[TYPE] SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 1-8048
______________________
TII INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 66-0328885
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
1385 Akron Street, Copiague, New York 11726
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 516-789-5000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO _______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 1, 1995
Common Stock, par value $.01 4,037,746
Class B Stock, par value $.01 370,366
TII INDUSTRIES, INC. AND SUBSIDIARIES
Form 10-Q for the Quarter Ended March 31, 1995
INDEX
Part I - FINANCIAL INFORMATION
Item 1: Financial Statements: Page No.
Consolidated Condensed Balance Sheets -
March 31, 1995 and June 24, 1994 2
Consolidated Condensed Statements of
Operations - Three and Nine Months Ended
March 31, 1995 and March 25, 1994 3
Consolidated Statement of Stockholders'
Investment - Nine Months Ended
March 31, 1995 4
Consolidated Condensed Statements of
Cash Flows - Nine Months Ended
March 31, 1995 and March 25, 1994 5
Notes to Consolidated Condensed
Financial Statements 6-9
Item 2: Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10-12
Part II- OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 13
Signature 13
<PAGE>
TII INDUSTRIES, INC AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
March 31, June 24,
ASSETS 1995 1994
--------- ---------
CURRENT ASSETS:
Cash $978,000 $1,099,000
Marketable securities available for sale 1,126,000 2,391,000
Trade receivables 5,593,000 5,174,000
Other receivables 356,000 405,000
Inventories 12,741,000 9,677,000
Prepaid expenses 562,000 365,000
--------- -----------
Total current assets 21,356,000 19,111,000
Marketable securities - restricted 1,125,000 --
PROPERTY AND EQUIPMENT, AT COST:
Machinery and equipment 15,794,000 15,216,000
Tools, dies and molds 5,812,000 5,466,000
Leasehold improvements 5,546,000 4,881,000
Office fixtures, equipment and other 2,554,000 2,410,000
--------- ----------
29,706,000 27,973,000
Less - Accumulated depreciation and
amortization 19,853,000 19,058,000
---------- ----------
9,853,000 8,915,000
---------- ----------
OTHER ASSETS 1,640,000 1,352,000
---------- ----------
$33,974,000 $29,378,000
========== ==========
The accompanying notes to consolidated condensed financial statements are
an integral part of these statements.
(Unaudited)
March 31, June 24,
LIABILITIES AND STOCKHOLDERS' INVESTMENT 1995 1994
---------- ----------
CURRENT LIABILITIES:
Current portion of long-term debt $65,000 $5,688,000
Accounts payable 7,477,000 5,292,000
Accrued liabilities 887,000 1,397,000
---------- ----------
Total current liabilities 8,429,000 12,377,000
---------- ----------
LONG-TERM DEBT 6,921,000 1,864,000
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' INVESTMENT:
Preferred Stock, par value $1.00 per share;
1,000,000 authorized and issuable in series:
Series A Cumulative Convertible Redeemable
Preferred Stock, 100,000 shares authorized;
27,626 shares outstanding at March 31, 1995
and June 24, 1994.(issued and valued at
liquidation value of $100.00 per share). 2,763,000 2,763,000
Series B Cumulative Redeemable Preferred Stock,
20,000 shares authorized; zero shares
outstanding at March 31, 1995 and June 24, 1994. --- ---
Common Stock, par value $.01 per share;
30,000,000 shares authorized (with one vote
per share); 4,035,412 and 3,819,966 shares issued
at March 31, 1995 and June 24, 1994, respectively. 40,000 38,000
Class B Common Stock, par value $.01 per share;
10,000,000 shares authorized (with ten votes
per share and convertible into one share of Common
Stock); 370,366 and 370,630 shares outstanding at
March 31, 1995 and June 24, 1994, respectively. 4,000 4,000
Class C Common Stock, par value $.01 per share;
100,000 shares authorized (non-voting);
no shares issued --- ---
Warrants outstanding 120,000 120,000
Capital in excess of par value 15,231,000 14,317,000
Retained earnings (Accumulated deficit) 745,000 (1,824,000)
Unrealized gain on marketable securities 2,000 ---
--------- -----------
18,905,000 15,418,000
Less - 17,637 common shares in treasury, at cost 281,000 281,000
--------- ----------
18,624,000 15,137,000
--------- ----------
$33,974,000 $29,378,000
========= ==========
-2-
TII INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
-----------------------
March 31, March 25,
1995 1994
----------- ----------
Net sales $11,502,000 $10,886,000
----------- ----------
Cost and expenses:
Cost of sales 7,501,000 7,505,000
Selling, general and administrative expenses 1,752,000 1,489,000
Research and development expenses 670,000 572,000
----------- ----------
Total 9,923,000 9,566,000
----------- ----------
Operating income 1,579,000 1,320,000
----------- ----------
Other income (expense)
Interest expense (194,000) (168,000)
Other income (expense), net 41,000 41,000
----------- ----------
Other income (expense), net (153,000) (127,000)
----------- ----------
Net profit $1,426,000 $1,193,000
=========== ===========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
PRIMARY $0.22 $0.18
=========== ===========
ASSUMING FULL DILUTION $0.21 $0.17
=========== ===========
SHARES USED IN COMPUTING EARNINGS PER
COMMON AND COMMON EQUIVALENT SHARE:
PRIMARY 8,116,000 7,575,000
=========== ===========
ASSUMING FULL DILUTION 8,566,000 7,955,000
=========== ===========
The accompanying notes to consolidated condensed financial
statements are an integral part of these statements.
-3-
TII INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
-----------------------
March 31, March 25,
1995 1994
----------- -----------
Net sales $32,619,000 $29,781,000
----------- -----------
Cost and expenses:
Cost of sales 22,326,000 21,472,000
Selling, general and administrative expenses 5,239,000 4,206,000
Research and development expenses 2,015,000 1,520,000
----------- -----------
Total 29,580,000 27,198,000
----------- -----------
Operating income 3,039,000 2,583,000
----------- -----------
Other income (expense)
Interest expense (487,000) (546,000)
Other income (expense), net 17,000 435,000
----------- -----------
Other income (expense), net (470,000) (111,000)
----------- -----------
Net profit $2,569,000 $2,472,000
=========== ===========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
PRIMARY $0.43 $0.41
=========== ===========
ASSUMING FULL DILUTION $0.42 $0.39
=========== ===========
SHARES USED IN COMPUTING EARNINGS PER
COMMON AND COMMON EQUIVALENT SHARE:
PRIMARY 7,959,000 7,577,000
=========== ===========
ASSUMING FULL DILUTION 8,466,000 7,930,000
=========== ===========
TII INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
(Unaudited)
Preferred Stock Common Stock
----------------- --------------
Shares Dollars Shares Dollars
------- ---------- -------- --------
BALANCE,
June 24, 1994 27,626 $2,763,000 3,819,966 $38,000
Registration costs -- -- -- --
Exercise of stock options -- -- 26,182 --
Exercise of UPOs -- -- 2,000 --
Exercise of Warrants -- -- 187,000 2,000
Conversion of Class B stock
to common stock -- -- 264 --
Net income for the
nine months ended
March 31, 1995 -- -- -- --
Unrealized gain - marketable securities -- -- -- --
------- ---------- -------- -------
BALANCE,
March 31, 1995 27,626 $2,763,000 4,035,412 $40,000
====== ========== ========= ======
The accompanying notes to consolidated condensed financial statements are
an integral part of these statements.
Capital
Class B Common Stock in excess
------------------- Warrants of par
Shares Dollars Outstanding Value
-------- --------- ----------- --------
BALANCE,
June 24, 1994 370,630 $4,000 $120,000 $14,317,000
Registration costs -- -- -- (98,000)
Exercise of stock options -- -- -- 73,000
Exercise of UPOs -- -- -- 6,000
Exercise of Warrants -- -- -- 933,000
Conversion of Class B stock
to common stock (264) -- -- --
Net income for the
nine months ended
March 31, 1995 -- -- -- --
Unrealized gain
- marketable securities -- -- -- --
-------- ------ --------- ----------
BALANCE,
March 31, 1995 370,366 $4,000 $120,000 $15,231,000
======== ====== ======== ==========
Unrealized
Treasury gain-market
Retained Stock securities
Earnings --------- ----------
(Deficit) Dollars Dollars
--------- -------- ---------
BALANCE,
June 24, 1994 ($1,824,000) $281,000 $ --
Registration costs -- -- --
Exercise of stock options -- -- --
Exercise of UPOs -- -- --
Exercise of warrants -- -- --
Conversion of Class B stock
to common stock -- -- --
Net income for the nine months
ended March 31, 1995 2,569,000 -- --
Unrealized gain - marketable
securities -- -- 2,000
--------- -------- ---------
BALANCE,
March 31, 1995 $745,000 $281,000 $2,000
========= ======== =========
TII INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31, March 25,
1995 1994
------ -------
CASH FLOWS PROVIDED (USED) BY OPERATIONS
Net Profit $2,569,000 $2,472,000
Adjustments to reconcile net profit
to net cash provided (used) by
operating activities
Depreciation and amortization 1,312,000 1,208,000
Amortization of deferred charges
and other assets, net 138,000 61,000
Loss (gain) on sale of
marketable securities 17,000 (458,000)
Changes in assets and liabilities
net of effects from purchase of Ditel
Increase in trade receivables (419,000) (423,000)
Decrease increase in other
receivables 49,000 (143,000)
Increase in inventories (3,064,000) (457,000)
Increase in prepaid expenses
and other assets (623,000) (696,000)
Increase in accounts payable,
accrued liabilities and taxes 1,675,000 673,000
--------- ---------
Total adjustments (915,000) (235,000)
--------- ---------
Net cash provided by operating
activities 1,654,000 2,237,000
--------- ---------
CASH FLOWS PROVIDED (USED) BY INVESTING
ACTIVITIES
Capital expenditures (2,211,000) (1,136,000)
Sale of investments in marketable
securities available for sale 123,000 2,996,000
-------- ---------
Net cash provided (used)
by investing activities (2,088,000) 1,860,000
-------- ---------
CASH FLOWS PROVIDED (USED) BY FINANCING
ACTIVITIES
Payment of debt (6,605,000) (2,029,000)
Proceeds from exercise of options
and warrants 918,000 163,000
Proceeds from issuance of debt 6,000,000 ---
--------- ---------
Net cash provided (used) by
financing activities 313,000 (1,866,000)
--------- ---------
Net (decrease) increase in cash and
cash equivalents (121,000) 2,231,000
Cash at beginning of period 1,099,000 825,000
--------- --------
Cash and cash equivalents at end
of period $978,000 $3,056,000
The accompanying notes to consolidated condensed financial statements
are an integral part of these statements.
TII INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 1995
(1) INTERIM FINANCIAL STATEMENTS:
The unaudited interim financial statements presented herein have
been prepared in accordance with generally accepted accounting principles
for interim financial statements and with the instructions to Form 10-Q
and Regulation S-X pertaining to interim financial statements.
Accordingly, they do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
The financial statements reflect all adjustments (consisting of normal
recurring adjustments and accruals) which, in the opinion of management, are
considered necessary for a fair presentation of financial position at
March 31, 1995 and results of operations for the three months and nine months
ended March 31, 1995 and March 25, 1994. The financial statements should be
read in conjunction with the summary of significant accounting policies and
notes to consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended June 24, 1994. The results of
operations for the three and nine months ended March 31, 1995 are not
necessarily indicative of the results that may be expected for the full year
ending June 30, 1995.
(2) NET PROFIT PER COMMON SHARE:
Net profit per common and common equivalent share is calculated using the
weighted average number of common shares outstanding and the net additional
number of shares which would be issuable upon the exercise of dilutive stock
options and warrants assuming that the Company used the proceeds received
to purchase additional shares (up to 20% of shares outstanding) at market
value, retire debt and invest any remaining proceeds in U.S. government
securities. The effect on net profit of these assumed transactions is
considered in the computation.
(3) STATEMENTS OF CASH FLOWS:
During the nine months ended March 31, 1995 and March 24, 1994, the Company
made cash payments of $487,000 and $546,000 respectively, for interest.
(4) MARKETABLE SECURITIES AVAILABLE FOR SALE:
During the first quarter of fiscal 1995 the Company implemented the provisions
of SFAS 115, Accounting for Certain Investments in Debt and Equity Securities,
which requires the Company to categorize its investments as: held-to-maturity
securities, reported at cost; trading securities, reported at fair value; or
available-for-sale securities, reported at fair value. Changes in the fair
value of trading securities are included in earnings, while changes in the
unrealized gains and losses of available-for-sale securities are reported as
a separate component of stockholders' equity. The Company has evaluated the
conditions under which it might sell its marketable securities. As a result
the Company decided that all of its marketable securities would be potentially
available-for-sale in the event that such sales might be necessary either as
part of the Company's efforts to realize gains or in response to meet its
long-term obligations.
(5) CAPITAL STOCK:
Stock Options- The following summarizes stock option activity for the
quarter ended March 31, 1995:
Granted None
Exercise Price
Exercised 2,000
Exercise Price $4.219
Options Cancelled/Expired/Terminated 2,000
Exercise Price $6.25
Warrants- During the quarter ended March 31, 1995 a total of 107,000 shares
were issued as a result of the exercise of warrants associated with the
private placement in August of 1992.
(6) LONG TERM DEBT:
On January 31, 1995 the Company completed a refinancing of its long
term debt. Under the terms of the 5 year $8,000,000 revolving
credit facility with Chemical Bank - New York, the Company repaid
its existing debt with all of its banks in Puerto Rico and its term
loan with the Overseas Private Investment Corporation (OPIC) using
approximately $4,426,000 of loan proceeds for that purpose, and
borrowed an additional $1,574,000 for general working capital purposes. The
maximum borrowing under the revolving credit agreement reduces by $400,000
per quarter. Loans bear interest at floating rates which approximate prime
plus 1% or fixed rates for varying periods at LIBOR plus 3%, at the Company's
option. No quarterly principal payment need to be made until the amount
borrowed is within $400,000 of the maximum amount allowed under the facility
at that time.Chemical Bank has taken a lien on approximately $1,125,000 in
cash and cash equivalents (restricted cash) until approximately June 30, 1996,
all trade accounts receivable and all U.S.-based assets as well as guarantees
from most of the Company's subsidiaries.
The loan agreement requires, among other things, that the Company
maintain: (a) an amount of consolidated tangible net worth plus consolidated
subordinated debt (each as defined) of at least $15,500,000 through June
29, 1995, $17,500,000 thereafter through June 27, 1996 and $20,000,000
thereafter; (b) a ratio of total consolidated unsubordinated liabilities
to consolidated tangible net worth (each as defined) of no greater than
1.0 to 1.0; (c) a consolidated current ratio (as defined) of less than 1.25
to 1.0 through June 26, 1997 and 1.5 to 1.0 at anytime thereafter;
and (d) a debt service ratio as defined of at least 1.35 to 1.0. The Company
may not pay cash dividends or repurchase capital stock without the consent of
the Bank. In addition, the Company may not incur a consolidated net loss
( as defined), excluding extraordinary gains, for any two fiscal quarters in
any four consecutive fiscal quarters, and the Company is to limit (a)
consolidated capital expenditures to $3,500,000 per annum (subject to a
one-year carryforward of any unused amounts) and (b) consolidated lease
obligations to $400,000 per annum (exclusive of its leases for its Dominican
Republic facilities and its equipment lease with PRC Leasing, Inc.)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations:
The following discussion and analysis should be read in conjunction
with the foregoing financial statements and notes thereto.
Results of Operations
Net sales for the third quarter of fiscal 1995 increased from the
third quarter of fiscal 1994 by $616,000 or 5.7% to $11,502,000. Net
sales for the first nine months of fiscal 1995 increased from the
comparable period in fiscal 1994 by $2,838,000 or 9.5% to $32,619,000
from $29,781,000. These improvements in sales were primarily the result of
increased sales of overvoltage protectors and network interface devices to
the Company's telephone company ("Telco") customers, as well as improved sales
of the Company's fiber optic products.
During the third quarter of each of fiscal year 1995 and 1994, the
Company received payments of $777,000 and $680,000, included in
net sales, from American Telephone & Telegraph Company for sales shortfalls
corresponding to the contract years ended December 31, 1994 and 1993 under
an agreement entered into in fiscal 1989.
Cost of sales decreased as a percentage of sales in the third
quarter of fiscal 1995 to 65.2% from 68.9% in the comparable quarter of
fiscal 1994. Cost of sales decreased as a percentage of sales in the
first nine months of fiscal 1995 to 68.4% from 72.1% reported in the prior
period. These improvements were primarily due to the higher sales volume which
enabled the Company to improve the absorption of fixed expenses, together
with the effect of improved manufacturing efficiencies.
Selling, general and administrative expenses increased in dollar
amount by $263,000 or 17.7% for the third quarter of fiscal 1995 and by
$1,033,000 or 24.6% for the first nine months of fiscal 1995, in each
case over the comparable fiscal 1994 period, primarily as a result of a
change to a direct sales force from an indirect sales force, sales
commissions associated with the increased sales volume and strengthening the
Company's marketing department.
Research and development expenses increased by $98,000 or 17.1% in
the third quarter of fiscal 1995 from the third quarter of fiscal 1994
and by $495,000 or 32.6% in the first nine months of fiscal 1995 from
the first nine months of fiscal 1994. These increases were due, in
large part, to increases in both internal and external expenses associated
with the development of new products.
Interest expense increased by $26,000 or 15.5% in the third quarter
of fiscal 1995 but declined by $59,000 or 10.8% in the first nine months
from the comparable fiscal 1994 periods due to debt reductions during the first
two quarters of fiscal year 1995 as the Company made scheduled debt
installment payments persuant to the terms of the previous loan agreements,
offset by an increase in bank debt outstanding persuant to the terms of the
Company's new loan facility completed during the third quarter of fiscal 1995
and, higher prevailing interest rates during most of fiscal 1995 compared to
fiscal 1994.
Other income did not change between the reported three month
periods in fiscal 1995 and fiscal 1994. Other income in the first nine
months of fiscal 1994 resulted primarily from a $458,000 capital gain
from a change in investment policy, pursuant to which the Company
liquidated a portfolio of common stocks and reinvested the proceeds in
government and money market securities.
As a result of the above, net profit increased $233,000 or 19.5% to
$1,426,000 for the three months ended March 31, 1995 compared to $1,193,000
for the comparable three months in fiscal 1994. Net profit increased by
$97,000 or 3.9% to $2,569,000 for the nine months ended March 31, 1995
compared to $2,472,000 for the comparable nine months in fiscal 1994.
Liquidity and Capital Resources
Key factors in the Company's financial position were:
As Of
March 31 June 24,
1995 1994
(Dollars in Thousands)
Working capital $12,927 $6,734
Current ratio 2.53 1.54
Total debt to equity ratio .82 .94
During the first 9 months of fiscal 1995, cash was provided principally
by the Company's net profit, $2,569,000; depreciation and amortization,
$1,312,000; an increase in accounts payable and accrued liabilities,
$1,675,000; proceeds from the issuance of debt, $6,000,000; and warrants
associated with the Company's August 1992 Private Placement $918,000. These
sources and existing cash and marketable securities were used to support the
increased inventories ($3,064,000), for capital expenditures ($2,211,000),
and for the repayment of debt at scheduled maturity ($6,605,000).
On January 31, 1995 the Company consummated an $8,000,000 five year
revolving credit facility with Chemical Bank. The Company immediately
drew down $6,000,000 to repay its existing debt with all of its banks in
Puerto Rico and its term loan with the Overseas Private Investment
Corporation (OPIC) ($4,426,000) and for general working capital purposes
($1,574,000).
Funds anticipated to be generated from operations, together with
available cash and marketable securities, are considered to be adequate
to finance the Company's operations and capital needs at the present
time.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11. Statement Re: Computation of Per Share Earnings
(b) Reports on Form 8-K
On January 31, 1995 the Company filed an 8-K report regarding
the revolving credit facility.
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.
TII INDUSTRIES,INC.
(Registrant)
Date: May 15, 1995 /s/ Timothy J. Roach
------------------
Timothy J. Roach
President & CEO
EXHIBIT NO. 11<PAGE>
EXHIBIT 11
TII INDUSTRIES, INC AND SUBSIDIARIES
page 1 of 2
COMPUTATION OF PER SHARE EARNINGS
Three Months Nine Months
Ended Ended
March 31, 1995 March 31, 1995
-------------- -------------
PRIMARY EARNINGS PER SHARE
Weighted Average of Common Stock
Beginning of period (shares)
Common Stock outstanding 3,908,000 3,802,000
Class B Common Stock 371,000 371,000
---------- ------------
4,279,000 4,173,000
Issuance of common stock 79,000 85,000
---------- ------------
4,358,000 4,258,000
Common Stock Equivalents
Options and warrants 3,316,000 3,259,000
Preferred Stock
Preferred Stock, Series A
convertible at $6.25 442,000 442,000
---------- ------------
8,116,000 7,959,000
========== ============
Primary Earnings Per Share Computation
Net profit $1,426,000 $2,569,000
Add: Effects of using the Modified
Treasury Stock Method
Reduction of interest expense on debt 175,000 430,000
Interest earned on investment
in U.S. Government Securities 144,000 414,000
---------- ------------
Adjusted Net Profit $1,745,000 $3,413,000
Adjusted Net profit /
weighted average of common stock **
$1,745,000/8,116,000 $0.22
$3,413,000/7,959,000 $0.43
========== ============
Memo: Market price at end of period $5.06 $5.06
Average market price for the period $5.58 $5.43
EXHIBIT 11
page 2 of 2
TII INDUSTRIES, INC AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
Three Months Nine Months
Ended Ended
March 31, 1995 March 31, 1995
------------- -------------
FULLY DILUTED EARNINGS PER SHARE
Weighted average of Common Stock outstanding 4,358,000 4,258,000
Incremental shares from options and warrants * 3,316,000 3,316,000
Preferred stock conversion 442,000 442,000
Contingent Option 150,000 150,000
OPIC loan 300,000 300,000
--------- -----------
8,566,000 8,466,000
========= ===========
Fully Diluted Earnings Per Share Computation
Net profit $1,426,000 $2,569,000
Add: Effects of using the Modified
Treasury Stock Method
Reduction of interest expense on debt 194,000 487,000
Interest earned on investment
in U.S. Government Securities 161,000 459,000
-------- ----------
Adjusted Net Profit $1,781,000 $3,515,000
========= ==========
Adjusted net profit / weighted average of common stock **
$1,781,000/8,566,000 $0.21
$3,515,000/8,466,000 $0.42
========= ==========
* Since the number of shares of common stock obtainable by
assuming the exercise of all options and warrants with an exercise
price below market exceeds 20% of the number of shares of common
stock outstanding at the end of the period, the treasury stock
method is modified. All options and warrants are assumed to
have been exercised and the aggregate proceeds therefrom to
have been applied, first to repurchase outstanding common shares,
but not to exceed 20% of the outstanding shares and, second to
reduce borrowings with any remaining funds invested in U.S.
Government Securities or commercial paper.
** Loss per share is based on the weighted average of common
stock outstanding since any assumption of conversion is antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
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<NET-INCOME> 2569
<EPS-PRIMARY> .43
<EPS-DILUTED> .42
</TABLE>
