decrease in revenue for the year-to-year
comparable periods related to the disposition of name brand products businesses
was $25.3 million. The sale of these business units completed the disposition of
the Company's entire line of name brand products which also included two sale
transactions in the second quarter of 1995.
Gross profit for the third quarter of 1996 decreased to $0.8 million or
1.7% of revenue from $3.1 million or 4.3% of revenue in the third quarter of
1995. Gross profit for the first nine months of 1996 increased to $9.8 million
or 5.5% of revenue from $8.6 million or 4.1% of revenue in the first nine months
of 1995. The decrease in gross profit in the third quarter of 1996 is primarily
attributable to the disposition of the Company's name brand products business
units and the under-utilized capacity of its Tampa based operations. The net
increase in gross profit during the first nine months of 1996 is principally
related to a $7.7 million increase in gross profit from the Company's core
manufacturing and engineering services businesses, partially offset by a $6.5
million decrease in gross profit from the name brand products business. The $7.7
million increase in gross profit is associated with a reduced level of inventory
reserves and adjustments, contract estimate changes and severance costs as
compared to the same period in 1995. Additionally, the gross margin amount for
the first nine months of 1996 also includes a favorable name brand products
business claim settlement of $4.1 million.
11
Selling, general and administrative expense for the third quarter of 1996
decreased to $2.4 million or 5.0% of revenue from $3.5 million or 4.9% of
revenue in the third quarter of 1995. Selling, general and administrative
expense for the first nine months of 1996 decreased to $8.6 million or 4.8% of
revenue from $14.0 million or 6.7% of revenue for the same period in 1995. The
decrease in the first nine months of 1996 reflects the disposition of the name
brand products business units and the result of ongoing cost reduction
activities.
Research and development expense for the third quarter and first nine
months of 1996 decreased $0.6 million and $2.2 million, respectively, from the
comparable prior year periods. The Company's research and development efforts
have historically been concentrated on the name brand products business units.
The Company's manufacturing and engineering services businesses are expected to
continue to require comparatively lower levels of research and development in
the future.
Interest expense for the third quarter and first nine months of 1996
increased $0.2 million and $0.7 million, respectively, from the comparable prior
year periods. Although the Company's average debt outstanding during the first
nine months of 1996 was lower than the comparable prior year period, the
weighted average interest rate on borrowings increased during 1996.
Additionally, $0.6 million of the increase for the first nine months of 1996
resulted from the Company's expansion into Latin America.
Income tax expense for the three and nine month periods ended June 30,
1996, consists primarily of income taxes on earnings in foreign countries.
Liquidity and Capital Resources
Net cash provided by operating activities was $3.0 million for the first
nine months of 1996. Inventories and accounts receivable decreased by $13.3
million and $7.1 million, respectively, attributable to the completion or
curtailment of certain commercial contracts during 1996.
The Company's accounts payable decreased by $20.0 million during the first
nine months of 1996. The decrease is attributable to utilization of a portion of
the proceeds from the sales of businesses and a reduction in inventory
requirements. While the Company has maintained extended payment terms with its
suppliers, the Company has long-term relationships with a majority of its
suppliers and has been successful in maintaining reasonable credit terms with
its supplier base.
Net cash provided by investing activities was $9.2 million for the first
nine months of 1996. Capital expenditures were $2.4 million and the divestiture
of Metrum's instrumentation products business and the Company's Badger business
unit generated net proceeds of $10.1 million and $1.5 million, respectively. The
majority of the proceeds from the sale transactions were used to reduce the
Company's debt outstanding and to reduce accounts payable.
Net cash used in financing activities was $13.1 million for the first nine
months of 1996. On March 29, 1996, the Company entered into a credit agreement
with its bank which provided the Company with a revolving credit facility and
two term facilities. The revolving credit facility is for a term of two years
and provides credit availability up to $27.5 million through December 1996 and
$22.5 million through March 1998, subject to a borrowing base consisting of
eligible accounts receivable and inventories. At September 29, 1996,
availability on the Company's revolving credit facility was approximately $4.6
million. The term facilities include a $3.3 million term note payable in
installments over two years and a $5.0 million term note payable in installments
through December 1996. Of the $5.0
12
million term note payable, approximately $4.2
million was paid down during the first nine months of 1996.
In connection with the new credit agreement, the majority shareholder of
the Company invested $1.0 million in the Company in exchange for shares of
Common Stock. As a condition of the consummation of the restructured credit
agreement, the Company also issued warrants to purchase 1.2 million shares of
Common Stock to the bank, 0.2 million of which were vested on date of closing
and the remaining 1.0 million become vested quarterly in 25% increments
beginning March 1997. The bank will forfeit any unvested warrants in the event
the Company repays all debt outstanding prior to any warrant vesting date. The
Company is investigating alternative sources of financing which, if obtained,
will enable the Company to repay the debt to the bank prior to March 29, 1997.
At September 29, 1996, the Company was not in compliance with certain financial
covenants contained in the credit agreement. The bank waived such items of non-
compliance through November 30, 1996.
The Company's principal sources of liquidity currently consist of funds
available under its revolving credit facility and its ability to manage asset
turnover. The Company's ability to manage its working capital position and to
generate profitable revenue for its Tampa facility during the remainder of 1996
will impact the Company's accounts receivable and inventories collateral base
and, therefore, the availability of borrowings under the revolving credit
facility. The maximum available borrowings under the revolving credit facility
of $27.5 million through December 1996 and $22.5 million thereafter should
provide the Company with sufficient resources to meet its cash requirements
through the next twelve months. However, if the Company is unable to maintain
the collateral base required to utilize this borrowing capacity, its liquidity
may be adversely affected. Should it become evident that a potential deficiency
in short-term liquidity exists, management will undertake proactive measures,
including seeking alternative sources of working capital and capital equipment
financing, the sale of certain assets and actions to maximize the amounts of
accounts receivable and inventories eligible as collateral. Cash requirements
for periods beyond the next twelve months depend on the Company's profitability,
its ability to manage working capital requirements and its rate of growth.
Inflation did not have a material effect on the Company's operations in the
first nine months of either 1996 or 1995.
13
Part II Other Information
Item 3. Defaults Upon Senior Securities
As of September 29, 1996, the Company was not in compliance with certain
covenants regarding financial ratios which are specified in the Amended and
Restated Credit and Security Agreement with First Union Commercial Corporation
dated March 29, 1996. There is further discussion of these items of non-
compliance in Note 5 of the Notes to Interim Consolidated Financial Statements
on page 8 hereof and in the "Liquidity and Capital Resources" section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in Part I of this Form 10-Q on page 12 hereof.
Item 5. Other Information
On October 10, 1996, the Company announced that it is considering entering
into a proposed merger with the Company's parent company, Group Financial
Partners, Inc. The Board of Directors of the Company has appointed a special
committee, consisting of its independent directors, to review and analyze the
proposed merger in order to ensure that the transaction is fair to the
unaffiliated shareholders of the Company. The special committee of the Board of
Directors has retained an investment banking firm to assist it with the review
and analysis of the proposed merger. The special committee is expected to
deliver a report to the full Board of Directors on the fairness of the proposed
merger in December 1996.
On November 4, 1996, the Company also announced that, effective October 31,
1996, Carl P. McCormick resigned from his position as a director and as the
President and Chief Executive Officer of the Company and that the Board of
Directors of the Company appointed Robert E. Gill to serve as the Company's
President and Chief Executive Officer. Mr. McCormick will remain an employee of
the Company until December 31, 1996, at which time he plans to retire from the
Company. Mr. Gill also serves as the chairman of Group Financial Partners, Inc.
He has been a director of the Company since 1989 and he served as chairman of
the Company's Board of Directors from 1989 to 1992. The remaining members of
the Board of Directors of the Company have not yet elected a director to fill
the vacancy created by Mr. McCormick's resignation from the Board.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits listed on the Exhibit Index on page 15 of this Form 10-Q are
filed as a part of this report.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
September 29, 1996.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GROUP TECHNOLOGIES CORPORATION
(Registrant)
Date: November 12, 1996 By: /s/ Robert E. Gill
----------------- -----------------------------------
(Robert E. Gill)
President & Chief Executive Officer
Date: November 12, 1996 By: /s/ David D. Johnson
----------------- -----------------------------------
(David D. Johnson)
Vice President & Chief Financial Officer
15
Exhibit Index
Exhibit
Number Description
- -------- -----------
10.4.1 First Amendment to Amended and Restated Credit and Security Agreement,
dated May 13, 1996.
10.4.2 Second Amendment to Amended and Restated Credit and Security
Agreement, dated September 5, 1996.
10.4.3 Letter Agreement dated November 7, 1996 Pertaining to Amended and
Restated Credit and Security Agreement.
10.32.2 Group Technologies Corporation Independent Directors' Stock Option
Plan restated effective October 29, 1996, dated October 27, 1994.
10.33.2 Group Technologies Corporation 1994 Stock Option Plan for Key
Employees restated effective October 29, 1996, dated October 27,
1994.
11 Statement re: computation of per share earnings.
27 Financial data schedule (for SEC use only).