-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L8knzM+DSZoMfBDZwIyGyIy8aL2q1ei40jaXbDDVd5N3vXERaJo3jZk8TRO8QeWZ jW5AT0ybBrlUmcRSyBKyrA== 0000950124-97-002911.txt : 19970515 0000950124-97-002911.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950124-97-002911 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970330 FILED AS OF DATE: 19970514 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: LABARGE INC CENTRAL INDEX KEY: 0000057139 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 730574586 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05761 FILM NUMBER: 97605050 BUSINESS ADDRESS: STREET 1: 1300 NATIONAL HIGHWAY CITY: THOMASVILLE STATE: NC ZIP: 27360 BUSINESS PHONE: 9104764777 MAIL ADDRESS: STREET 1: PO BOX 14499 CITY: ST LOUIS STATE: MO ZIP: 63178-4499 FORMER COMPANY: FORMER CONFORMED NAME: DORSETT ELECTRONICS INC DATE OF NAME CHANGE: 19690406 10-Q 1 10-Q DATED MARCH 30, 1997 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 30, 1997 Commission file number: 1-5761 - -------------------------------------------------------------------------------- LABARGE, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 73-0574586 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 14499, St. Louis, Missouri 63178 - -------------------------------------------------------------------------------- (Address) (Zip Code) (314) 997-0800 - -------------------------------------------------------------------------------- (Registrant's telephone number, including Area Code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 . ----- ----- Indicate the number of shares outstanding of each of the Issuer's classes of common stock as of March 30, 1997. 15,638,280 common stock. 2 LABARGE, INC. STATEMENTS OF OPERATIONS (Unaudited) (dollars in thousands except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 30, March 31, MARCH 30, March 31, 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ NET SALES $ 25,230 $ 21,423 $ 71,256 $ 49,695 - ------------------------------------------------------------------------------------------------------------------------------------ COSTS AND EXPENSES: Cost of sales 20,456 17,382 56,710 41,188 Selling and administrative expense 2,796 2,414 8,724 5,885 - ------------------------------------------------------------------------------------------------------------------------------------ 23,252 19,796 65,434 47,073 EARNINGS FROM OPERATIONS 1,978 1,627 5,822 2,622 - ------------------------------------------------------------------------------------------------------------------------------------ Interest expense 226 350 814 996 Equity in loss of joint venture (6) - (145) - Other income, net 28 26 60 211 - ------------------------------------------------------------------------------------------------------------------------------------ EARNINGS BEFORE INCOME TAXES 1,774 1,303 4,923 1,837 INCOME TAX EXPENSE 98 85 300 118 - ------------------------------------------------------------------------------------------------------------------------------------ NET EARNINGS $ 1,676 $ 1,218 $ 4,623 $ 1,719 ==================================================================================================================================== NET EARNINGS PER COMMON SHARE $ .11 $ .08 $ .30 $ .11 ==================================================================================================================================== AVERAGE COMMON SHARES OUTSTANDING 15,628 15,302 15,618 15,281 ====================================================================================================================================
See accompanying notes to consolidated financial statements. -2- 3 LABARGE, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (dollars in thousands except per share data)
MARCH 30, June 30, 1997 1996 ---------- --------- CURRENT ASSETS: Cash and cash equivalents $ 1,110 $ 935 Accounts and notes receivable, net 13,802 13,455 Inventories 17,604 17,577 Prepaid expenses 332 286 Deferred tax assets, net 1,013 1,013 ---------- --------- TOTAL CURRENT ASSETS 33,861 33,266 ---------- --------- PROPERTY, PLANT AND EQUIPMENT, NET 3,979 3,194 DEFERRED TAX ASSETS, NET 2,237 2,237 INVESTMENT IN JOINT VENTURE 12 157 OTHER ASSETS, NET 3,020 2,696 ---------- --------- $ 43,109 $ 41,550 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings $ 500 $ 400 Current maturities of long-term debt 1,006 633 Trade accounts payable 5,578 7,614 Accrued liabilities 5,995 4,729 ---------- --------- TOTAL CURRENT LIABILITIES 13,079 13,376 ---------- --------- Long-term debt 7,628 10,419 ---------- --------- STOCKHOLDERS' EQUITY: Common stock, $.01 par value. Authorized 20,000,000 shares; issued 15,638,280 shares at March 30, 1997 and 15,601,891 shares at June 30, 1996 156 156 Additional paid-in capital 13,571 13,527 Retained earnings 8,675 4,073 Less stock in treasury; -0- shares at March 30, 1997 and 187 shares at June 30, 1996 - (1) ---------- --------- TOTAL STOCKHOLDERS' EQUITY 22,402 17,755 ---------- --------- $ 43,109 $ 41,550 ========== =========
See accompanying notes to consolidated financial statements. -3- 4 LABARGE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (dollars in thousands)
NINE MONTHS ENDED MARCH 30, March 31, 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 4,623 $ 1,719 Adjustments to reconcile net cash provided (used) by operating activities: Undistributed loss in equity of joint venture 145 - Depreciation and amortization 751 697 Other - (15) Changes in assets and liabilities: Accounts and notes receivable, net (347) (4,749) Inventories (27) (2,972) Prepaid expenses (46) (108) Trade accounts payable (2,036) 3,566 Accrued liabilities 1,266 1,064 Current liabilities of discontinued operations, net - (275) - ------------------------------------------------------------------------------------------------------------------------------------ NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 4,329 (1,073) - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (1,401) (985) Additions to other assets (458) (317) - ------------------------------------------------------------------------------------------------------------------------------------ NET CASH USED BY INVESTING ACTIVITIES (1,859) (681) - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of long-term debt (2,418) (3,839) Exercise of stock warrants and options 22 18 Sale of common stock from treasury 1 - Net change in short-term borrowings 100 6,500 - ------------------------------------------------------------------------------------------------------------------------------------ NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (2,295) 2,679 - ------------------------------------------------------------------------------------------------------------------------------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 175 304 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 935 143 - ------------------------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,110 $ 447 ====================================================================================================================================
See accompanying notes to consolidated financial statements. -4- 5 LABARGE, INC. FORM 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. CONSOLIDATED FINANCIAL STATEMENTS - BASIS OF PREPARATION -------------------------------------------------------- The consolidated balance sheets at March 30, 1997 and June 30, 1996, the related consolidated statements of operations for the three and nine months ended March 30, 1997 and March 31, 1996 and the consolidated statements of cash flows for the nine months ended March 30, 1997 and March 31, 1996 have been prepared by LaBarge, Inc. (the "Company") without audit. In the opinion of management, adjustments of a normal and recurring nature, necessary to present fairly the financial position and the results of operations and cash flows for the aforementioned periods, have been made. Certain information and footnote disclosures normally included in consolidated financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996. 2. ACCOUNTS AND NOTES RECEIVABLE ----------------------------- Accounts and notes receivable consist of the following: (dollars in thousands)
MARCH 30, June 30, 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Billed shipments, net of progress payments $ 13,280 $ 12,860 Less allowance for doubtful accounts 160 187 - ------------------------------------------------------------------------------------------------------------------------------------ Trade receivables - net 13,120 12,673 Current portion of notes receivable 600 600 Other current receivables 82 182 - ------------------------------------------------------------------------------------------------------------------------------------ $ 13,802 $ 13,455 ====================================================================================================================================
Progress payments are payments from customers in accordance with contractual terms for contract costs incurred to date. Such payments are credited to the customer at the time of shipment. Notes receivable include a note from a former officer of the Company totaling $600,000. Other current receivables represent amounts due from employees for travel advances and other miscellaneous sources. -5- 6 3. INVENTORIES ----------- Inventories consist of the following: (dollars in thousands)
MARCH 30, June 30, 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Raw materials $ 13,250 $ 14,042 Work in process 4,354 4,779 - ------------------------------------------------------------------------------------------------------------------------------------ 17,604 18,821 Less progress payments - 1,244 - ------------------------------------------------------------------------------------------------------------------------------------ $ 17,604 $ 17,577 ====================================================================================================================================
In accordance with contractual agreements, the government has a security interest in inventories related to contracts for which progress payments have been received. 4. SHORT AND LONG-TERM OBLIGATIONS ------------------------------- Short-term borrowings, long-term debt and the current maturities of long-term debt consist of the following: (dollars in thousands)
MARCH 30, June 30, 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM BORROWINGS: Revolving credit agreement: Balance at period-end $ 500 $ 400 Interest rate at period-end 6.85% 8.25% Average amount of short-term borrowings outstanding during period $ 1,913 $ 5,823 Average interest rate for period 7.58% 10.07% Maximum short-term borrowings at any month-end $ 3,060 $ 9,800 ==================================================================================================================================== Total short-term borrowings $ 500 $ 400 ====================================================================================================================================
-6- 7 4. SHORT AND LONG-TERM OBLIGATIONS (continued) -------------------------------
MARCH 30, June 30, 1997 1996 LONG-TERM DEBT: Senior lender: Revolving credit agreement $ 4,500 $ 4,500 Term loan 4,000 3,000 12% Subordinated Notes - 3,386 Industrial revenue bond due semiannually through 2001, interest at 5% 110 134 Other 24 32 - ------------------------------------------------------------------------------------------------------------------------------------ 8,634 11,052 Less current maturities 1,006 633 - ------------------------------------------------------------------------------------------------------------------------------------ Total long-term debt, less current maturities $ 7,628 $ 10,419 ====================================================================================================================================
The average interest rate was computed by dividing the sum of daily interest costs by the sum of the daily borrowings for the respective periods. On February 28, 1997, the Company redeemed all $3.4 million of outstanding 12% Subordinated Notes, which were due in May 1998. On March 20, 1997, the Company entered into an amended credit agreement with NationsBank (formerly Boatmen's National Bank), its senior lender. The revised four-year unsecured lending agreement provides a $4.0 million term loan payable in quarterly installments of $250,000 beginning June 30, 1997 and a $17.0 million working capital revolver. The interest rate on both loans is variable based on a ratio of senior debt to earnings and is available as either a premium over LIBOR or a discount from prime rate at the Company's option. 5. EARNINGS PER COMMON SHARE ------------------------- In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128 (SFAS No. 128) "Earnings Per Share" (EPS). SFAS No. 128 establishes standards for computing and presenting earnings per share. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS No. 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997, and early application is not permitted. The Company believes the adoption of this accounting standard will not have a material impact on earnings per share. Earnings per common share is based on the weighted average number of shares outstanding during the period, i.e., quarter or year to date. Also outstanding are the following common stock options: 155,000 shares currently exercisable at $.66 to $1.44 and 161,775 shares with exercise -7- 8 prices ranging from $1.42 to $7.24 which are not exercisable at this time. The earliest exercise date of the non-exercisable options is April 11, 1997. Due to the insignificant percentage of options outstanding to the total number of common shares outstanding, the options are not considered dilutive common stock equivalents for the purposes of the earnings per share calculation. During the nine months ended March 30, 1997, options to purchase 40,000 shares were exercised at prices ranging from $1.125 to $1.3125 per share. 6. INCOME TAXES ------------ The tax benefits from the Company's net operating loss carryforwards, which will more likely than not be realized, have been recorded as an asset. As of March 30, 1997, the net value of this benefit was $3.2 million and is reported as $1.0 million in current assets and $2.2 million in other assets. The net operating loss carryforwards as of June 30, 1996, for Federal Income Tax purposes, were $16.6 million, which are available to offset future Federal taxable income through 2003. The Company also has investment tax credit carryforwards for Federal income tax purposes of approximately $200,000 which are available to reduce future Federal income taxes through 2001. In addition, the Company has alternative minimum tax credit carryforwards of approximately $300,000 which are available to reduce future regular Federal income taxes over an indefinite period. 7. CASH FLOWS ---------- Total cash payments for interest for the three and nine months ended March 30, 1997 were $133,000 and $609,000 compared to $345,000 and $980,000, respectively, for the three and nine months ended March 31, 1996. -8- 9 LABARGE, INC. FORM 10-Q MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Statements contained in this Report which are not historical facts are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. For a summary of important factors which could cause the Company's actual results to differ materially from those projected in, or inferred by, the forward looking statements, see the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996, which is on file with the Securities and Exchange Commission and available to stockholders from the Company. LaBarge, Inc. designs, engineers, manufactures, tests and sells sophisticated custom electronic products and systems and complex interconnect assemblies. Primary markets the Company has chosen to pursue for its products include telecommunications, geophysical, medical, aerospace and defense. The Company employs approximately 800 people. In May 1996, the Company, through its wholly-owned subsidiary LaBarge Wireless Inc., entered into a fifty-fifty joint venture with Clayco Construction Company of St. Louis, Missouri. The new company, LaBarge Clayco Wireless L.L.C., provides cell site engineering, project management, construction, equipment installation and testing services to the rapidly growing wireless telecommunications industry. LaBarge Clayco Wireless complements LaBarge's capability in the design, manufacture and sale of electronic equipment for this segment of the telecommunications market. LaBarge, Inc. accounts for its fifty percent investment in LaBarge Clayco Wireless L.L.C. under the equity method of accounting. In May 1996, the Company, through its wholly-owned subsidiary LaBarge/STC, Inc., purchased the assets of SOREP Technology Corporation in Houston, Texas for approximately $2.7 million and assumed $400,000 of liabilities. LaBarge/STC, Inc. is engaged in the engineering and manufacture of custom hybrid circuits and high-temperature electronic assemblies used in oil and gas exploration, drilling and production. The acquisition furthers the Company's efforts to expand its geophysical business. The results of this subsidiary are included in the consolidated results of the Company for the three and nine months ended March 30, 1997 only. The Company's backlog of firm, unshipped orders at March 30, 1997 was approximately $62.3 million compared to $58.5 million at March 31, 1996. The backlog at March 30, 1997 consisted of approximately $39.0 million for various defense products, and approximately $23.1 million for commercial products. Approximately $11.6 million of the -9- 10 total backlog is not scheduled to ship within the next 12 months pursuant to the shipment schedules contained in those contracts. For the nine months ended March 30, 1997, approximately 45% of the Company's sales were defense related while 55% were commercial. Commercial markets included telecommunications (19%), geophysical (22%), aerospace (7%) and other (7%). Several customers account for a significant percentage of sales for the nine months: One in the aerospace/defense market accounts for 24% of total sales; one in the geophysical market accounts for 15% of total sales; and one in the telecommunications market accounts for 14% of total sales. The Company has designed and developed the Laser Lancet(TM), a small medical laser, for Venisect, Inc. under a technology licensing agreement from Venisect. On April 16, 1997, Venisect and the Company announced it had received clearance from the U.S. Food and Drug Administration (FDA) to market the device for the purpose of perforating the skin to collect capillary blood for clinical testing. With FDA clearance the Company will begin to manufacture the Laser Lancet(TM) for distribution by Venisect. It is too early to project annual sales for the Laser Lancet(TM) or predict how it will contribute to LaBarge's revenues and earnings. -10- 11 LABARGE, INC. FORM 10-Q MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS NINE MONTHS ENDED MARCH 30, 1997 COMPARED TO NINE MONTHS ENDED MARCH 31, 1996 - -------------------------------------------- Net sales for the nine months ended March 30, 1997 were $71.3 million compared to $49.7 million for the nine months ended March 31, 1996, an increase of $21.6 million or 43%. This increase is primarily attributable to sales growth in the telecommunications and geophysical markets, including sales of LaBarge/STC, Inc. Gross profit for the nine months ended March 30, 1997 was $14.5 million, 20.4% of sales, compared to $8.5 million, 17.1% of sales, for the nine months ended March 31, 1996, an increase of $6 million or 70%. The increase in gross margin is attributable to higher sales volume in relation to fixed costs and a more profitable product mix. Selling and administrative expenses for the nine months ended March 30, 1997 were $8.7 million or 12.2% of sales, compared to $5.9 million or 11.8% of sales for the nine months ended March 31, 1996. The increase in expense is due to additional personnel hired to support growing customer application needs at the higher sales volume and due to the acquisition of SOREP Technology Corporation in May 1996. Earnings from operations were $5.8 million or 8.2% of sales, for the nine months ended March 30, 1997, compared to $2.6 million or 5.3% of sales, for the nine months ended March 31, 1996. Interest expense for the nine months ended March 30, 1997 was $814,000 compared to $996,000 for the nine months ended March 31, 1996. Lower debt levels, redemption of the 12% Subordinated Notes and reduced interest rates under the new loan agreement continue to result in lower interest costs. Equity in loss of joint venture of $145,000 represents the Company's share of the loss incurred by LaBarge Clayco Wireless L.L.C. for the nine months ended March 30, 1997. The Company has significant net operating loss carryforwards which offset most of its income tax liability. Income tax expense for the nine months ended March 30, 1997 and March 31, 1996, respectively, was $300,000 and $118,000. Net earnings for the nine months ended March 30, 1997 were $4.6 million compared to $1.7 million for the nine months ended March 31, 1996, an increase of $2.9 million or -11- 12 170%. Earnings per common share were $.30 for the nine months ended March 30, 1997 and $.11 for the nine months ended March 31, 1996. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 30, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996 - --------------------------------------------- Net sales for the three months ended March 30, 1997 were $25.2 million compared to $21.4 million for the three months ended March 31, 1996. This is an 18% increase and is largely attributable to higher shipments in the telecommunications and geophysical markets over the prior year's quarter. Over the last five quarters, a significant portion of the Company's telecommunications market sales have been to one customer. Sales to that customer declined in the third quarter and are now expected to decline further over the next few quarters due to: slower PCS infrastructure build out and a decision to redesign the product to better meet the needs of the market. It is expected that sales to other telecommunications customers and other markets should offset this decline. Gross profit for the three months ended March 30, 1997 was $4.8 million or 18.9% of sales, compared to $4.0 million or 18.9% of sales, for the three months ended March 31, 1996. The higher volume of sales in relation to fixed costs is the primary reason for the increased profit dollars. Selling and administrative expenses were $2.8 million or 11.1% of sales, for the three months ended March 30, 1997, compared to $2.4 million or 11.3% of sales, for the three months ended March 31, 1996. Selling and administrative expenses have increased due to additional personnel to support growth and the acquisition of SOREP Technology Corporation. Earnings from operations for the three months ended March 30, 1997 were $2.0 million or 7.8% of sales, compared to $1.6 million or 7.6% of sales, for the three months ended March 31, 1996. Interest expense for the three months ended March 30, 1997 was $226,000 compared to $350,000 for the three months ended March 31, 1996. The Company continues to have significant tax loss carryforwards which, in accordance with SFAS 109, results in $3.25 million of deferred tax assets, net of the related valuation allowance as of June 30, 1996. Income tax expense for the three months ended March 30, 1997 and March 31, 1996 was $98,000 and $85,000, respectively. Net earnings for the three months ended March 30, 1997 were $1.7 million, compared to $1.2 million for the three months ended March 31, 1996, an increase of $500,000 or 42%. Earnings per common share were $.11 for the three months ended March 30, 1997, compared to $.08 for the three months ended March 31, 1996. -12- 13 FINANCIAL CONDITION & LIQUIDITY - ------------------------------- On February 28, 1997, the Company redeemed all $3.4 million of 12% Subordinated Notes, which were due in May 1998. On March 20, 1997, the Company entered into a revised and amended four-year unsecured lending agreement providing for a $4.0 million term loan and a $17.0 million revolving credit facility. The term loan requires quarterly payments of principal of $250,000 beginning June 30, 1997. This loan agreement provides sufficient working capital to support planned business growth. For the nine months ended March 30, 1997, the Company generated cash from its operations totaling $4.3 million. Cash was generated through net earnings and was used to reduce accounts payable by $2.0 million and pay down debt by $2.3 million. -13- 14 PART II Amendment to Loan Agreement between NationsBank (formerly Boatmen's) and LaBarge, Inc., LaBarge/STC, Inc. and LaBarge Wireless, Inc. -14- 15 SIGNATURE 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. LABARGE, INC. ------------------- (Registrant) Date 5/14/97 William J. Maender ---------------------- William J. Maender Vice President - Finance, Treasurer and Secretary -15- EX-10.9 2 AMENDMENT TO LOAN AGREEMENT 1 EXHIBIT 10.9 AMENDMENT TO LOAN AGREEMENT AMONG THE BOATMEN'S NATIONAL BANK OF ST. LOUIS AND LABARGE, INC., LABARGE/STC, INC., AND LABARGE WIRELESS, INC. This AMENDMENT to LOAN AGREEMENT (the "Amendment") is entered into as of March 20, 1997, LABARGE, INC., LABARGE/STC, INC., and LABARGE WIRELESS, INC. (collectively and separately, "Borrower") and THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, a national banking association ("Bank"). RECITALS: A. Borrower and Bank are party to that certain Loan Agreement dated as of June 25, 1996, (as it may be amended, restated, extended, renewed, replaced, or otherwise modified from time to time, the "Loan Agreement"). B. Borrower has requested that Bank release its Security Interests in the property of Borrower, extend the Maturity Date of the Loans, increase the amount of the Term Commitment, and make certain other changes to the provisions of the Loan Agreement. Bank is willing to do so subject to, and in reliance upon, the terms and conditions contained herein. C. Borrower and Bank desire to amend the Loan Agreement upon the terms and conditions hereinafter set forth. Therefore, in consideration of the mutual agreements herein and other sufficient consideration, the receipt of which is hereby acknowledged, Borrower and Bank hereby amend the Loan Agreement as follows: 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein have the meanings given them in the Loan Agreement. 2. EFFECTIVE DATE OF AMENDMENTS; UP-FRONT FEE. This Amendment shall become effective as of March 20, 1997, provided that Borrower has paid to Lender an up-front fee of $10,000 in consideration of the increase in the Term Commitment provided by this Amendment and has 2 executed and delivered to Lender an Allonge to the Term Note dated the effective date and in form of Exhibit A hereto. 3. AMENDMENTS TO LOAN AGREEMENT. 3.1. LIMITATION ON REVOLVING ADVANCES. Section 3.1.2 of the Loan Agreement is hereby amended by deleting the final sentence and replacing it with the following: "On any date when the ratio of Borrower's Funded Debt to EBITDA for the fiscal quarter most recently ended, calculated in accordance with Section 16.6 of this Agreement, exceeds 1.5 to 1.0, the "Maximum Available Amount" for any Revolving Advance shall be a Dollar amount equal to (i) the lesser of the Revolving Commitment or the Borrowing Base on such date, minus (ii) the Letter of Credit Exposure (except to the extent that such Revolving Advance will be used immediately to reimburse Lender for unreimbursed draws on a Letter of Credit). On any date when the ratio of Borrower's Funded Debt to EBITDA for the fiscal quarter most recently ended, calculated in accordance with Section 16.6 of this Agreement, is equal to or less than 1.5 to 1.0, the "Maximum Available Amount" for any Revolving Advance shall be a Dollar amount equal to (i) the Revolving Commitment, minus (ii) the Letter of Credit Exposure (except to the extent that such Revolving Advance will be used immediately to reimburse Lender for unreimbursed draws on a Letter of Credit)." 3.2. ELIGIBLE ACCOUNTS. Section 3.1.5 of the Loan Agreement is hereby amended by replacing the text of subsections (i) and (v) with the words "intentionally omitted" and deleting from subsection (vii) the words "and any other steps necessary to perfect lender's Security Interest". 3.3. ELIGIBLE INVENTORY. Section 3.1.6 of the Loan Agreement is hereby amended by replacing the text of subsection (ii) with the words "intentionally omitted." 3.4. TERM LOAN. Section 3.2.1 of the Loan Agreement is hereby amended by replacing the amount of $3,000,000 with the amount of $4,000,000. 3.5. CBR DECREMENTS AND LIBOR INCREMENTS. Section 4.3 of the Loan Agreement is hereby amended by deleting the table and replacing it with the following table: If the ratio of Funded Debt to the LIBOR Increment the CBR Decrement shall EBITDA is: shall be: be: Greater than or equal to 2.50 2.50% -0.00% to 1.00
2 3 less than 2.50 to 1.00 and 2.00% -0.25% greater than or equal to 2.00 to 1.00 less than 2.00 to 1.00 and 1.75% -0.50% greater than or equal to 1.75 to 1.00 less than 1.75 to 1.00 and 1.25% -1.00% greater than or equal to 1.50 to 1.00 less than 1.50 to 1.00 and 1.00% -1.25% greater than or equal to 1.25 to 1.00 less than 1.25 to 1.00 0.75% -1.50%
3.6. COMMITMENT FEE. Section 5.2 of the Loan Agreement is hereby amended by deleting the table and replacing it with the following table:
If the ratio of Funded Debt to The Commitment Fee EBITDA is: Percentage shall be: Greater than or equal to 2.50 0.375% to 1.00 less than 2.50 to 1.00 and 0.300% greater than or equal to 2.00 to 1.00 less than 2.00 to 1.00 and 0.250% greater than or equal to 1.75 to 1.00 less than 1.75 to 1.00 0.200%
3.7. MATURITY DATE. Section 6.1 of the Loan Agreement is hereby amended by replacing the date July 1, 1999 with the date February 1, 2001. 3.8. PRINCIPAL PAYMENTS ON TERM LOAN BEFORE MATURITY DATE. Section 6.3 of the Loan Agreement is hereby amended by deleting the second sentence replacing it with the following: 3 4 "The amount of each principal installment shall be $250,000 commencing with the installment due on the last day of June, 1997." 3.9. SECURITY. The text of Section 9 of the Loan Agreement (and each of its subsections) is hereby deleted and replaced with the following: "Intentionally Omitted." 3.10. PERFECTION OF SECURITY INTERESTS. Section 10.1.4 of the Loan Agreement is hereby deleted. 3.11. ENCUMBRANCES. The text of Section 12.19 of the Loan Agreement is hereby deleted and replaced with the words "Intentionally Omitted." 3.12. REAL PROPERTY. The last sentence of Section 12.26 of the Loan Agreement is hereby deleted. 3.13. STATE OF COLLATERAL AND OTHER PROPERTY. Section 12.27 of the Loan Agreement is hereby by deleting the sentence which begins with the words "There are no Security Interests" and by deleting the word "Collateral" from the penultimate sentence. 3.14. ACCOUNTS. Section 12.27.1 of the Loan Agreement is hereby amended by replacing the text of subsection (viii) with the words "intentionally omitted". 3.15. INVENTORY. Section 12.27.2 of the Loan Agreement is hereby amended by deleting the words "except for the first priority, perfected Security Interest granted to Lender and except for existing Permitted Security Interests" from subsection (ii). 3.16. EQUIPMENT. Section 12.27.3 of the Loan Agreement is hereby amended by deleting the words "except for the first priority, perfected Security Interest granted to Lender and" from subsection (ii). 3.17. INTELLECTUAL PROPERTY. Section 12.27.4 of the Loan Agreement is hereby amended by deleting the words ", except for the applicable Collateral Assignment" from subsection (ii). 3.18. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Section 12.27.5 of the Loan Agreement is hereby amended by deleting the words "describing, evidencing or constituting Collateral" and the words "free and clear of all Security Interests". 3.19. CHIEF PLACE OF BUSINESS. Section 12.28.3 of the Loan Agreement is hereby deleted. 3.20. NEGATIVE PLEDGES. The text of Section 12.29 of the Loan Agreement is hereby deleted and replaced with the words: "Intentionally Omitted". 4 5 3.21. SECURITY DOCUMENTS. The text of Section 12.30 of the Loan Agreement is hereby deleted and replaced with the words: "Intentionally Omitted". 3.22. USE OF PROCEEDS. The text of Section 14.1 of the Loan Agreement is hereby replaced with the words "All proceeds of the Loans shall be used by Borrower solely for working capital". 3.23. MAINTENANCE OF PROPERTY AND LEASES. Section 14.3 of the Loan Agreement is hereby amended by deleting the last two sentences. 3.24. PAYMENT OF TAXES AND OTHER OBLIGATIONS. Section 14.5 of the Loan Agreement is hereby amended by deleting the words "the Collateral or its other" in both places where they appear. 3.25. MAINTENANCE OF SECURITY INTERESTS. The text of Section 14.11 (and each of its subsections) is hereby deleted and replaced with the following: "Intentionally Omitted." 3.26. BORROWING BASE CERTIFICATE. Section 14.14 of the Loan Agreement is hereby amended by inserting the following after the words "of each month" in the second line: "while the ratio of Borrower's Funded Debt to EBITDA calculated as of the end of any fiscal quarter in accordance with Section 16.6 of this Agreement, exceeds 1.5 to 1.0". 3.27. PERMITTED ACQUISITIONS. Section 15.6 of the Loan Agreement is hereby amended by replacing the text of subsection (vi) with the words "intentionally omitted". 3.28. MAXIMUM FUNDED DEBT TO EBITDA RATIO. Section 16.6 of the Loan Agreement is hereby amended by replacing the words "shall not be greater than 3.0 to 1.0" with the words "shall not be greater than 2.75 to 1.0." 3.29. LOAN DOCUMENTS; SECURITY INTERESTS. The text of Section 17.1.16 of the Loan Agreement is hereby deleted and replaced with the following: "Intentionally Omitted." 3.30. NOTICE TO ACCOUNT DEBTORS. The text of Section 17.2.4 of the Loan Agreement is hereby deleted and replaced with the following: "Intentionally Omitted." 3.31. ENTRY UPON PREMISES AND ACCESS TO INFORMATION. The text of Section 17.2.5 of the Loan Agreement is hereby deleted and replaced with the following: "Intentionally Omitted." 3.32. BORROWER'S OBLIGATIONS. The text of Section 17.2.6 of the Loan Agreement is hereby deleted and replaced with the following: "Intentionally Omitted." 5 6 3.33. EXERCISE OF RIGHTS AS SECURED PARTY. The text of Section 17.2.7 of the Loan Agreement (and each of its subsections) is hereby deleted and replaced with the following: "Intentionally Omitted." 3.34. LENDER'S RIGHT TO CURE. Section 18.1 of the Loan Agreement is hereby amended by deleting the words ", the Collateral or Lenders Security interests therein" and the words "and any other Security Interest upon or with respect to the Collateral" in the first sentence, and by deleting the words ", the repayment of which shall be secured by the Collateral" in the second sentence. 3.35. SALE OF PARTICIPATIONS. Section 18.4.4 of the Loan Agreement is hereby amended by replacing the text of subsection (iv) with the words "intentionally omitted". 3.36. PAYMENT OF EXPENSES. Section 18.6 of the Loan Agreement is hereby amended by deleting from the last sentence thereof the words "and are secured by the Collateral". 3.37. DEFINITIONS. Exhibit 2.1 to the Loan Agreement (Glossary and Index of Defined Terms) is hereby amended as follows: the definition of "Loan Documents" is amended by deleting the words "the Security Documents"; the definition of "Collateral" is hereby deleted; the definitions of all terms that contain the word "Collateral" are hereby deleted; and the definition of "Security Documents" is hereby deleted. 4. REMAINING REFERENCES TO COLLATERAL. In all places in the Loan Agreement where the word "Collateral" or "Real Property Collateral" or "Personal Property Collateral" still remains, such word shall be deemed to mean "the assets of Borrower", "the real property assets of Borrower" and "the personal property assets of Borrower", respectively. 5. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby represents and warrants to Bank as of the date hereof that (i) this Amendment has been duly authorized by Borrower's Board of Directors, (ii) no consents are necessary from any third parties for Borrower's execution, delivery or performance of this Amendment, (iii) this Amendment constitutes the legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with its terms except as the enforcement thereof may be limited by bankruptcy, insolvency or other laws related to creditors rights generally or by the application of equity principles, (iv) the representations and warranties in the Loan Agreement are true and correct and have been true and correct at all times since the Effective Date, and (v) there exists no Default or Event of Default under the Loan Agreement, as amended by this Amendment. 6. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Bank under the Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Loan Agreement, any of the other Loan Documents or any existing Default or Event of Default, nor 6 7 act as a release or subordination of the security interests of Bank under the Security Documents. Each reference in the Loan Agreement to "the Agreement", "hereunder", "hereof", "herein", or words of like import, shall be read as referring to the Loan Agreement as amended by this Amendment. 7. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i) except as expressly amended hereby the Loan Agreement remains in full force and effect, (ii) the Loan Agreement, as amended hereby, is in full force and effect, (iii) Borrower has no defenses to its obligations under the Loan Agreement and the other Loan Documents, and (iv) Borrower has no claim against Bank arising from or in connection with the Loan Agreement or the other Loan Documents. 8. GOVERNING LAW. This Amendment has been executed and delivered in St. Louis, Missouri, and shall be governed by and construed under the laws of the State of Missouri without giving effect to choice or conflicts of law principles thereunder. 9. SECTION TITLES. The section titles in this Amendment are for convenience of reference only and shall not be construed so as to modify any provisions of this Amendment. 10. COUNTERPARTS; FACSIMILE TRANSMISSIONS. This Amendment may be executed in one or more counterparts and on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures to this Amendment may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same. 11. INCORPORATION BY REFERENCE. Bank and Borrower hereby agree that all of the terms of the Loan Documents are incorporated in and made a part of this Amendment by this reference. 12. STATUTORY NOTICE. The following notice is given pursuant to Section 432.045 of the Missouri Revised Statutes; nothing contained in such notice will be deemed to limit or modify the terms of the Loan Documents or this Amendment: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. 7 8 BORROWER AND BANK HEREBY AFFIRM THAT THERE IS NO UNWRITTEN ORAL CREDIT AGREEMENT BETWEEN BORROWER AND BANK WITH RESPECT TO THE SUBJECT MATTER OF THIS AMENDMENT. [rest of page intentionally blank] 8 9 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by appropriate duly authorized officers as of the date first above written. LABARGE/STC, INC. LABARGE WIRELESS, INC. by its Pres. by its Pres. Craig E. LaBarge Craig E. LaBarge - ----------------------------------- --------------------------------- Notice Address: Notice Address: C/O LaBarge, Inc. C/O LaBarge, Inc. 9900A Clayton Road 9900A Clayton Road St. Louis, MO 63124 St. Louis, MO 63124 Attn: William J. Maender Attn: William J. Maender FAX # 812-9438 FAX # 812-9438 TEL # 997-0800 TEL # 997-0800 LABARGE, INC. THE BOATMEN'S NATIONAL BANK OF by its President ST. LOUIS by its Vice President Craig E. LaBarge Jeffrey S. Potts - --------------------------------- --------------------------------- Craig E. LaBarge Jeffrey S. Potts Notice Address: Notice Address: LaBarge, Inc. One Boatmen's Plaza, 12th Floor 9900A Clayton Road 800 Market Street, LBP 3501 St. Louis, MO 63124 St. Louis, MO 63101 Attn: William J. Maender Attn: Jeffrey S. Potts FAX # 812-9438 FAX # 466-7783 TEL # 997-0800 TEL # 466-6061 10 EXHIBIT A FORM OF ALLONGE TO TERM NOTE ALLONGE Term Note This ALLONGE is and shall be deemed attached to, made a part of, and incorporated for all purposes in, that certain Term Note, dated June 25, 1996 (the "Instrument"), executed by LaBarge, Inc., LaBarge/STC, Inc., and LaBarge Wireless, Inc. (collectively and separately, "Borrower"), and payable to the order of The Boatmen's National Bank of St. Louis in the original principal amount of Three Million and no/100 Dollars ($3,000,000.00). The original principal amount of the Note is hereby increased to Four Million and no/100 Dollars ($4,000,000.00). Except as expressly provided herein or in the Loan Agreement, as amended from time to time, all terms and provisions contained in the Instrument remain unchanged and shall continue in full force and effect. Dated and effective as of March 20, 1997. LABARGE, INC. By: Craig E. LaBarge ----------------------------- Name: Craig E. LaBarge --------------------------- Title: Pres. -------------------------- LABARGE/STC, INC. By: Craig E. LaBarge ----------------------------- Name: --------------------------- Title: Pres. LABARGE WIRELESS, INC. By: Craig E. LaBarge ----------------------------- Name: --------------------------- Title: Pres. -------------------------- i 11 AGREED AND ACCEPTED effective as of the date above written: THE BOATMEN'S NATIONAL BANK OF ST. LOUIS By: Jeffrey S. Potts ------------------------------------ Jeffrey S. Potts Vice President ii 12 EXHIBIT B Additions to the Disclosure Schedule of the Loan Agreement If none listed, none. iii 13 EXHIBIT A FORM OF ALLONGE TO TERM NOTE ALLONGE Term Note This ALLONGE is and shall be deemed attached to, made a part of, and incorporated for all purposes in, that certain Term Note, dated June 25, 1996 (the "Instrument"), executed by LaBarge, Inc., LaBarge/STC, Inc., and LaBarge Wireless, Inc. (collectively and separately, "Borrower"), and payable to the order of The Boatmen's National Bank of St. Louis in the original principal amount of Three Million and no/100 Dollars ($3,000,000.00). The original principal amount of the Note is hereby increased to Four Million and no/100 Dollars ($4,000,000.00). Except as expressly provided herein or in the Loan Agreement, as amended from time to time, all terms and provisions contained in the Instrument remain unchanged and shall continue in full force and effect. Dated and effective as of March 20, 1997. LABARGE, INC. By: Craig E. LaBarge ----------------------------- Name: Craig E. LaBarge --------------------------- Title: Pres. -------------------------- LABARGE/STC, INC. By: Craig E. LaBarge ----------------------------- Name: Craig E. LaBarge --------------------------- Title: Pres. -------------------------- LABARGE WIRELESS, INC. By: Craig E. LaBarge ----------------------------- Name: Craig E. LaBarge --------------------------- Title: Pres. -------------------------- AGREED AND ACCEPTED effective as of the date above written: THE BOATMEN'S NATIONAL BANK OF ST. LOUIS By: Jeffrey S. Potts ------------------------------------ Jeffrey S. Potts Vice President EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS JUN-29-1997 MAR-30-1997 1,110 0 13,802 160 17,604 33,861 3,979 (9,820) 43,109 13,079 0 0 0 156 22,246 43,109 71,256 71,256 56,710 65,434 85 0 814 4,923 300 4,623 0 0 0 4,623 .30 .30
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