SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996 or
/ / Transition report pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission file number 1-1915
DeSoto, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-1899490
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 E. Washington St., Joliet, Illinois 60433
(Address of principal executive offices)
815 - 727 - 4931
(Registrant's telephone number, including area code)
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
At July 31, 1996 the registrant had 4,688,523 shares of common stock
outstanding.
PAGE 2
DeSOTO, INC. AND SUBSIDIARIES
INDEX
Page
No.
PART I. FINANCIAL INFORMATION
Consolidated Condensed Statements of
Operations for the Three Months and Six
Months ended June 30, 1996 and June 30, 1995 3
Consolidated Condensed Balance Sheets as of
June 30, 1996 and December 31, 1995 4
Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 1996
and June 30, 1995 5
Notes to Consolidated Condensed Financial
Statements 6-7
Management's Analysis of Financial Statements 8-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11-12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 13
PAGE 3
DeSOTO, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(in thousands except per share amounts)
<S> <C> <C> <C> <C>
NET REVENUES............................ $ 3,635 $ 16,314 $ 9,481 $ 35,241
COSTS AND EXPENSES:
Cost of sales........................ 3,342 16,372 8,383 35,815
Selling, administrative and general.. 1,279 2,914 2,718 5,729
Retirement security program.......... (1,776) (1,700) (3,436) (3,382)
Nonrecurring expense................. - - 1,562 -
------- -------- ------- --------
TOTAL OPERATING COSTS AND EXPENSES...... 2,845 17,586 9,227 38,162
------- -------- ------- --------
EARNINGS (LOSS) FROM OPERATIONS......... 790 (1,272) 254 (2,921)
OTHER CHARGES AND CREDITS:
Interest expense..................... - 212 - 459
Nonoperating expense (income)........ 1,184 (6,089) 1,184 (6,360)
------- -------- ------- --------
Earnings (Loss) before Income Taxes..... (394) 4,605 (930) 2,980
Provision (Benefit) for Income Taxes.... (149) 1,708 (351) 1,105
------- -------- ------- --------
NET EARNINGS (LOSS)..................... (245) 2,897 (579) 1,875
Dividends on Preferred Stock............ (172) (85) (283) (168)
------- -------- ------- --------
Net Earnings (Loss) Available
for Common Shares...................... $ (417) $ 2,812 $ (862) $ 1,707
======= ======== ======= ========
NET EARNINGS (LOSS) PER COMMON SHARE.... $ (0.09) $ 0.60 $ (0.18) $ 0.37
======= ======== ======= ========
Average Common Shares Outstanding....... 4,688 4,677 4,684 4,674
======= ======== ======= ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
PAGE 4
DeSOTO, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30,
1996 December 31,
(Unaudited) 1995
(in thousands of dollars)
ASSETS
Current Assets:
Cash....................................... $ 42 $ 51
Restricted cash............................ - 29
Restricted short-term investments.......... 1,180 1,180
Trade accounts and notes receivable-net.... 2,744 4,764
Inventories - net:
Finished goods........................... 25 405
Raw materials and work-in-process........ 330 380
------- -------
355 785
Deferred income taxes...................... 3,180 2,049
Prepaid expenses and other current assets.. 218 231
------- -------
Total Current Assets..................... 7,719 9,089
Restricted Investments....................... 3,877 3,770
Property, Plant and Equipment - net.......... 589 2,610
Prepaid Pension.............................. 50,710 46,913
Other Non-Current Assets..................... 748 2,586
------- -------
$63,643 $64,968
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable........................... $11,482 $14,263
Reserves and liabilities related to
restructuring programs................... 4,242 3,226
Waste site clean-up........................ 2,025 2,025
Other...................................... 4,388 4,500
------- -------
Total Current Liabilities................ 22,137 24,014
Waste site clean-up - long-term.............. 5,550 5,269
Post Retirement and Post
Employment Insurance....................... 1,431 1,223
Deferred Income Taxes........................ 12,256 11,461
Long-Term Deferred Gain...................... 2,581 2,779
Redeemable Preferred Stock................... 4,684 4,288
Common Stock and Other Stockholders' Equity.. 15,004 15,934
------- -------
$63,643 $64,968
======= =======
See accompanying notes to consolidated condensed financial statements.
PAGE 5
DeSOTO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1996 1995
(in thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)...................................... $ (579) $ 1,875
Non-cash items:
Net gain on disposal of property, plant and equipment.. 636 (17)
Depreciation and amortization.......................... 175 881
Pension income......................................... (3,797) (3,746)
Deferred income taxes.................................. (336) 1,107
Amortization of deferred gain ......................... (198) (198)
Other non-cash items................................... 45 38
------- -------
Net non-cash items..................................... (3,475) (1,935)
Changes in assets and liabilities resulting from
operating activities:
Net (increase) decrease in trade accounts
and notes receivable............................. 2,020 (599)
Net decrease in other non-current assets............. 1,731 178
Net increase (decrease) in other liabilities......... 1,393 (1,847)
Net decrease in inventories.......................... 430 47
Net decrease in other current assets................. 42 608
Net increase (decrease) in accounts payable.......... (2,781) 1,569
Other................................................ - (4)
------- -------
Net cash flows from operating activities............... (1,219) (108)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment.... 1,210 500
Additions to property, plant and equipment............. - (197)
------- -------
Net cash flows from investing activities................. 1,210 303
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions (payments) under Revolving Credit Agreement.. - (1,369)
------- -------
Net cash flows from financing activities................. - (1,369)
------- -------
Net decrease in cash and cash equivalents................ (9) (1,174)
Cash and cash equivalents at beginning of year........... 51 1,702
------- -------
Cash and cash equivalents at end of period............... $ 42 $ 528
======= =======
See accompanying notes to consolidated condensed financial statements.
PAGE 6
DeSOTO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments (consisting of normal recurring accruals) necessary
for a fair presentation of the results of operations for the
periods indicated.
The results of operations for the three and six months ended June
30, 1996 are not necessarily indicative of the results to be
expected for the full year.
A. ACCOUNTING POLICIES
The reader is directed to the Company's 1995 Annual Report on
Form 10-K previously filed with the Securities and Exchange
Commission for details of the accounting policies followed by
the Company.
B. INCOME TAXES
The provision (benefit) for income taxes is computed at the
current estimated effective income tax rate for the year.
C. INVENTORY VALUATION
Inventory at June 30, 1996 is valued at the last-in, first-out
(LIFO) method of inventory accounting. If the first-in, first-
out (FIFO) method of inventory accounting had been used for
all of the Company's inventories, inventories would have been
$520,000 and $1,493,00 higher than reported at June 30, 1996
and December 31, 1995, respectively.
D. ACCOUNTS RECEIVABLE
During the six months ended June 30, 1996, the Company sold
certain of its accounts receivable to fund short-term cash
requirements. Proceeds of $4,291,000 were received during the
six-month period of which $1,335,000 related to invoices due
after June 30, 1996. The accounts receivable sold were
excluded from Trade Accounts and Notes Receivable on the
balance sheet as of June 30, 1996. The Company has retained
the risk of loss in the event of nonpayment of the
receivables. The Company does not believe, however, that
there is significant risk in the collectibility of the
receivables.
E. DISPOSITIONS
On July 21, 1995, the Company announced the transfer and
assignment of various operations and assets involved in its
liquid detergent and fabric softener dryer sheet businesses to
two separate buyers. The Company assigned the rights to
certain customers with respect to these businesses. The
Company also sold other assets which included certain accounts
receivable, inventory and machinery and equipment. The
proceeds of these transactions were utilized to reduce the
Company's senior debt owed to CIT. Both transactions also
provide for the Company to receive royalties and other earn-
out opportunities over a three-year period in one case and
over a four-year period in the other case.
PAGE 7
The statement of operations for the three months and six
months ended June 30, 1995 includes the results of operations
of these businesses.
The following information is provided on a pro forma basis to
illustrate the effect of certain adjustments to the historical
consolidated financial statements that would have resulted
from the above dispositions if such transactions had occurred
on January 1, 1995. The results are not necessarily
indicative of actual results had the foregoing transactions
occurred as described above, nor do they purport to represent
results of future operations of the Company.
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1995
(in thousands except per
share amounts - unaudited)
Net revenues $ 6,632 $13,710
======= =======
Net earnings $ 3,827 $ 3,505
======= =======
Net earnings per common share $ 0.80 $ 0.71
======= =======
On April 11, 1996, the Company announced that it had sold the
domestic business and assets of its laundry detergent
manufacturing and distribution operations, at its Union City,
California, plant, to Star Pacific, Inc. The buyer will
continue production under a sublease of the plant from DeSoto.
The Company will retain its international detergent business.
A charge of $1.6 million was recorded in the 1996 first
quarter related to the costs associated with the Union City
disposition. This provision included the write-down of fixed
assets to net realizable value, future rental commitments on a
leased warehouse, and severance pay. The provision is
reflected on the statement of operations as nonrecurring
expense and the accrual is included with restructuring
reserves on the balance sheet. The statement of operations
for the three months and six months ended June 30, 1995
includes the results of operations of this business.
F. NONOPERATING EXPENSE (INCOME)
Nonoperating expense during the second quarter of 1996
resulted primarily from a provision for uncollectible
receivables related to prior operations. Nonoperating income
during the first quarter of 1995 resulted primarily from
royalty income related to technology sold by the Company in
1990. The nonoperating income during the second quarter of
1995 resulted primarily from insurance settlements.
G. KEYSTONE MERGER
As previously reported, the Company, on June 27, 1996, entered
into a definitive merger agreement with Keystone Consolidated
Industries, Inc. The consummation of the merger is subject to
certain conditions, including approval by the shareholders of
both companies and Keystone's obtaining the additional
financing necessary to consummate the merger.
PAGE 8
MANAGEMENT'S ANALYSIS OF FINANCIAL STATEMENTS
Liquidity and Capital Resources
The Company reported negative operating cash flows of
approximately $1.2 million during the first six months of 1996.
This cash outflow was primarily funded by the proceeds from the
sale, in February 1996, of machinery and equipment formerly used
in the Company's liquid laundry detergent and fabric softener
sheet businesses; these businesses were sold in 1995. The
Company has also factored certain accounts receivable from time
to time to address short-term cash requirements. Proceeds of
$4,291,000 were received from factoring during the six month
period of which $1,335,000 related to invoices due after June 30,
1996.
The Company has finalized a Trade Composition Agreement and a
related Security Agreement with its trade creditors as
represented by a committee of six major creditors of the Company.
The agreements include a standstill agreement related to accounts
payable existing as of September 22, 1995. Also, as part of the
Trade Composition Agreement, the Company initiated the
termination of its overfunded pension plan to be effective upon
the receipt of appropriate governmental approval, which has now
been received. Under the standstill agreement, if certain
conditions are met, the creditors who sign the agreement agree
not to initiate litigation or other efforts to collect amounts
owed to them. Under the agreement, the Company agreed to pay
each Qualified Trade Creditor (as defined) the balance owed to
that creditor within 10 days of receipt of the reverted excess
pension plan assets. Per the agreement, interest would begin to
accrue on July 1, 1996, at 8% per annum on the outstanding
balance. The Security Agreement granted a security interest and
lien on all of the Company's assets to secure the obligations of
the Company to the Qualified Trade Creditors as a result of the
Trade Committee obtaining standstill agreements from 80%, in
dollar amount, of the trade creditors. The Trade Composition
Agreement further stipulated that the Company may suspend efforts
to terminate its pension plan if the Company entered into a
binding agreement for a merger, asset sale or similar
transaction, involving substantially all of the Company's assets,
which provides that all Qualified Trade Creditors would be paid
in full. As a result of the proposed merger between the Company
and Keystone Consolidated Industries, Inc., the Company is no
longer pursuing the pension plan termination. If the merger is
not consummated, DeSoto will reinstate the pension plan
termination process.
On April 11, 1996, the Company announced that it had sold the
domestic business and assets of its laundry detergent
manufacturing and distribution operations, at its Union City,
California, plant to Star Pacific, Inc. The proceeds from that
transaction did not have a material impact on the Company's
results of operations, cash flows or financial position.
As a result of its liquidity situation, the Company is currently
operating on a C.O.D. or limited credit basis with respect to
purchases of supplies and raw materials. The Company has been
able to operate within these constraints and expects to be able
to continue to do so for the immediate future. Lower inventory
levels at June 30, 1996 versus December 31, 1995 reflect the
Company's efforts to manage its cash flow, as well as the impact
of the dispositions discussed above.
PAGE 9
Accounts receivable at June 30, 1996 decreased versus December
31, 1995, reflecting the fact that there were no second quarter
sales to Procter & Gamble, an increase in reserve for allowance
of doubtful accounts, a formalized offset of accounts receivable
and accounts payable relative to certain parties who were both
debtors and creditors of DeSoto, and an increase in the level of
factored receivables. The trade receivables are net of factored
accounts receivable as discussed in the notes to the consolidated
condensed financial statements.
The decline in property, plant and equipment primarily resulted
from the sale of machinery and equipment no longer used in
operations as discussed above. This equipment was sold as part
of an auction that took place in February 1996. The sale of the
machinery and equipment at the Union City plant as part of the
transaction with Star Pacific, Inc. was another major component
of the reduction. The balance of the reduction in property,
plant and equipment represents depreciation.
The reduction in non-current assets reflects reclassification of
certain amounts to current as well as a reserve against certain
assets reflecting a diminishment in value due to questions with
respect to realizability.
The reduction in the trade payables reflects continued cost
control efforts as well as the formalized offset of accounts
receivable and accounts payable relative to certain parties who
were both debtors and creditors of DeSoto. Reserves and
liabilities related to restructuring programs increased during
the first six months of 1996 due to provision for expenses
related to the disposition of the Union City operations.
Significant components of this accrual include the write-down of
fixed assets to net realizable value, future rental commitments
on a leased warehouse and severance pay.
The Company expects to fund operations in 1996 with proceeds from
insurance settlements as well as continued spot factoring of
accounts receivable.
Results of Operations for the Six Months Ended June 30, 1996
The net revenues for the first six months of 1996 decreased from
the same period in 1995 due to the disposition of the liquid and
fabric softener businesses in July 1995 and the business at Union
City (primarily Procter & Gamble) disposed of in April 1996. The
1995 six month net revenues related to the disposed businesses
were $26.9 million.
The improved gross profit for the 1996 six month period reflects
the effect of the 1995 disposition discussed above. The six
month period includes $2 million in revenues related to the
disposed Union City business. A temporary change in purchasing
patterns at the Union City facility during the first three months
of 1996 had a positive impact on the six month gross profit.
Selling, administrative and general expenses were lower than the
first six months of 1995. The 1995 expenses reflected the
operation of the South Holland, Thornton and Union City
facilities. There were no comparable 1996 expenses with the
exception of the expenses related to Union City for the first
three months of 1996.
Nonrecurring expense in 1996 represents the provision for
expenses related to the disposition of the Union City operations.
Significant components of this provision include the write-down
of fixed assets to net realizable value, future rental
commitments on a leased warehouse and severance pay.
The Company reported no interest expense in 1996 because the
Company had no outstanding borrowing subsequent to September
1995, when the Company completely repaid the outstanding
borrowing under its credit facility with CIT.
PAGE 10
The nonoperating expense for the six month period represents the
provision for a reserve against certain receivables related to
disposed operations. The nonoperating income in 1995 included
approximately $6.0 million from insurance settlements and
approximately $243,000 of royalty income related to technology
sold by the Company in 1990.
Results of Operations for the Three Months Ended June 30, 1996
Second quarter net revenues were $3.6 million in 1996 versus net
revenues of $16.3 million in the 1995 second quarter. Gross
profit for the 1996 second quarter was $293,000 versus a negative
gross profit in 1995 of $58,000. Results of operations for the
second quarter of 1995 include the Company's former liquid
detergent and fabric softener businesses which were sold on July
14, 1995, as well as results of operations of the Company's Union
City plant, sold on April 2, 1996. These businesses accounted
for approximately $12.5 million of net revenues in the 1995
second quarter. These dispositions, coupled with a change in
customer mix contributed to the 1996 increase in gross profit
As a result of these dispositions, the Company operates only one
manufacturing facility. Sales to Sears, Roebuck and Co., the
Company's largest customer, in 1996 were slightly higher than the
same period of 1995. Volume increases in 1996 have been offset
by changes in selling prices.
Selling, general and administrative costs were $1.3 million in
the 1996 second quarter versus $2.9 million in the comparable
quarter in 1995. This decrease primarily reflects the
elimination of administrative personnel and other costs as a
result of the business dispositions in 1995 and 1996.
The Company reported no interest expense in 1996 because the
Company had no outstanding borrowing subsequent to September
1995, when the Company completely repaid the outstanding
borrowing under its credit facility with CIT.
The nonoperating expense in the second quarter of 1996 primarily
represents the provision for a reserve against certain
receivables related to disposed operations. Nonoperating income
in 1995 primarily resulted from insurance settlements.
PAGE 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
(i) As previously reported, the Company received an amended
unilateral Administrative Order issued by the U. S. EPA
under Section 106 of the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"),
alleging that the Company is a potentially responsible
party in connection with the Marina Cliffs Site in the
South Milwaukee, Wisconsin. The Company presently believes
it has no liability for the claims made relating to the
site.
(ii) United States of America v. Akzo et. al.
As previously reported, the Company was named in a
complaint filed in the United States District Court for the
Eastern District of Michigan. The complaint, filed on
behalf of the U.S. EPA, alleges, inter alia, that the
Company and four other parties are responsible under
Section 107 of CERCLA for costs the EPA incurred at the
Metamora Landfill site in Lapeer, Michigan. The complaint
also seeks a declaration under Section 113 of CERCLA that
the Company is liable for the EPA's future costs that may
be incurred at this site. Separately, on June 13, 1996,
the Company was served with a complaint, also filed in the
United States District Court for the Eastern District of
Michigan, entitled Foamseal, Inc., et. al. v. The Dow
Chemical Co., et. al., by a group of firms seeking, inter
alia, contributions from the Company and numerous other
parties for remediation costs being incurred by the
plaintiff firms at the named site.
The Company's defense in these actions has been assumed by
the firm and its principal shareholder from which the
Company purchased certain assets of the business which is
alleged to be partially responsible for the alleged
contamination at this site. The former owners have also
agreed to indemnify the Company with respect to the claims
asserted in the complaints.
(iii) Pennsauken Solid Waste Management Authority v. State of New
Jersey DEP, et. al.
On or about December 14, 1995, the Company was served with
an amended complaint filed in the New Jersey Superior
Court, Camden County, alleging, inter alia, that the
Company and numerous other parties are jointly and
severally responsible for the disposition of hazardous
wastes at the Pennsauken Sanitary Landfill in New Jersey.
An earlier complaint naming the Company was dismissed
without prejudice.
(iv) As previously reported, Fort Dearborn Lithograph Co. has
filed suit against the Company in the Circuit Court of Cook
County, Illinois, seeking to collect allegedly unpaid
invoices for goods and services, of approximately $500,000.
The disposition of this action has been stayed, based on a
payment arrangement made with this creditor.
PAGE 12
(v) Rooney v. DeSoto, Inc., et. al.
This action was filed in 1991 in the District Court of
Tarrant County, Texas, by various emergency health care
providers against the Company, among others, claiming
damages for alleged personal injuries purportedly related
to an industrial accident involving a Company employee at
its former facility in Fort Worth, Texas. The case has
now been set for trial in the fall of 1996.
Item 6. Exhibits and Reports on Form 8-K
a) The exhibits to this report are listed in the
Index to Exhibits on page 14 hereof.
b) Reports on Form 8-K
A current report on Form 8-K, dated as of April
11, 1996, was filed to report under Item 5 that the
Company had sold the domestic business and assets of
its laundry detergent manufacturing and distribution
operations, at its Union City, California, plant, to
Star Pacific, Inc.
A current report on Form 8-K, dated as of June
13, 1996, was filed to report under Item 5 that the
Board of Directors of the Company adopted a
resolution amending the Rights Agreement, dated as of
February 20, 1989, between the Company and Harris
Trust and Savings Bank.
A current report on Form 8-K, dated as of June
27, 1996, was filed to report under Item 5 that the
Company had entered into a definitive merger
agreement with Keystone Consolidated Industries,
Inc., subject to certain conditions, including
approval by the shareholders of both companies, the
requisite governmental review, and Keystone's
obtaining the additional financing necessary to
consummate the merger.
PAGE 13
SIGNATURE
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.
DeSOTO, INC.
(Registrant)
/s/ Anne E. Eisele
Anne E. Eisele
President and Chief
Financial Officer
/s/ William Spier
William Spier
Chairman and
Chief Executive Officer
August 14, 1996
Date
PAGE 14
DeSOTO, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
11 - Computation of Fully Diluted Earnings Per Share
27 - Financial Data Schedule
PAGE 15
Exhibit 11
DeSOTO, INC. AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
(in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Net Earnings (Loss) $ (245) $ 2,897 $ (579) $ 1,875
Preferred Dividends (172) (85) (283) (168)
-------- -------- -------- --------
Net Earnings (Loss)
Applicable to Common Stock $ (417) $ 2,812 $ (862) $ 1,707
======= ======= ======= =======
Net Earnings (Loss)
Per Common Share: $ (0.09) $ 0.60 $ (0.18) $ 0.37
======= ======= ======= =======
Average Common Shares
Outstanding (A) 4,688 4,677 4,684 4,674
======= ======= ======= =======
Net Fully Diluted Earnings (Loss)
Per Common Share (B) $ (0.09) $ 0.60 $ (0.18) $ 0.37
======= ======= ======= =======
Average Common Shares Outstanding 4,688 4,677 4,684 4,674
Additional Shares Outstanding
After Application of the
Treasury Stock Method 7 - 5 -
------- ------- ------- -------
Total (B) 4,695 4,677 4,689 4,674
======= ======= ======= =======
(A) Outstanding common stock options and common stock warrants have been
omitted because the effect reduces the net loss per share.
(B) Reflecting the dilutive effect of outstanding common stock options
and common stock warrants under the treasury stock method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of June 30, 1996 and the Consolidated Statement of
Operations for the three months and six months ended June 30, 1996 and is
qualified in its entirety by reference to such financial information.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 42 42
<SECURITIES> 1,180 1,180
<RECEIVABLES> 2,744 2,744
<ALLOWANCES> 0 0
<INVENTORY> 355 355
<CURRENT-ASSETS> 7,719 7,719
<PP&E> 8,116 8,116
<DEPRECIATION> 7,527 7,527
<TOTAL-ASSETS> 63,643 63,643
<CURRENT-LIABILITIES> 22,137 22,137
<BONDS> 0 0
4,684 4,684
0 0
<COMMON> 5,619 5,619
<OTHER-SE> 9,385 9,385
<TOTAL-LIABILITY-AND-EQUITY> 63,643 63,643
<SALES> 3,635 9,481
<TOTAL-REVENUES> 3,635 9,481
<CGS> 3,342 8,383
<TOTAL-COSTS> 2,845 9,227
<OTHER-EXPENSES> 1,184 1,184
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (394) (930)
<INCOME-TAX> (149) (351)
<INCOME-CONTINUING> (245) (579)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (245) (579)
<EPS-PRIMARY> (0.09) (0.18)
<EPS-DILUTED> (0.09) (0.18)
</TABLE>