UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
--------------------------------
Commission File Number 1-8037
---------------------
AEROFLEX INCORPORATED
(Exact name of Registrant as specified in its Charter)
DELAWARE 11-1974412
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
35 South Service Road
Plainview, N.Y. 11803
(Address of principal executive offices) (Zip Code)
(516) 694-6700
(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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
May 11, 1998 17,358,437 shares (excluding 1,092 shares held in treasury)
- --------------------------------------------------------------------------------
(Date) (Number of Shares)
NOTE: THIS IS PAGE 1 OF A DOCUMENT CONSISTING OF 16 PAGES.
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
INDEX
-----
PAGE
----
PART I: FINANCIAL INFORMATION
- ------ ---------------------
CONSOLIDATED BALANCE SHEETS
March 31, 1998 and June 30, 1997 3-4
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended March 31, 1998 and 1997 5
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1998 and 1997 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 1998 and 1997 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8-10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Nine and Three Months Ended March 31, 1998 and 1997 11-14
PART II: OTHER INFORMATION
- ------- -----------------
ITEM 6 Exhibits and Reports on Form 8-K 15
SIGNATURES 16
-2-
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
---------------------------
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,141 $ 600
Accounts receivable, less allowance for
doubtful accounts of $538,000 and $417,000 19,627 21,843
Inventories 29,909 20,319
Deferred income taxes 2,059 2,043
Prepaid expenses and other current assets 1,415 812
-------- -------
Total current assets 76,151 45,617
Property, plant and equipment, at cost, net 22,913 14,487
Intangible assets acquired in connection with
the purchase of businesses, net 7,770 8,046
Cost in excess of fair value of net assets
of businesses acquired, net 9,910 9,903
Other assets 2,214 2,994
-------- --------
Total assets $118,958 $ 81,047
======== ========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
-3-
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(continued)
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
--------- --------
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ 5,010 $ 4,247
Accounts payable 7,384 5,093
Accrued expenses and other current liabilities 12,072 8,564
Income taxes payable 2,126 1,841
-------- --------
Total current liabilities 26,592 19,745
Long-term debt 6,777 14,688
Deferred income taxes 43 334
Other long-term liabilities 2,540 1,259
Senior subordinated convertible debentures - 9,981
-------- --------
Total liabilities 35,952 46,007
-------- --------
Stockholders' equity:
Preferred Stock, par value $.10 per share;
authorized 1,000,000 shares:
Series A Junior Participating Preferred
Stock, par value $.10 per share,
authorized 150,000 shares - -
Common Stock, par value $.10 per share;
authorized 25,000,000 shares; issued
17,340,000 and 12,658,000 shares 1,734 1,266
Additional paid-in capital 99,966 58,110
Accumulated deficit (18,689) (23,584)
-------- --------
83,011 35,792
Less: Treasury stock, at cost (1,000 and
169,000 shares) 5 752
-------- --------
Total stockholders' equity 83,006 35,040
-------- --------
Total liabilities and stockholders' equity $118,958 $ 81,047
======== ========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
-4-
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-----------------
1998 1997
-------- --------
(In thousands, except per share data)
<S> <C> <C>
Net sales $ 84,431 $ 64,912
Cost of sales 55,417 43,618
-------- --------
Gross profit 29,014 21,294
-------- --------
Selling, general and administrative costs 16,020 12,898
Research and development costs 3,510 2,293
-------- --------
19,530 15,191
-------- --------
Operating income 9,484 6,103
-------- --------
Other expense (income)
Interest expense 1,798 2,263
Other expense (income) 41 (71)
-------- --------
Total other expense (income) 1,839 2,192
-------- --------
Income before income taxes 7,645 3,911
Provision for income taxes 2,750 1,450
-------- --------
Net income $ 4,895 $ 2,461
======== ========
Net income per common share:
- Basic $ .35 $ .20
====== ======
- Diluted $ .32 $ .19
===== ======
Weighted average number of common
shares and common share equivalents
outstanding:
- Basic 13,948 12,431
======= =======
- Diluted 15,749 14,695
======= =======
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
-5-
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
-------- --------
(In thousands, except per share data)
<S> <C> <C>
Net sales $ 31,221 $ 22,937
Cost of sales 20,338 15,178
-------- --------
Gross profit 10,883 7,759
-------- --------
Selling, general and administrative costs 5,655 4,744
Research and development costs 1,481 871
-------- --------
7,136 5,615
-------- --------
Operating income 3,747 2,144
-------- --------
Other expense (income)
Interest expense 548 712
Other expense (income) (33) (10)
-------- --------
Total other expense (income) 515 702
-------- --------
Income before income taxes 3,232 1,442
Provision for income taxes 1,175 525
-------- --------
Net income $ 2,057 $ 917
======== ========
Net income per common share:
- Basic $ .14 $ .07
====== ======
- Diluted $ .13 $ .07
===== ======
Weighted average number of common
shares and common share equivalents
outstanding:
- Basic 14,749 12,523
======= =======
- Diluted 16,132 14,597
======= =======
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
-6-
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------------
1998 1997
--------- --------
(In thousands)
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 4,895 $ 2,461
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,791 3,292
Amortization of deferred gain (441) -
Other, net (123) (26)
Change in operating assets and liabilities,
net of effects from purchase of business:
Decrease (increase) in accounts receivable 2,027 5,238
Decrease (increase) in inventories (8,455) (5,197)
Decrease (increase) in prepaid expenses, income
tax refund receivable and other assets (522) 654
Increase (decrease) in accounts payable, accrued
expenses and other long-term liabilities 4,644 (1,095)
Increase (decrease) in income taxes payable 1,584 (208)
-------- --------
Net Cash Provided By (Used In)
Operating Activities 7,400 5,119
-------- --------
Cash Flows From Investing Activities:
Purchase of equipment, inventory and
technology rights from Lucent Technologies (4,435) -
Capital expenditures (5,710) (2,075)
Other, net 35 (106)
-------- --------
Net Cash Provided By (Used In)
Investing Activities (10,110) (2,181)
-------- --------
Cash Flows From Financing Activities:
Proceeds from issuance of common shares in
public offering 31,781 -
Costs in connection with public offering (488) -
Borrowings under debt agreements 6,232 -
Debt repayments (13,380) (3,228)
Proceeds from the exercise of stock options
and warrants 1,106 652
Purchase of treasury stock - (437)
-------- --------
Net Cash Provided By (Used In)
Financing Activities 25,251 (3,013)
-------- --------
Net Increase (Decrease) In Cash
And Cash Equivalents 22,541 (75)
Cash And Cash Equivalents At Beginning Of Period 600 661
-------- --------
Cash And Cash Equivalents At End Of Period $ 23,141 $ 586
======== ========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
-7-
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The consolidated balance sheet of Aeroflex Incorporated and Subsidiaries
("the Company") as of March 31, 1998 and the related consolidated
statements of operations for the nine and three months ended March 31, 1998
and 1997 and the statements of cash flows for the nine months ended March
31, 1998 and 1997 have been prepared by the Company and are unaudited. In
the opinion of management, all adjustments (which include normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at March 31, 1998 and for all periods presented
have been made. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. It is suggested that
these consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's June 30,
1997 annual report to shareholders. There have been no changes of
significant accounting policies since June 30, 1997, except as described in
Note 3. Certain reclassifications have been made to previously reported
financial statements to conform to current classifications.
Results of operations for the nine and three month periods are not
necessarily indicative of results of operations for the corresponding
years.
2. Common Stock Offering
---------------------
In March 1998, the Company sold 2,597,000 shares of its Common Stock in a
public offering for $31,293,000, net of an underwriting discount of
$1,973,000 and issuance costs of $488,000. Of these net proceeds,
$9,639,000 was used to repay bank indebtedness. The balance of the net
proceeds, which is included in cash and cash equivalents, will be used for
general corporate purposes, including working capital, capital
expenditures, facilities expansion and potential acquisitions.
3. Earnings Per Share
------------------
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 128 "Earnings Per Share" during the quarter ended December 31, 1998. In
accordance with SFAS No. 128, earnings per common share ("Basic EPS") is
computed by dividing net income by the weighted average common shares
outstanding. Earnings per common share, assuming dilution ("Diluted EPS")
is computed by dividing net income plus a pro forma addback of debenture
interest by the weighted average common shares outstanding plus potential
dilution from the conversion of debentures and the exercise of stock
options and warrants. Earnings per share amounts for prior periods have
been restated to conform to SFAS No. 128.
-8-
<PAGE>
A reconciliation of the numerators and denominators of the Basic EPS and
Diluted EPS calculations is as follows:
<TABLE>
<CAPTION>
Nine Months
Ended March 31,
-----------------------------------
1998 1997
---- ----
(In thousands, except per share data)
<S> <C> <C>
Computation of Adjusted Net Income:
Net income for basic earnings per common share $ 4,895 $ 2,461
Add: Debenture interest and amortization
expense, net of income taxes 103 369
Adjusted net income for diluted -------- --------
earnings per common share $ 4,998 $ 2,830
Computation of Adjusted Weighted Average ======== ========
Shares Outstanding:
Weighted average shares outstanding 13,948 12,431
Add: Effect of dilutive options and warrants
outstanding 1,279 490
Add: Shares assumed to be issued upon
conversion of debentures 522 1,774
Weighted average shares and common share -------- --------
equivalents used for computation of
diluted earnings per common share 15,749 14,695
Net Income Per Common Share: ======== ========
Basic $ .35 $ .20
====== ======
Diluted $ .32 $ .19
===== ======
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------------------------
1998 1997
---- ----
(In thousands, except per share data)
<S> <C> <C>
Computation of Adjusted Net Income:
Net income for basic earnings per common share $ 2,057 $ 917
Add: Debenture interest and amortization
expense, net of income taxes - 123
Adjusted net income for diluted
earnings per common share $ 2,057 $ 1,040
Computation of Adjusted Weighted Average ======== ========
Shares Outstanding:
Weighted average shares outstanding 14,749 12,523
Add: Effect of dilutive options and warrants
outstanding 1,383 300
Add: Shares assumed to be issued upon
conversion of debentures - 1,774
Weighted average shares and common share -------- --------
equivalents used for computation of
diluted earnings per common share 16,132 14,597
Net Income Per Common Share: ======== ========
Basic $ .14 $ .07
====== ======
Diluted $ .13 $ .07
====== ======
</TABLE>
4. Acquisition of Business
-----------------------
Effective July 1, 1997, the Company's subsidiary, MIC Technology
Corporation, acquired certain equipment, inventory, licenses for technology
and patents of two of Lucent Technologies' microelectronics component units
- multi-chip modules and film integrated circuits - for approximately
$4,400,000 in cash. These units manufacture microelectronic modules and
interconnect products. The Company has also signed a multi-year supply
agreement to provide Lucent with film integrated circuits for use in
telecommunications applications. The purchase price has been allocated to
the assets acquired, based on their fair values, and certain obligations
assumed relating to the agreements.
-9-
<PAGE>
5. Bank Loan Agreements
--------------------
As of March 15, 1996 the Company replaced a previous agreement with a
revised revolving credit and term loan agreement with two banks which is
secured by substantially all of the Company's assets not otherwise
encumbered. The agreement provides for a revolving credit line of
$22,000,000 and a term loan of $16,000,000. The revolving credit line
expires in March 1999. There are no borrowings under this line as of March
31, 1998. The term loan is payable in quarterly installments of $900,000
with final payment on September 30, 2000. As of March 31, 1998, the
outstanding term loan was $4,720,000. The interest rate on borrowings under
this agreement is at various rates depending upon certain financial ratios,
with the current rate substantially equivalent to the prime rate (8-1/2% at
March 31, 1998) plus 1/4% on the revolving credit borrowings and prime plus
1/2% on the term loan borrowings. The terms of the agreement require
compliance with certain covenants including minimum consolidated tangible
net worth and pre-tax earnings, maintenance of certain financial ratios,
limitations on capital expenditures and indebtedness and prohibition of the
payment of cash dividends. Management is in the process of amending the
existing agreement to extend the term of the revolving credit line, among
other changes.
6. Inventories
-----------
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
-------- --------
(In thousands)
<S> <C> <C>
Raw Materials $ 13,836 $ 11,191
Work in Process 11,249 6,642
Finished Goods 4,824 2,486
-------- --------
$ 29,909 $ 20,319
======== ========
</TABLE>
7. Income Taxes
------------
At June 30, 1997 the Company had net operating loss carryforwards of
approximately $4,000,000 for Federal income tax purposes which expire
through 2006.
The Company is undergoing routine audits by various taxing authorities of
several of its state and local income tax returns covering different
periods from 1994 to 1996. Management believes that the probable outcome of
these various audits should not materially affect the consolidated
financial statements of the Company.
8. Contingencies
-------------
A subsidiary of the Company whose operations were discontinued in 1991, is
one of several defendants named in a personal injury action initiated in
August, 1994, by a group of plaintiffs. The plaintiffs are seeking damages
which cumulatively exceed $500 million. The complaint alleges, among other
things, that the plaintiffs suffered injuries from exposure to substances
contained in products sold by the subsidiary to one of its customers. This
action is in the early stages of discovery. Based upon available
information and considering its various defenses, together with its product
liability insurance, in the opinion of management of the Company, the
outcome of the action against its subsidiary will not have a materially
adverse effect on the Company's consolidated financial statements.
9. Conversion of 7-1/2% Debentures
-------------------------------
On September 8, 1997, the Company called for the redemption of all of its
outstanding 7-1/2% Senior Subordinated Convertible Debentures ($9,981,000)
at 104-1/2% of the principal amount. As of October 1997, all of the
principal amount outstanding was converted into Common Stock at $5-5/8 per
share. In connection with the conversions, $599,000 of deferred bond
issuance costs were charged to additional paid-in capital.
-10-
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Aeroflex, founded in 1937, utilizes its advanced design, engineering and
manufacturing capabilities to provide state-of-the-art microelectronic module,
interconnect and testing solutions used in communication applications for
commercial and defense markets. Its products are used in satellite, personal
wireless, cable television ("CATV") and defense communications markets. It also
designs and manufactures motion control systems and shock and vibration
isolation systems used for commercial, industrial and defense applications. The
Company's operations are grouped into three segments: Microelectronics; Test,
Measurement and Other Electronics; and Isolator Products. The Company's
consolidated financial statements include the accounts of Aeroflex and its
subsidiaries, all of which are wholly-owned.
Effective July 1, 1997, the Company acquired certain equipment, inventory,
licenses for technology and patents of two of Lucent Technologies'
microelectronics component units, multi-chip modules and film integrated
circuits. These units manufacture microelectronic modules and interconnect
products. The Company has also signed a multi-year supply agreement to provide
Lucent with film integrated circuits for use in the telecommunications industry.
Approximately 50% and 65% of the Company's sales for fiscal years 1997 and
1996, respectively, were to agencies of the United States Government or to prime
defense contractors or subcontractors of the United States Government. The
Company's overall dependence on the defense market has been declining as a
result of the acquisition of MIC Technology Corporation, which is more
commercially oriented, and a focusing of resources towards developing standard
products for the commercial market.
Management believes that potential reductions in defense spending will not
materially affect its operations. In certain product areas, the Company has
suffered reductions in sales volume due to cutbacks in the military budget. In
other product areas, the Company has experienced increased sales volume due to a
realignment of government spending towards upgrading existing systems instead of
purchasing completely new systems. The overall effect of the cutbacks and
realignment has not been material to the Company.
In June 1997, the Financial Accounting Standards Board issued Statement of
Finanical Accounting Standards No. 131, "Disclosure About Segments of an
Enterprise and Related Information", which is effective for fiscal years
beginning after December 15, 1997. This statement establishes standards for
reporting information about operating segments and related disclosures about
products and services, geographic areas and major customers. The Company has not
determined the impact that the adoption of this new accounting standard will
have on its consolidated financial statement disclosures. The Company will adopt
this standard effective July 1, 1998, as required.
-11-
<PAGE>
Nine Months Ended March 31, 1998 Compared to Nine Months Ended March 31, 1997
Net Sales. Net sales increased 30.1% to $84.4 million for the nine months
ended March 31, 1998 from $64.9 million for the nine months ended March 31,
1997. Net sales in the Microelectronics segment increased 64.3% to $52.7 million
for the nine months ended March 31, 1998 from $32.1 million for the nine months
ended March 31, 1997 due to increased sales volume in both thin film
interconnects and microelectronic modules. Sales of thin film interconnects
increased primarily due to the commencement of a strategic supply contract with
Lucent Technologies effective July 1, 1997. Net sales in the Test, Measurement
and Other Electronics segment decreased 12.2% to $18.0 million for the nine
months ended March 31, 1998 from $20.5 million for the nine months ended March
31, 1997 primarily as a result of reduced sales volume of frequency synthesizers
which was partially offset by increased sales of high speed instrumentation test
systems. The decrease in frequency synthesizer sales was due to the early
completion of the current Consolidated Automated Support System ("CASS")
contract. Net sales in the Isolator Products segment increased 11.5% to $13.7
million for the nine months ended March 31, 1998 from $12.3 million for the nine
months ended March 31, 1997 due to increased sales volume in each of the
commercial, industrial and military isolator product lines.
Gross Profit. Cost of sales includes materials, direct labor and overhead
expenses such as engineering labor, fringe benefits, allocable occupancy costs,
depreciation and manufacturing supplies. Gross profit increased 36.3% to $29.0
million for the nine months ended March 31, 1998 from $21.3 million for the nine
months ended March 31, 1997. Gross margin increased to 34.4% for the nine months
ended March 31, 1998 from 32.8% for the nine months ended March 31, 1997. The
increase was primarily a result of increased margins in the Microelectronics
segment reflecting the greater efficiencies of higher volume.
Selling, General and Administrative Costs. Selling, general and
administrative costs include office and management salaries, fringe benefits,
commissions and advertising costs. Selling, general and administrative costs
increased 24.2% to $16.0 million (19.0% of net sales) for the nine months ended
March 31, 1998 from $12.9 million (19.9% of net sales) for the nine months ended
March 31, 1997. The increase was primarily due to labor related expenses
including salaries for additional hires, recruitment and relocation costs in
connection with the Company's growth.
Research and Development Costs. Research and development costs consist of
material, engineering labor and allocated overhead. Company sponsored research
and development costs increased 53.1% to $3.5 million (4.2% of net sales) for
the nine months ended March 31, 1998 from $2.3 million (3.5% of net sales) for
the nine months ended March 31, 1997. The increase was primarily attributable to
the costs for development of a new low-cost, high speed, high performance
frequency synthesizer intended for commercial communication test systems.
Other Expense (Income). Other expense decreased by 16.1% to $1.8 million for
the nine months ended March 31, 1998 from $2.2 million for the nine months ended
March 31, 1997. Interest expense decreased 20.5% to $1.8 million for the nine
months ended March 31, 1998 from $2.3 million for the nine months ended March
31, 1997. The decrease was primarily due to the conversion of $10.0 million of
debentures. Other expense included $102,000 of debenture redemption costs for
the nine months ended March 31, 1998.
Provision for Income Taxes. Income taxes recorded by the Company increased
89.7% to $2.8 million (an effective income tax rate of 36.0%) for the nine
months ended March 31, 1998 from $1.5 million (an effective income tax rate of
37.1%) for the nine months ended March 31, 1997. The income tax provisions for
the two periods differed from the amount computed by applying the U.S. Federal
income tax rate to income before income taxes primarily due to state and local
income taxes.
-12-
<PAGE>
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Net Sales. Net sales increased 36.1% to $31.2 million for the three months
ended March 31, 1998 from $22.9 million for the three months ended March 31,
1997. Net sales in the Microelectronics segment increased 64.8% to $19.6 million
for the three months ended March 31, 1998 from $11.9 million for the three
months ended March 31, 1997 due to increased sales volume in both thin film
interconnects and microelectronic modules. Sales of thin film interconnects
increased primarily due to the commencement of a strategic supply contract with
Lucent Technologies effective July 1, 1997. Net sales in the Test, Measurement
and Other Electronics segment increased 1.0% to $6.7 million for the three
months ended March 31, 1998 from $6.6 million for the three months ended March
31, 1997. Net sales in the Isolator Products segment increased 11.5% to $4.9
million for the three months ended March 31, 1998 from $4.4 million for the
three months ended March 31, 1997 due to increased sales volume in the
commercial and industrial product lines.
Gross Profit. Gross profit increased 40.3% to $10.9 million for the three
months ended March 31, 1998 from $7.8 million for the three months ended March
31, 1997. Gross margin increased to 34.9% for the three months ended March 31,
1998 from 33.8% for the three months ended March 31, 1997. The increase was
primarily a result of increased margins in the Microelectronics segment
reflecting the greater efficiencies of higher volume.
Selling, General and Administrative Costs. Selling, general and
administrative costs increased 19.2% to $5.7 million (18.1% of net sales) for
the three months ended March 31, 1998 from $4.7 million (20.7% of net sales) for
the three months ended March 31, 1997. The increase was primarily due to labor
related expenses including salaries for additional hires, recruitment and
relocation costs in connection with the Company's growth.
Research and Development Costs. Company sponsored research and development
costs increased 70.0% to $1.5 million (4.7% of net sales) for the three months
ended March 31, 1998 from $871,000 (3.8% of net sales) for the three months
ended March 31, 1997. The increase was primarily attributable to the costs for
development of a new low-cost, high speed, high performance frequency
synthesizer intended for commercial communication test systems.
Other Expense (Income). Other expense decreased by 26.6% to $515,000 for the
three months ended March 31, 1998 from $702,000 for the three months ended March
31, 1997. Interest expense decreased 23.0% to $548,000 for the three months
ended March 31, 1998 from $712,000 for the three months ended March 31, 1997.
The decrease was primarily due to the conversion of $10.0 million of debentures.
Provision for Income Taxes. Income taxes recorded by the Company increased
123.8% to $1.2 million (an effective income tax rate of 36.4%) for the three
months ended March 31, 1998 from $525,000 (an effective income tax rate of
36.4%) for the three months ended March 31, 1997. The income tax provisions for
the two quarters differed from the amount computed by applying the U.S. Federal
income tax rate to income before income taxes primarily due to state and local
income taxes.
-13-
<PAGE>
Liquidity and Capital Resources
In March 1998, the Company sold 2,597,000 shares of its Common Stock in a
public offering for $31,293,000, net of an underwriting discount of $1,973,000
and issuance costs of $488,000. Of these net proceeds, $9,639,000 was used to
repay bank indebtedness. The balance of the net proceeds, which is included in
cash and cash equivalents, will be used for general corporate purposes,
including working capital, capital expenditures, facilities expansion and
potential acquisitions.
As of March 31, 1998, the Company had $49.6 million in working capital. As
of March 15, 1996, the Company replaced a previous agreement with a revised
revolving credit and term loan agreement with two banks which is secured by
substantially all of the Company's assets not otherwise encumbered. The
agreement provides for a revolving credit line of $22.0 million and a term loan
of $16.0 million. The revolving credit line expires in March 1999. The term loan
is payable in quarterly installments of $900,000 with final payment on September
30, 2000. The interest rate on borrowings under this agreement is at various
rates depending upon certain financial ratios, with the current rate
substantially equivalent to the prime rate (8-1/2% at March 31, 1998) plus 1/4%
on the revolving credit borrowings and prime plus 1/2% on the term loan
borrowings. The terms of the agreement require compliance with certain covenants
including minimum consolidated tangible net worth and pre-tax earnings,
maintenance of certain financial ratios, limitations on capital expenditures and
indebtedness and prohibition of the payment of cash dividends. At March 31,
1998, the outstanding borrowings under the term loan were $4.7 million and there
were no outstandings under the revolving credit line. Management is in the
process of amending the existing agreement to extend the term of the revolving
credit line, among other changes.
During June 1994, the Company completed a sale of $10.0 million principal
amount of 7-1/2% Senior Subordinated Convertible Debentures ("Debentures"). On
September 8, 1997, the Company called for redemption all of its outstanding
Debentures at 104-1/2% of the principal amount. The Debentures were convertible
into the Company's Common Stock at a price of $5-5/8 per share through October
6, 1997. As of October 1997, all of the principal amount outstanding was
converted into Common Stock. In connection with the conversions, $599,000 of
deferred bond issuance costs were charged to additional paid-in capital.
The Company's order backlog at March 31, 1998 and 1997 was $69.4 million and
$49.1 million, respectively.
At June 30, 1997, the Company had net operating loss carryforwards of
approximately $4.0 million for Federal income tax purposes.
The Company's net cash provided by operating activities was $7.4 million
for the nine months ended March 31, 1998. Net cash used in investing activities
was $10.1 million for the nine months ended March 31, 1998, consisting primarily
of $4.4 million of cash used to purchase equipment, inventory and technology
rights from Lucent Technologies and $5.7 million for capital expenditures. Net
cash provided by financing activities was $25.3 million for the nine months
ended March 31, 1998 including $31.8 million from the issuance of Common Stock
as discussed above.
Management has initiated a company-wide program to prepare it for the Year
2000 issue. The Company expects to incur internal staff costs as well as
consulting and other expenses related to Year 2000 compliance. The Company
believes the total costs to be incurred for all Year 2000 related projects will
not have a material impact on the Company's business, results of operations and
financial condition.
Management of the Company believes that internally generated funds and
available lines of credit will be sufficient for its working capital
requirements, capital expenditure needs and the servicing of its debt for at
least the next twelve months.
-14-
<PAGE>
AEROFLEX INCORPORATED
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3 - Amended By-Laws
10 - 1998 Stock Option Plan
27.a - Financial Data Schedule
27.b - Restated Financial Data Schedules
27.c - Restated Financial Data Schedules
(b) Reports on Form 8-K
None
-15-
<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.
AEROFLEX INCORPORATED
(REGISTRANT)
May 11, 1998 By: s/Michael Gorin
--------------------------------
Michael Gorin
President, Chief Financial Officer
and Principal Accounting Officer
-16-
April 1998
AEROFLEX INCORPORATED
(Formerly: ARX, INC. and AEROFLEX LABORATORIES INCORPORATED)
* * * * * *
AMENDED BY-LAWS
* * * * * *
ARTICLE I
---------
OFFICES
Section 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
----------
MEETING OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of Wilmington, State of Delaware, at such place as may
be fixed from time to time by the board of directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the second
Wednesday of December if not a legal holiday, and if a legal holiday, then on
the next secular day following, at 10:00 a.m., or at such other date and time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting, at which they shall elect by a plurality vote those
directors whose terms have expired pursuant to the provisions of the certificate
of incorporation, and transact such other business as may properly be brought
before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or the certificate of
incorporation, may be called by the president or secretary and shall be called
by the president or secretary at the written request of stockholders owning at
least sixty-six and two-thirds (66-2/3%) percent of the entire capital stock of
the corporation issued and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
<PAGE>
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose for which the meeting is called, shall be
given not less than ten nor more than fifty days before the date of the meeting,
to each stockholder entitled to vote at such meeting.
Section 7. (A) (1) Nominations of persons for election to the board of
directors of the corporation and the proposal of business to be considered by
the stockholders may be made at an annual meeting of stockholders (a) pursuant
to the Corporation's notice of meeting, (b) by or at the direction of the board
of directors or (c) by any stockholder of the corporation who was a stockholder
of record at the time of giving of notice provided for in this By-law, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this By-law.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A) (1) of this by-law the stockholder must have given timely notice thereof in
writing to the Secretary of the corporation and such other business must
otherwise be a proper matter for stockholder action.
To be timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the corporation not later than the close of
business on the 60th day nor earlier than the close of business on the 90th day
prior to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is more than 30
days before or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the class and number of shares of the corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.
<PAGE>
(3) Notwithstanding anything in the second sentence of
paragraph (A) (2) of this by-law to the contrary, in the event that the number
of directors to be elected to the board of directors of the corporation is
increased and there is no public announcement by the corporation naming all of
the nominees for director or specifying the size of the increased board of
directors at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this by-law shall also
be considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
(B) Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
board of directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the corporation's notice of meeting (a)
by or at the direction of the board of directors or (b) provided that the board
of directors has determined that directors shall be elected at such meeting, by
any stockholder of the corporation who is a stockholder of record at the time of
giving of notice provided for in this by-law who shall be entitled to vote at
the meeting and who complies with the notice procedures set forth in this
by-law. In the event the corporation calls a special meeting of stockholders for
the purpose of electing one or more directors to the board of directors, any
such stockholder may nominate a person or persons (as the case may be), for
election to such position(s) as specified in the corporation's notice of
meeting, if the stockholder's notice required by paragraph (A) (2) of this
by-law shall be delivered to the Secretary at the principal executive offices of
the corporation not earlier than the close of business on the 90th day prior to
such special meeting and not later than the close of business on the later of
the 60th day prior to such special meeting or the 10th day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the board of directors to be elected at such
meeting. In no event shall the public announcement of an adjournment of a
special meeting commence a new time period for the giving of a stockholder's
notice as described above.
(C) (1) Only such persons who are nominated in accordance with
the procedures set forth in this by-law shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this by-law. Except as otherwise provided by law, the certificate of
incorporation or these by-laws, the Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this by-law and, if any proposed
nomination or business is not in compliance with this by-law, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this by-law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this by-law,
a stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this by-law. Nothing in this by-law shall be deemed to affect any
rights (i) of stockholders to request inclusion of proposals in the
corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(ii) of the holders of any series of Preferred Stock to elect directors under
specified circumstances.
<PAGE>
Section 8. Except as otherwise provided by law or by the certificate of
incorporation, the holders of a majority of the outstanding shares of the
corporation entitled to vote generally in the election of directors (the "Voting
Stock"), represented in person or by proxy, shall constitute a quorum at a
meeting of stockholders, except that when specified business is to be voted on
by a class or series of stock voting as a class, the holders of a majority of
the shares of such class or series shall constitute a quorum of such class or
series for the transaction of such business. The Chairman of the meeting or a
majority of the shares so represented may adjourn the meeting from time to time,
whether or not there is such a quorum. No notice of the time and place of
adjourned meetings need by given except as required by law. The stockholders
present at a duly called meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. The Chairman of the meeting shall fix
and announce at the meeting the date and time of the opening and the closing of
the polls for each matter upon which the stockholders will vote at a meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation
or certificates of designations, and preferences, each stockholder shall at
every meeting of the stockholders be entitled to one vote in person or by proxy
for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.
ARTICLE III
-----------
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than three nor more than twelve. No director need be a
stockholder of the corporation. Any director may be removed from office with
cause at any time by the affirmative vote of stockholders of record holding a
majority of the outstanding shares of stock of the corporation entitled to vote,
given at a meeting of the stockholders called for that purpose.
Section 2. The board of directors shall be divided into three classes as
nearly equal in number as possible. The terms of office of the directors
initially classified shall be as follows: that of Class I shall expire at the
next annual meeting of stockholders in 1981, Class II at the second succeeding
annual meeting of stockholders in 1982 and Class III at the third succeeding
annual meeting of stockholders in 1983. At each annual meeting of stockholders
after such initial classification, directors chosen to succeed those whose terms
than expire at such annual meeting shall be elected for a term of office
<PAGE>
expiring at the third succeeding annual meeting of shareholders after their
election. When the number of directors is increased by the board of directors
and any newly created directorships are filled by the board of directors, there
shall be no classification of the additional directors until the next annual
meeting of stockholders. Directors elected, whether by the board of directors or
by the stockholders, to fill a vacancy, subject to the foregoing, shall hold
office for a term expiring at the annual meeting at which the term of the Class
to which they have been elected expires. The foregoing notwithstanding, each
director shall serve until his successor shall have been duly elected and
qualified, unless he shall resign, become disqualified, disabled or shall
otherwise be removed. Whenever a vacancy occurs on the board of directors, a
majority of the remaining directors have the power to fill the vacancy by
electing a successor director to fill that portion of the unexpired term
resulting from the vacancy.
Section 3. The business of the corporation shall be managed by its board of
directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. The board of directors shall choose a chairman of the board of
directors who shall preside at all meetings of stockholders and directors.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 6. The first meeting of each newly elected board of directors shall
be held at such time and place as shall be fixed by the vote of stockholders at
the annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided that a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of the first meeting of the newly elected board of directors,
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
the directors.
Section 7. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 8. Special meetings of the board may be called by the chairman of
the board or president on three days' notice to each director, either personally
or by mail or by telegram; special meetings shall be called by the chairman of
the board or the president or secretary in like manner and on like notice on the
written request of two directors.
Section 9. At all meetings of the board a majority of the board of
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 10. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
<PAGE>
COMMITTEES OF DIRECTORS
Section 11. The board of directors, may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member of any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
----------
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
<PAGE>
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
---------
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a chairman of the board of directors, a president, one or
more vice-presidents, a secretary and a treasurer. The board of directors may
also choose additional vice-presidents, and one or more assistant secretaries
and assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a chairman of the board of directors, a
president, one or more vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE CHAIRMAN OF THE BOARD
Section 6. The chairman of the board of directors shall be the chief
executive officer of the corporation. He shall preside at all meetings of
stockholders and directors. Except where by law the signature of the president
is required, the chairman of the board of directors shall possess the same power
as the president to sign all certificates, contracts, and other instruments of
the corporation which may be authorized by the board of directors. During the
absence or disability of the president, he shall exercise all powers and
discharge all the duties of the president.
THE PRESIDENT
Section 7. The president shall be the chief financial officer of the
corporation. In the event that the board of directors shall not appoint an
executive vice president of the corporation, or in the event of his resignation
or inability to serve, the president shall be the chief operating officer of the
corporation. In the absence of the chairman of the board of directors, the
president shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
The president shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
<PAGE>
THE VICE PRESIDENTS
Section 8. The executive vice president, if any, shall be the chief
operating officer of the corporation. In the absence of the chairman of the
board of directors or the president or in the event of his inability or refusal
to act, the executive vice president shall perform the duties of the chairman of
the board of directors or the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the chairman of the board
of directors or the president. The executive vice president shall perform such
other duties and shall have other powers as the board of directors may from time
to time prescribe.
Section 9. In the absence of the chairman of the board of directors or the
president or the executive vice president or in the event of his inability or
refusal to act, the vice president (or in the event there be more than one vice
president, the vice presidents in the order designated, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the chairman of the board of directors or the president, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
chairman of the board of directors or the president. The vice presidents shall
perform such other duties and shall have other powers as the board of directors
may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all proceedings of the
meetings of the corporation and of the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors, the chairman
of the board of directors or the president, under whose supervision he shall be.
He shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 11. The assistant secretary, or if there be more than one, the
assistant secretaries, in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 12. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 13. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the chairman of the board of directors and
the president and the board of directors, at its regular meetings, or when the
board of directors so requires, an account of all his transactions as treasurer
and of the financial condition of the corporation.
<PAGE>
Section 14. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 15. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
INDEMNIFICATION PROVISION
Section 16. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened pending or completed
action, suit or proceeding by reason of the fact that he is or was a director,
officer, employee or an agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against all
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
defense or settlement of such action, suit or proceeding, to the fullest extent
and in the manner set forth in and permitted by the General Corporation Law of
the State of Delaware, as from time to time in effect, and any other applicable
law, as from time to time in effect. Such right of indemnification shall not be
deemed exclusive of any other rights to which such director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of each such person.
The foregoing provisions of this Article shall be deemed to be a contract
between the corporation and each director, officer, employee or agent who serves
in such capacity at any time while this Article, and the relevant provisions of
the General Corporation Law of the State of Delaware and other applicable law,
if any, are in effect, and any repeal or modification thereof shall not affect
any rights or obligations then existing with respect to any state of facts then
or theretofore existing or any action, suit or proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
ARTICLE VI
----------
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by the chairman
of the board of directors, the president or a vice president and the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
<PAGE>
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series or stock, provided that, except as otherwise provided in Section 202 of
the General Corporation Law of Delaware, in lieu of the foregoing requirements,
there may be set forth on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, a statement
that the corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
Section 2. Where a certificate is countersigned (1) by a transfer agent
other than the corporation or its employee, or (2) by a registrar other than the
corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting, provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
<PAGE>
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
-----------
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining property of the corporation, or for such other purpose
as the directors shall think conducive to the interest of the corporation, and
the directors may modify or abolish any such reserve in the manner in which it
was created.
<PAGE>
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words, "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended, repealed, or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting provided, however, that the provision set
forth in Article III hereof may not be altered, amended or repealed in any
respect unless such alteration, amendment
or repeal is approved by the affirmative vote of the holders of not less than
sixty-six and two-thirds (66 2/3%) percent of the total voting power of all
outstanding shares of capital stock of the company.
Aeroflex Incorporated
1998 Stock Option Plan
----------------------
SECTION 1. GENERAL PROVISIONS
------------------
1.1. Name and General Purpose
------------------------
The name of this plan is the Aeroflex Incorporated 1998 Stock Option
Plan (hereinafter called the "Plan"). The Plan is intended to be a broadly-based
incentive plan which enables Aeroflex Incorporated (the "Company") and its
subsidiaries and affiliates to foster and promote the interests of the Company
by attracting and retaining directors, officers and employees of, and
consultants to, the Company who contribute to the Company's success by their
ability, ingenuity and industry, to enable such directors, officers, employees
and consultants to participate in the long-term success and growth of the
Company by giving them a proprietary interest in the Company and to provide
incentive compensation opportunities competitive with those of competing
corporations.
1.2 Definitions
-----------
a. "Affiliate" means any person or entity controlled by or under
common control with the Company, by virtue of the ownership of
voting securities, by contract or otherwise.
b. "Board" means the Board of Directors of the Company.
c. "Change in Control" means a change of control of the Company, or
in any person directly or indirectly controlling the Company,
which shall mean:
(a) a change in control as such term is presently defined in
Regulation 240.12b-(f) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); or
(b) if any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act) other than the Company or any "person"
who on the date of this Agreement is a director or officer of the
Company, becomes the "beneficial owner" (as defined in Rule
13(d)-3 under the Exchange Act) directly or indirectly, of
securities of the Company representing twenty percent (20%) or
more of the voting power of the Company's then outstanding
securities; or
(c) if during any period of two (2) consecutive years during the
term of this Plan, individuals who at the beginning of such
period constitute the Board of Directors, cease for any reason to
constitute at least a majority thereof.
d. "Committee" means the Committee referred to in Section 1.3 of the
Plan.
e. "Common Stock" means shares of the Common Stock, par value $.10
per share, of the Company.
f. "Company" means Aeroflex Incorporated, a corporation organized
under the laws of the State of Delaware (or any successor
corporation).
g. "Fair Market Value" means the market price of the Common Stock on
the New York Stock Exchange consolidated reporting system on the
date of the grant or on any other date on which the Common Stock
is to be valued hereunder. If no sale shall have been reported on
the New York Stock Exchange consolidated reporting system on such
date, Fair Market Value shall be determined by the Committee.
<PAGE>
h. "Non-Employee Director" shall have the meaning set forth in Rule
16(b) promulgated by the Securities and Exchange Commission
("Commission").
i. "Option" means any option to purchase Common Stock under Section
2 of the Plan.
j. "Option Agreement" means the option agreement described in
Section 2.4 of the Plan.
k. "Participant" means any director, officer, employee or consultant
of the Company, a Subsidiary or an Affiliate who is selected by
the Committee to participate in the Plan.
l. "Subsidiary" means any corporation in which the Company possesses
directly or indirectly 50% or more of the combined voting power
of all classes of stock of such corporation.
m. "Total Disability" means accidental bodily injury or sickness
which wholly and continuously disabled an optionee. The
Committee, whose decisions shall be final, shall make a
determination of Total Disability.
1.3 Administration of the Plan
--------------------------
The Plan shall be administered by the Board or by the Committee appointed
by the Board consisting of two or more members of the Board all of whom shall be
Non-Employee Directors. The Committee shall serve at the pleasure of the Board
and shall have such powers as the Board may, from time to time, confer upon it.
Subject to this Section 1.3, the Committee shall have sole and
complete authority to adopt, alter, amend or revoke such administrative rules,
guidelines and practices governing the operation of the Plan as it shall, from
time to time, deem advisable, and to interpret the terms and provisions of the
Plan.
The Committee shall keep minutes of its meetings and of action taken
by it without a meeting. A majority of the Committee shall constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by all of the members of the
Committee without a meeting, shall constitute the acts of the Committee.
1.4 Eligibility
-----------
Stock Options may be granted only to directors, officers, employees or
consultants of the Company or a Subsidiary or Affiliate. Any person who has been
granted any Option may, if he is otherwise eligible, be granted an additional
Option or Options.
1.5 Shares
------
The aggregate number of shares reserved for issuance pursuant to the
Plan shall be 750,000 shares of Common Stock, or the number and kind of shares
of stock or other securities which shall be substituted for such shares or to
which such shares shall be adjusted as provided in Section 1.6.
Such number of shares may be set aside out of the authorized but
unissued shares of Common Stock or out of issued shares of Common Stock acquired
for and held in the Treasury of the Company, not reserved for any other purpose.
Shares subject to, but not sold or issued under, any Option terminating or
expiring for any reason prior to its exercise in full will again be available
for Options thereafter granted during the balance of the term of the Plan.
<PAGE>
1.6 Adjustments Due to Stock Splits,
Mergers, Consolidation, Etc.
-------------------------------
If, at any time, the Company shall take any action, whether by stock
dividend, stock split, combination of shares or otherwise, which results in a
proportionate increase or decrease in the number of shares of Common Stock
theretofore issued and outstanding, the number of shares which are reserved for
issuance under the Plan and the number of shares which, at such time, are
subject to Options shall, to the extent deemed appropriate by the Committee, be
increased or decreased in the same proportion, provided, however, that the
Company shall not be obligated to issue fractional shares.
Likewise, in the event of any change in the outstanding shares of
Common Stock by reason of any recapitalization, merger, consolidation,
reorganization, combination or exchange of shares or other corporate change, the
Committee shall make such substitution or adjustments, if any, as it deems to be
appropriate, as to the number or kind of shares of Common Stock or other
securities which are reserved for issuance under the Plan and the number of
shares or other securities which, at such time are subject to Options.
In the event of a Change in Control, at the option of the Board or
Committee, (a) all Options outstanding on the date of such Change in Control
shall, for a period of sixty (60) days following such Change in Control, become
immediately and fully exercisable, and (b) an optionee will be permitted to
surrender for cancellation within sixty (60) days after such Change in Control
any Option or portion of an Option which was granted more than six (6) months
prior to the date of such surrender, to the extent not yet exercised, and to
receive a cash payment in an amount equal to the excess, if any, of the Fair
Market Value (on the date of surrender) of the shares of Common Stock subject to
the Option or portion thereof surrendered, over the aggregate purchase price for
such Shares under the Option.
1.7 Non-Alienation of Benefits
--------------------------
Except as herein specifically provided, no right or unpaid benefit
under the Plan shall be subject to alienation, assignment, pledge or charge and
any attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant or other person entitled to benefits hereunder should attempt to
alienate, assign, pledge or charge any benefit hereunder, then such benefit
shall, in the discretion of the Committee, cease.
1.8 Withholding or Deduction for Taxes
----------------------------------
If, at any time, the Company or any Subsidiary or Affiliate is
required, under applicable laws and regulations, to withhold, or to make any
deduction for any taxes, or take any other action in connection with any Option
exercise, the Participant shall be required to pay to the Company or such
Subsidiary or Affiliate, the amount of any taxes required to be withheld, or, in
lieu thereof, at the option of the Company, the Company or such Subsidiary or
Affiliate may accept a sufficient number of shares of Common Stock to cover the
amount required to be withheld.
1.9 Administrative Expenses
-----------------------
The entire expense of administering the Plan shall be borne by the
Company.
1.10 General Conditions
------------------
a. The Board or the Committee may, from time to time, amend, suspend
or terminate any or all of the provisions of the Plan, provided
that, without the Participant's approval, no change may be made
which would alter or impair any right theretofore granted to any
Participant.
b. With the consent of the Participant affected thereby, the
Committee may amend or modify any outstanding Option in any
manner not inconsistent with the terms of the Plan, including,
without limitation, and irrespective of the provisions of Section
2.3(c) below, to accelerate the date or dates as of which an
installment of an Option becomes exercisable.
<PAGE>
c. Nothing contained in the Plan shall prohibit the Company or any
Subsidiary or Affiliate from establishing other additional
incentive compensation arrangements for employees of the Company
or such Subsidiary or Affiliate.
d. Nothing in the Plan shall be deemed to limit, in any way, the
right of the Company or any Subsidiary or Affiliate to terminate
a Participant's employment with the Company (or such Subsidiary
or Affiliate) at any time.
e. Any decision or action taken by the Board or the Committee
arising out of or in connection with the construction,
administration, interpretation and effect of the Plan shall be
conclusive and binding upon all Participants and any person
claiming under or through any Participant.
f. No member of the Board or of the Committee shall be liable for
any act or action, whether of commission or omission, (i) by such
member except in circumstances involving actual bad faith, nor
(ii) by any other member or by any officer, agent or employee.
1.11 Compliance with Applicable Law
------------------------------
Notwithstanding any other provision of the Plan, the Company shall not
be obligated to issue any shares of Common Stock, or grant any Option with
respect thereto, unless it is advised by counsel of its selection that it may do
so without violation of the applicable Federal and State laws pertaining to the
issuance of securities and the Company may require any stock certificate so
issued to bear a legend, may give its transfer agent instructions limiting the
transfer thereof, and may take such other steps, as in its judgment are
reasonably required to prevent any such violation.
1.12 Effective Dates
---------------
The Plan was adopted by the Board on April 29, 1998. The Plan shall
terminate on April 28, 2008.
Section 2. OPTION GRANTS
-------------
2.1 Authority of Committee
----------------------
Subject to the provisions of the Plan, the Committee shall have the
sole and complete authority to determine (i) the Participants to whom Options
shall be granted; (ii) the number of shares to be covered by each Option; and
(iii) the conditions and limitations, if any, in addition to those set forth in
Sections 2 and 3 hereof, applicable to the exercise of an Option, including
without limitation, the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of shares acquired upon exercise of
an Option.
Stock Options granted under the Plan shall be non-qualified stock
options.
The Committee shall have the authority to grant Options.
2.2 Option Exercise Price
---------------------
The price of stock purchased upon the exercise of Options granted
pursuant to the Plan shall be the Fair Market Value thereof at the time that the
Option is granted.
<PAGE>
The purchase price is to be paid in full in cash, certified or bank
cashier's check or, at the option of the Company, Common Stock valued at its
Fair Market Value on the date of exercise, or a combination thereof, when the
Option is exercised and stock certificates will be delivered only against such
payment.
2.3 Option Grants
-------------
Each Option will be subject to the following provisions:
a. Term of Option
--------------
An Option will be for a term of not more than ten years from the
date of grant.
b. Exercise
--------
(i) By an Employee:
--------------
Subject to the power of the Committee under Section 1.10(b) above
and except in the manner described below upon the death of the
optionee, an Option may be exercised only in installments as
follows: up to one-half of the subject shares on and after the
first anniversary of the date of grant, up to all of the subject
shares on and after the second such anniversary of the date of the
grant of such Option but in no event later than the expiration of
the term of the Option.
An Option shall be exercisable during the optionee's lifetime only
by the optionee and shall not be exercisable by the optionee
unless, at all times since the date of grant and at the time of
exercise, such optionee is an employee of or providing services to
the Company, any parent corporation of the Company or any
Subsidiary or Affiliate, except that, upon termination of all such
employment or provision of services (other than by death, Total
Disability, or by Total Disability followed by death in the
circumstances provided below), the optionee may exercise an Option
at any time within three months thereafter but only to the extent
such Option is exercisable on the date of such termination.
Upon termination of all such employment by Total Disability, the
optionee may exercise such Options at any time within three years
thereafter, but only to the extent such Option is exercisable on
the date of such termination.
In the event of the death of an optionee (i) while an employee of
or providing services to the Company, any parent corporation of
the Company or any Subsidiary or Affiliate, or (ii) within three
months after termination of all such employment or provision of
services (other than for Total Disability) or (iii) within three
years after termination on account of Total Disability of all such
employment or provision of services, such optionee's estate or any
person who acquires the right to exercise such option by bequest
or inheritance or by reason of the death of the optionee may
exercise such optionee's Option at any time within the period of
three years from the date of death. In the case of clauses (i) and
(iii) above, such Option shall be exercisable in full for all the
remaining shares covered thereby, but in the case of clause (ii)
such Option shall be exercisable only to the extent it was
exercisable on the date of such termination.
<PAGE>
(ii) By Persons other than Employees:
-------------------------------
If the optionee is not an employee of the Company or the parent
corporation of the Company or any Subsidiary or Affiliate,
the vesting of such optionee's right to exercise his Options shall
be established and determined by the Committee in the Option
Agreement covering the Options granted to such optionee.
Notwithstanding the foregoing provisions regarding the exercise of
an Option in the event of death, Total Disability, other
termination of employment or provision of services or otherwise,
in no event shall an Option be exercisable in whole or in part
after the termination date provided in the Option Agreement.
c. Transferability
---------------
An Option granted under the Plan shall not be transferable
otherwise than by will or by the laws of descent and distribution,
except as may be permitted by the Board or the Committee.
2.4 Agreements
----------
In consideration of any Options granted to a Participant under the
Plan, each such Participant shall enter into an Option Agreement with the
Company providing, consistent with the Plan, such terms as the Committee may
deem advisable.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements for the nine months ended March 31, 1998 and
is qualified in its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 23,141
<SECURITIES> 0
<RECEIVABLES> 20,165
<ALLOWANCES> 538
<INVENTORY> 29,909
<CURRENT-ASSETS> 76,151
<PP&E> 51,082
<DEPRECIATION> 28,169
<TOTAL-ASSETS> 118,958
<CURRENT-LIABILITIES> 26,592
<BONDS> 0
0
0
<COMMON> 1,734
<OTHER-SE> 81,272
<TOTAL-LIABILITY-AND-EQUITY> 118,958
<SALES> 84,431
<TOTAL-REVENUES> 84,431
<CGS> 55,417
<TOTAL-COSTS> 74,947
<OTHER-EXPENSES> 41
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,798
<INCOME-PRETAX> 7,645
<INCOME-TAX> 2,750
<INCOME-CONTINUING> 4,895
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,895
<EPS-PRIMARY> .35
<EPS-DILUTED> .32
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements of the Registrant and is qualified in its
entirety by reference to such statements.
</LEGEND>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996 JUN-30-1996 JUN-30-1996
<PERIOD-END> SEP-30-1995 DEC-31-1995 MAR-31-1996 JUN-30-1996
<CASH> 11,604,000 9,576,000 777,000 661,000
<SECURITIES> 0 0 0 0
<RECEIVABLES> 16,431,000 17,609,000 17,580,000 23,690,000
<ALLOWANCES> 473,000 519,000 603,000 354,000
<INVENTORY> 13,471,000 15,878,000 20,559,000 16,916,000
<CURRENT-ASSETS> 43,363,000 44,383,000 41,416,000 44,264,000
<PP&E> 38,164,000 33,595,000 38,361,000 37,228,000
<DEPRECIATION> 24,662,000 21,077,000 21,704,000 22,374,000
<TOTAL-ASSETS> 70,626,000 70,576,000 80,915,000 81,169,000
<CURRENT-LIABILITIES> 10,577,000 9,661,000 18,067,000 19,528,000
<BONDS> 10,000,000 9,990,000 9,990,000 9,981,000
1,196,000 0 0 0
0 0 0 0
<COMMON> 0 1,196,000 1,236,000 1,238,000
<OTHER-SE> 46,090,000 47,122,000 26,372,000 29,234,000
<TOTAL-LIABILITY-AND-EQUITY> 70,626,000 70,576,000 80,915,000 81,169,000
<SALES> 13,149,000 28,344,000 44,300,000 74,367,000
<TOTAL-REVENUES> 13,149,000 28,344,000 44,300,000 74,367,000
<CGS> 9,080,000 19,715,000 30,655,000 51,070,000
<TOTAL-COSTS> 12,258,000 26,056,000 63,758,000 89,649,000
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 303,000 616,000 936,000 1,939,000
<INCOME-PRETAX> 758,000 2,005,000 (19,799,000) (16,146,000)
<INCOME-TAX> 151,000 400,000 680,000 1,274,000
<INCOME-CONTINUING> 607,000 1,605,000 (20,479,000) (17,420,000)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 607,000 1,605,000 (20,479,000) (17,420,000)
<EPS-PRIMARY> .05 .14 (1.72) (1.46)
<EPS-DILUTED> .05 .13 (1.72) (1.46)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements of the Registrant and is qualified in its
entirety by reference to such statements.
</LEGEND>
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1997 JUN-30-1997 JUN-30-1997 JUN-30-1998
<PERIOD-END> SEP-30-1996 DEC-31-1996 MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 837,000 1,025,000 586,000 600,000 1,070,000
<SECURITIES> 0 69,000 69,000 0 187,000
<RECEIVABLES> 17,525,000 19,071,000 18,445,000 22,260,000 19,453,000
<ALLOWANCES> 361,000 361,000 417,000 417,000 460,000
<INVENTORY> 18,142,000 19,195,000 22,113,000 20,319,000 26,591,000
<CURRENT-ASSETS> 39,076,000 41,928,000 43,451,000 45,617,000 50,245,000
<PP&E> 37,838,000 38,488,000 38,915,000 39,723,000 46,221,000
<DEPRECIATION> 23,188,000 23,971,000 24,511,000 25,236,000 26,229,000
<TOTAL-ASSETS> 75,452,000 77,746,000 79,220,000 81,047,000 91,071,000
<CURRENT-LIABILITIES> 16,771,000 18,355,000 18,679,000 19,745,000 26,695,000
<BONDS> 9,981,000 9,981,000 9,981,000 9,981,000 1,504,000
0 0 0 0 0
0 0 0 0 0
<COMMON> 1,255,000 1,255,000 1,266,000 1,266,000 1,418,000
<OTHER-SE> 30,332,000 31,287,000 31,815,000 33,774,000 43,096,000
<TOTAL-LIABILITY-AND-EQUITY> 75,452,000 77,746,000 79,220,000 81,047,000 91,071,000
<SALES> 19,061,000 41,975,000 64,912,000 94,299,000 23,885,000
<TOTAL-REVENUES> 19,061,000 41,975,000 64,912,000 94,299,000 23,885,000
<CGS> 12,783,000 28,440,000 43,618,000 63,109,000 15,673,000
<TOTAL-COSTS> 17,263,000 38,016,000 58,809,000 84,563,000 21,277,000
<OTHER-EXPENSES> 0 0 0 0 83,000
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 810,000 1,551,000 2,263,000 2,974,000 723,000
<INCOME-PRETAX> 1,034,000 2,469,000 3,911,000 6,855,000 1,802,000
<INCOME-TAX> 383,000 925,000 1,450,000 2,435,000 650,000
<INCOME-CONTINUING> 651,000 1,544,000 2,461,000 4,420,000 1,152,000
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 651,000 1,544,000 2,461,000 4,420,000 1,152,000
<EPS-PRIMARY> .05 .12 .20 .36 .09
<EPS-DILUTED> .05 .12 .19 .34 .08
</TABLE>
