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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 30, 2003
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 1-13041
WATERLINK, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 34-1788678
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
---------------------------------
835 North Cassady Avenue
Columbus, Ohio 43219
(Address of Principal Executive Offices)
(Zip Code)
---------------------------------
614-258-9501
(Registrant's Telephone Number, Including Area Code)
----------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.001 par value - 19,665,149 shares outstanding as of July 31,
2003
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INDEX
WATERLINK, INC. AND SUBSIDIARIES
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets - September 30, 2002 and
June 30, 2003 3 - 4
Consolidated statements of operations - Three months
ended June 30, 2002 and 2003; Nine months ended
June 30, 2002 and 2003 5
Consolidated statements of cash flows - Nine months
ended June 30, 2002 and 2003 6
Notes to consolidated financial statements 7 - 14
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14 - 22
Item 4. Controls and Procedures 22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 3. Defaults Upon Senior Securities 23
Item 5. Other Items 23
Item 6. Exhibits and Reports on Form 8-K 24
Signatures 25
2
PART I, ITEM I - FINANCIAL STATEMENTS
WATERLINK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS-UNAUDITED
September 30, June 30,
2002 2003
-------- --------
ASSETS (In thousands)
Current assets:
Cash and cash equivalents $ 2,530 $ 1,720
Trade accounts receivable, net 11,210 12,693
Inventories 10,528 9,546
Costs in excess of billings 1,783 806
Other current assets 1,130 1,676
Net assets of discontinued operations 640 1,217
-------- --------
Total current assets 27,821 27,658
Property, plant and equipment, at cost:
Land, buildings and improvements 1,626 1,836
Machinery and equipment 6,538 7,420
Office equipment 717 785
-------- --------
8,881 10,041
Less accumulated depreciation 3,723 4,485
-------- --------
5,158 5,556
Other assets:
Goodwill 24,250 3,652
Other assets 85 108
Net assets of discontinued operations 2,170 1,000
-------- --------
26,505 4,760
-------- --------
Total assets $ 59,484 $ 37,974
======== ========
See notes to consolidated financial statements
3
PART I, ITEM I - FINANCIAL STATEMENTS
WATERLINK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS-UNAUDITED (CONTINUED)
September 30, June 30,
2002 2003
---------- ----------
(In thousands,
LIABILITIES AND SHAREHOLDERS' EQUITY except share data)
Current liabilities:
Trade accounts payable $ 6,848 $ 2,765
Accrued expenses 5,988 3,240
Billings in excess of cost 232 1,226
Accrued income taxes 313 157
Current debt obligations 39,674 867
Liabilities subject to compromise -- 43,313
---------- ----------
Total current liabilities 53,055 51,568
Accrued pension costs 3,787 3,815
Shareholders' equity (deficit):
Preferred Stock, $.001 par value, 10,000,000 shares
authorized, none issued and outstanding -- --
Common Stock, voting, $.001 par value,
authorized - 40,000,000 shares, issued and
outstanding - 19,659,694 shares at
September 30, 2002 and 19,665,149 shares
at June 30, 2003 20 20
Additional paid-in capital 92,174 92,174
Accumulated other comprehensive loss (6,314) (5,922)
Accumulated deficit (83,238) (103,681)
---------- ----------
Total shareholders' equity (deficit) 2,642 (17,409)
---------- ----------
Total liabilities and shareholders' equity $ 59,484 $ 37,974
========== ==========
See notes to consolidated financial statements
4
PART I, ITEM I - FINANCIAL STATEMENTS
WATERLINK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2003 2002 2003
-------- -------- -------- --------
(In thousands, except per share data)
Net sales $ 16,107 $ 18,074 $ 47,130 $ 48,137
Cost of sales 12,326 13,944 36,204 37,376
-------- -------- -------- --------
Gross profit 3,781 4,130 10,926 10,761
Selling, general and
administrative expenses 2,454 2,702 7,511 7,740
Amortization 160 -- 476 --
-------- -------- -------- --------
Operating income 1,167 1,428 2,939 3,021
Other expense:
Interest expense (923) (792) (2,784) (2,488)
Amortization of financing costs (127) (100) (503) (232)
Other items-net (25) 1 (66) 3
-------- -------- -------- --------
Income (loss) before income taxes 92 537 (414) 304
Income taxes 3 170 9 247
-------- -------- -------- --------
Income (loss) from continuing operations 89 367 (423) 57
Loss from discontinued operations (314) -- (534) --
-------- -------- -------- --------
Income (loss) before cumulative effect of
accounting change (225) 367 (957) 57
Cumulative effect of accounting change -- -- -- (20,500)
-------- -------- -------- --------
Net income (loss) $ (225) $ 367 $ (957) $(20,443)
======== ======== ======== ========
Per share data:
Basic and assuming dilution:
Continuing operations $ 0.00 $ 0.02 $ (0.02) $ 0.00
Discontinued operations (0.01) -- (0.03) --
Cumulative effect of accounting change -- -- -- (1.04)
-------- -------- -------- --------
$ (0.01) $ 0.02 $ (0.05) $ (1.04)
======== ======== ======== ========
Weighted average common shares outstanding:
Basic 19,660 19,665 19,660 19,663
Assuming dilution 19,660 20,074 19,660 19,663
See notes to consolidated financial statements
5
PART I, ITEM I - FINANCIAL STATEMENTS
WATERLINK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
Nine Months Ended
June 30,
2002 2003
-------- --------
(In thousands)
OPERATING ACTIVITIES
Income (loss) from continuing operations $ (423) $ 57
Adjustments to reconcile loss from continuing operations
to net cash provided by operating activities:
Depreciation and amortization 1,725 891
Deferred income taxes -- 214
Changes in working capital:
Accounts receivable 122 (1,286)
Inventories 854 1,097
Costs in excess of billings 417 1,007
Other assets (236) (466)
Accounts payable (1,168) (1,285)
Accrued expenses (1,511) (394)
Billings in excess of cost 619 990
Accrued income taxes (46) (5)
-------- --------
Net cash provided by operating activities 353 820
INVESTING ACTIVITIES
Proceeds from sale of divisions 12,130 250
Purchases of equipment (501) (956)
-------- --------
Net cash used by investing activities 11,629 (706)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 422 838
Payments on long-term borrowings (11,960) (1,743)
-------- --------
Net cash used by financing activities (11,538) (905)
Effect of exchange rate changes on cash 66 62
-------- --------
Cash flows used by continuing operations 510 (729)
Cash flows used in discontinued operations (386) (81)
-------- --------
Decreases in cash and cash equivalents 124 (810)
Cash and cash equivalents at beginning of period 1,646 2,530
-------- --------
Cash and cash equivalents at end of period $ 1,770 $ 1,720
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Payments made to professionals in
connection with bankruptcy proceedings $ 600 $ --
See notes to consolidated financial statements
6
PART I, ITEM I - FINANCIAL STATEMENTS
WATERLINK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(INFORMATION AS OF JUNE 30, 2003 AND FOR THE THREE AND NINE -MONTH PERIODS ENDED
JUNE 30, 2002 AND 2003 IS UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine-month periods ended June
30, 2003 are not necessarily indicative of the results that may be expected for
the fiscal year ending September 30, 2003. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
2002.
2. VOLUNTARY PETITION TO FILE BANKRUPTCY
Bankruptcy Proceedings. On June 27, 2003 (the "Petition Date"), the
Company and four of its direct, wholly owned subsidiaries (collectively, the
"Debtors") filed voluntary petitions for relief under Chapter 11 of Title 11 of
the United States Code (the "Bankruptcy Code") in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"). The bankruptcy
cases are being jointly administered under Case No. 03-11989 (the "Chapter 11
Cases"). Included in the Consolidated Financial Statements are subsidiaries that
are not party to the Chapter 11 Cases and are not Debtors.
The Debtors continue to operate their businesses as
"debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in
accordance with the applicable provisions of the Bankruptcy Code, the Federal
Rules of Bankruptcy Procedure and applicable court orders. All vendors are being
paid for all goods furnished and services provided after the Petition Date.
However, under Section 362 of the Bankruptcy Code, the filing of the bankruptcy
petition automatically stays most actions against a debtor, including most
actions to collect pre-petition indebtedness or to exercise control over the
property of the debtor's estate.
The Debtors are currently funding their operations through the use of cash
collateral pursuant to Order entered by the Bankruptcy Court pursuant to Section
363 of the Bankruptcy Code. The Debtors believe that the use of cash collateral
will support current operations and satisfy all customer needs. The Debtors
currently have authority to use cash collateral until September 26, 2003. The
Bankruptcy Court has scheduled a hearing to consider the further use of cash
collateral for September 25, 2003. The Debtors expect to file a motion for
further use of
7
cash collateral prior to the September 25, 2003 and to request authorization for
further use of cash collateral beyond September 26, 2003.
Pursuant to an Order entered in the Chapter 11 Cases, the Debtors have
employed NatCity Investments, Inc. to act as their investment bankers to assist
the Debtors in the investigation and consideration of their strategic
alternatives. Among the strategic alternatives being investigated and considered
by the Debtors is the possibility of a sale of all or substantially all of their
assets either through a motion or the confirmation of a plan. The timing of any
of the foregoing actions will depend on the timing and outcome of the
investigation and consideration of strategic alternatives being performed by
NatCity Investments, Inc. and numerous other ongoing matters in the Chapter 11
Cases. The debtors believe that it is possible that a sale or other transaction
will be presented to the Bankruptcy Court for approval prior to the end of the
calendar year.
The United States Trustee for the District of Delaware (the "U.S.
Trustee") has appointed an Official Committee of Unsecured Creditors (the
"Creditors' Committee"). The Creditors' Committee and its legal representatives
have a right to be heard on all matters that come before the Bankruptcy Court
with respect to the Debtors.
There can be no assurance that the Creditors' Committee or the Debtors'
secured creditors will support the Debtors' positions. Disagreements among the
Debtors, the Creditors' Committee and the Debtors' secured creditors could
protract the Chapter 11 Cases, negatively impact the Debtors' ability to operate
during the Chapter 11 Cases and delay the conclusion of the Chapter 11 Cases.
In order to successfully exit Chapter 11, the Debtors will need to
propose, and obtain confirmation by the Bankruptcy Court of, a plan that
satisfies the requirements of the Bankruptcy Code. A plan would resolve, among
other things, the Debtors' pre-petition obligations, set forth the revised
capital structure of the newly reorganized entity and provide for its corporate
governance subsequent to exit from bankruptcy. The timing of filing a plan of
reorganization by the Company will depend on the timing and outcome of numerous
other ongoing matters in the Chapter 11 Cases. There can be no assurance at this
time that a plan will be filed in the Chapter 11 Cases, confirmed by the
Bankruptcy Court, or that any such plan will be implemented successfully.
At this time, it is not possible to predict accurately the effect of the
Chapter 11 process on the Company's business or when it may emerge from Chapter
11. The rights and claims of various creditors and security holders may be
determined by the plan as well. No assurance can be given as to what values, if
any, will be ascribed in the bankruptcy proceedings to each of these
constituencies, and it is possible that the Company's equity or other securities
will be restructured in a manner that will reduce substantially or eliminate any
remaining value. Accordingly, the Company urges that appropriate caution be
exercised with respect to existing and future investments in any of such
securities and claims.
Pursuant to the Bankruptcy Code, the Debtors have filed schedules with the
Bankruptcy Court setting forth the assets and liabilities of the Debtors as of
the Petition Date. Differences between amounts recorded by the Debtors and
claims filed by creditors will be investigated and resolved as part of the
Chapter 11 Cases. A deadline for filing proofs of claim has not been
established. Accordingly, the ultimate number and allowed amounts of such claims
are not presently known.
8
Financial Statement Presentation. The accompanying consolidated financial
statements have been prepared in accordance with American Institute of Certified
Public Accountants' Statement of Position 90-7 ("SOP 90-7"), "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code," and on a
going-concern basis, which contemplates continuity of operations, realization of
assets and satisfaction of liabilities in the ordinary course of business.
SOP 90-7 requires that the financial statements for periods subsequent to
the filing of a Chapter 11 petition distinguish transactions and events that are
directly associated with the reorganization from the operations of the business.
Accordingly, revenues, expenses (including professional fees), realized gains
and losses, and provisions for losses directly associated with the
reorganization and restructuring of the business are reported separately in the
financial statements. No material amounts were incurred or earned through June
30, 2003. The Statements of Consolidated Financial Position distinguish
pre-petition liabilities subject to compromise both from those pre-petition
liabilities that are not subject to compromise and from post-petition
liabilities. Liabilities subject to compromise are reported at the amounts
expected to be allowed, even if they may be settled for lesser amounts.
In addition, as a result of the Chapter 11 filing, the realization of
assets and satisfaction of liabilities, without substantial adjustments and/or
changes in ownership, are subject to uncertainty. While operating as
debtors-in-possession under the protection of Chapter 11 of the Bankruptcy Code
and subject to approval of the Bankruptcy Court or otherwise as permitted in the
ordinary course of business, the Debtors, or some of them, may sell or otherwise
dispose of assets and liquidate or settle liabilities for some amounts other
than those reflected in the consolidated financial statements. Further, a plan
in the Chapter 11 cases could materially change the amounts and classifications
in the historical consolidated financial statements.
Liabilities Subject to Compromise. Liabilities subject to compromise
refers to liabilities incurred prior to the Petition Date. These amounts
represent the Company's estimate of known or potential pre-petition claims to be
resolved in connection with the Chapter 11 Cases. Such claims remain subject to
future adjustments. Adjustments may result from negotiations, actions of the
Bankruptcy Court, rejection of executory contracts and unexpired leases, the
determination as to the value of any collateral securing claims, proofs of claim
or other events. It is anticipated that such adjustments, if any, would be
material. Payment terms for these amounts will be established in connection with
the Chapter 11 Cases.
Bankruptcy Items. In connection with the Company's bankruptcy filing, the
Company has paid $600,000 of retainers to professionals for in reorganization
expenses, the majority of which will related to costs to be incurred before
September 30, 2003. With regard to these payments, approximately $580,000 is
included in other current assets at June 30, 2003.
Condensed Balance Sheet Information. Condensed balance sheet information
with respect to Debtors at June 30, 2003 is as follows (in thousands):
Assets:
Current assets $19,901
Other assets 5,513
Liabilities:
Current liabilities 3,875
Liabilities subject to compromise 43,313
Long-term liabilities 741
9
The assets listed above do not include a note receivable from Waterlink UK
Holdings Limited to Waterlink, Inc. of approximately $8,401,000. This note
receivable is eliminated upon consolidation for purposes of the consolidated
balance sheet at June 30, 2003.
3. DISCONTINUED OPERATIONS
In May 2002, the Company sold substantially all of the assets of its Pure
Water Division for approximately $15.6 million in cash, $12.9 million of which
was received at closing and $2.7 million of which has either been placed in
escrow or has been held back by the purchaser, subject to reduction for any
indemnification claims made on or before May 30, 2004. There will not be any
gain or loss recorded in connection with the sale of the Pure Water Division
until such time as all indemnification periods have expired and the amounts have
been released from escrow.
Accordingly, the results of operations for the Pure Water Division have
been presented within discontinued operations in the accompanying consolidated
financial statements for all periods presented. The Company allocates interest
expense to its discontinued operations based on the expected net proceeds from
the sale of its assets. Information regarding discontinued operations for the
three and nine-month periods ended June 30, 2002 is presented below (in
thousands):
Three Nine
Months Months
Ended Ended
June 30, 2002
-----------------------
Net sales $ 2,240 $ 9,125
Operating income (156) 88
Allocated interest expense (158) (622)
Income tax expense -- --
------- -------
Loss from operations $ (314) $ (534)
======= =======
The remaining escrows and holdbacks related to the sale of the Pure Water
Division have been classified either as current or long-term assets on the
consolidated balance sheets at September 30, 2002 and June 30, 2003 based on the
anticipated timing of their release.
4. CUMULATIVE EFFECT OF ACCOUNTING CHANGE
In June 2001 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 142 (SFAS No. 142),
"Goodwill and Other Intangible Assets". This statement requires that goodwill
and intangible assets deemed to have an indefinite life not be amortized.
Instead of amortizing goodwill and intangible assets deemed to have an
indefinite life, the statement requires a test for impairment to be performed
annually, or immediately if conditions indicate that such impairment could
exist. The Company adopted the provisions of SFAS No. 142 effective October 1,
2002, and as a result, no longer records goodwill amortization, which was
$160,000 and $476,000 for the three and nine-months ended June 30, 2002,
respectively.
During the quarter ended December 31, 2002, the Company completed the
initial goodwill impairment review as required under SFAS No. 142 and determined
that an impairment
10
condition did exist. Using a discounted cash flow analysis prepared by
management, supported by an independent assessment of what a market comparable
valuation might be, the Company determined it was necessary to reduce the
goodwill balance at October 1, 2002 by $20,500,000.
Had we accounted for goodwill under SFAS No. 142 for all periods
presented, our results from continuing operations and related per share amounts
would have been as follows (in thousands, except per share data):
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2003 2002 2003
---- ---- ---- ----
Reported income (loss) from continuing operations $ 89 $ 367 $ (423) $57
Add back goodwill amortization 160 -- 476 --
-------- -------- -------- -----
Adjusted income from continuing operations $ 249 $ 367 $ 53 $57
======== ======== ======== =====
Reported income (loss) per share from continuing operations
$ 0.00 $ 0.02 $ (0.02) $0.00
Add back goodwill amortization 0.01 -- 0.02 --
-------- -------- -------- -----
Adjusted income per share from
continuing operations $ 0.01 $ 0.02 $ 0.00 $0.00
======== ======== ======== =====
There was no income tax effect related to the elimination of goodwill
amortization, since goodwill amortization with regard to the reporting units is
non-deductible for income tax purposes based on the nature of the acquisition.
Per share amounts for basic and assuming dilution are identical, as all common
stock equivalents are anti-dilutive for both periods presented.
5. INVENTORIES
Inventories consisted of the following (in thousands):
September 30, June 30,
2002 2003
---- ----
Raw materials and supplies $ 6,279 $4,061
Work in process 203 1,733
Finished goods 4,046 3,752
------- ------
$10,528 $9,546
======= ======
11
6. CONTRACT BILLING STATUS
Information with respect to the billing status of contracts in process is as
follows (in thousands):
September 30, June 30,
2002 2003
Contract costs incurred to date $20,664 $ 11,712
Estimated profits 8,753 5,048
------- --------
Contract revenue earned to date 29,417 16,760
Less billings to date 27,866 17,180
------- --------
Costs and estimated earnings in excess of
(less than) billings, net $ 1,551 $ (420)
======= ========
The above amounts are included in the accompanying consolidated balance
sheets as follows (in thousands):
September 30, June 30,
2002 2003
---- ----
Costs in excess of billings $ 1,783 $ 806
Billings in excess of cost (232) (1,226)
------- -------
$ 1,551 $ (420)
======= =======
7. CAPITALIZATION
Debt obligations consisted of the following (in thousands):
September 30, June 30,
2002 2003
---- ----
Senior credit facility with a group of banks $36,424 $34,681
Revolving facility in England with a bank -- 867
Subordinated notes to related parties 1,000 1,000
Convertible subordinated notes payable to former
shareholders of acquired business 2,250 2,250
------- -------
$39,674 $38,798
======= =======
With regard to the above debt obligations, the $34,681,000 of senior debt,
the $1,000,000 of subordinated notes to related parties, and the $2,250,000 of
convertible subordinated notes payable are all subject to compromise and have
been classified accordingly on the balance sheet as of June 30, 2003.
The Company's senior credit facility is with Bank of America, NA, as
agent, and with five other participating banks. Effective October 1, 2002, the
Company entered into an amendment to its senior credit facility that extended
the maturity date of the facility from October 1, 2002 to October 1, 2003,
assuming the Company maintains a certain level of earnings before interest and
taxes and maintains certain balance sheet ratios through September 30, 2003. The
amendment also required the Company to present to the senior lenders on or
before June 30, 2003 a
12
plan to repay the senior debt obligations. Concurrent with the amendment to the
senior credit facility, the maturity dates of all subordinated notes payable
were extended until October 15, 2003.
In December 2002, Sutcliffe Speakman Limited, Waterlink's wholly-owned
operating subsidiary in England, entered into a credit facility with The Royal
Bank of Scotland, with availability based on a percentage of eligible accounts
receivable, with a maximum borrowing amount of 1,250,000 pounds sterling. In
connection with this facility, certain accounts receivable in England were
pledged as collateral. In connection with entering into this credit facility,
Waterlink remitted $1 million of the proceeds to our senior bank group as
required by the October 1, 2002 amendment to the senior credit facility.
Comprehensive income for the three months ended June 30, 2002 and 2003 was
$969,000 and $768,000, respectively. The comprehensive loss for the nine months
ended June 30, 2002 and 2003 was $324,000 and $20,051,000, respectively. The
only significant component of comprehensive income or loss, other than net
income or loss, was the effect of foreign currency translation adjustments.
8. GOING CONCERN CONSIDERATIONS
The accompanying consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As indicated in
Note 2 Waterlink filed a petition for bankruptcy on June 27, 2003; and, as
indicated in Note 7, all of Waterlink's outstanding debt obligations are
classified as current liabilities. These factors raise substantial doubt about
Waterlink's ability to continue as a going concern for a reasonable period of
time. The financial statements do not include any adjustments relating to the
recoverability and classification of assets or the amounts and classification of
liabilities that might be necessary should Waterlink be unable to continue as a
going concern. The Company's continuation as a going concern is dependent on its
ability to: generate sufficient cash flows to operate its business; and to
ultimately confirm a plan in the Chapter 11 Cases. At this time, Waterlink can
give no level of assurance that we will be successful in developing confirmation
and executing a plan in the Chapter 11 Cases. If it is unable to do so, then
Waterlink would need to examine all alternatives, including, without limitation,
a possible liquidation.
9. EARNINGS PER SHARE
The computation of weighted average common shares outstanding, basic and
assuming dilution, for the three-months ended June 30, 2003 follows (in
thousands):
Average shares outstanding-basic 19,665
Effect of dilutive common stock warrants 409
------
Average shares outstanding-assuming dilution 20,074
======
The adjustment to earnings related to cash generated from the exercise of
dilutive common stock warrants was less than $1,000 and did not impact the
computation of earnings per share for either period presented.
13
10. STOCK BASED COMPENSATION
The Company accounts for employee stock options using the intrinsic value
method. The Company has no current plans to change accounting methods. If the
fair value recognition provisions of SFAS No. 123, "Accounting for Stock Based
Compensation" had been applied to all stock based awards, the results would have
been (in thousands, except for per share data):
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2003 2002 2003
---- ---- ---- ----
PRO FORMA IMPACT OF FAIR VALUE METHOD
Reported net income (loss) $(225) $ 367 $(957) $(20,443)
Stock-based employee compensation determined
under fair value based method, net of taxes (21) (11) 230 (37)
----- ----- ----- --------
Pro forma net income (loss) $(246) $ 356 $(727) $(20,480)
===== ===== ===== ========
EARNINGS (LOSS) PER COMMON SHARE
Basic and assuming dilution-as reported $(0.01) $0.02 $(0.05) $ (1.04)
Basic and assuming dilution-pro forma $(0.01) $0.02 $(0.04) $ (1.04)
The fair value of each award granted was estimated using a Black Scholes
option-pricing model.
14
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Waterlink is an international provider of integrated water and air
purification solutions for both industrial and municipal customers. Waterlink
was incorporated in Delaware on December 7, 1994. The continuing operations of
Waterlink are comprised of Barnebey Sutcliffe Corporation in the United States,
Sutcliffe Speakman Limited in England, and the corporate office.
CHAPTER 11
Bankruptcy Proceedings. On June 27, 2003, the Debtors filed voluntary
petitions for relief under Chapter 11 of the United States Bankruptcy Code. For
further details regarding the Chapter 11 Cases, see "Voluntary Chapter 11" in
the Notes to Consolidated Financial Statements.
CRITICAL ACCOUNTING POLICIES
Revenue Recognition
Waterlink considers its accounting policy regarding revenue recognition on
long-term contracts to be a critical accounting policy. The majority of revenue
relates to carbon sales and services and is recognized when title passes upon
shipment. The systems and equipment produced by Waterlink are custom designed
and can take a number of months to produce. Revenues from systems and equipment
contracts are recognized using the percentage of completion method of accounting
in the proportion that costs incurred bear to total estimated costs at
completion. Waterlink believes that this method of accounting best measures
revenue earned as progress is made toward completion of the contract. Revisions
of estimated costs are recognized in the period in which they are determined.
Provisions are made currently for all known or anticipated losses. Variations
from estimated contract performance could result in a material adjustment to
operating results for any fiscal quarter or year. Claims for extra work or
changes in scope of work are included in revenues when collection is probable.
Retirement Plans
Waterlink sponsors two defined benefit pension plans that cover
substantially all of our employees. The accounting for pensions is determined by
standardized accounting and actuarial methods that include critical assumptions;
which include discount rates, expected return on plan assets and future
compensation increases. Waterlink considers these assumptions to be critical as
they can impact periodic pension expense as well as the minimum pension
liability. During the year ended September 30, 2002, Waterlink increased the
additional minimum pension liability by $2,219,000 and reduced equity by the
corresponding amount. At June 30, 2003, Waterlink's accrued pension liabilities
totaled $3,815,000.
BACKLOG
In the past Waterlink has experienced quarterly fluctuations in operating
results due to the contractual nature of its business and the consequent timing
of these orders. In addition, certain of the contracts will be subject to the
customer's ability to finance, or fund from government sources, the actual costs
of completing the project as well as the ability to receive any necessary
permits to commence the project. Therefore, Waterlink expects that its future
operating results
15
could fluctuate, especially on a quarterly basis, due to the timing of the
awarding of such contracts, the ability to fund project costs, and the
recognition by Waterlink of revenues and profits. In addition, Waterlink has
historically operated with a moderate backlog. As of June 30, 2003, Waterlink's
total backlog from continuing operations was approximately $16.3 million,
consisting of $12.1 million of firm commitments to purchase carbon and related
services and $4.2 million of written purchase orders for systems and equipment.
Quarterly sales and operating results will be affected by the volume and timing
of contracts received and performed within the quarter, which are difficult to
forecast. Any significant deferral or cancellation of a contract could have a
material adverse effect on Waterlink's operating results in any particular
period. Because of these factors, Waterlink believes that period-to-period
comparisons of its operating results are not necessarily indicative of future
performances.
RESULTS OF CONTINUING OPERATIONS
The following table sets forth, for the periods indicated, statements of
operations data as a percentage of net sales. In an effort to enhance
comparability between the two periods, goodwill amortization has been excluded
from the three and six-month periods ended March 31, 2002.
Three Months Ended Nine Months Ended
June 30, June 30,
-------- --------
2002 2003 2002 2003
---- ---- ---- ----
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 76.5 77.1 76.9 77.6
----- ----- ----- -----
Gross profit 23.5 22.9 23.1 22.4
Selling, general and administrative expenses 15.2 15.0 15.9 16.1
----- ----- ----- -----
Operating income 8.3 7.9 7.2 6.3
Other expense:
Interest expense (5.7) (4.4) (5.9) (5.2)
Amortization of financing costs (0.8) (0.5) (1.1) (0.5)
Other items - net (0.2) 0.0 (0.1) 0.0
----- ----- ----- -----
Income before income taxes 1.6 3.0 0.1 0.6
Income taxes 0.0 1.0 0.0 0.5
----- ----- ----- -----
Income from continuing operations 1.6 2.0 0.1 0.1
Discontinued operations (2.0) -- (1.1) --
----- ----- ----- -----
Income (loss) before cumulative effect of
accounting change (0.4) 2.0 (1.0) 0.1
Cumulative effect of accounting change -- -- -- (42.6)
----- ----- ----- -----
Net income (loss) (0.4) % 2.0 % (1.0) % (42.5) %
===== ===== ===== =====
Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002
Net Sales: Net sales for the three months ended June 30, 2003 were $18,074,000,
an increase of $1,967,000, or 12.2%, from the $16,107,000 in net sales reported
in the comparable prior period. On a consolidated basis, sales of carbons and
related services increased by 13.0%, with increase realized both in England and
in the United States. Capital equipment sales increased by 8.9% in the current
quarter, with the increase coming in the United States.
16
Gross Profit: Gross profit for the three months ended June 30, 2003 was
$4,130,000, an increase of $349,000 from the comparable prior period, due to the
increase in net sales. The gross margin decreased from 23.5% in 2002 to 22.9% in
2003 as a result of product mix and classification of certain manufacturing
costs as compared to the prior year quarter.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses for the three months ended June 30, 2003 were
$2,702,000, an increase of $248,000, or 10.1%, from the comparable prior period.
This increase reflects $250,000 of costs recorded at the corporate office with
regard to professionals engaged to assist the Company with the evaluation of its
financial alternatives with regard to its leverage situation. Selling, general
and administrative expenses as a percentage of net sales were 15.0% for the
three months ended June 30, 2003 as compared to 15.2% for the comparable prior
period.
Interest Expense: Interest expense for the three months ended June 30, 2003 was
$792,000, a decrease of $131,000 from the comparable prior period. This decrease
reflects both a decrease in interest rates and principal reductions made over
the last year.
Amortization of Financing Costs: Amortization of financing costs was $100,000
for the three months ended June 30, 2003 and $127,000 for the three months ended
June 30, 2002.
Nine Months Ended June 30. 2003 Compared to Nine Months Ended June 30, 2002
Net Sales: Net sales for the nine months ended June 30, 2003 were $48,137,000,
an increase of $1,007,000, or 2.1%, from the $47,130,000 in net sales reported
in the comparable prior period. On a consolidated basis, sales of carbons and
related services increased by 6.1%, represented by a 35.7% increase in England
that was partially offset by a 2.3% decrease in the United States. This overall
growth in sales of carbon and related services was more than offset by a 12.8%
decrease in sales of capital equipment. Sales of capital equipment were down in
both the United States and England as compared to the prior year. Sales of
capital equipment were impacted by the lack of spending in the marketplace.
Gross Profit: Gross profit for the nine months ended June 30, 2003 was
$10,761,000, a decrease of $165,000 from the comparable prior period, due to a
reduction in the gross margin from 23.1% to 22.4%. The decrease in the gross
margin reflects product mix and the classification of certain manufacturing
costs as compared to the prior year quarter.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses for the nine months ended June 30, 2003 were $7,740,000,
an increase of $229,000, or 3.0%, from the comparable prior period. This
increase reflects $358,000 of costs recorded at the corporate office with regard
to professionals engaged to assist the Company with the evaluation of its
financial alternatives with regard to its leverage situation. Absent this
special expense, selling, general and administrative expense decreased by
$129,000, or 1.7%. Selling, general and administrative expenses as a percentage
of net sales were 16.1% for the three months ended June 30, 2003 as compared to
15.9% for the comparable prior period.
Interest Expense: Interest expense for the nine months ended June 30, 2003 was
$2,488,000, a decrease of $296,000 from the comparable prior period. This
decrease reflects both a decrease in interest rates and principal reductions
made over the last year.
17
Amortization of Financing Costs: Amortization of financing costs was $232,000
for the nine months ended June 30, 2003 and $503,000 for the nine months ended
June 30, 2002. The amount in the prior year period reflects the amortization of
fees relating to two separate bank amendments entered into from September 30,
2001 to March 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, Waterlink's primary sources of liquidity have been:
-- borrowings available under credit facilities
-- net proceeds from the sale of Waterlink's common and preferred stock
-- net proceeds from the sale of businesses in connection with the
strategic alternative process
-- issuance of common stock and seller financing incurred in connection
with Waterlink's completed acquisitions
-- cash flow from certain profitable operations
Historically, Waterlink's primary uses of capital have been:
-- the funding of its acquisition program
-- working capital requirements including the funding for growth at
certain operations
-- the funding required for certain under-performing acquisitions
-- the funding of interest on borrowings and the repayment of
borrowings
In May 2000 Waterlink announced that its board of directors had instructed
management to explore various strategic alternatives, including the sale of all
or part of Waterlink. To date, Waterlink has sold four of its five operating
divisions: the biological division in two separate transactions in September and
December 2000; the separations division in February 2001; the European water and
wastewater division in a series of transactions during the fourth quarter of our
fiscal year ended September 30, 2001, and the pure water division in May 2002.
At June 30, 2003, Waterlink has recorded $2,217,000 of net assets of
discontinued operations that represents amounts either placed in escrow or held
back by the purchaser of the pure water division. These assets are subject to
reduction for indemnification claims made on or before May 30, 2004.
In September 2001 the Board of Directors of Waterlink determined the
corporate office should be relocated to its Columbus, Ohio facility. This
consolidation resulted in personnel reductions and the disposition of certain
fixed assets. Accordingly, Waterlink recorded a special charge of $2,560,000 in
2001 relating to severance obligations to eight individuals and the write-off of
certain fixed assets. At June 30, 2003, approximately $1,241,000 remains accrued
for severance obligations relating to two of these individuals and is currently
being paid at a rate of approximately $24,000 per month.
For the nine months ended June 30, 2003, net cash provided by operating
activities was $8,204,000 and purchases of equipment totaled $956,000. During
the nine months ended June 30, 2003, Waterlink collected $250,000 of proceeds
related to the sale of the European water and wastewater division that was
previously held back. This entire amount was remitted to our senior lenders as
required by the domestic senior credit facility.
18
Waterlink is currently funding their operations through the use of cash
collateral pursuant to Order entered by the Bankruptcy Court pursuant to Section
363 of the Bankruptcy Code. The Debtors believe that the use of cash collateral
will support current operations and satisfy all customer needs. The Debtors
currently have authority to use cash collateral until September 26, 2003. The
Bankruptcy Court has scheduled a hearing to consider the further use of cash
collateral for September 25, 2003. The Debtors expect to file a motion fur
further use of cash collateral prior to the September 25, 2003 hearing date and
to ask the court for further use of cash collateral at the hearing.
Credit Availability
As of June 30, 2003, Waterlink's credit facilities were comprised of (1) a
$34,681,000 domestic senior credit facility with Bank of America, NA, as agent,
which expires on October 1, 2003, and (2) a 1,250,000 pounds sterling revolving
credit facility in England with The Royal Bank of Scotland. At June 30, 2003
there were no borrowings available under the domestic senior credit facility in
the United States and approximately $536,000 of borrowings available in England
with The Royal Bank of Scotland.
Effective October 1, 2002, Waterlink entered into an amendment to our
domestic senior credit facility that extended the maturity date of the facility
from October 1, 2002 to October 1, 2003, assuming Waterlink maintains a certain
level of earnings before interest and taxes and maintains certain balance sheet
ratios through September 30, 2003. The amendment also required Waterlink to
present to the senior lenders on or before June 30, 2003 a plan to repay the
senior debt obligations, as well as additional strategic milestone obligations
arising on or before July 31, 2003 and August 31, 2003 relating to said plan.
Without an amendment to our domestic senior credit facility that would further
extend the maturity date, an infusion of additional capital, or the sale of
significant assets, Waterlink will not be able to meet its scheduled payment
obligations under the domestic senior credit facility. Since the filing of the
Chapter 11 Cases, Waterlink has not made any payments under the domestic senior
credit facility. At this time, Waterlink can give no level of assurance that we
will be successful in developing and executing a plan to repay the domestic
senior credit facility.
In December 2002, Sutcliffe Speakman Limited, Waterlink's wholly-owned
operating subsidiary in England, entered into a credit facility with The Royal
Bank of Scotland, with availability based on a percentage of eligible accounts
receivable, with a maximum borrowing amount of 1,250,000 pounds sterling. In
connection with this facility certain accounts receivable were pledged as
collateral. In connection with entering into this credit facility, Waterlink
remitted $1 million of the proceeds to our senior bank group as required by the
October 1, 2002 amendment to the domestic senior credit facility. The balance
outstanding on the facility with The Royal Bank of Scotland in England was
approximately $867,000 at June 30, 2003.
The terms of the credit facilities restrict or prohibit Waterlink from
taking many actions, including paying dividends and incurring or assuming other
indebtedness or liens. Waterlink's obligations under the domestic senior credit
facility are secured by liens on a substantial portion of Waterlink's domestic
assets, including equipment, inventory, accounts receivable and general
intangibles and the pledge of most of the stock of Waterlink's subsidiaries.
19
The Debtors are currently funding their operations through the use of cash
collateral pursuant to Order entered by the Bankruptcy Court pursuant to Section
363 of the Bankruptcy Code. The Debtors believe that the use of cash collateral
will support current operations and satisfy all customer needs. The Debtors
currently have authority to use cash collateral until September 26, 2003. The
Bankruptcy Court has scheduled a hearing to consider the further use of cash
collateral for September 25, 2003. The Debtors expect to file a motion for
further use of cash collateral prior to the September 25, 2003 and to request
authorization for further use of cash collateral beyond September 26, 2003.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets" (SFAS No. 144), which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", and the accounting and reporting
provisions of Accounting Principles Board ("APB") Opinion No. 30, Reporting the
Results of Operations for a disposal of a segment of a business. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001. Waterlink adopted
SFAS No. 144 as of October 1, 2002 and the adoption of SFAS No. 144 did not have
an impact on Waterlink's financial position or results from operations.
In July 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan and nullifies
Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)." SFAS No. 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002
and, accordingly, Waterlink can only determine prospectively the impact, if any,
SFAS No. 146 would have on Waterlink's financial position and results of
operations.
In December 2002, FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure." SFAS No. 148 amends SFAS 123
"Accounting for Stock-Based Compensation" and APB Opinion No. 28, "Interim
Financial Reporting." Companies reporting stock-based compensation on the
intrinsic value method, as does Waterlink, are now required to include in
interim financial statements, as well as annual financial statements, certain
disclosures of stock-based compensation cost and pro forma net income and
earnings per share information as if the fair value method of accounting for
stock-based compensation had been applied to all periods. SFAS No. 148's
amendment of annual disclosure requirements is effective for Waterlink's fiscal
year ending September 30, 2003, whiles its impact on interim financial
information became effective for Waterlink's quarter ended March 31, 2003. SFAS
No. 148 had no impact on consolidated net income or net worth of Waterlink upon
implementation, but did add pro forma information, which is shown in Note 10 to
the financial statements for the three and nine-month periods ended June 30,
2003.
In May 2003, FASB issued SFAS No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liability and Equity" which requires
that certain classes of financial instruments previously classified in equity be
classified in the liability section of the balance
20
sheet. The Statement is effective for contracts created or modified after May
31, 2003 and for existing contracts at the beginning of the first interim period
beginning after June 15, 2003. Waterlink did not enter into any such contracts
between May 31, 2003 and June 30, 2003. The Company has not determined the
financial reporting effects of implementing this Statement as of July 1, 2003.
FORWARD LOOKING STATEMENTS
With the exception of historical information, the matters discussed in
this report may include forward-looking statements that involve risks and
uncertainties. While forward-looking statements are sometimes presented with
numerical specificity, they are based on a variety of assumptions made by
management regarding future circumstances over which Waterlink has little or no
control. A number of important factors, including those identified in this
section as well as factors discussed elsewhere herein, could cause Waterlink's
actual results to differ materially from those in forward-looking statements or
financial information. Actual results may differ from forward-looking results
for a number of reasons, including the following:
- the ability to negotiate with creditors payment terms
- the ability to continue as a going concern
- the ability to continue to obtain further Bankruptcy Court authority
to use cash collateral
- the ability to obtain court approval with respect to motions in the
Chapter 11 cases prosecuted by it from time to time - the
ability to develop, prosecute, confirm and consummate one or more
plans in the Chapter 11 Cases
- risks associated with third parties seeking and obtaining court
approval for the appointment of a Chapter 11 trustee or to convert
the Chapter 11 cases to Chapter 7 cases
- the ability to obtain and maintain normal terms with vendors and
service providers
- the ability to maintain contracts that are critical to its
operations
- the potential adverse impact of the Chapter 11 Cases on the
Debtors' liquidity or results of operations
- the ability to execute its business plan
- the ability to attract, motivate and/or retain key employees
- the ability to attract and retain customers
- changes in world economic conditions, including
- instability of governments and legal systems in countries in
which Waterlink conducts business
- significant changes in currency valuations
- recessionary environments
- the effects of military conflicts
- changes in customer demand and timing of orders as they affect sales
and product mix, including
- the effect of strikes at a customer's facilities
- variations in backlog
- the impact of changes in industry business cycles
- changes in environmental laws
21
- competitive factors, including
- changes in market penetration
- introduction of new products by existing and new competitors
- changes in operating costs, including
- changes in Waterlink's and its subcontractors' manufacturing
processes
- changes in costs associated with varying levels of operations
- changes resulting from different levels of customers demands
- effects of unplanned work stoppages
- changes in cost of labor and benefits
- the cost and availability of raw materials and energy
- the cost of capital, including interest rate increases
- unanticipated litigation, claims or assessments
Readers are referred to the "Forward-Looking Statements" and "Risk
Factors" sections, commencing on page 16, in Waterlink's 2002 Annual Report on
Form 10-K filed on December 10, 2002, which identifies important risk factors
that could cause actual results to differ from those contained in the
forward-looking statements herein.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
As of the end of the fiscal quarter ended June 30, 2003, an evaluation was
performed under the supervision and with the participation of the Company's
management, including the Chief Executive Officer ("CEO"), and the Chief
Financial Officer ("CFO"), of the effectiveness of the design and operation of
the Company's disclosure controls and procedures to ensure that the information
required to be disclosed by the Company in the reports that it files or submits
under the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. Based on that evaluation, the Company's
management, including the CEO and CFO, concluded that the Company's disclosure
controls and procedures were effective as of the end of the period covered by
this report.
(b) Changes in internal controls.
There was no change in the Company's internal control over financial reporting
that occurred during the fiscal quarter ended June 30, 2003 that has materially
affected, or is reasonably likely to materially affect, internal control over
financial reporting.
22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On June 27, 2003 (the "Petition Date"), Waterlink filed a voluntary
petition for reorganization under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), Case No. 03-11989. Four of
Waterlink's subsidiaries, Barnebey Sutcliffe Corporation, an Ohio corporation
(Case No. 03-11993), Waterlink Technologies, Inc., a Delaware corporation (Case
No. 03-11990), Waterlink Management, Inc., an Ohio corporation (Case No.
03-11992), and C'Treat Offshore, Inc., a Texas corporation (Case No. 03-11991)
also filed voluntary petitions for reorganization under the provisions of
Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. Waterlink and the
foregoing companies are collectively referred to as the "Filing Companies," and
the bankruptcy cases of the Filing Companies are collectively referred to herein
as the "Bankruptcy Cases." Pursuant to a Bankruptcy Court order dated July 2,
2003, the Bankruptcy Cases are being jointly administered under Case No.
03-11989.
Item 3. Defaults Upon Senior Securities.
On the Petition Date, the Debtors commenced the Chapter 11 Cases. Under
the terms of the senior credit facility with Bank of America, NA, as agent,
Waterlink was obligated to make a scheduled principal repayment of $150,000 and
a scheduled interest payment of approximately $177,000 on June 30, 2003, which
payment has not been made. As a result of the filing of the Chapter 11 Cases and
the non-payment, Waterlink is in default under the domestic senior credit
facility, with the total arrearage thereunder as of the date of this filing
being approximately $35,558,000, although enforcement of the lenders' remedies
is currently stayed as a result of the Chapter 11 Cases.
Item 5. Other Information
At a hearing conducted on July 31, 2003, NatCity Investments, Inc.
disclosed some of the terms of a non-binding letter of intent submitted with
respect to a possible acquisition of substantially all of the Debtors' assets,
which was reported in the August 1, 2003 edition of Daily Bankruptcy Review
Small-Cap, published by DowJones Newsletters. Due to, among other things, the
non-binding nature of the referenced draft letter of intent and the Debtors'
decision to retain NatCity Investments, Inc. to consider strategic alternatives,
the Debtors made the determination not to execute the draft letter of intent.
23
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibits are filed as part of this Form 10-Q.
31.1 Section 302 Certification of the Company's Chief Executive Officer
31.2 Section 302 Certification of the Company's Chief Financial Officer
32.1 Section 906 Certification of the Company's Chief Executive Officer
32.2 Section 906 Certification of the Company's Chief Financial Officer
(b) Reports on Form 8-K.
(i) On May 5, 2003 Waterlink filed a Current Report on Form 8-K
reporting under item 5 the resignation of Dr. R. Gary Bridge from
our Board of Directors.
(ii) On May 12, 2003 Waterlink filed a Current Report on Form 8-K
reporting under item 7 and item 9 the issuance of a press release
concerning second quarter operating results and including under item
7(c) a copy of the press release.
(iii) On June 13, 2003 Waterlink filed a Current Report on Form 8-K
reporting under item 5 the resignation of Peter G. Kleinhenz from
our Board of Directors.
(iv) On June 27, 2003 Waterlink filed a Current Report on Form 8-K
reporting under item 5 and item 7 the issuance of a press release
announcing that Waterlink filed a voluntary petition for
reorganization under Chapter 11 of Title 11 of the United States
Bankruptcy Code.
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Waterlink, Inc.
(Registrant)
By: /s/ William W. Vogelhuber
----------------------------------
William W. Vogelhuber
President and Chief Executive Officer
By: /s/ Donald A. Weidig
----------------------------------
Donald A. Weidig
Chief Financial Officer
Dated: August 19, 2003
25