0000912057-95-006483.txt : 19950815
0000912057-95-006483.hdr.sgml : 19950815
ACCESSION NUMBER: 0000912057-95-006483
CONFORMED SUBMISSION TYPE: 424B1
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 19950814
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NORTH STAR UNIVERSAL INC
CENTRAL INDEX KEY: 0000768158
STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045]
IRS NUMBER: 410498850
STATE OF INCORPORATION: MN
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 424B1
SEC ACT: 1933 Act
SEC FILE NUMBER: 033-58163
FILM NUMBER: 95562988
BUSINESS ADDRESS:
STREET 1: 5353 WAYZATA BLVD
STREET 2: PARK NATIONAL BANK BLDG STE 610
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55416
BUSINESS PHONE: 612-941-76
MAIL ADDRESS:
STREET 1: 610 PARK NATIONAL BANK BUILDING
STREET 2: 5353 WAYZATA BOULEVARD
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55416
424B1
1
FORM 424B1
$40,000,000
NORTH STAR UNIVERSAL, INC.
SIX AND TWELVE MONTH SUBORDINATED
EXTENDIBLE TIME CERTIFICATES
TWO, FIVE AND TEN YEAR SUBORDINATED
FIXED-TERM TIME CERTIFICATES
PROSPECTUS SUPPLEMENT NO. 1
TO PROSPECTUS DATED MAY 15, 1995
The following information dated August 11, 1995, amends and updates the
Prospectus of North Star Universal, Inc., dated May 15, 1995 (the "Prospectus"),
and should be read in conjunction therewith. Please keep this Prospectus
Supplement with your Prospectus for future reference.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS AUGUST 11, 1995
NORTH STAR UNIVERSAL, INC. AND SUBSIDIARIES
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO AMOUNTS)
The following table sets forth certain summary financial data for the
Company and should be read in conjunction with the Condensed Consolidated
Financial Statements of the Company included in this Prospectus Supplement.
SIX MONTHS ENDED
JUNE 30, 1995
(UNAUDITED)
---------------------------------
OPERATIONS: 1995 1994
------------- -------------
Revenues $ 26,254 $ 21,482
Operating income (loss) 364 (549)
Income from continuing operations 1,338 499
Discontinued operations (3,025) (441)
Net income (loss) (1,687) 58
------------- -------------
------------- -------------
Income (loss) per share:
Continuing operations $ .14 $ .05
Discontinuing operations (.32) (441)
------------- -------------
Income (loss) per share $ (.18) $ .01
------------- -------------
------------- -------------
Ratio of earnings to fixed charges .19X
-------------
-------------
June 30,
1995 December 31,
FINANCIAL POSITION: (Unaudited) 1994
------------- -----------
Total assets $ 106,112 $ 111,093
Long-term debt 43,868 45,061
Shareholders' equity 32,478 34,186
------------- -------------
------------- -------------
North Star Universal, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 vs. THREE MONTHS ENDED JUNE 30, 1994
Consolidated revenues increased $2.2 million or 19% to $13.7 million from
$11.5 million in 1994.
Revenues at Americable increased approximately $1.4 million or 15% to
$10.5 million. This includes increased revenues of approximately $1.6 million
and $400,000 resulting from higher demand of networking products and services
and cable assemblies, respectively. Offsetting these increases was
approximately $600,000 of decreased sales of bulk cable and other connectivity
products due to lower mix of volume to contractors and resellers.
Revenues at Transition increased approximately $590,000 or 21%, to $3.4
million which includes increased sales of approximately $280,000 or 15%, to
domestic customers and approximately $310,000 or 32% to international customers.
Overall, these increases are primarily a result of new product introductions and
higher product demand from both new and existing customers. Sales from new
product introductions and enhancements accounted for approximately $863,000 or
24% of net sales for the period.
Consolidated gross profit, as a percent of revenues, increased to 27.8% in
1995 as compared to 27.2% in 1994. Increased margins at Americable are
primarily attributable to a higher mix of cable assembly sales and, to a lesser
extent, improved manufacturing efficiencies within its cable assembly operation.
Decreased margins at Transition were a result of lower pricing on certain
product lines due to increased competition.
The Company's selling, general and administrative expenses increased
$334,000 or 9.9%, to $3.7 million from $3.4 million in 1994. Operating
expenses at Americable increased approximately 6.6% for the period which is
primarily a result of higher sales commissions. Transition had increased
operating expenses of approximately $106,000 or 10.5%, which is primarily a
result of increased sales and marketing expenses associated with its distributor
conference and the addition of administrative and technical support personnel
needed to support its overall growth.
Interest expense is relatively unchanged between years.
The income tax benefits of $325,000 in 1995 and $450,000 in 1994 relate to
the elimination of deferred tax liabilities that will reverse as net operating
losses available for carryforward are utilized in future periods. To the extent
loss carryforwards are realized in the future, deferred taxes will be
reinstated.
North Star Universal, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS (CONTINUED)
Equity in earnings of unconsolidated subsidiaries increased $167,000 to
$1,325,000 from $1,158,000 in the previous year. This includes increases of
$121,000 and $46,000 in the equity in earnings of Michael Foods and CorVel
Corporation, respectively, which is a result of higher earnings at each of these
companies. Further information with respect to the results of operations of
Michael Foods and CorVel is contained in the Management's Discussion and
Analysis of Financial Condition and Results of Operation section of their
respective quarterly reports on Form 10-Q as filed with the Securities and
Exchange Commission.
The loss from discontinued operations for the period includes the operating
and disposition losses of C.E. Services which was sold May 5, 1995 (see Note 2
to the Notes to Condensed Consolidated Financial Statements). The loss from
operations, net of income tax benefits, of $245,000 in 1995 represents one
month of operations prior to the sale versus a loss of $407,000 in 1994 for a
three month period. For the quarter ended June 30, 1995, the Company recorded a
loss on disposition of approximately $2.1 million, net of an income tax benefit
of $1.3 million, related to this sale. The loss on disposition includes
accruals for estimated obligations of $950,000, writeoff of goodwill of
approximately $1.7 million and an additional accrued loss of approximately
$790,000.
North Star Universal, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 1995 vs. SIX MONTHS ENDED JUNE 30, 1994
Consolidated revenues increased $4.8 million or 22% to $26.3 million from
$21.5 million in 1994.
Revenues at Americable increased approximately $2.9 million or 17% to
$19.8 million. This includes increased revenues of approximately $2.8 million
and $290,000 resulting from higher demand from networking products and services
and cable assemblies, respectively. Of this amount, approximately $1.4 million
of sales were attributable to higher volume of networking products with a large
end user customer of which such increase may not continue for the remainder of
1995. Offsetting these increases was approximately $160,000 of decreased sales
of bulk cable and other connectivity products due to lower mix of volume to
contractors and resellers.
Revenues at Transition increased approximately $1.8 million, or 33%, to
$7.1 million which includes increased sales of approximately $1 million or 28%,
to domestic customers and approximately $800,000 or 42% to international
customers. Overall, these increases are primarily a result of new product
introductions and higher product demand from both new and existing customers.
Sales from new product introductions and enhancements accounted for
approximately $1.7 million or 24% of net sales for the period. Transition's
ability to maintain its present level of sales and its continued sales growth is
highly dependent upon its ability to offer new products that meet customer's
demands in a rapidly changing market, particularly in light of the relatively
short life cycle of its products.
Consolidated gross profit, as a percent of revenues, increased to 28.9% in
1995 as compared to 28.8% in 1994. Increased margins at Americable are
primarily attributable to a higher mix of cable assembly sales. Decreased
margins at Transition was a result of lower pricing on certain product lines due
to increased competition.
The Company's selling, general and administrative expenses increased
$487,000 or 7.2%, to $7.2 million from $6.7 million in 1994. Operating expenses
at Americable increased approximately $122,000 or 3% for the period which is
primarily a result of higher sales salaries and commissions offset by an overall
general and administrative expense reductions effected in the third quarter of
1994 and second quarter of 1995. Americable expects, however, that its sales
and marketing expenses, as a percentage of revenues, may increase during the
year through the addition of sales personnel in new geographic locations. These
anticipated increases in operating expenses may result in lower operating
profits at Americable, if the company is unable to maintain current gross profit
margins and continued sales growth.
North Star Universal, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS (CONTINUED)
Transition had increased operating expenses of approximately $261,000 or
13.8%, which is primarily due to increased sales and marketing expenses
associated with its distributor conference, advertising and participation in
trade shows. In addition, this increase reflects the addition of administrative
and technical support personnel and related facility expenses needed to support
its overall growth. Transition believes that its research and development
expenses will increase in order to achieve market acceptance of new products.
There can be no assurances, however, that its research and development efforts
will result in commercially successful new products in the future. In addition
Transition believes that sales and marketing expenses may continue to increase
in terms of absolute dollars in an effort to differentiate its products and
enhance its competitive position. These anticipated increases in operating
expenses may result in lower operating profit at Transition, if the company is
unable to maintain its current gross profit margins and continued sales growth.
The income tax benefits of $535,000 in 1995 and $940,000 in 1994 relate to
the elimination of deferred tax liabilities that will reverse as net operating
losses available for carryforward are utilized in future periods. To the extent
loss carryforwards are realized in the future, deferred taxes will be
reinstated.
Equity in earnings of unconsolidated subsidiaries increased $347,000 to
$2,532,000 from $2,185,000 in the previous year. This includes increases of
$230,000 and $117,000 in the equity in earnings of Michael Foods and CorVel
Corporation, respectively, which is a result of higher earnings
at each of these companies. Further information with respect to the results of
operations of Michael Foods and CorVel is contained in the Management's
Discussion and Analysis of Financial Condition and Results of Operation section
of their respective annual and quarterly reports as filed on Forms 10-K and 10-Q
with the Securities and Exchange Commission.
The loss from discontinued operations for the period includes the operating
and disposition losses of C.E. Services which was sold May 5, 1995 (see Note 2
to the Notes to Condensed Consolidated Financial Statements). The loss from
operations, net of income tax benefits, was $934,000 in 1995 versus $441,000 in
1994 which is attributable to the significant reduction in the domestic and
international demand for used mainframe systems and features at C.E. Services.
For the quarter ended June 30, 1995 the Company recorded a loss on disposition
of approximately $2.1 million, net of an income tax benefit of $1.3 million,
related to this sale.
North Star Universal, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
CAPITAL RESOURCES AND LIQUIDITY
Historically, the Company has experienced cash flow deficits from
operations. Cash used in operations was $2.2 million for the six months ended
June 30, 1995 as compared to $3.3 million in 1994. The Company expects
operating cash flow deficits to continue. The Company does not have the use of
cash flow generated by Michael Foods other than proceeds from quarterly
dividends. In each of the six month periods ended June 30, 1995 and 1994, the
Company received dividends of $736,000. There can be no assurance that Michael
Foods will continue to declare such dividends.
Likewise, since CorVel's initial public offering in July 1991, the Company
has not had the use of cash generated by CorVel and its subsidiaries. Since its
initial public offering, CorVel has not declared any dividends, and has
indicated that it does not anticipate doing so for the foreseeable future.
The Company maintains a program whereby it sells subordinated debentures of
various maturities to primarily individual investors. The debentures are
offered on a continuous basis at interest rates that change from time to time
depending on market conditions. Historically, a substantial portion of maturing
debentures have been reinvested in new debentures. At June 30, 1995, the
Company had approximately $41.9 million principal amount of subordinated
debentures outstanding.
For the six months ended June 30, 1995, approximately $3.2 million or 54%
of debenture maturities were reinvested in new debentures. Included within
long-term debt repayments for the six months ended June 30, 1995, is
approximately $2.7 million of redemptions of subordinated debentures. Proceeds
from long-term debt include approximately $2.2 million of new debentures sold
along with $942,000 of compounded interest on debentures. The net activity
under the debenture program for the period resulted in net cash proceeds to the
Company of approximately $435,000.
Americable and Transition maintain a revolving line of credit and term loan
facility which provides borrowings up to $5.5 million due in May 1996.
Borrowings under the revolving credit facility are based on eligible accounts
receivable and inventory with interest at prime plus 1.5%, (10% at June 30,
1995). At June 30, 1995, there were outstanding borrowings of $761,000 under
the revolving line of credit and $1.2 million under the term loan.
At June 30, 1995, North Star had no borrowings outstanding under its $6.5
million revolving credit facility and approximately $4.6 million of cash and
cash equivalents, excluding cash of its operating subsidiaries. As previously
discussed, on May 5, 1995, the Company sold C.E. Services for $2.5 million cash.
The Company believes that its available cash and cash equivalents along with its
debenture program and amounts available under its revolving credit facility and
the credit facilities of its operating companies, will be adequate to meet
expected cash requirements for the remainder of the year.
NORTH STAR UNIVERSAL, INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page
Condensed Consolidated Balance Sheets as of June 30, 1995 and
December 31, 1994 9
Condensed Consolidated Statements of Operations for the Three and Six Months
Ended June 30, 1995 and 1994 10
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1995 and 1994 11
Notes to Condensed Consolidated Financial Statements 12
North Star Universal, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share data)
June 30, December 31,
1995 1994
--------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 4,618 $ 5,102
Accounts receivable, net 7,128 8,980
Inventories 6,530 7,994
Prepaid expenses and other current assets 1,292 1,293
------------------------
Total current assets 19,568 23,369
Property and equipment, net 1,402 3,747
Investment in unconsolidated subsidiaries 78,884 75,663
Goodwill, net 5,039 6,816
Other assets 1,219 1,498
------------------------
$ 106,112 $ 111,093
------------------------
------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to bank $ -- $ 600
Current portion of long-term debt 12,312 12,518
Accounts payable and accrued expenses 8,999 9,678
Income taxes payable 304 333
------------------------
Total current liabilities 21,615 23,129
Long-term debt, net of current maturities 31,556 32,543
Deferred income taxes 20,463 21,225
Shareholders' Equity
Common stock, $.25 par value
100,000,000 shares authorized,
9,438,000 issued and outstanding 2,360 2,360
Additional paid-in-capital 30,856 31,015
Retained earnings (738) 949
Foreign currency translation adjustment -- (128)
------------------------
Total shareholders' equity 32,478 34,196
------------------------
$ 106,112 $ 111,093
------------------------
------------------------
See accompanying notes to condensed consolidated financial statements.
North Star Universal, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1995 1994 1995 1994
------------------------ ------------------------
Revenues $ 13,697 $ 11,536 $ 26,254 $ 21,482
Operating and product costs 9,885 8,399 18,666 15,294
--------------------------------------------------------
Gross profit 3,812 3,137 7,588 6,188
Selling, general, and administrative expenses 3,719 3,385 7,224 6,737
--------------------------------------------------------
Operating income (loss) 93 (248) 364 (549)
Interest expense, net (1,031) (1,041) (2,093) (2,077)
--------------------------------------------------------
Loss before income taxes and equity in
earnings of unconsolidated subsidiaries (938) (1,289) (1,729) (2,626)
Income tax benefit (325) (450) (535) (940)
--------------------------------------------------------
Loss before equity in earnings
of unconsolidated subsidiaries (613) (839) (1,194) (1,686)
Equity in earnings of unconsolidated
subsidiaries 1,325 1,158 2,532 2,185
--------------------------------------------------------
Income from continuing operations 712 319 1,338 499
Discontinued operations
Loss from operations, net of
income tax benefits (245) (407) (934) (441)
Loss on disposition, net of
income tax benefit (2,091) -- (2,091) --
--------------------------------------------------------
(2,336) (407) (3,025) (441)
--------------------------------------------------------
Net income (loss) $ (1,624) $ (88) $ (1,687) $ 58
--------------------------------------------------------
--------------------------------------------------------
Income (loss) per share
Continuing operations $ 0.08 $ 0.03 $ 0.14 $ 0.05
Discontinued operations (0.25) (0.04) (0.32) (0.04)
--------------------------------------------------------
Income (loss) per share $ (0.17) $ (0.01) $ (0.18) $ 0.01
--------------------------------------------------------
--------------------------------------------------------
Weighted average shares outstanding 9,438,000 9,438,000 9,438,000 9,633,100
--------------------------------------------------------
--------------------------------------------------------
See accompanying notes to condensed consolidated financial statements.
North Star Universal, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, (Unaudited)
(In thousands)
1995 1994
--------------------------------
Net cash used in operating activities $ (2,164) $ (3,335)
Cash flows from investing activities
Capital expenditures (142) (419)
Proceeds from divestiture 2,500 --
Other (253) 273
--------------------------------
Net cash provided by (used in) investing activities 2,105 (146)
--------------------------------
Cash flow from financing activities
Proceeds from long-term debt 30,291 14,540
Payments on long-term debt (31,452) (13,996)
Proceeds from notes payable -- 1,875
Payments on notes payable -- (1,115)
Cash dividends received from Michael Foods 736 736
--------------------------------
Net cash provided by (used in) financing activities (425) 2,040
--------------------------------
Net decrease in cash and cash equivalents (484) (1,441)
Cash and cash equivalents at beginning of period 5,102 6,981
--------------------------------
Cash and cash equivalents at end of period $ 4,618 $ 5,540
--------------------------------
--------------------------------
See accompanying notes to condensed consolidated financial statements.
North Star Universal, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION --
The accompanying unaudited condensed consolidated financial statements have
been prepared by North Star Universal, Inc. ("North Star" or the "Company"),
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. The information furnished in the condensed consolidated
financial statements includes normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of such financial
statements. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. Although the Company believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
annual report on Form 10-K.
Results for the three and six months ended June 30, may not necessarily be
indicative of the results to be expected for the full year.
2. DISCONTINUED OPERATIONS
On May 5, 1995, the Company completed the sale of its shares in Dalworth
Holdings, Inc. and subsidiaries, including C.E. Services Inc. (collectively
"C.E. Services") to Amdahl Corporation for $2.5 million cash. The loss on
disposition was approximately $2.1 million, net of an income tax benefit of
approximately $1.3 million. The accompanying condensed consolidated statements
of operations have been restated for all periods presented to reflect C.E.
Services as discontinued operations. The following are summarized results of
operations and financial position for C.E. Services. Results for the period
ended June 30, 1995 reflect the results of operations of C.E. Services through
the date of sale (in thousands):
Results of Operations Six Months Ended June 30,
1995 1994
----------------------------------
Revenues $ 6,442 $ 26,508
Gross profit 1,233 4,081
Pretax loss (1,414) (541)
Income tax benefit 480 100
Loss from operations (934) (441)
Financial Position As of December 31, 1994
----------------------------------
Current assets $ 4,786
Property and equipment, net 2,161
Goodwill and other assets 1,908
Total liabilities (2,799)
--------
Net assets of C.E. Services $ 6,056
--------
--------
North Star Universal, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES --
The Company's unconsolidated subsidiaries consist of its investments in
Michael Foods, Inc. ("Michael Foods") and CorVel Corporation ("CorVel"). CorVel
has a fiscal year ended March 31. The following is summarized balance sheet and
income statement information of the Company's unconsolidated subsidiaries as of,
and for the six month period ended June 30, 1995 (in thousands):
Michael Foods CorVel
----------------------------------
Current assets $ 91,476 $ 32,579
Noncurrent assets 242,176 13,008
Current liabilities 62,479 7,375
Noncurrent liabilities 98,822 524
Revenues 257,564 52,869
Gross profit 39,894 9,524
Net income 7,915 3,333
4. INVENTORIES --
Inventories are stated at the lower of average cost (first-in, first-out)
or market. Inventories consist of the following (in thousands):
June 30, December 31,
1995 1994
---------------------------------
Work in process and finished goods $ 5,269 $ 4,775
Purchased parts and supplies 1,261 3,219
---------------------------------
$ 6,530 $ 7,994
---------------------------------
---------------------------------
5. EARNINGS PER SHARE --
Earnings per share are based on the average number of shares outstanding
during the period after giving effect to the assumed exercise of outstanding
stock options, except where the effects are antidilutive.
6. INCOME TAXES --
Deferred income taxes arise from temporary differences between financial
and tax reporting. To the extent the Company's financial reporting basis in its
investment in unconsolidated subsidiaries exceeds its tax basis, and is not
expected to be realized in a tax-free manner, the Company records a deferred tax
liability. At June 30, 1995, the deferred tax liability includes a cumulative
tax effect of approximately $22.2 million and $5.2 million for the differences
in the financial reporting and tax basis of the Company's investments in Michael
Foods and CorVel, respectively.
7. RECLASSIFICATIONS --
Certain 1994 amounts have been reclassified to conform with the financial
statement presentation used in 1995. Such reclassifications had no impact on
previously reported retained earnings or net income.
North Star Universal, Inc. and Subsidiaries
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
North Star Universal, Inc. ("North Star" or "the Company") is a holding
company. The Company's three key holdings consist of Michael Foods, Inc.
("Michael Foods"), CorVel Corporation ("CorVel") and its computer businesses.
At June 30, 1995, the Company owned a 38% interest in Michael Foods and a 35%
ownership interest in CorVel. The common stock of each of Michael Foods and
CorVel is included on the NASDAQ National Market System under the symbols MIKL
and CRVL. The Company's investments in Michael Foods and CorVel are accounted
for as unconsolidated subsidiaries using the equity method of accounting.
On May 5, 1995, the Company sold C.E. Services, Inc. through the sale of
its shares of Dalworth Holdings, Inc., a holding company for C.E. Services,
Inc., Bridging Solutions Corporation, Commercial Computer Services, Inc. and
C.E. Services (Europe) Limited (collectively "C.E. Services") for approximately
$2.5 million cash. C.E. Services is a third-party provider of systems, parts and
services for mainframe computers and peripherals. Following the sale of C.E.
Services, the Company's continuing operations consist of Americable, Inc.
("Americable") and Transition Networks, Inc., formerly Transition Engineering
("Transition"). Americable is a provider of connectivity and networking
products and services. Transition designs, manufactures and markets
connectivity devices used in local area network ("LAN") applications.
The following are unaudited summarized operating results for each of the
Company's continuing operations for the three and six months ended June 30 (in
thousands).
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
1995 1994 1995 1994
----------------------------------------------------------------------------------------------------------------------------------
Revenues
Americable $ 10,490 $ 9,111 $ 19,769 $ 16,862
Transition Networks 3,447 2,857 7,089 5,317
Eliminations (240) (432) (604) (697)
----------------------------------------------------------------------
$ 13,697 $ 11,536 $ 26,254 $ 21,482
----------------------------------------------------------------------
----------------------------------------------------------------------
Gross Profit
Americable $ 2,560 $ 2,045 $ 4,998 $ 4,084
Transition Networks 1,252 1,092 2,590 2,104
----------------------------------------------------------------------
$ 3,812 $ 3,137 $ 7,588 $ 6,188
----------------------------------------------------------------------
----------------------------------------------------------------------
Selling, General and Administrative
Expenses
Americable $ 2,219 $ 2,082 $ 4,391 $ 4,269
Transition Networks 1,115 1,009 2,152 1,891
Corporate 385 294 681 577
----------------------------------------------------------------------
$ 3,719 $ 3,385 $ 7,224 $ 6,737
----------------------------------------------------------------------
----------------------------------------------------------------------
Operating Income (Loss)
Americable $ 341 $ (37) $ 607 $ (185)
Transition Networks 137 83 438 213
Corporate (385) (294) (681) (577)
----------------------------------------------------------------------
$ 93 $ (248) $ 364 $ (549)
----------------------------------------------------------------------
----------------------------------------------------------------------