================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 18, 2003
PSC INC.
(Exact Name of Registrant as Specified in its Charter)
NEW YORK 0-9919 16-0969362
-------- ------ ----------
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification No.)
111 S.W. FIFTH AVENUE, SUITE 4100,PORTLAND, OREGON 97204
-------------------------------------------------- -----
(Address of principal executive (Zip Code)
offices)
(503) 553-3920
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address; if changed
since last report.)
================================================================================
Item 5. Other Events
As previously reported, on November 22, 2002, PSC Inc. (the "Company")
filed a voluntary bankruptcy petition for relief under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York. Since the November 22, 2002 petition date, the Company has
operated as a debtor in possession and is in compliance with all bankruptcy
reporting requirements.
As a result of the Chapter 11 proceeding, each month the Company is
required to file with the Bankruptcy court a schedule of monthly income and
expenses, along with selected balance sheet data (the "Monthly Operating
Statement"). On February 18, 2003, the Registrant filed a Monthly Operating
Statement with the Bankruptcy Court covering the period of January 1, 2003 to
January 24, 2003. This Monthly Operating Statement is filed as Exhibit 99.1 to
this Current Report.
The financial data included in the Monthly Operating Statement is not
audited. The Monthly Operating Statement is in a format prescribed by applicable
bankruptcy laws. There can be no assurance that, from the perspective of an
investor or potential investor in the Company's securities, the Monthly
Operating Statement is complete. The Monthly Operating Statement also contains
information for periods different from those required in the Company's reports
pursuant to the Securities Exchange Act of 1934, as amended ("the Exchange
Act"). This information might not be indicative of the Company's financial
condition or operating results for the period that would be reflected in the
Company's financial statements or in its reports pursuant to the Exchange Act.
Results set forth in any Monthly Operating Statement should not be viewed as
indicative of future results.
Item 7. Financial Statements and Exhibits.
(c) EXHIBITS.
--------
EXHIBIT NO. DESCRIPTION
- ---------- -----------
99.1 PSC Inc. Monthly Operating statement for the period from
January 1, 2003 to January 24, 2003
FORWARD LOOKING STATEMENTS
Certain statements in this Form 8-K are forward-looking statements
that involve risk and uncertainties, which may cause actual results to differ
materially from the statements made including market potential, regulatory
clearances, business growth and other risks listed from time to time in the
Company's Securities and Exchange Commission filings. These forward-looking
statements represent the Company's judgment, as of the date of this release, and
the Company disclaims any intent or obligation to update these forward-looking
statements.
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 hereunto duly authorized.
PSC INC.
By: /s/EDWARD J. BOREY
-----------------------------
Name: Edward J. Borey
Title: President, Chief Executive
Officer and Director
Dated: February 19, 2003
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ---------- -----------
99.1 PSC Inc. Monthly Operating statement for the period from
January 1, 2003 to January 24, 2003
MONTHLY OPERATING REPORT DEBTOR: PSC INC.
--------------------
CASE #: 02-15876 (SMB)
JOINTLY ADMINISTERED
--------------------
REPORTING PERIOD: JANUARY, 2003
--------------------
Monthly Operating Report Prepared By Debtor
-----------------
TABLE OF CONTENTS Form Number
-----------------
Statement of Operations MOR 1
Balance Sheet MOR 2
Cashflow Statement MOR 3
Schedule of Cash Receipts and Disbursements MOR 4
Schedule of Cash Receipts and Disbursements - Detailed Report MOR 4-A
Schedule of Accounts Payable MOR 5
Status of Post-Petition Taxes
Sales Tax MOR 6
Payroll Taxes MOR 7
Property Taxes MOR 8
Accounts Receivable MOR 9
Debtor Questionnaire And Insurance Certification MOR 10
Notes To Financials MOR 11
Debtor: PSC Inc. 02-15876 (SMB)
PSC Scanning, Inc. 02-15877 (SMB)
Address: 111 SW Fifth Avenue, Suite 4100
Portland, OR 97204
Debtors' Attorneys: Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
CERTIFICATION:
The undersigned, having reviewed the attached report and being familiar
with the Debtors' financial affairs, verifies under the penalty of
perjury, that the information contained therein is complete, accurate and
truthful to the best of my knowledge.
----------------------------------------------------------- ------------------------------------------------
Signature of Authorized Individual Date
Paul M. Brown Vice President and Chief Financial Officer
----------------------------------------------------------- ------------------------------------------------
Printed Name of Authorized Individual Title of Authorized Individual
-----------------
Indicated if this is an amended statement by checking here: AMENDED STATEMENT:
-----------------
PSC INC.
CASE #: 02-15876 (SMB)
REPORTING PERIOD: JANUARY, 2003
$ AMOUNTS IN THOUSANDS
----------------------- ---------------------
UNAUDITED UNAUDITED
----------------------- ---------------------
December 31, January 24,
CONSOLIDATED STATEMENT OF OPERATIONS (MOR-1) (a) 2002 2003 (b)
----------------------- ---------------------
Sales to third parties $ 15,529 $ 11,523
Cost of Sales 11,261 7,172
----------------------- ---------------------
GROSS PROFIT 4,268 4,351
----------------------- ---------------------
Operating Expenses
Sales & Marketing 3,526 2,382
Engineering, R&D 1,089 1,058
General & Administrative 1,304 804
Debt Restructuring Fees 450 503
Foreign Curr. (Gain) Loss (212) (114)
Write-off of Debt Discount 732
Write-off of Goodwill - 633
----------------------- ---------------------
Total Operating Expenses 5,955 5,998
OPERATING PROFIT (LOSS) (1,687) (1,647)
----------------------- ---------------------
Other (Income) Expense
Other (Income) Expense (1,788) (26)
Interest Expense 77 30
----------------------- ---------------------
Other (Income) Expense (1,711) 4
----------------------- ---------------------
INCOME (LOSS) BEFORE TAXES $ 24 $ (1,651)
Tax Provision (Benefit) 338 (2)
----------------------- ---------------------
NET INCOME (LOSS) $ (314) $ (1,649)
======================= =====================
Notes:
(a) This Statement of Operations is for the PSC Inc., on a consolidated
basis. All foreign subsidiaries included in this statement are
excluded from the Chapter 11 filing of the debtors.
(b) Reporting period for December, 2002 is actually from November 22, 2002
(the petition filing date) to December 31, 2002. The reporting period
for January is January 1, 2003 to January 24, 2003
Page 3 of 15 Schedule: MOR-1
PSC INC.
Case #: 02-15876 (SMB)
Reporting Period: January, 2003
$ Amounts in thousands
--------------------- --------------------- ---------------------
UNAUDITED UNAUDITED UNAUDITED
--------------------- --------------------- ---------------------
Consolidated Balance Sheet (MOR-2) 11/22/02
(Petition Date) 12/31/02 (a) 1/24/03
--------------------- --------------------- ---------------------
ASSETS
- ------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents 2,328 3,308 3,733
Accounts Receivable - net 29,643 29,012 30,182
Inventories - net 22,891 20,121 19,289
Prepaid Expenses and Other 2,832 3,960 4,738
--------------------- --------------------- ---------------------
Total current assets 57,694 56,401 57,942
--------------------- --------------------- ---------------------
PROPERTY, PLANT AND EQUIPMENT
Land - - -
Buildings & Improvements 29 54 559
Office Furniture 13,966 14,117 14,153
Production Equipment 17,629 17,719 17,852
Leasehold Improvements 921 926 929
--------------------- --------------------- ---------------------
Total property, plant and equipment 32,545 32,816 33,493
Less: Accumulated Depreciation (23,961) (24,337) (25,264)
--------------------- --------------------- ---------------------
NET PROPERTY, PLANT AND EQUIPMENT 8,584 8,479 8,229
--------------------- --------------------- ---------------------
OTHER ASSETS
Intangibles from Acquisitions 102 50 -
Other Intangibles 14,751 15,119 14,401
Other Assets (358) 86 227
Less: Accumulated amortization (5,593) (5,742) (5,909)
--------------------- --------------------- ---------------------
Total other assets 8,902 9,513 8,719
--------------------- --------------------- ---------------------
TOTAL ASSETS 75,180 74,393 74,890
===================== ===================== =====================
Page 4 of 15 Schedule: MOR-2
PSC INC.
Case #: 02-15876 (SMB)
Reporting Period: January, 2003
$ Amounts in thousands
--------------------- --------------------- ---------------------
UNAUDITED UNAUDITED UNAUDITED
--------------------- --------------------- ---------------------
Consolidated Balance Sheet (MOR-2) 11/22/02
(Petition Date) 12/31/02 (a) 1/24/03
--------------------- --------------------- ---------------------
LIABILITIES & SHAREHOLDERS' EQUITY
- -------------------------------------------
LIABILITIES (POST-PETITION)
- -------------------------------------------
CURRENT LIABILITIES
DIP Financing Arrangement - 4,000 4,000
Accounts Payable - 4,945 6,004
Note Payable - - -
Accrued Expenses - 151 2,144
Accrued Interest - 11 39
Deferred Revenue - 131 144
Accrued Warranty - 138 297
Accrued Taxes/VAT - 19 (172)
Accrued Royalties - 535 855
Accrued Payroll and Commissions - 947 2,963
Accr. Acq. Related Restructuring Costs - 550 -
Intercompany payable (receivable) - 170 (248)
--------------------- --------------------- ---------------------
TOTAL CURRENT LIABILITIES - 11,597 16,026
--------------------- --------------------- ---------------------
LONG-TERM LIABILITIES
Deferred Revenue - - 29
LT Warranty Accrual - 110 172
Other LT Liabilities (includes warrants) - - 160
--------------------- --------------------- ---------------------
TOTAL LONG-TERM LIABILITIES - 110 361
--------------------- --------------------- ---------------------
TOTAL LIABILITIES (POST-PETITION) - 11,707 16,387
--------------------- --------------------- ---------------------
LIABILITIES (PRE-PETITION)
- -------------------------------------------
CURRENT LIABILITIES
Secured debt 93,462 93,462 93,462
Priority debt 29,268 29,268 30,000
Note Payable 1,651 1,651 1,651
Accounts Payable 17,226 8,463 6,675
Accrued Expenses 8,543 6,956 5,977
Accrued Interest 14,128 13,927 13,928
Deferred Revenue 884 560 615
Accrued Warranty 1,519 1,387 1,239
Accrued Taxes/VAT (457) - 12
Accrued Royalties 1,637 716 716
Accrued Payroll and Commissions 2,983 1,639 539
Accr. Acq. Related Restructuring Costs - - -
Intercompany payable (receivable) - - -
--------------------- --------------------- ---------------------
TOTAL CURRENT LIABILITIES 170,844 158,029 154,814
--------------------- --------------------- ---------------------
LONG-TERM LIABILITIES
Deferred Revenue 550 555 523
LT Warranty Accrual 1,557 1,497 1,441
Other LT Liabilities (includes warrants) 489 495 333
--------------------- --------------------- ---------------------
TOTAL LONG-TERM LIABILITIES 2,596 2,547 2,297
--------------------- --------------------- ---------------------
TOTAL LIABILITIES (PRE-PETITION) 173,440 160,576 157,111
--------------------- --------------------- ---------------------
TOTAL LIABILITIES 173,440 172,283 173,498
--------------------- --------------------- ---------------------
SHAREHOLDERS' EQUITY
Preferred Stock 1 1 1
Common Shares 129 129 129
Additional Paid-in Capital 73,078 73,078 73,078
Cumulative Translation Adjustment (3,277) (2,593) (1,662)
Retained earnings - prepetition (166,834) (166,834) (166,834)
Retained earnings - postpetition - (314) (1,963)
Less: Treasury Shares (1,357) (1,357) (1,357)
--------------------- --------------------- ---------------------
TOTAL SHAREHOLDERS' EQUITY (98,260) (97,890) (98,608)
--------------------- --------------------- ---------------------
TOTAL LIABILITIES AND SHAREHOLDERS, EQUITY 75,180 74,393 74,890
===================== ===================== =====================
(a) The Consolidated Balance Sheet is for the PSC Inc., on a consolidated
basis. All foreign subsidiaries included in this statement are excluded
from the Chapter 11 filing of the debtors.
Page 5 of 15 Schedule: MOR-2
PSC INC.
Case #: 02-15876 (SMB)
Reporting Period: January, 2003
-------------------------- --------------------------
$ Amounts in thousands UNAUDITED UNAUDITED
-------------------------- --------------------------
CONSOLIDATED STATEMENT OF CASHFLOWS (MOR-3) (b) 12/31/02 (a) 01/24/02
-------------------------- --------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss) (314) (1,649)
Adjustments to reconcile net income to net cash:
Depreciation 348 472
Amortization 95
Change in fair value of warrants - (10)
(INCREASE) DECREASE IN ASSETS:
Accounts receivable 631 (1,170)
Inventories 2,770 832
Prepaid expenses and other (1,124) (778)
INCREASE (DECREASE) IN LIABILITIES:
Accounts payable (6,450) (42)
Accrued expenses 1,771 (2,111)
Accrued payroll & commissions (351) 916
Other Long-term liabilities (132) 79
-------------------------- --------------------------
Net Cash Provided by/(Used in) Operating Activities (2,756) (3,461)
-------------------------- --------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net (243) (61)
Proceeds from sale of assets -
Write-off of goodwill - 633
Write-off of discount related to sub-debt 2,383
Addition to intangible assets & other long-term assets, net (706) -
-------------------------- --------------------------
Net Cash Provided by/(Used in) Investing Activities (949) 2,955
-------------------------- --------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to Debtor-In-Possession Financing Arrangement 4,000 -
Additions (Payments) of long-term debt 1
-------------------------- --------------------------
Net Cash Provided by/(Used in) Financing Activities 4,001 -
-------------------------- --------------------------
Effect of Exchange Rate Changes on Cash & Cash Equivalents 684 931
-------------------------- --------------------------
Net Increase (Decrease) in Cash & Cash Equivalents 980 425
CASH AND CASH EQUIVALENTS, beginning of period 2,328 3,308
-------------------------- --------------------------
CASH AND CASH EQUIVALENTS, end of period 3,308 3,733
========================== ==========================
Notes:
(a) This Statement of Cashflows is for the PSC Inc., on a consolidated
basis. All foreign subsidiaries included in this statement are excluded
from the Chapter 11 filing of the debtors.
(b) Reporting period for December, 2002 is actually from November 22, 2002
(the petition filing date) to December 31, 2002. The reporting period
for January is January 1, 2003 to January 24, 2003
Page 6 of 15 Schedule: MOR-3
PSC INC.
CASE #: 02-15876 (SMB)
REPORTING PERIOD: JANUARY, 2003
$ AMOUNTS IN THOUSANDS
--------------------- ----------------------
UNAUDITED UNAUDITED
--------------------- ----------------------
SCHEDULE OF CASH RECEIPTS & DISBURSEMENTS (MOR-4) (a), (b) 12/31/02 01/24/02
--------------------- ----------------------
Cash Receipts
- ------------------------------------------------------------
Accounts Receivable Collections 10,394 7,780
Cash Repatriations From International Subsidiaries 3,681 3,176
Additions to Post-Petition Debt 4,000 -
Other Cash Receipts -
--------------------- ----------------------
Total Cash Receipts 18,075 10,956
--------------------- ----------------------
OPERATING DISBURSEMENTS (c)
- ------------------------------------------------------------
Payroll and Payroll Taxes 2,638 2,454
Accounts Payable And Accrued Liabilities 11,774 6,662
Consulting and Professionals In The Normal Course 201 125
Royalty Payments 921 30
Director & Officer Liability Insurance Payments 307 600
Rents 221 -
Capital Expenditures 468 185
DIP Interest 11
--------------------- ----------------------
TOTAL OPERATING DISBURSEMENTS 16,530 10,067
--------------------- ----------------------
BANKRUPTCY-RELATED FEES AND EXPENSES
- ------------------------------------------------------------
Payments To Professionals - -
US Trustee Fees - -
Court Costs - -
Other Costs - -
--------------------- ----------------------
TOTAL BANKRUPTCY-RELATED FEES AND EXPENSES -
--------------------- ----------------------
TOTAL CASH DISBURSEMENTS 16,530 10,067
--------------------- ----------------------
Net Change In Cash 1,545 889
Beginning Cash Balance, US Bank Accounts (282) 1,263
--------------------- ----------------------
ENDING CASH BALANCE, US BANK ACCOUNTS 1,263 2,152
===================== ======================
RECONCILIATION TO BALANCE SHEET:
Cash - US Bank Accounts 1,263 2,152
Cash - International Bank Accounts (Not In Chapter 11) 2,045 1,581
--------------------- ----------------------
TOTAL CASH PER BALANCE SHEET 3,308 3,733
===================== ======================
(a) This schedule of Cash Receipts And Disbursements is related to US-only
disbursements that are treated in accordance with the Chapter 11 provisions.
International revenues and expenses are excluded. Note that Cash Repatriations
From International Subsidiaries is the net cash swept from foreign cash
collections, after local disbursements.
(b) Reporting period for December, 2002 is actually from November 22, 2002 (the
petition filing date) to December 31, 2002. Reporting period for January, 2003
is actually January 1 to January 24, 2003.
(c) Includes payment of Court-approved Pre-Petition items.
Page 7 of 15 Schedule: MOR-4
PSC INC.
CASE #: 02-15876 (SMB)
REPORTING PERIOD: JANUARY, 2003
--------- -------- ----------- --------- ------------ ---------
$ AMOUNTS IN THOUSANDS PSC Inc. PSC Scanning TOTAL PSC Inc. PSC Scanning TOTAL
----------- ---------
Only Only UNAUDITED Only Only ANAUDITED
--------- -------- ----------- --------- ----------- ---------
SCHEDULE OF CASH RECEIPTS & DISBURSEMENTS (a), (b) 12/31/02 12/31/02 12/31/02 01/24/02 01/24/02 01/24/02
(MOR-4A) --------- -------- ----------- ---------- ----------- ---------
Cash Receipts
- -----------------------------------------
Accounts Receivable Collections - 10,394 10,394 - 7,780 7,780
Cash Repatriations From International Subsidiaries - 3,681 3,681 - 3,176 3,176
Additions to Post-Petition Debt - 4,000 4,000 - - -
Other Cash Receipts - - - - - -
--------- -------- ----------- ---------- ---------- ---------
Total Cash Receipts 18,075 18,075 - 10,956 10,956
--------- -------- ----------- ---------- ---------- ---------
OPERATING DISBURSEMENTS (c)
- -----------------------------------------
Payroll and Payroll Taxes 91 2,547 2,638 87 2,367 2,454
Accounts Payable And Accrued Liabilities 72 11,702 11,774 46 6,599 6,662
Consulting and Professionals In The Normal Course 214 (13) 201 25 100 125
Royalty Payments - 921 921 - 30 30
Director & Officer Liability Insurance Payments - 307 307 600 - 600
Rents 17 204 221 17 - -
Capital Expenditures - 468 468 - 185 185
DIP Interest 11 11
--------- -------- ----------- ---------- ---------- ---------
TOTAL OPERATING DISBURSEMENTS 394 16,136 16,530 775 9,281 10,067
--------- -------- ----------- ---------- ---------- ---------
BANKRUPTCY-RELATED FEES AND EXPENSES
- -------------------------------------------------
Payments To Professionals - -
US Trustee Fees - -
Court Costs - -
Other Costs - -
----------- ---------
TOTAL BANKRUPTCY-RELATED FEES AND EXPENSES - -
----------- ---------
TOTAL CASH DISBURSEMENTS 16,530 10,067
----------- ---------
Net Change In Cash 1,545 889
Beginning Cash Balance, US Bank Accounts (282) 1,263
----------- ---------
ENDING CASH BALANCE, US BANK ACCOUNTS 1,263 2,152
=========== =========
RECONCILIATION TO BALANCE SHEET:
Cash - US Bank Accounts 1,263 2,152
Cash - International Bank Accounts (Not In Chapter 11) 2,045 1,581
----------- ---------
TOTAL CASH PER BALANCE SHEET 3,308 3,733
=========== =========
(a) This schedule of Cash Receipts And Disbursements is related to US-only
disbursements that are treated in accordance with the Chapter 11 provisions.
International revenues and expenses are excluded. Note that Cash Repatriations
From International Subsidiaries is the net cash swept from foreign cash
collections, after local disbursements.
(b) Reporting period for December, 2002 is actually from November 22, 2002 (the
petition filing date) to December 31, 2002. Reporting period for January, 2003
is actually January 1 to January 24, 2003.
(c) Includes payment of Court-approved Pre-Petition items.
Page 8 of 15 Schedule: MOR-4A
PSC, INC.
PSC Inc.
Case #: 02-15876 (SMB)
Reporting Period: January, 2003
$ Amounts in thousands
-------------------- --------------------
UNAUDITED UNAUDITED
-------------------- --------------------
SCHEDULE OF ACCOUNTS PAYABLE (MOR-5) 12/31/02 1/24/2003
-------------------- --------------------
Trade Accounts Payable
US Pre-Petition Accounts Payable 7,870 6,675
US Post-Petition Accounts Payable 4,945 5,551
Foreign Subsidiary Accounts Payable 593 453
-------------------- --------------------
TOTAL CONSOLIDATED ACCOUNTS PAYABLE 13,408 12,679
==================== ====================
-------------------- --------------------
Payable Payable
INTERCOMPANY TRADE ACCOUNTS (a) (Receivable) (Receivable)
-------------------- --------------------
PSC Inc. (debtor) 9,715 14,012
PSC Scanning, Inc (debtor) (19,765) (21,708)
PSC UK (233) (337)
PSC France 686 623
PSC Italy 2,551 2,713
PSC Germany 3,559 3,594
PSC Australia 10 (138)
PSC Japan 268 287
Consolidation Eliminations 3,209 954
-------------------- --------------------
TOTAL INTERCOMPANY TRADE ACCOUNTS - -
==================== ====================
Note:
(a) All cash flows within subsidiaries flow from the foreign subsidiaries to the
domestic debtors. There are no cash disbursements from the debtors to non-debtor
subsidiaries.
Page 9 of 15 Schedule: MOR-5
PSC INC.
CASE #: 02-15876 (SMB)
-----------
REPORTING PERIOD: JANUARY, 2003 UNAUDITED
-----------
SCHEDULE OF SALES AND USE TAXES (MOR-6)
------------------------------------------------------------------------------------------
SALES & USE TAX LIABILITY
------------------------------------------------------------------------------------------
JURISDICTION 12/31/02 TOTAL PAYMENTS PAYMENTS 01/24/03
BALANCE COLLECTED DISCOUNT COLLECTIONS MADE DATE BALANCE
------------------------------------------------------------------------------------------
Canada 1,518 (3,147) 3,147 (2,726) 1/17/03 1,939
Arkansas 208 (322) 322 (208) 1/17/03 322
Arizona (7,386) (253) 253 (7,132)
California (1,692) (1,252) 1,252 (14) 1/17/03 (454)
Colorado 212 (170) 170 (212) 1/17/03 170
Florida 1,382 (415) 415 (1,382) 1/17/03 415
Georgia 1,085 (2,069) 2,069 (1,085) 1/17/03 2,069
Hawaii/adj to be made (22) - (22)
Illinois 1,678 (1,215) 1,215 (1,678) 1/17/03 1,215
Indiana (9,162) (278) 278 (8,884)
Louisiana/adj to be made (6) - (6)
Massachusetts (665) 27 (27) (692)
Maryland 126 (27) 27 (126) 1/17/03 27
Michigan 820 (310) 310 (820) 1/10/03 310
Minnesota 3,866 (11) 11 3,877
Minnesota/adj to be made 1,305 - 1,305
North Carolina 11,372 (893) 893 (11,372) 1/13/03 893
New Jersey (6,693) 14 (14) (6,707)
New York 1,266 681 (681) (1,266) 1/17/03 (681)
Ohio (1,322) (2,530) 2,530 1,208
Oklahoma (46) - (46)
Pennsylvania 1,143 (2,283) 2,283 (1,143) 1/17/03 2,283
Tennessee (877) (1,392) 1,392 515
Texas 3,120 (1,329) 1,329 (3,120) 1/17/03 1,329
Virginia 1,275 (135) 135 (1,275) 1/17/03 135
Washington (616) (148) 148 (38) 1/17/03 (506)
Posting errors to be adj 76 - 6
------------------------------------------------------------------------------------------
Total 1,967 (17,458) - 17,458 (26,465) (7,108)
==========================================================================================
(a) Reporting period for December, 2002 is actually from November 22, 2002 (the
petition filing date) to December 31, 2002. The reporting period for January,
2003 is actually from January 1, 2003 to January 24, 2003.
Page 10 of 15 Schedule: MOR-6
PSC INC.
CASE #: 02-15876 (SMB)
----------
REPORTING PERIOD: JANUARY, 2003 UNAUDITED
----------
SCHEDULE OF PAYROLL & PAYROLL TAXES (MOR-7)
------------------------------ ------------------------- ------------------------------- -----------------
EMPLOYEE EMPLOYER DATE
GROSS SALARY/WAGES PAID PAYROLL TAXES WITHHELD PAYROLL TAXES CONTRIBUTIONS TAXES REMITTED
JURISDICTION 1/3/03 1/17/03 TOTAL 1/3/03 1/17/03 TOTAL 1/3/03 1/17/03 TOTAL 1/3/03 1/17/03
------------------------------ ------------------------- ------------------------------- -----------------
1,097,614 1,111,575 2,209,189
Federal 23,168 128,616 251,784 - 1/3/03 1/17/03
EIC - -
Social Security 66,091 66,946 133,036 66,091 66,946 133,036 1/3/03 1/17/03
Medicare 15,457 15,657 31,113 15,457 15,657 31,113 1/3/03 1/17/03
FUTA - 8,353 7,243 15,596 1/3/03 1/17/03
California 1,516 1,328 2,844 1,456 978 2,434 1/3/03 1/17/03
Colorado 127 111 238 101 91 192 1/3/03 1/17/03
Florida - 149 106 255 1/3/03 1/17/03
Georgia 1,773 1,616 3,388 - 1/3/03 1/17/03
Indiana 82 70 152 74 64 138 1/3/03 1/17/03
Massachusetts 112 95 208 43 38 80 1/3/03 1/17/03
Maryland - -
North Carolina 147 121 268 52 45 97 1/3/03 1/17/03
New Jersey 188 151 339 188 165 353 1/3/03 1/17/03
Nevada - 103 93 196 1/3/03 1/17/03
New York 699 610 1,309 495 421 916 1/3/03 1/17/03
Ohio 2,366 2,246 4,612 820 445 1,265 1/3/03 1/17/03
Oregon 51,474 50,930 102,404 23,810 23,816 47,626 1/3/03 1/17/03
Pennsylvania 472 1,155 1,627 272 124 395 1/3/03 1/17/03
Texas - 105 125 230 1/3/03 1/17/03
Utah 147 124 271 3 3 5 1/3/03 1/17/03
Washington - 98 73 171 1/3/03 1/17/03
Canada 5,575 5,335 10,910 1,901 1,750 3,650 427 408 834 12/30/02 1/15/03
--------- --------- --------- ------- ------- ------- ------- ------- -------
Total 1,103,189 1,116,910 2,220,100 265,719 271,525 537,244 118,095 116,839 234,934
========= ========= ========= ======= ======= ======= ======= ======= =======
(a) Reporting period for December, 2002 is actually from November 22, 2002 (the
petition filing date) to December 31, 2002. The reporting period for
January, 2003 is actually from January 1, 2003 to January 24, 2003.
Page 11 of 15 Schedule: MOR-7
PSC INC.
----------
CASE #: 02-15876 (SMB) UNAUDITED
----------
Reporting Period: January, 2003
SCHEDULE OF PROPERTY TAXES (MOR-8)
-------------------------------------------------------
PROPERTY TAXES
- -------------------------------------------------------------------------- -------------------------------------------------------
1/1 - 1/24 ACCRUED PAID/ DATE
Jurisdication Location Asset Description EXPENSED LIABILITY TOTAL (REFUND) PAID
- -------------------------------------------------------------------------- -------------------------------------------------------
Boulder County Boulder, CO Tooling (scrapped in 2001) 3,925 3,925 3,925 1/16/2003
Miami Dade County Miami, CA office furniture/equip 222 222 222 1/16/2003
Citicorp Vendor Finance Philadelphia, PA 2 photo copiers 132 132 132 1/16/2003
Siemens Financial Chicago, IL Manufacturing Equip. 25,881 25,881 Not Due
Clark County Vancouver, WA Tooling 18,490 18,490 34,233 1/31/2003
Clark County Vancouver, WA Refund of prior payments (8,611)
Nielsen Family Partnership Eugene, OR Building Rent 5,911 5,911 5,911 1/16/2003
Sonoma County Sonoma, CA 239 239 239 1/16/2003
Lane County Eugene, OR various asset classes 27,102 27,102
------------------------------------------
TOTAL 54,800 27,102 81,902 36,051
==========================================
Page 12 of 15 Schedule: MOR-8
PSC INC.
CASE #: 02-15876 (SMB)
----------------------------
REPORTING PERIOD: JANUARY, 2003 UNAUDITED
----------------------------
SCHEDULE OF INCOMETAXES (MOR-9)
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12/31/2002 TAX TAX TAX TAX 1/24/2003
TAX LIABILITY REFUNDS DUE WITHHELD PAYMENTS TAX LIABILITY
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Federal Income Tax - - - - - -
-
State Income Tax - - - - - -
Pennsylvania Refund - - - - - -
NY State Refund - - - - - -
Foreign Income Tax - - - - - -
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TOTAL - - - - - -
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Page 13 of 15 Schedule: MOR-9
PSC INC.
CASE #: 02-15876 (SMB)
REPORTING PERIOD: JANUARY, 2003
$ AMOUNTS IN THOUSANDS
SCHEDULE OF ACCOUNTS RECEIVABLE (MOR-9)
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UNAUDITED
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January 24, 2003
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US 15,668
Europe 13,253
Asia 1,908
Total Accounts Receivable 30,829
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Allowance For Doubtful Accounts (647)
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Net Accounts Receivable 30,182
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Page 14 of 15 Schedule: MOR-9
PSC INC.
Case #: 02-15876 (SMB)
Reporting Period: January, 2003
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DEBTOR QUESTIONNAIRE (MOR-10)
January 24, 2003
Must be completed each month Yes No
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1. Have any assets been sold or transferred outside the X
normal course of business this period? If yes, provide
an explanation below.
2. Have any funds been disbursed for any account other X
than a debtor in possession account this reporting
period? If yes, provide an explanation below.
3. Have all postpetition tax returns been timely filed? X
If no, provide an explanation below.
4. Are workers compensation and general liability and other X
necessary insurance coverages in effect? If no,
provide an explanation below.
5) All insurance policies are fully paid for the current X
period.
6) All amounts relating to workers compensation and X
disability insurance have been paid for the current period.
Page 15 of 15 Schedule: MOR-10
PSC INC.
CASE #: 02-15876 (SMB)
REPORTING PERIOD: JANUARY, 2002
NOTES TO FINANCIALS
1. THE COMPANY
The accompanying financial statements are comprised of the accounts of PSC Inc.
(a New York corporation) (the Company) and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation. Certain schedules have been provided to provide direct cash
receipts and disbursement information that relates solely to the debtors.
On November 22, 2002, PSC Inc. and PSC Scanning, Inc. (both US corporations)
(the debtors) filed for protection from creditors under Chapter 11, of the US
Bankruptcy Code. The Company filed a Plan of Reorganization outlining its
anticipated treatment of various creditor classes on the same date. At the time
of the filing, the debtors had negotiated a Debtor-In-Possession financing
arrangement (DIP financing) to provide up to $20 million in working capital for
the period of reorganization, subject to certain performance covenants. This DIP
financing was subsequently approved by the Bankruptcy Court. As of January 24,
2002, the Company was in compliance with all performance covenants.
2. SUMMARY OF SIGNIFIGANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, including those
related to revenue recognition, bad debts, inventories, warranty obligations,
and income taxes. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting policies
and the related judgments and estimates affect the preparation of our
consolidated financial statements.
The Company reports its results from operations on a fiscal month reporting
basis. As such, the first and second month of each quarter is a 4-week month and
the third month of each quarter is a 5-week month. At yearend, the last month of
the year is extended or reduced so that the year end falls on the last day of
the calendar year. Management believes that this reporting policy facilitates
effective management of the business. However, for monthly reporting purposes,
comparability of monthly results can be affected by the differences in the
length of the reporting period.
REVENUE RECOGNITION. Our policy is to recognize revenue upon delivery of our
products to our customers and the fulfillment of all contractual terms and
Page 1 of 3 Schedule: MOR-11
conditions, pursuant to the guidance provided by Staff Accounting Bulletin No.
101, Revenue Recognition in Financial Statements (SAB 101), issued by the
Securities and Exchange Commission.
Revenue related to the sales of the Company's scanning products is generally
recognized when products are shipped or services are rendered, the risk of loss
has passed to the customer, the sales price is fixed or determinable, and
collectibility is reasonably assured. Some distributors and dealer agreements
allow for return of product and/or price protection under certain conditions
within limited time periods. The Company maintains a reserve for sales returns
and price adjustments based on historical experience and other qualitative
factors. Estimated sales returns and price protection amounts are reserved for
against revenue in the month in which it is recognized. These estimates have not
differed materially from actual results. Service and maintenance sales are
recognized over the contract term.
ALLOWANCE FOR DOUBTFUL ACCOUNTS. Our policy is to maintain allowances for
estimated losses resulting from the inability of our customers to make required
payments. Credit limits are established through a process of reviewing the
financial history and stability of each customer. Where appropriate, we obtain
credit rating reports and financial statements of the customer when determining
or modifying their credit limits. We regularly evaluate the collectibility of
our trade receivable balances based on a combination of factors. When a
customer's account balance becomes past due, we initiate dialogue with the
customer to determine the cause. If it is determined that the customer will be
unable to meet its financial obligation to us, such as in the case of a
bankruptcy filing, deterioration in the customer's operating results or
financial position or other material events impacting their business, we record
a specific allowance to reduce the related receivable to the amount we expect to
recover given all information presently available.
We also record an allowance for all other customers based on certain other
factors including the length of time the receivables are past due and historical
collection experience with individual customers. If the financial conditions of
those customers were to deteriorate, however, resulting in their inability to
make payments, we may need to record additional allowances, which would result
in additional selling, general and administrative expenses being recorded for
the period in which such determination was made.
INVENTORY RESERVES. As a designer and manufacturer of bar code verification
products, we are exposed to a number of economic and industry factors that could
result in portions of our inventory becoming either obsolete or in excess of
anticipated usage. These factors include, but are not limited to, technological
changes in our markets, our ability to meet changing customer requirements,
competitive pressures in products and prices, and the availability of key
components from our suppliers. Our policy is to establish inventory reserves
when conditions exist that suggest that our inventory may be in excess of
anticipated demand, or is obsolete based upon our assumptions about future
demand for our products and market conditions. We regularly evaluate the ability
to realize the value of our inventory based on a combination of factors
including the following: historical usage rates, forecasted sales or usage,
product end of life dates, estimated current and future market values and new
product introductions. Purchasing requirements and alternative usage avenues are
explored within these processes to mitigate inventory exposure. When recorded,
our reserves are intended to reduce the carrying value of our inventory to its
net realizable value.
PRODUCT WARRANTIES. Our products are sold with warranty provisions that require
us to remedy deficiencies in quality or performance of our products over a
specified period of time at no cost to our customers. Our policy is to establish
Page 2 of 3 Schedule: MOR-11
warranty reserves at levels that represent our estimate of the costs that will
be incurred to fulfill those warranty requirements at the time that revenue is
recognized. We believe that our recorded liability at December 31, 2002, is
adequate to cover our future cost of materials, labor and overhead for the
servicing of our products sold through that date. If actual product failures, or
material or service delivery costs differ from our estimates, our warranty
liability would need to be revised accordingly.
INCOME TAXES. The Company has recorded a valuation allowance to reduce our
deferred tax assets to the amount that is more likely than not to be realized.
The Company has assessed the valuation allowance based upon our estimate of
future taxable income covering a relatively short time horizon given the
volatility in the markets we serve and our historic operating results. External
market data is considered in this evaluation. The availability of tax planning
strategies to utilize our recorded deferred tax assets is also considered.
DEBT. Prepetition senior secured and subordinated unsecured debt was acquired
from the Company's prior lenders by affiliates of Littlejohn & Co., LLC
(Littlejohn), a private investment firm based in Greenwich, Connecticut.
Littlejohn makes control equity investments in mid-sized companies that can
benefit from operational or financial restructuring. Immediately following the
debt purchase, and agreement with the terms of an arrangement between Littlejohn
and the Company, the debtors filed a petition from protection from creditors
under Chapter 11 of the US Bankruptcy Code. Simultaneously with the filing of
the bankruptcy petition, the debtors also filed a Plan of Reorganization (the
Plan) which, among other provisions, contemplates that all pre-petition debt
will be converted to equity upon confirmation of the Plan.
As an integral part of the arrangement between Littlejohn and the Company, a DIP
financing arrangement was agreed upon, to provide working capital financing
during the period of reorganization, for amounts up to $20 million. The DIP
financing arrangement provides that the Company maintain certain financial and
non-financial performance covenants, including minimum revenue, cash receipts
and cash disbursements results and well as cash flow and EBITDA performance
measurements. In addition, there are certain non-financial performance measures
related to progressing efficiently through the reorganization process. The DIP
financing arrangement expires on March 31, 2003.
GOODWILL. In November 2002, in conjunction with the filing of the Chapter 11
reorganization, all goodwill was determined to be impaired. The write-off
resulted in a charge of $63 million recorded in November 2002.
Page 3 of 3 Schedule: MOR-11