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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 4, 1997
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BOWMAR INSTRUMENT CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Indiana 1-4817 35-0905052
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
5080 N. 40th Street, Suite 475, Phoenix, AZ 85018
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (602) 957-0271
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other
Acting upon the recommendations of management, on December 4, 1997, the Board
of Directors of Bowmar Instrument Corporation (the "Company") determined to
implement a series of actions designed to strategically reposition the Company,
reduce corporate overhead and realign management. The Board of Directors has
concluded that these steps are in the best interest of the Company and its
shareholders.
The Board of Directors has determined to seek a buyer for the Company's
Technologies division based in Fort Wayne, Indiana. Although the Company has
received several unsolicited inquiries from third parties interested in
acquiring the division, it is not yet in serious discussions with any particular
potential buyer. The Technologies division designs, manufactures, and sells a
variety of electromechanical components, electromechanical display devices and
keyboard assemblies for military and commercial applications. Customers for
these products include original equipment manufacturers primarily in the
aerospace industry and agencies of the U.S. Government. Changes over the past
few years in U.S. defense spending have had a negative impact on the
Technologies division. The Company has sought to minimize that negative impact
by pursuing commercial business for the Technologies division. Although in
fiscal 1997 the Technologies division made progress by substantially increasing
its new business bookings in the third and fourth quarters of the year, the
rapid growth in business during that time strained the division's capacities.
New personnel hired to handle the increased demand drove up costs. As a result,
the division experienced a $405,000 pre-tax loss for the year.
Meanwhile, the Company's microelectronics division has continued to grow. The
microelectronics division designs, manufactures and sells high density, solid
state memory products and microprocessor circuits in both monolithic and
modular form (multichip modules) for use in commercial, industrial and military
markets in the United States and worldwide. The division's sales for fiscal
1997 were almost 18% over sales for fiscal 1996. Gross margin as a percentage
of sales in the microelectronic division for fiscal 1997 also represented an
increase over fiscal 1996 (38.5% in 1997 from 37.6% in 1996). Pre-tax income at
this division in 1997 was $2,608,000, an increase of over $400,000 from 1996.
Changes in U.S. defense spending have not had the same adverse effect on the
microelectronics division because of the nature of its products and its
competitive advantages in the military niche market that it services.
The Company has been advised by its independent public accountants, Coopers &
Lybrand, that the
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decision to seek a buyer for the Technologies division requires the Company to
account for the Technologies division as a "discontinued operation."
Accordingly, a $1.3 million reserve for anticipated losses and the cost of
disposition was recorded in the fourth quarter of fiscal 1997.
The Company has retained an investment advisor, Needham and Company, to assist
it in its efforts to sell the Technologies division. There can be no assurance
that the Board of Directors will be able to identify a suitable buyer, or any
buyer at all, or that if a sale is concluded it will be on terms and conditions
advantageous to the Company.
In light of this decision to sell the Technologies division, the Board of
Directors concluded that the Company could realize additional overhead savings
by closing the Company's corporate headquarters in Phoenix, Arizona as soon as
reasonably possible, but in any event by the end of January 1998. The Company
will operate exclusively out of the new microelectronics division facility also
located in Phoenix, Arizona. As previously reported, the Company recently moved
the division into a modern, 53,000 square foot facility leased by the Company
and built out according to Company specifications. The move was completed
shortly after the close of the 1997 fiscal year.
The Board of Directors believes that these steps will result in a strategic
repositioning of the Company as a pure microelectronics company, focused
exclusively on that segment of the business which has demonstrated the greatest
probability of long-term success. The Company's President and Chief Executive
Officer, Tom Lanin, has submitted his resignation effective January 2, 1998. The
Board has determined to appoint Hamid Shokrgozar, the microelectronic division's
current president, as President and CEO of the Company. Mr. Lanin will remain
with the Company in his capacity as a Director, serving on the Board of
Directors through his current term. Management expects to nominate Mr. Lanin for
reelection to the Board in fiscal 1998. Mr. Lanin also will remain available to
the Company to facilitate the transition and to assist Mr. Shokrgozar as he
assumes his duties.
The Company estimates that the changes associated with the closing of the
corporate office and related severance payments will result in a net charge to
earnings during the first quarter of fiscal 1998 of approximately $340,000.
Except for the historical information contained herein, the matters discussed in
this document contain forward-looking statements. Such statements involve
certain risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Potential risk and
uncertainties include such factors as the ability of the Company to identify a
potential buyer for the Technologies division and to conclude a beneficial
agreement in a timely fashion, the ability of the Company to conclude such a
sale without substantial disruption to the business of the Technologies
division, demand for the products of the microelectronics division, demand for
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microelectronic products generally, industry competitiveness, reductions in
price and other risks of doing business generally.
Item 7. Exhibits
C.
EX-99. Press release issued by the Company on December 18, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOWMAR INSTRUMENT CORPORATION
By: /s/ Thomas K. Lanin
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Thomas K. Lanin
Its: President and Chief Executive Officer
Date: December 18, 1997
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EXHIBIT 99
For: Bowmar Instrument Corporation
5080 North 40th Street, Suite 475
Phoenix, Arizona 85018
Contact: Joseph G. Warren, Jr.
Bowmar Instrument Corporation
(602)957-0271
FOR IMMEDIATE RELEASE
BOWMAR INSTRUMENT CORPORATION
BOWMAR TO SELL DIVISION AND CLOSE CORPORATE OFFICE
NAMES NEW CEO
PHOENIX, ARIZONA--DECEMBER 18, 1997
Bowmar Instrument Corporation (ASE:BOM) announced today plans to seek a
buyer for its Technologies division. The Board of Directors determined that
focusing on the highly successful microelectronics business of its White
Microelectronics division was the best course of action for Bowmar and its
shareholders.
In addition, with but one location to manage, the need for the Corporate
office and the associated costs become redundant and will be eliminated. This
move alone is expected to save Bowmar approximately $800,000 per year, the full
effect of which will not be realized until fiscal 1999.
The decision to sell the Technologies division will result in a $1,300,000
pre-tax charge to earnings which, under accounting guidelines, must be
recognized in fiscal 1997. Therefore, the previously released earnings have
been restated to reflect the charge to earnings and to classify the
Technologies division's results as discontinued operations. The closure of the
Corporate office will result in a one-time charge of approximately $340,000,
which will be recognized in the first quarter of 1998.
The strategic repositioning of Bowmar to a pure microelectronics company
calls for leadership with expertise in that market. As such, Hamid Shokrgozar,
White Microelectronics division's current President, will assume the role of
President and CEO of Bowmar on January 2, 1998. Tom Lanin will remain with the
Company as a member of the Board of Directors.
Tom Lanin, President and CEO stated, "The actions taken at the
Technologies division over the past two years have strengthened the division and
have increased its attractiveness as an acquisition candidate. In fact, we have
received several unsolicited inquiries from parties interested in acquiring the
Technologies division. By focusing on White Microelectronics and reducing our
overhead, we can leverage the profitability of White Microelectronics."
Lanin continued, "Hamid, with his technical and marketing background is
uniquely suited to running this company. He has combined this experience with
enthusiastic and energetic leadership in profitably growing White
Microelectronics. I look forward to working with Hamid in my continuing role as
a Bowmar Board member."
Bowmar, which is headquartered in Phoenix, Arizona, manufactures and sells
microelectronic products with specific applications in the aerospace,
electronic, and computer industries.
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands of dollars, except share data)
<TABLE>
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<CAPTION>
Fourth Quarter of Fiscal Year Fiscal Year
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Sales $ 5,824 $ 5,150 $ 22,189 $ 18,840
Cost of sales 3,451 3,071 13,169 11,002
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Gross margin 2,373 2,079 9,020 7,838
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Expenses:
Selling, general and
administrative 1,595 1,360 5,870 5,315
Product development 116 128 480 423
Interest expense 111 128 416 483
Other expense (income), net (Note 1) 420 (90) 135 (478)
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Total expenses 2,242 1,526 6,901 5,743
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Income from continuing operations
before income taxes 131 553 2,119 2,095
Provision (credit) for income taxes (94) 190 679 800
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INCOME FROM CONTINUING OPERATIONS 225 363 1,440 1,295
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Discontinued operations (Note 2)
Electromechanical segment
Loss from operations 1 128 (51) (9)
Provision (credit) for income taxes 0 (41) 16 4
Loss on disposition, net of deferred
income tax credit of $417 (883) (883)
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Net (loss) gain from discontinued operations (882) 87 (918) (5)
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NET INCOME (LOSS) $ (657) $ 450 $ 522 $ 1,290
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Net income per common share:
Continuing operations $ 0.02 $ 0.04 $ 0.16 $ 0.14
(Loss) gain on discontinued operations (0.14) 0.01 (0.14) 0
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NET INCOME PER SHARE, PRIMARY (NOTE 3) $ (0.12) $ 0.05 $ 0.02 $ 0.14
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</TABLE>
NOTE: (1) Includes a $425,000 provision for the loss on the sale of the building
in Acton, Massachusetts.
(2) Reflects accounting for the electromechanical segment as discontinued
operations, including a provision of $600,000 for operating losses
during the phase-out period, as a result of the decision in December
1997 to sell this division.
(3) Fully diluted net income per share is considered to be the same as
primary net income per share since the effect of the potentially
dilutive preferred stock is currently antidilutive.
