<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
------------------------------------------------
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 0-27738
----------------------------------------------------------
THE JPM COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1702908
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
155 North 15th Street, Lewisburg, PA 17837
- --------------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrants telephone number, including area code 717-524-8225
-------------------------------
Route 15 North, Lewisburg, PA 17837
- --------------------------------------------------------------------------------
(Former address of principal executive offices) (ZIP 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 10 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 issuers classes of
common stock, as of the latest practicable date.
At December 31, 1997, 6,983,969 shares of common stock, $.000067 par value, were
issued and outstanding.
<PAGE>
THE JPM COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited-in thousands)
<TABLE>
<CAPTION>
Three Months Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Net sales $ 31,466 $ 26,721
Cost of sales 26,243 21,684
--------- ---------
Gross profit 5,223 5,037
Selling, general and administrative 3,251 2,280
Secondary offering costs 400 -
--------- ---------
Operating profit 1,572 2,757
Other Income (expense)
Interest expense (264) (110)
Other (net) 61 299
--------- ---------
(203) 189
--------- ---------
Income before taxes 1,369 2,946
Provision for income taxes 520 1,178
--------- ---------
Net income $ 849 $ 1,768
========= =========
Basic earnings per share $ 0.12 $ 0.26
========= =========
Diluted earnings per share $ 0.11 $ 0.24
========= =========
Average number of shares outstanding
(Basic) 6,978,000 6,815,000
Average number of shares outstanding
(Diluted) 7,540,000 7,290,000
</TABLE>
The accompanying notes are an integral part of these statements.
Page 2
<PAGE>
THE JPM COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited-In Thousands)
<TABLE>
<CAPTION>
December 31, 1997 September 30, 1997
----------------- ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 1,323 $ 543
Accounts receivable, net 13,961 12,692
Inventories, net 20,817 19,328
Other current assets 2,466 2,045
------ ------
Total current assets 38,567 34,608
Property, plant and equipment, net 15,114 13,552
Excess of cost over fair value of
assets acquired, net 4,722 4,807
Other assets 1,249 1,163
------ ------
$ 59,652 $ 54,130
====== ======
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 12,880 $ 8,182
Current maturities of long-term debt 1,522 1,517
Accounts payable 5,601 6,841
Accrued expenses 5,402 3,924
Deferred income taxes 1,532 1,532
------ ------
Total current liabilities 26,937 21,996
Long-term debt 2,638 2,805
Other long-term liabilities 922 1,098
------ ------
30,497 25,899
SHAREHOLDERS EQUITY
Preferred stock, no par value,
10,000,000 shares authorized;
None issued and outstanding - -
Common Stock, $.000067 par value,
40,000,000 shares authorized,
Issued 6,984,000 at December 31, 1997
and 6,970,000 at
September 30, 1997 - -
Additional paid-in capital 17,282 17,187
Cumulative translation adjustment (20) -
Retained earnings 11,893 11,044
------ ------
Total shareholders equity 29,155 28,231
------ ------
$ 59,652 $ 54,130
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
Page 3
<PAGE>
THE JPM COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited-in thousands)
<TABLE>
<CAPTION>
Three Months Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
- -------------------------------------
Net income $ 849 $ 1,768
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 523 384
Foreign currency translation (gain)
loss (54) (349)
Loss (gain) on sale of property,
plant and equipment - 75
Deferred taxes (224) 4
Deferred compensation expense 49 27
Change in assets and liabilities:
(Increase) decrease in accounts
receivable (1,072) 685
(Increase) decrease in inventories (1,489) (1,986)
(Increase) decrease in other
assets (623) (77)
Increase (decrease) in accounts
payable (1,240) (1,049)
Increase (decrease) in accrued
expenses 1,478 (82)
Increase (decrease) in income
taxes payable - (63)
------ ------
Net cash provided by (used
in) operating activities (1,803) (663)
------ ------
Cash flows from investing activities:
Capital expenditures (2,000) (775)
Proceeds from the sales of property,
plant and equipment - 71
Deferred compensation plan
contributions (48) -
------ ------
Net cash provided by (used in)
investing activities (2,048) (704)
------ ------
Cash flows from financing activities:
Net borrowings (repayments) under
credit facilities 4,698 838
Principal payments on long-term debt (162) (157)
Proceeds from exercise of stock
options 95 27
------ ------
Net cash provided by (used in) 4,631 708
financing activities ------ ------
Increase (decrease) in cash 780 (659)
Cash at beginning of the period 543 1,411
------ ------
Cash at the end of the period $ 1,323 $ 752
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
Page 4
<PAGE>
Accounting Policies
- -------------------
The consolidated balance sheet as of December 31, 1997, and the related
consolidated statements of operations and cash flows for the three month periods
ended December 31, 1997 and December 31, 1996, have been prepared by the Company
without audit. In the opinion of the management, the financial statements
include all of the adjustments necessary for fair presentation. All adjustments
made were of a normal recurring nature. Interim results are not necessarily
indicative of results for a full year. For further financial information, refer
to the audited financial statements of the Company and the notes thereto for the
fiscal year ended September 30, 1997, included in the Companys Form 10-K dated
November 24, 1997.
Inventories
- -----------
Inventories are valued at the lower of cost or market as determined on the
first-in, first-out basis. Cost includes raw materials, direct labor and
manufacturing overhead. The Company generally provides reserves for inventory
considered to be in excess of 12 months of future demand.
<TABLE>
<CAPTION>
December 31, September 30,
(in thousands) 1997 1997
-------- --------
<S> <C> <C>
Finished goods $ 4,825 $ 4,103
Work-in-process 3,730 2,810
Raw material and supplies 12,959 13,108
Valuation reserves (697) (693)
------ ------
$ 20,817 $ 19,328
====== ======
</TABLE>
Earnings Per Share Information (SFAS 128)
- -----------------------------------------
The Company has adopted Statement of Financial Accounting Standards No. 128,
Earnings per Share (SFAS 128), which establishes new standards for computing and
presenting earnings per share (EPS). SFAS 128 replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires dual presentation
of diluted EPS on the face of the income statement for all entities with a
complex capital structure. SFAS 128 is effective for financial statements issued
for periods ending after December 15, 1997. All prior period EPS information has
been restated in accordance with SFAS 128. The share difference between the
basic average number of shares outstanding and the diluted average number of
shares outstanding is the treasury stock method calculation of the unexercised
stock options granted under the Companys 1993 and 1995 stock option plans.
Short-Term Borrowings
- ---------------------
In December 1997, the Company increased its revolving line of credit to permit
the Company to draw up to $30,000,000. In conjunction with this increase, the
bank agreed to delete the advance formula based on 90% of the Companys qualified
accounts receivable and 80% of its raw material and finished goods inventories.
Page 5
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Net sales for the three month period ended December 31, 1997 were $31,466,000,
an increase of $4,745,000, or 17.8% compared to the net sales of $26,721,000 for
the same period one year earlier. The net sales increase for the three month
period was primarily the result of internal sales growth through increased
volumes with existing customers. The Company has announced that it expects that
sales in its second fiscal quarter may be lower than sales during its first
fiscal quarter.
Gross profit was $5,223,000, an increase of $186,000 or 3.7%, for the three
month period compared to $5,037,000 for the corresponding period one year
earlier. Gross profit as a percentage of net sales decreased to 16.6% from 18.9%
for the three month period when compared to the same period one year earlier.
The decrease in gross profit as a percentage of net sales for the three month
period was primarily the result of an increase in direct labor costs related to
new product start-up costs, a 4% wage increase granted in October to
substantially all of the Companys Pennsylvania and South Carolina employees and
lower productivity related to the start-ups and support for the $4,321,000
increase in sales experienced in the first fiscal quarter of 1998 over the
fourth fiscal quarter of 1997. The Company believes that its margins will
continue to be depressed in the short-term for the above reasons. As a result of
these factors, the Company is evaluating its cost structures against its
expectations of growth.
Selling, general and administrative (SG & A) expenses increased $971,000, or
42.6% for the three month period when compared to the same period one year
earlier. The three month comparison excludes the $400,000 charge for the write-
off expenses related to the cancelled secondary offering. As a percent of net
sales (excluding the charge for the expenses related to the cancelled secondary
offering), SG & A expenses increased to 10.3% for the three month period
compared to 8.5% for the same period one year earlier. In addition to the charge
for costs related to the cancelled secondary offering, the increased SG & A
expense increases were primarily attributable to compensation expense necessary
to support the Companys growth both domestically and internationally, travel
expense, costs related to hiring new employees and to commissions paid on the
sale of certain of the Company's products.
The Company's effective tax rate for the three month period was 38.0% compared
to 40% in the corresponding period one year earlier.
Net earnings including the charge for expenses related to the cancellation of
the secondary offering (which charge had a $248,000 after tax effect) decreased
$919,000, or 52.0% compared to the same period one year earlier. Without the
secondary offering expense charge, net earnings would have declined $671,000 or
a decrease of 38% when compared to the same period one year earlier. The net
earnings decrease during the three month period was primarily due to the
decreased margins and increased SG & A expense as discussed above. Due to the
reasons discussed under gross profit and under SG & A expenses, the Company
anticipates that its net profit will continue to be lower than historical norms
for at least the next two quarters.
Diluted earnings per share decreased to $0.11 (after the $0.03 charge for the
write-off of expenses related to the cancelled secondary offering) from $0.24
for the three month period one year earlier.
Year 2000 Issues
- ----------------
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Companys
computer programs that have date-sensitive software may recognize a date using
00 as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
Based on a recent assessment, the Company determined that it will be required to
replace portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999. The Company presently believes that with
modifications to existing software, the Year 2000 Issue can be mitigated.
However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Company.
Page 6
<PAGE>
The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties failure to remediate their own Year 2000
Issue. The Companys total Year 2000 project costs include the estimated costs
and time associated with the impact of a third party's Year 2000 Issue on the
Company, and are based on presently available information. However, there can be
no guarantee that the systems of other companies on which the Companys systems
rely will be timely converted, or that a failure to convert by another company,
or a conversion that is incompatible with the Companys systems, would not have
material adverse effect on the Company. The Company has determined it has no
exposure to contingencies related to the Year 2000 Issue for the products it has
sold.
The Company plans to complete the Year 2000 project by December 31, 1998. The
total cost of the Year 2000 project is estimated at $100,000, substantially all
of which is to purchase a revision of its current software, and is being funded
through operating cash flows.
The costs of the project and the date on which the Company plans to complete the
Year 2000 modifications are based on managements best estimates, which were
derived utilizing assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from these plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
Liquidity and Capital Resources
- -------------------------------
Operating activities during the first three months of fiscal 1998 used cash in
the amount of $1,803,000, primarily attributable to increases in accounts
receivable and inventory, as compared to cash used in the amount of $663,000
during the same period one year earlier. Working capital at December 31, 1997
was $11,630,000, a decrease of $982,000 from September 30, 1997. During the
first three months of fiscal 1998, the Company had capital expenditures of
approximately $2,000,000, comprised mainly of costs related to the remodeling
and expansion of a small manufacturing facility into the Companys corporate
office.
In December 1997, the Company expanded its credit line from $20,000,000 to
$30,000,000. In conjunction with this increase in the line of credit, the Bank
agreed to delete the advance formula, and the requirement for monthly borrowing
base certifications to verify the borrowers accounts receivable and inventory.
Borrowings under the Companys line of credit at December 31, 1997 were
$12,880,000. $10,000,000 was borrowed under the terms of the line of credit
agreement at a LIBOR rate of 7.125%, the remainder was borrowed at an interest
rate of 8.25% against a borrowing availability of $30,000,000. The Company
believes cash flow from operations and funds available from its bank line of
credit will be sufficient to satisfy its working capital requirements and
capital expenditure needs for at least the next twelve months. However,
depending upon its rate of growth, acquisitions and profitability, the Company
may require additional equity or debt financing to meet its working capital
requirements or capital expenditure needs, including the possible need for
additional manufacturing capacity.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995.
This filing may contain forward-looking statements that involve risks and
uncertainties. Among the important factors which could cause actual results to
differ materially from those in the forward-looking statements are the impact of
competitive products and pricing, product demand, the presence of competitors
with greater financial resources, commercialization risks, costs associated with
integration and administration of acquired operations, capacity and supply
constraints or difficulties, the results of financing efforts and other factors
detailed in the Companys filings with the Securities and Exchange Commission
including its recent filings on Forms 10-K, 10-Q and Schedule 14A.
Page 7
<PAGE>
PART II - OTHER INFORMATION
Item 1. N/A
- ------- ---
Item 2. N/A
- ------- ---
Item 3. N/A
- ------- ---
Item 4. N/A
- ------- ---
Item 5. N/A
- ------- ---
Item 6. Exhibits and Reports on Form 8-K.
- ------- ---------------------------------
(a) None
Page 8
<PAGE>
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.
THE JPM COMPANY
---------------
Registrant
Date: February 12, 1998 By: /s/ John H. Mathias
---------------------- ------------------------------
John H. Mathias
Chairman of the Board and Chief
Executive Officer (Principal Executive
Officer)
Date: February 12, 1998 By: /s/ William D. Baker
---------------------- -------------------------------
William D. Baker
Vice President, Chief Financial Officer
and Officer
(Principal Financial Officer and
Officer and Accounting
Page 9
<PAGE>
EXHIBIT INDEX
-------------
Exhibit numbers are in accordance with the
Exhibit Table in Item 601 of Regulation S-K
-------------------------------------------
Exhibit No. Exhibit Description
- ----------- -------------------
3.1.* Amended and Restated Articles of
Incorporated of the Company
3.2.* Amended and Restated Bylaws of the Company
4.1.* Specimen Certification of Common Stock of
the Company
10.4.1.* List of contracts identified in Item 16 of
Registration Statement the Companys
10.4.2. List of contracts identified in Item 14 of
the Companys Form 10-K dated November
24, 1997 (Commission File No. 0-27730)
10.4.3. Employment Agreement dated October 14,
1997, by and between Wayne A. Bromfield
and The JPM Company
10.4.4. Amendment dated December 17, 1997, to the
May 30, 1997 Revolving Line of Credit
Business Loan Agreement by and between The
JPM Company and CoreStates
24.1. Power of Attorney filed as Item 24.1 of the
Company's Form 10-K dated November 24, 1997
(Commission File No. 0-27730)
27 Financial Data Schedule
* Filed as part of the Companys Registration Statement filed on Form S-1 on
February 9, 1996 and declared effective April 30, 1996.
Page 10
<PAGE>
EXHIBIT 10.4.3
EMPLOYMENT AGREEMENT
The Agreement (Agreement), dated October 14, 1997, is between The JPM
Company (Company), a Pennsylvania corporation and Wayne A. Bromfield (Employee).
The Parties, intending to be legally bound, agree as follows:
1. Employment. The Company hereby employs Employee and the Employee hereby
--------------
accepts employment upon the terms and conditions contained in this Agreement.
2. Term. The term of this Agreement is indefinite.
--------
3. Duties. During the employment period, the Employee will devote his full
----------
working time and best efforts to the Company in fulfilling the duties of his
position. His initial title shall be Executive Vice President, General Counsel,
and Corporate Secretary. The principle duties of the position shall include
3.1. Coordination and control of all Company legal activities;
3.2. Oversight of merger and acquisition agreements and integration
planning;
3.3. Administrative oversight of global human resources functions.
3.4. Such additional duties as are assigned from time to time by the
Company through John H. Mathias, CEO or James P. Mathias, COO, to both or either
of whom he shall solely report.
4. Compensation.
----------------
4.1. Salary. The Employees base salary shall be One Hundred Seventy
------------
Five Thousand Dollars ($175,000) per year payable in monthly installments,
subject to increase by the Board of Directors, which shall review the salary
periodically. The salary shall not be decreased without the consent of Employee.
4.2. Signing Bonus. The Employee shall receive an additional twenty
-------------------
five thousand ($25,000) upon commencement of work, which shall be payable on or
before September 30, 1997.
4.3. Incentive Compensation. For each year of employment, Employee
----------------------------
shall be eligible to receive a cash bonus in an amount equal to twenty percent
(20%) of his base salary, provided that the Company satisfies its
<PAGE>
financial objectives for which the bonus is paid.
4.4. Benefits. Employee will be eligible to participate, to the
--------------
extent it is legal and permitted by the benefits contracts, in all benefit
programs of the Company which are in effect for its executive personnel from
time to time. Employee shall be entitled each year to vacation for a period of
time consistent with the normal policy of the Company, during which period
Employees compensation shall be paid in full. If any modifications of the
benefit package result in a net reduction in compensation to the Employee, the
Company will pay Employee a cash equivalent.
4.5. Special Benefits.
----------------------
4.5.1. Car. Employee shall receive a car allowance which shall
----------
permit use of a automobile with a purchase price no greater than thirty thousand
dollars ($30,000), or an allowance of up to $7,500 per year, at the option of
Company.
4.5.2. Deferred Compensation. For each year of employment,
----------------------------
Employee shall receive as deferred compensation an amount equal to ten percent
of his annual base salary. Company shall permit Employee to enroll in any
further deferred compensation plan which would permit Employee to defer up to
twenty five percent (25%) of his total income.
4.5.3. Stock Options. Company shall issue 20,000 stock options to
-------------------
Employee, the date of Agreement signing, which options shall be issued at market
value as of the date of employment.
4.5.4. Dues and Fees. Company recognizes that Employee will
---------------------
require professional, technical and technological support for performance of the
functions assigned to him. Company agrees to reimburse Employee, or to directly
pay, for professional dues, fees, insurances, and resources appropriate and
necessary to the performance of his duties, including membership in professional
organizations of assistance in such performance.
4.5.5. Support Staff. An administrative support person shall
---------------------
be assigned to Employee which person may be assigned additional duties from time
to time by Company. That person shall be employed at an initial salary range of
$33 35,000, together with standard Company benefits customarily available to
such personnel.
4.5.6. Index. All references within this agreement to dollar
-------------
amounts are calculated on the basis of September 1, 1997 valuations and shall be
subject to adjustment from time to time for inflation.
5. Acknowledgment. Employee acknowledges that the Companys
------------------
<PAGE>
business and services are highly specialized, that the identity and particular
needs of the Companys customers and suppliers are not generally known and that
the documents and information regarding the Companys customers, suppliers,
services and methods of operation, sales, pricing and costs are highly
confidential and constitute trade secrets. Employee further acknowledges that
the services rendered to the Company by Employee have been or will be of special
and unusual character which have unique value to the Company and that Employee
has had or will have access to trade secrets and confidential information
belonging to the Company, the loss of which cannot adequately be compensated by
damages in an action at law.
6. Covenant Against Competition. During the term of Employees employment
-------------------------------
with the company and for a period of three years from the voluntary or
involuntary termination of Employees agreement with the Company for any reason
whatsoever, Employee will not directly or indirectly, own, manage, operate,
control, be employed by, perform services for, consult with, solicit business
for, participate in, or be connected with the ownership, management, operation,
or control of any business which performs the services materially similar to or
competitive with those provided by the Company in any location where the Company
has had an office or has sold products or provided services to customers during
the period Employee is employed by the Company. Nothing in this paragraph shall
prohibit stock ownership, directly or through a mutual fund, in such companies.
7. Covenant Against Disclosure of Confidential Information. During the
-----------------------------------------------------------
term of Employees employment with the Company and for a period of three (3)
years after the termination of Employees employment with the Company for any
reason whatsoever, Employee shall not use for any purpose or disclose to any
person or entity any confidential information acquired during the course of
employment with the Company. The term confidential information as used in this
Agreement includes, but is not limited to, records, lists, and knowledge of the
Companys current and former customers, suppliers, methods of operation,
processes, trade secrets, methods of determination of the prices, financial
consideration, profits, sales, net income, and indebtedness.
8. Non solicitation of Employees. During the term of Employees
---------------------------------
employment with the Company and for a period of three (3) years from the
voluntary or involuntary termination of Employees employment with the Company
for any reason whatsoever, Employee shall not either on his own account of for
any person, firm, partnership, corporation, or other entity solicit, interfere
with, or endeavor to cause any employee of the Company to leave his or her
employment, or induce or attempt to induce, any such employee to breach his or
her employment agreement with the Company. In the event of termination, however,
nothing in this paragraph shall inhibit the Employee from maintaining his
personal administrative staff in subsequent employment.
<PAGE>
9. Non solicitation of Customers. During the term of Employees employment
---------------------------------
with the Company and for a period of three (3) years from the voluntary or
involuntary termination of Employees employment with the Company for any reason
whatsoever, Employee shall not solicit, induce or attempt to induce, any past or
current customer of the Company to cease doing business in whole or in part
through the Company, or to do business with any other person, firm, partnership,
corporation, or other entity which performs services materially similar to or
competitive with those provided by the Company.
10. Reasonableness of Restriction. Employee has carefully read and
----------------------------------
considered the provisions hereof, and having done so, agrees that the
restrictions set forth in paragraphs 6 through 9 of this Agreement are fair and
reasonable and are reasonably required for the protection of the interests of
the Company.
11. Compensation During Disability and Upon Death.
--------------------------------------------------
11.1. Compensation During Initial Disability Period. If at any time
----------------------------------------------------
during the term of this agreement, Employee becomes disabled or incapacitated or
is unable for any reason to perform substantially his duties under this
agreement and he has not breached any of the provisions of this agreement, the
Company shall continue to compensate Employee as provided in Paragraph 4, but
only as to the first six months of Employees disability or incapacitation (the
Initial Disability Period).
11.2. Compensation After Initial Disability Period. Effective after
---------------------------------------------------
expiration of the Initial Disability Period, the Company may, at its sole
option, elect to
11.2.1. continue payment of Employees salary until he is able
to return to work;
11.2.2. continue payment of Employees salary for such period
greater than six months as the Company elects; or
11.2.3. terminate this Agreement.
11.3. Death of Employee. If Employee should die during the term of
------------------------
this Agreement, Employees employment and the Companys obligations hereunder
shall terminate as of the date of the Employees death.
12. Termination.
-----------------
12.1. Conditions of Termination. This Agreement may be terminated
--------------------------------
at any time upon ninety (90) days notice to the other party.
<PAGE>
12.2. Payment upon Termination. If this Agreement is terminated by
-------------------------------
the Company, Employee shall receive termination compensation equal to the
greater of one years salary or $175,000, unless such termination was for cause.
Cause shall be limited to termination for:
12.2.1. Fraud, theft or embezzlement of Companys assets; or
12.2.2. Violation of paragraph 7 of this Agreement.
12.3. Death or Disability. No additional payment shall be due if
--------------------------
termination is due to the death of Employee, other than as set forth in
paragraph 12.4 below. If termination is due to disability of Employee, one half
years salary or $87,500, whichever is greater, shall be payable to Employee upon
termination.
12.4. Compensation upon Termination. Upon termination of employment,
------------------------------------
Employee shall be entitled to receive all compensation accrued and unpaid as of
the date of termination, together with such sums as are payable under paragraph
12.2 above.
13. Rights and Remedies.
------------------------
13.1. Both parties recognize that the services to be rendered under\
this Agreement by Employee are special, unique and are of extraordinary
character. Upon breach of any provision of this Agreement, either may, at its
option, terminate this Agreement or elect to institute and prosecute proceedings
in any court of competent jurisdiction, either in law or in equity, to obtain
damages, to enforce specific performance of the Agreement, to enjoin the other
party as appropriate, and to recover reasonable attorneys fees and the costs of
prosecuting such action.
13.2. Termination for any cause shall not constitute a waiver of the
Companys rights under Paragraphs 6 through 9 of this Agreement nor a release of
Employee from his obligations hereunder. The rights and remedies of the parties
shall be cumulative and in addition to any other rights and remedies provided by
law or otherwise. A partys failure to exercise its right to terminate this
Agreement or to enforce any provision of this Agreement for default or violation
by the other party shall not prejudice such partys right of termination or
enforcement for any further or other default or violation.
14. Miscellaneous.
-------------------
14.1. Governing Law. It is understood and agreed that the
--------------------
construction and the interpretation of this Agreement shall at all times and in
all respects be governed by the laws of the Commonwealth of Pennsylvania,
<PAGE>
without giving effect to the conflict of laws provisions thereof. Venue of any
action brought to enforce this Agreement or relating to this Agreement shall be
brought exclusively in a Pennsylvania Court of Common Pleas or the U.S.District
Court for the Middle District of Pennsylvania.
14.2. Assignment. This Agreement shall be binding upon and shall
-----------------
inure to the benefit of the Company and Employee, and their respective
successors and assigns. The Company shall have the right to assign its rights
hereunder to any successor in interest, whether by merger, consolidation, sale
of assets, or otherwise, provided, however, that the duties and reporting
obligations shall remain as set forth in paragraph 3 hereof. Employee may not
assign any of his rights or delegate any of his obligations under this Agreement
without first obtaining written consent from the Company.
14.3. Entire Agreement. This Agreement constitutes the entire
-----------------------
agreement between the parties respecting the employment of Employee, and there
are no representations, warranties or commitments, except as set forth in this
Agreement. This Agreement may be amended only by a writing executed by the
parties to this Agreement. No valid waiver of any provision of this Agreement at
any time shall be deemed a waiver of any other provision of this Agreement.
14.4. Severability. The provisions of this Agreement shall be
-------------------
deemed severable and the invalidity or unenforceability of any of the provisions
hereof shall not affect the validity or enforceability of any other provision in
this Agreement.
14.4.1.1. Notices. Any notice, request, demand or other
------------------
communication made under this Agreement shall be in writing and shall be deemed
to be duly given when personally delivered to an officer of the Company or to
Employee, as the case may be, or when delivered by mail at the following
addresses:
To the Company: To Wayne Bromfield:
The JPM Company Wayne A. Bromfield
Rt. 15 North P.O. Box 415
Lewisburg, PA 17837 New Berlin, PA 17855
15. Effective Date. The effective date of this Agreement shall be
--------------------
October 1, 1997.
IN WITNESS WHEREOF, the Company and the Employee have duly executed this
Agreement as of October 14, 1997.
ATTEST: /s/James P. Mathias THE JPM COMPANY
- --------------------------- By: /s/ John H. Mathias
----------------------
<PAGE>
Corporate Seal Its: CEO
/s/ Laney Shambach -----------------------
- -------------------------- /s/ Wayne A. Bromfield
Witness -----------------------
Wayne A. Bromfield
<PAGE>
EXHIBIT 10.4.4
December 17, 1997
William D. Baker, CFO and Treasurer
The JPM Company
155 N. 15th Street
Lewisburg, PA 17837
Dear Bill:
By letter dated May 28, 1997, I advised you that CoreStates Bank, N.A. (the
Bank) had approved a secured line of credit (the Line of Credit) in an amount of
up to Twenty Million Dollars ($20,000,000) to The JPM Company (the Borrower). I
am pleased to advise you that the Bank has approved, subject to the execution of
loan documentation required by the Bank in mutually acceptable form (together
with the Commitment Letter dated May 28, 1997, and this Letter, the Loan
Documents) an increase in the maximum amount of the Line of Credit to Thirty
Million Dollars ($30,000,000). In conjunction with this approval, the Bank has
agreed (i) to delete the advance formula and the requirement for monthly
borrowing base certifications to verify the Borrowers qualified accounts
receivable and inventory, and (ii) to change the requirement for monthly
financial statements to a requirement for quarterly financial statements (the
Borrowers 10-Q Reports). The Bank will continue to require audited financial
statements on an annual basis (annual report and the Borrowers 10-K Reports).
All other terms and conditions, covenants and requirements of the Line of Credit
as set forth in existing loan, collateral and guaranty documents will remain in
force and effect and are ratified and confirmed.
Please signify your concurrence by signing, dating and returning a copy of this
letter to the Bank by or before January 15, 1998. Unless so accepted, this
commitment shall be null and void.
Very truly yours,
/s/ David M. Diffenderffer
David M. Diffenderffer
Vice President
<PAGE>
The JPM Company
Page 2
December 17, 1997
Acknowledged and accepted this 5th day of January, 1998.
-------------------------
ATTEST: THE JPM COMPANY
By: /s/ Wayne A. Bromfield By: /s/John H. Mathias
----------------------------- --------------------------------------
Wayne A. Bromfield John H. Mathias
Title: Secretary Title: Chief Executive Officer
------------------------- -----------------------------------
ATTEST: ELECTRONICA PANTERA,
S.A. DE C.V.
By:_____________________________ By: /s/ William D. Baker
--------------------------------------
William D. Baker
Title:__________________________ Title: Vice President, CFO, Treasurer
-----------------------------------
ATTEST: THE JPM COMPANY DE MEXICO,
S.A. DE C.V.
By:_____________________________ By: /s/ William D. Baker
-------------------------------------
William D. Baker
Title:__________________________ Title: Vice President, CFO, Treasurer
-----------------------------------
ATTEST: THE JPM COMPANY OF DELAWARE,
INC.
By:_____________________________ By: /s/ John H. Mathias
--------------------------------------
John H. Mathias
Title:__________________________ Title: Chief Executive Officer
-----------------------------------
ATTEST: DENRON, INC., t/d/b/a/ The JPM Company
By: /s/ William D. Baker By: /s/ James P. Mathias
----------------------------- --------------------------------------
William D. Baker James P. Mathias
Title: CFO Title: President
-------------------------- -----------------------------------
<PAGE>
The JPM Company
Page 3
December 17, 1997
ATTEST: JPM DEUTSCHLAND
GmbH
By:_____________________________ By: /s/ John H. Mathias
--------------------------------------
John H. Mathias
Title:__________________________ Title: Shareholder
-----------------------------------
ATTEST: JPM CZECH REPUBLIC
spol, s.r.o.
By: ____________________________ By: /s/ John H. Mathias
--------------------------------------
John H. Mathias
Title:__________________________ Title: Shareholder
-----------------------------------
ATTEST: THE JPM TECHNOLOGY, INC,
By: ____________________________ By: /s/ Joseph a. Mattioli
--------------------------------------
Joseph A. Mattioli
Title:__________________________ Title: President
-----------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE JPM COMPANY AND SUBSIDIARIES AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,323
<SECURITIES> 0
<RECEIVABLES> 14,198
<ALLOWANCES> 237
<INVENTORY> 20,817
<CURRENT-ASSETS> 38,567
<PP&E> 24,129
<DEPRECIATION> 9,015
<TOTAL-ASSETS> 59,652
<CURRENT-LIABILITIES> 26,937
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,155
<TOTAL-LIABILITY-AND-EQUITY> 59,652
<SALES> 31,466
<TOTAL-REVENUES> 31,466
<CGS> 26,243
<TOTAL-COSTS> 29,894
<OTHER-EXPENSES> (61)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 264
<INCOME-PRETAX> 1,369
<INCOME-TAX> 520
<INCOME-CONTINUING> 849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 849
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.11
</TABLE>
