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 MARCH 31, 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 May 10, 1996 there were 16,220,629 shares of the Registrant's Common
Stock outstanding.
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INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Operations for the
Quarters ended March 31, 1996 and April 2, 1995.................. 3
Consolidated Balance Sheets at March 31, 1996 and
December 31, 1995................................................ 4
Consolidated Statements of Cash Flows for the
Quarters ended March 31, 1996 and April 2, 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 5. OTHER INFORMATION .......................................... 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ........................... 13
SIGNATURES ..................................................................... 14
EXHIBIT INDEX .................................................................. 15
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GROUP TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
QUARTERS ENDED
---------------------
MARCH 31, APRIL 2,
1996 1995
--------- -------
(UNAUDITED)
Revenue....................................... $68,200 $ 65,100
Cost of operations ........................... 64,000 60,032
------- --------
Gross profit ............................... 4,200 5,068
Selling, general and administrative expense .. 2,773 4,971
Research and development ..................... 286 985
------- --------
Operating income (loss) .................... 1,141 (888)
Interest expense ............................. 949 628
Other expense (income), net .................. 84 (78)
------- --------
Income (loss) before income taxes .......... 108 (1,438)
Income tax expense (benefit) ................. 103 (535)
------- --------
Net income (loss) ............................ $ 5 $ (903)
======= ========
Net income (loss) per share:
Primary .................................... $ 0.00 $ (0.06)
Fully diluted .............................. $ 0.00 $ (0.06)
Shares used in computing per share amounts:
Primary .................................... 15,965 15,660
Fully diluted .............................. 16,263 15,660
The accompanying notes are an integral part of the consolidated financial
statements.
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GROUP TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents .................... $ 681 $ 2,143
Accounts receivable, net ..................... 40,642 31,167
Inventories, net ............................. 42,167 46,499
Other current assets ......................... 7,071 7,965
-------- --------
Total current assets ......................... 90,561 87,774
Property and equipment, net ................... 22,081 24,090
1,016 1,242
Other assets .................................. -------- --------
$113,658 $113,106
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................. $ 41,628 $ 37,789
Accrued liabilities .......................... 15,673 17,892
Note payable ................................. 5,000 -
Current portion of long-term debt ............ 3,267 8,171
-------- --------
Total current liabilities .................. 65,568 63,852
Long-term debt ................................ 20,411 23,050
Other liabilities ............................. 300 364
-------- --------
Total liabilities .......................... 86,279 87,266
Commitments and contingencies
Shareholders' equity:
Preferred Stock, $.01 par value, 1,000,000
shares authorized; no shares issued and
outstanding.............................. - -
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 .................... 24,067 22,537
Retained earnings ............................. 3,150 3,145
-------- --------
Total shareholders' equity ................. 27,379 25,840
-------- --------
$113,658 $113,106
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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GROUP TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
QUARTERS ENDED
--------------------
MARCH 31, APRIL 2,
1996 1995
---- ----
(UNAUDITED)
Cash flows from operating activities:
Net income (loss) .......................................... $ 5 $ (903)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization ........................... 1,294 1,077
Other ................................................... 200 3
Changes in operating assets and liabilities, net of
acquisitions and dispositions:
Accounts receivable ................................... (12,579) (3,500)
Inventories ........................................... (2,981) (3,081)
Other current and non-current assets .................. (446) (668)
Accounts payable ...................................... 4,828 (2,991)
Accrued and other liabilities ......................... (1,902) 803
-------- -------
Net cash used in operating activities ................ (11,581) (9,260)
Cash flows from investing activities:
Capital expenditures ....................................... (472) (2,757)
Proceeds from disposal of assets ........................... 11,457 -
-------- -------
Net cash provided by (used in) investing activities ... 10,985 (2,757)
Cash flows from financing activities:
Net (repayments) proceeds under revolving credit agreement . (1,730) 13,880
Repayments of long-term debt ............................... (136) (379)
Net proceeds from issuance of Common Stock ................. 1,000 75
-------- -------
Net cash (used in) provided by financing activities ... (866) 13,576
-------- -------
Net (decrease) increase in cash and cash equivalents ........ (1,462) 1,559
Cash and cash equivalents at beginning of period ............ 2,143 1,328
-------- -------
Cash and cash equivalents at end of period .................. $ 681 $ 2,887
======== =======
The accompanying notes are an integral part of the consolidated financial
statements.
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GROUP TECHNOLOGIES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION 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 quarter
ended March 31, 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 INCOME (LOSS) PER SHARE
Net income (loss) per share is computed using the weighted average number
of common shares and dilutive common equivalent shares outstanding during the
applicable period. Common equivalent shares consist of stock options, using
the treasury stock method. The computation includes those common shares and
common equivalent shares as prescribed by Securities and Exchange Commission
Staff Accounting Bulletins.
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(4) INVENTORIES
Inventories consist of the following:
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
Raw materials ................................................. $ 31,054 $ 34,469
Work in process ............................................... 3,929 6,840
Finished goods ................................................ - 330
Costs relating to long-term contracts and programs, net
of amounts attributed to revenue recognized to date......... 27,329 25,766
Progress payments related to long-term contracts and
programs .................................................... (13,444) (12,300)
Reserve for inactive, obsolete and unsalable .................. (6,701) (8,606)
-------- --------
$ 42,167 $ 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 March 31, 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
March 31, 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 October 1996. The 1996 Note is payable in two equal installments on
August 30, 1996 and December 31, 1996 and is classified as a note payable in
the Company's March 31, 1996 balance sheet. The 1996 Credit Agreement requires
maintenance of certain financial ratios and contains other restrictive
covenants, including prohibiting the Company from paying dividends.
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 March 31, 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
the maturity date. The Company recorded an original issue discount for the 1996
Credit Agreement equal to the fair market value of the exercisable options and
will amortize this discount on a straight-line basis over a 12 month period
beginning April 1996.
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Long-term debt consists of the following:
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
Revolver .................................................... $ 15,549 $ 25,583
Term Note ................................................... 3,300
Other ....................................................... 5,309 5,638
----------- ------------
Total long-term debt ....................................... 24,158 31,221
Unamortized original issue discount related to issuance
of warrants exercisable on date of issuance............... (480) -
Current portion of long-term debt............................ (3,267) (8,171)
----------- -----------
$ 20,411 $ 23,050
=========== ===========
Available borrowings on the Revolver at March 31, 1996 were $7,798,000.
The interest rate on all debt outstanding under the 1996 Credit Agreement at
March 31, 1996 was 10.25%.
(6) DISPOSITIONS
On February 9, 1996, the assets of the instrumentation products business
unit of Metrum were sold to F.W. Bell, Inc. ("Bell") for $10,000,000 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, which amount has not yet been determined, will be
recorded by the Company as a contribution to its capital.
On March 22, 1996, the Company sold substantially all of the assets
related to its Badger name brand product business unit for $1,457,000 cash.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain data, expressed as a percentage of
revenue, from the Company's Consolidated Statement of Operations for the
quarters ended March 31, 1996 and April 2, 1995.
QUARTER ENDED
-----------------------------
MARCH 31, 1996 APRIL 2, 1995
-------------- -------------
Revenue ...................................... 100.0% 100.0%
Cost of operations ........................... 93.8 92.2
-------------- -------------
Gross profit ................................. 6.2 7.8
Selling, general and administrative expense .. 4.1 7.6
Research and development ..................... 0.4 1.5
-------------- -------------
Operating income (loss) ...................... 1.7 (1.3)
Interest expense ............................. 1.4 1.0
Other expense (income), net .................. 0.1 (0.1)
-------------- -------------
Income (loss) before income taxes ............ 0.2 (2.2)
Income tax expense (benefit) ................. 0.2 (0.8)
-------------- -------------
Net income (loss) ............................ 0.0% (1.4)%
============== =============
The Company reported a small net income for the first quarter of 1996
following five consecutive quarterly net losses. The improvement in the
Company's financial performance during the first quarter of 1996 is the result
of a number of initiatives taken by management during 1995 to restore the
Company's profitability, including increasing sales, improving productivity and
reducing operating costs. These initiatives remain an integral part of
management's top priority of returning the Company to profitability. The
turnaround process is expected to be a challenging activity and there are many
internal and external factors affecting the ultimate outcome of the process.
Accordingly, management can make no assurances that the Company will return to
profitability in 1996.
Revenue for the first quarter of 1996 was $68.2 million, an increase of
$3.1 million or 4.8% from $65.1 million for the first quarter of 1995. The
overall increase in revenue reflects several changes in the Company's business
which occurred during 1995 and the first quarter 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 the disposition of the name
brand products business units. The net increase of $3.1 million is comprised of
a net increase in the Company's core manufacturing and engineering services
business of $13.1 million offset by a $10.0 million decrease in revenue
resulting from the disposition of substantially all of the assets of Metrum's
instrumentation products business and the Badger business unit.
The change in the Company's revenue mix is indicative of the strategic
focus on the Company's core manufacturing services business, which accounted
for an increase in revenue of $15.2 million over 1995. The largest component of
the revenue increase was generated by the growth in the Company's Mexican and
Brazilian manufacturing services operations, which combined for an increase of
$12.2 million. The increase in revenue from the Mexican operation was provided
by the continuation of a
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turnkey contract which began in the second half of 1995. The Company's
Brazilian operation commenced operations during the third quarter of 1995,
providing manufacturing services under a consignment contract with the
Company's largest customer.
The Company's domestic manufacturing services business increased revenue
by $3.0 million over the prior year period, while revenue from the Company's
engineering services business declined by $2.1 million. The majority of the
domestic revenue increase was related to production on a turnkey contract for a
commercial customer which was awarded to the Company in the fourth quarter of
1995. The Company completed a successful ramp-up on this contract and met
delivery and quality commitments to the customer throughout the first quarter
of 1996. The contract is scheduled to be completed during the second quarter of
1996. The Company is also scheduled to complete shipments on a longer-term
commercial contract during the second quarter of 1996.
The Company significantly reduced the fixed costs of its Tampa facility
during 1995 to lower the break-even point of its manufacturing services
operation. The revenue load for this facility during the first quarter of 1996
was sufficient to enable it to report an operating profit. The impact of the
completion of these two commercial contracts may, however, create underutilized
production capacity at the Company's Tampa manufacturing facility beginning
late in the second quarter as the contracts are completed. The Company is
actively pursuing new business opportunities with its existing customer base
and new customers to replace this business.
To enhance the Company's prospects for achieving an adequate revenue load
for the second half of 1996, management is structuring 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 on the technology center
structure implemented during the fourth quarter of 1995, and are designed to
attract and win profitable contracts that will be optimum for the process
technology, level of service and cost structure for each of the three
technology centers. Management is also consolidating 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 third and fourth
quarters of 1996, its financial performance during these quarters may be
adversely affected. Management will closely monitor the progress of these
activities and will take actions to minimize the impact of any potential
revenue shortfall.
The Company's instrumentation products and Badger business units were sold
during the first quarter of 1996 at amounts that approximated the carrying
value of the net assets sold. The sale of these 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. The aggregate decrease in
revenue for the year-to-year comparable periods related to the disposition of
the name brand products business was $10.0 million. Revenue for the name brand
products business units was $11.7 million for the first quarter of 1996 as
compared to $1.7 million for the comparable prior year period.
Gross profit for the first quarter of 1996 decreased to $4.2 million or
6.2% of revenue from $5.1 million or 7.8% of revenue in 1995. While gross
profit from the Company's core manufacturing and engineering services business
nearly tripled to $3.5 million in the first quarter of 1996 from $1.2 million
in 1995, gross profit decreased, both in dollars and as a percentage of
revenue, primarily due to the disposition of the Company's name brand products
business units. Gross profit from name brand products was typically higher than
the Company's manufacturing services business; however, the name
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brand products business also required higher levels of selling, general and
administrative expense and research and development than the manufacturing
services business.
Selling, general and administrative expense for the first quarter of 1996
decreased to $2.8 million or 4.1% of revenue from $5.0 million or 7.6% of
revenue in 1995. The decrease reflects primarily the disposition of the name
brand products business units; however, a number of cost reduction actions
implemented by the Company throughout 1995 and further actions taken in the
first quarter of 1996 have also contributed to the decrease in expense.
Research and development expense for the first quarter of 1996 decreased
to $0.3 million or 0.4% of revenue from $1.0 million or 1.5% of revenue in
1995. 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 require
comparatively lower levels of research and development in the future.
Interest expense for the first quarter of 1996 increased to $0.9 million
from $0.6 million in 1995. Although the Company's average debt outstanding
during the first quarter of 1996 was lower than the comparable prior year
period, the weighted average interest rate on borrowings from the Company's
bank, including borrowings under its revolving credit facility, increased to
approximately 9.8% in 1996 as compared to approximately 6.9% in 1995.
Income tax expense for the first quarter of 1996 consists primarily of
income taxes on earnings in foreign countries.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities was $11.6 million for the first
quarter of 1996. The increases and decreases in the Company's operating assets
and liabilities during the first quarter are net of the impact of the
disposition of the assets and liabilities of the instrumentation products and
Badger business units. The Company's accounts receivable and inventories
increased by $12.6 million and $3.0 million, respectively, during this period.
The growth in accounts receivable is primarily attributable to shipments from
the Company's Tampa facility on the large commercial contract which provided
the majority of the year-to-year domestic revenue increase. Shipments on this
contract were heavily weighted toward the last month of the first quarter,
thereby resulting in an increase in accounts receivable at March 31, 1996. The
increase in inventories is primarily due to the material requirements
associated with production on this contract which is scheduled for completion
in the second quarter, in addition to other contracts on which production
continues into the second quarter.
The Company's accounts payable increased by $4.8 million during the first
quarter. The increase in accounts payable is primarily attributable to
increased inventories purchased to support the increased revenue during the
last month of the first quarter. While the Company has maintained extended
payment terms with its suppliers, the increase in accounts payable did not
result from an increase in past-due accounts, as the Company concentrated on
improving the aging of its open accounts payable. Additionally, a portion of
the proceeds from the two sale transactions of the name brand products business
during the first quarter of 1996 were used to reduce accounts payable. The
Company has long-term relationships with a majority of its suppliers and, as a
result, has been successful in continuing to work on reasonable credit terms
with its supplier base.
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Net cash provided by investing activities was $11.0 million for the first
quarter of 1996. Capital expenditures were $0.5 million for the first quarter.
Current commitments for capital expenditures for the remainder of 1996 is
approximately $2.2 million. The divestiture of the Company's instrumentation
products and Badger name brand products business units generated net proceeds
of $10.0 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 by financing activities was $0.9 million for the first
quarter of 1996. The Company reduced its debt by $1.9 million during the first
quarter. 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 March 31, 1996, availability
on the Company's revolving credit facility was approximately $7.8 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 two equal installments in
August and December 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 one year from closing. The bank will forfeit any unvested warrants in
the event the Company repays all debt outstanding prior to any warrant vesting
date. The Company intends to seek alternative sources of financing during 1996
and, if possible, to repay the debt to the bank prior to March 29, 1997.
The Company's principal sources of liquidity 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 second half 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 take proactive measures in
response to this issue, 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 quarter of either 1996 or 1995.
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PART II OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company issued additional shares of its common stock, $.01 par value, to
its principal shareholder, Group Financial Partners Inc. ("GFP"), in two
separate private placement transactions completed during the quarter ended
March 31, 1996:
(i) On February 21, 1996, the Company issued an additional 87,204 shares
of its common stock to GFP in exchange for management services which GFP
had rendered to the Company during the period from July 1, 1995 to
January 31, 1996 (the "Compensation Period"). The number of shares
issued to GFP for services rendered was determined by dividing the value
of the services by an average of the price for the last sale transaction
of the Company's common stock as reported by the National Association of
Securities Dealers Automated Quotation System on each of the last three
(3) business days of each month during the Compensation Period.
(ii) On March 29, 1996, the Company issued an additional 374,531 shares
of its common stock to GFP in exchange for cash at a price equal to the
average of the price for the last sale transaction of the Company's
common stock as reported by the National Association of Securities
Dealers Automated Quotation System on each of the last three (3)
business days prior to the date of sale.
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.
27 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
The Company filed one report on Form 8-K during the quarter ended March
31, 1996. The Company's Form 8-K dated February 9, 1996 reported the
sale of substantially all of the assets and liabilities of the
instrumentation product business unit of the Company's wholly-owned
subsidiary, Metrum, Inc. to F.W. Bell, Inc. The Company subsequently
amended its report on Form 8-K/A dated March 28, 1996 wherein it
appended its pro forma financial information as of October 1, 1995 and
for the nine months then ended and the year ended December 31, 1994 as
Item 7 of the filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GROUP TECHNOLOGIES CORPORATION
(Registrant)
Date: 05/13/95 By: /s/ Carl P. McCormick
-------- ----------------------------------------
(Carl P. McCormick)
President & Chief Executive Officer
Date: 05/13/95 By: /s/ David D. Johnson
-------- ----------------------------------------
(David D. Johnson)
Vice President & Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
10.32.1 Group Technologies Corporation Independent Directors' Stock Option
Plan Restated effective on February 21, 1996, dated October 27, 1994.
10.33.1 Group Technologies Corporation 1994 Stock Option Plan For Key
Employees Restated effective on February 21, 1996, dated October 27,
1994.
10.36 Group Technologies Corporation Independent Directors Compensation
Program Restated effective on February 21, 1996, dated September 1,
1995.
10.37 Group Technologies Corporation 1996 Special Recovery Bonus Plan for
Vice Presidents effective as of January 2, 1996.
10.38 Sublease between Group Technologies Supr. Informatica Ind. e Com.
Ltda. and Ceccato S/A Comercio de Utilidades Domesticas dated March 20,
1996 regarding the Campinas, Brazil property.
11 Statement re: computation of per share earnings.
27 Financial data schedule. (for SEC use only).
15