SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission file number 0-9487
CORCOM, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-2307626
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
844 E. Rockland Road, Libertyville, Illinois 60048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847)680-7400
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of class)
Indicate by checkmark 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 by checkmark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or an
amendment of this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant. The aggregate market value has been
computed by reference to the closing price of such stock as of March 6,
1996: Approximately $11,700,000.
Indicate the number of shares outstanding of the registrant's common
stock as of March 6, 1996: 3,761,543.
Documents incorporated by reference: Definitive proxy statement to
be filed for 1996 annual meeting (Part III).
<PAGE>
PART I
Item 1. Business.
CORCOM, Inc. is an Illinois corporation incorporated in March, 1955.
Except as otherwise indicated by the context, references herein to
"CORCOM" or the "Company" mean CORCOM, Inc. and its subsidiaries.
CORCOM's business consists of the design, manufacture, and sale of radio
frequency interference filters to the commercial, military, and facility
filter markets. The Company also manufactures and sells a broad line of
power entry devices that are used to connect electronic equipment to an
external power source.
Products
Radio frequency interference (RFI) filters are electronic components
used to protect electronic equipment from radio frequency interference
conducted through the AC power cord. They are also used to control the
emission of the RFI generated by electronic equipment so these emissions
do not interfere with other electronic devices. Customers purchase RFI
filters for emission control purposes to bring their equipment into
compliance with government regulations that limit the amount of radio
frequency interference that can be emitted by digital computing devices.
The Company also manufactures a complete line of Signal Sentry(tm) products,
filtered modular RJ jacks designed to solve RFI problems on signal lines.
CORCOM maintains a catalog of standard commercial filters that
contains approximately 500 designs, offering a variety of sizes, electrical
configurations, current ratings and environmental capabilities. These filters
consist of electronic circuits utilizing passive electrical components:
inductance coils, capacitors, and resistors. These are enclosed in a metal
or plastic case having terminals, lead wires, or an integral connector, for
attachment to associated equipment. Sales of commercial filters, including
Signal Sentry(tm) products, accounted for approximately 70% of consolidated
net sales in 1995, 74% in 1994, and 70% in 1993.
CORCOM also manufactures and sells RFI filters for the military and
facility markets. Both product lines are similar to commercial filters in
their basic function and design. However, military filters are subject to
extremely high performance requirements as described by military
specification. Facility filters are larger versions of the Company's line of
commercial filters and are used to control RFI conducted through the main
power line feeding secure facilities. Together they represented 5% of 1995
sales, 8% of 1994 sales, and 13% of 1993 sales.
The Company also distributes a line of power entry products that are
used to connect electronic equipment with a power source. These devices come
in a variety of configurations and may include an on-off switch, voltage
selector, fuse holder, and an IEC connector. Some power entry products also
contain an RFI filter. CORCOM's line of power entry products contains items
of its own design, plus some products obtained under a private label
agreement. Sales of power entry devices accounted for 25% of consolidated
net sales in 1995, 18% in 1994, and 17% in 1993.
In addition to filters and power entry products, the Company
distributes a variety of A/C power cords for use with filters and power entry
products having integral power connectors plus a series of line to line
capacitors used for RFI suppression.
All of the Company's products are marketed under its federally
registered trademark, "CORCOM".
CORCOM filters are designed to meet the requirements of one or more
safety and reliability specifications, such as those of Underwriters
Laboratories (UL), the Canadian Standards Association (CSA), the Verband
Deutscher Electrotechniker (VDE) in Germany, and the Schweizerischer
Elektrotechnischer Verein (SEV) in Switzerland.
All CORCOM filters are designed and built to operate continuously
for at least five years when connected across a live A/C power line. CORCOM
filters must perform without interruption because in most cases they are
energized even when the equipment in which they are installed is switched off.
Markets
CORCOM power line RFI filters are used as electronic pollution
control devices by manufacturers of digital electronic equipment all over the
world. In addition, many filters are used by field service organizations for
installation in sensitive equipment which was manufactured without an
effective filter. Power entry products are sold into the same markets and
through the same channels of distribution. Military filters are sold to
defense contractors and U.S. government agencies for use in sensitive
electronic devices. Facility filters are sold principally to contractors for
installation in screen room test facilities, computer installations, or other
locations containing sensitive electronic equipment.
Over 3,300 customers in the United States and more than 100 customers
in other countries purchased filters and power entry products from CORCOM or
its distributors in 1995. No single customer accounted for more than 10% of
sales in 1995, 1994, or 1993.
Distribution
Sales of CORCOM products in the United States are obtained by 18
independent sales representative firms which call on major original equipment
manufacturers (OEM's), government contractors, U.S. government agencies, and
independent electronic parts distributors. There are 28 United States
distributor firms which carry the Company's products; these distributors
service the smaller OEM's and the service organizations. Both
representatives and distributors handle other types of products, and some
distributors carry competing lines.
Export sales are conducted through combination
representative/distributor organizations. Representative sales are on a
commission basis with shipments directly to OEM's. On a distribution basis,
filters and power entry products are imported and sold to customers within
their countries.
The Company has 36 international representative/distributors plus
wholly-owned subsidiaries in Germany, Mexico and Hong Kong. This network
sold into 23 countries in 1995. Primary export markets include Canada,
Germany, the United Kingdom, France, Italy, Spain, Sweden, Japan, South Korea,
Taiwan, and Hong Kong. International catalogs are published in German,
Japanese, Malaysian, Chinese and English. Total international sales, which
include the sales from Corcom's German and Hong Kong subsidiaries, totaled
$6,562,000 in 1995 (21.4% of net sales), $5,149,000 in 1994 (19.3% of net
sales) and $5,126,000 in 1993 (19.8% of net sales).
Export sales from the United States and sales of the Company's Hong
Kong subsidiary are invoiced in United States dollars; sales of the Company's
German subsidiary are invoiced in German Deutschmarks. All international
sales are subject to factors such as changes in foreign exchange rates,
protective tariffs, tax policy and export/import controls.
CORCOM supports the marketing of its products by wide distribution
of its catalogs and by advertising in technical magazines. Advertising
and catalog costs for the Company were approximately $209,000, $173,000,
and $169,000 in 1995, 1994, and 1993, respectively.
Backlog
The Company's backlog of orders with firm delivery schedules was
approximately $10,346,000 on January 31, 1996, compared to $8,195,000
on January 31, 1995. The backlog consists principally of special orders
and scheduled increments of volume contracts. Most catalog items are
shipped from inventory. Typical lead time for special orders is 12-14
weeks. Over 85% of all orders are scheduled for delivery within 6
months. The Company does not believe that its business is subject to
seasonal variations.
Competition
Although industry statistics generally are not available, CORCOM
believes that in the United States it accounts for approximately 25 percent of
commercial and industrial power line interference filters, exclusive of
military applications. Competition principally includes Schaffner A.G. of
Switzerland; Delta of Taiwan; Aerovox, Inc.; Stanford Applied Engineering,
Inc.; as well as a number of lesser participants. CORCOM believes that its
sales volume is approximately equal to the aggregate volume of its three
principal United States competitors. In Europe the principal competitors are
Schaffner A.G., Siemens, Eickhoff and Tesch. In the Far East CORCOM's
principal competitor is Delta. Many of the competitors are firms much larger
than CORCOM, with far greater financial resources, broader product lines and
larger marketing organizations.
CORCOM believes that its position in the commercial and industrial
power line interference filter market results from a number of factors,
including the Company's concentration on this market sector, its emphasis
on application engineering to meet individual customer requirements, its
reputation for high product reliability and quality, its broad catalog line,
and its ability to provide standard items from inventory and/or local
distributor stock. The Company believes that these factors have to date
enabled CORCOM products to achieve high acceptance in the marketplace.
Because the Company's products are an integral part of the digital
electronic equipment produced by its OEM customers, there will always be
the possibility of a customer electing to produce its own RFI filters and
power entry products rather than purchase the Company's products.
CORCOM's major competitor in power entry products is Schaffner, A.G.
of Zurich, Switzerland. The Company believes that the two companies comprise
approximately half the market for these devices in the United States, with
each company having approximately the same market share.
Production, Testing and Assembly
CORCOM's products are composed of electrical components such as
capacitors and inductors and connectors which are wired into specific circuit
configurations, soldered, assembled into metal or plastic housings, and
tested. Materials and components generally are available from multiple
sources, and loss of a particular supplier would not be expected to have a
materially adverse effect on the Company's operations.
Engineering
The Engineering Department is divided into four sections --
Applications, Catalog, Support, and Manufacturing Engineering. Applications
Engineering provides assistance to key OEM accounts as well as customers
within specific geographic regions. Catalog Engineering develops new products
based on input from Marketing, and maintains and improves existing catalog
products through new technologies. Support Engineering consists of Safety
Engineering, which ensures compliance with safety regulations worldwide, and
Test Engineering, which develops and maintains all testing and inspection
equipment. Manufacturing Engineering verifies that the necessary equipment,
tooling and processes are in place, and updates manufacturing on new and
developing techniques and processes. The costs associated with the
Engineering Department were $1,247,000 in 1995. This compares to $1,152,000
in 1994 and $1,061,000 in 1993.
ISO Registration
CORCOM's manufacturing facilities were granted ISO 9001 registration
in 1995 by Underwriters Laboratories. This registration validates a company's
management system to the internationally accepted ISO 9001 standard relative
to the design, manufacturing, and quality of the products it manufactures.
ISO registration is seen as a benefit to CORCOM's customers, as well as a
vehicle to promote a continuous improvement philosophy within the Company.
Government Regulations
The Federal Communications Commission (FCC) has adopted regulations
to reduce the interference potential of electronic equipment having circuitry
"that generates and uses timing signals or pulses at a rate in excess of
10,000 pulses (cycles) per second and uses digital techniques." This
definition includes essentially all A/C-powered computers and other digital
equipment. Although the FCC has exempted several specific types of devices,
compliance with these rules has been required for most types of A/C-powered
digital equipment since October, 1983.
CORCOM believes that in most cases compliance with the FCC requirements will
require the suppression of conducted RFI through the use of power line
interference filters, and these are now considered a standard component
in most A/C-powered digital electronic equipment.
Outside the United States, and especially in Europe, RFI is controlled
by national regulations that in most respects follow the recommendation of the
special committee on radio interference (CISPR) of the International
Electrotechnical Commission (IEC). In Germany, RFI controls are issued by
VDE, the German safety agency which imposes regulations on computing equipment
shipped into that country. These specifications essentially follow CISPR
recommendations and in many respects are similar to the FCC rules. Similar
agencies act in Switzerland and other foreign countries. It is therefore
possible for a manufacturer using a CORCOM filter to produce equipment in such
a manner than it complies with both FCC and international interference control
regulations as well as domestic and foreign safety requirements.
Patents
The Company holds 11 patents. It may be possible for competitors of
CORCOM to copy aspects of its products even though the Company regards these
as proprietary. However, the Company believes that patent protection is of
less importance than the knowledge and experience of its management and
personnel and their ability to develop and market the Company's products. The
Company will apply for patents if and when it develops patentable processes or
products. The Company is not aware that the manufacture and sale of its
products, including those presently under development, require it to obtain
any licenses from others, although it may be necessary or desirable in the
future to obtain licenses for one or more of its future products.
Employees
On January 31, 1996, CORCOM had 644 full-time employees, of whom 540
were engaged in production activities, 31 in product development and related
activities, 14 in sales and marketing, and 59 in general and administrative
capacities. The Company considers its employee relations to be excellent.
The Company has not experienced any work stoppage due to a labor dispute in
over 29 years.
Item 2. Properties.
The following table contains information about the Company's principal
facilities at March 5, 1996:
Location Square Footage Owned or Leased(1) Type of Facility
Libertyville, Illinois 35,000 Lease expiring 1999 Office, research,
manufacturing and
warehouse
El Paso, Texas 16,000 Lease expiring 1998 Office and
warehouse
Ciudad Juarez, Mexico 47,000 Beneficially owned Office and
manufacturing
Martinsried, Germany 7,000 Lease expiring 1997 Office and
warehouse
Ciudad Juarez, Mexico 13,000 Lease expiring 1998 Office,
manufacturing,
and warehouse
(1) For further information regarding lease rentals and foreign properties,
see Notes 5, 9 and 10 to consolidated financial statements.
In 1995, 1994, and 1993 the major portion of the Company's production was
performed in Mexico.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 4A. Executive Officers of the Registrant.
Name Age Principal Occupation and Position and Office
with Registrant
Werner E. Neuman 70 President and Director since 1955; Treasurer
from 1955 until April, 1980, and again from
March, 1981 until August, 1981.
Thomas J. Buns 46 Vice President and Treasurer since April, 1991.
Prior to joining the Company, employed by Bell
& Howell Phillipsburg Company (mail handling
equipment) as Controller from 1985 to
April, 1991. Bell & Howell Phillipsburg
Company is a subsidiary of Bell & Howell
Corporation.
Michael P. Raleigh 34 Vice President of Engineering and Quality
Assurance since August, 1995. Vice President
of Engineering from July, 1993 to August, 1995.
Director of Engineering from May, 1992 to
July, 1993. Prior to joining the Company in
May, 1992, employed by Guardian Electric
(manufacturer of relays and solenoids) from
1984 to 1992, with the position of Director of
Engineering from January, 1989.
The officers of the registrant are elected annually by the Board of
Directors at the first meeting of the Board held after each annual meeting of
shareholders. Each officer holds office until his successor shall have been
duly elected and shall have qualified or until his death or until he shall
resign or shall have been removed as provided in the next sentence. Any
officer may be removed by the Board whenever in its judgment the best
interests of the registrant would be served thereby. Mr. Neuman and Mr. Buns
have employment agreements with the registrant. These agreements will be
described in the registrant's definitive proxy statement.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The Company's common stock is traded on the Nasdaq National Market
tier of The Nasdaq Stock Market(sm) under the symbol: CORC. The range of
high and low sales prices for such stock for the Company's two most recent
fiscal years, as shown in the monthly statistical reports furnished to the
Company by The Nasdaq Stock Market(sm), has been as follows:
Period High Low
1995: 1st Quarter $3.38 $2.75
2nd Quarter $4.13 $3.13
3rd Quarter $8.25 $3.75
4th Quarter $8.25 $5.75
1994: 1st Quarter $1.88 $1.63
2nd Quarter $5.00 $1.50
3rd Quarter $3.63 $2.50
4th Quarter $4.50 $2.38
The approximate number of record holders of the Company's common
stock at December 31, 1995 (including participants in securities position
listings) was greater than 500.
The Company has declared no cash dividends with respect to its
common stock and presently intends to retain all earnings for use in its
business. It is anticipated that such dividends will not be paid to
holders of common stock in the foreseeable future.
<PAGE>
<TABLE>
Item 6. Selected Financial Data.
<CAPTION>
1995 1994 1993 1992 1991
(In thousands except per share data)
<S> <C> <C> <C> <C> <C>
Year ended December 31:
Net sales $30,660 $26,726 $25,854 $26,990 $27,345
Income (loss):
Before income taxes and
extraordinary item $ 2,967 $1,310 $(1,993) $ (232) $(1,718)
Before extraordinary
item $ 2,786 $1,243 $(2,047) $ (687) $(1,759)
Net income (loss) $ 2,786 $1,243 $(2,047) $ (305) $(1,759)
Net income (loss) per
common and common
equivalent share:
Before extraordinary
item $ .72 $ .33 $ (.58) $ (.20) $ (.50)
Net income (loss) $ .72 $ .33 $ (.58) $ (.09) $ (.50)
At December 31:
Total assets $17,394 $14,816 $16,936 $19,524 $21,184
Long-term debt $ 162 $ 213 $ 1,256 $ 1,056 $ 1,113
<FN>
No cash dividends were declared during the five years in the period ended
December 31, 1995.
<FN>
Notes:
(1) Loss before income taxes in 1993 includes restructuring costs of
$2,051,000 (see Note 6 to consolidated financial statements).
(2) The 1992 extraordinary item represents a $382,000 ($.11 per share)
benefit from the utilization of foreign income tax net operating
loss carryforwards. The benefit from the utilization of net
operating loss carryforwards in 1994 ($381,000) and 1995 ($848,000)
is included in the provision for income taxes.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
CORCOM's net sales for 1995 were $30,660,000, an increase of 14.7%
from the $26,726,000 reported for the previous year. The bulk of the increase
came in the form of volume increases in the Company's North American and
European commercial filter businesses and was the result of increases in the
overall electronics market. There were no appreciable price changes year to
year. Between 1993 and 1994, sales increased 3.4%. Again, most of this
increase came as a result of volume increases in the Company's North American
and European commercial filter businesses. There were no appreciable price
changes in this period either.
The Company's backlog of orders with firm delivery schedules grew to
approximately $10,346,000 as of January 31, 1996, compared to $8,195,000
as of January 31, 1995 and $6,507,000 on January 31, 1994. The growth
from 1995 to 1996 was the result of an increase in the incoming order
level for the Company's North American and European commercial filter
businesses. The growth from 1994 to 1995 was mainly the result of an
increase in the incoming order level for the Company's North American
commercial filter business in the latter part of 1994.
In 1995 the Company's gross margins improved to 37.1% of sales from
the 32.1% reported in 1994. This was the result of the combination of
reductions in manufacturing overhead at the Company's principal manufacturing
location in Juarez, Mexico and improvements in labor productivity at this
same plant. A portion of the Company's manufacturing costs are Mexican
peso-based. The devaluation of the peso relative to the dollar late in 1994
was a contributor to the manufacturing cost reductions in 1995. Should the
value of the peso increase relative to the dollar, or if inflation in Mexico
escalates, the Company's manufacturing costs could rise. The period 1993 to
1994 showed an improvement in gross margins from 30.7% in 1993 to 32.1% in
1994. Again, this was principally the result of lower manufacturing overhead
and higher labor productivity in the Juarez, Mexico production facility.
Engineering expenses increased $95,000, or 8.2%, in 1995 over 1994's
level as a result of higher new product support and development costs. In
1994, engineering expenses increased $91,000, or 8.5%, over 1993's level as a
result of higher new product development costs and higher safety agency
certification costs.
Selling, administrative and other expenses were $1,156,000, or 19.5%,
higher in 1995 than in 1994. The major components of this increase were
higher sales commission and sales and management incentive compensation costs
on the higher levels of sales and earnings in 1995, and the fact that certain
one-time gains recognized in 1994 (a $241,000 gain on the sale of real estate
and a $198,000 recapture of part of the restructuring reserve established in
1993) were not repeated in 1995. Selling, administrative and other expenses
in 1994 were $383,000, or 6%, lower than they were in 1993. The largest
components of the decrease were a $241,000 gain on the sale of the Company's
Libertyville, Illinois real estate in March, 1994, and a reduction of $198,000
of the accrual for restructuring costs established in 1993 due to subleasing a
leased facility which was intended to be vacated.
Interest expense in 1995 was $106,000, or 60%, lower than in 1994 as
a result of lower borrowings. Interest expense declined $320,000 in 1994
from 1993's level. This, again, was the result of lower borrowings on
the Company's line of credit.
In 1993, the Company accrued restructuring costs of $2,051,000
related to a planned consolidation of facilities due to excess productive
capacity. The principal components of the adjustment were a $953,000
writedown of goodwill related to acquired product lines with marginal
projected future profitability, and a $775,000 charge for costs of plant
and equipment which will not be utilized for future operations.
The Company's pre-tax earnings for 1995 were $2,967,000. This
compares to pre-tax earnings in 1994 of $1,310,000 and to a pre-tax loss
in 1993 of $1,993,000, including the restructuring costs described above.
The primary reasons for the improvement are discussed above.
The Company's net income after tax in 1995 was $2,786,000 ($.72 per
share). This compares to net earnings in 1994 of $1,243,000 ($.33 per
share) and to a net loss in 1993 of $2,047,000 ($.58 per share), including all
restructuring costs. In 1995 and 1994, the company utilized $2,493,000 and
$1,624,000 (respectively) of income tax net operating loss (NOL) carryforwards
to reduce the income tax provision in these years. Average shares outstanding
for 1995 were 3,867,000, an increase of 147,000 shares from the 3,720,000
average shares outstanding reported for 1994. The increase was the joint
result of the issuance of 121,000 shares on exercise of stock options by
certain key employees in 1995, and the dilutive effect of existing unexercised
stock options. Average shares outstanding in 1994 were 3,720,000, an increase
of 160,000 shares from the 3,560,000 reported in 1993. This increase was the
joint result of the issuance of 59,000 shares on exercise of stock options
by certain key employees in 1994, and the dilutive effect of existing
unexercised stock options.
Liquidity and Capital Resources
On April 3, 1995, the Company entered into a new loan agreement with
American National Bank and Trust Company of Chicago. This agreement is a one
year, unsecured line of credit with maximum borrowings of $4,000,000, or 80%
of eligible accounts receivable, whichever is less. Interest on this loan is
the Company's choice of either LIBOR plus one hundred fifty basis points, or
the Bank's prime rate. On December 27, 1995, the Company extended this loan
agreement through 1996. This agreement replaces the secured line of credit
with Norwest Business Credit, Inc. which had been established in June, 1991.
Maximum borrowings under the old agreement were $5,000,000, of which
$4,600,000 was a revolving credit facility and $400,000 was a term loan. The
borrowings were collateralized by domestic inventory and receivables. The
interest rate under the old loan agreement was the Bank's prime rate plus
2-3/4%.
The Company has domestic income tax NOL carryforwards of $7,234,000
which expire in the years 2001 through 2008 and foreign income tax NOL
carryforwards of $1,400,000. Approximately $975,000 of the foreign NOL
carryforwards have no expiration dates.
The Company had cash and cash equivalents of $887,000 and was not
borrowing any funds against its line of credit as of December 31, 1995.
This compares to net borrowings of $483,000 at the end of 1994. Management
feels that existing cash balances and the existing bank line of credit will be
sufficient to support its cash needs through 1996.
Item 8. Financial Statements and Supplementary Data.
The response to this item is submitted in a separate section of this
report following Item 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
<PAGE>
PART III
The information called for by PART III (Item 10 (Directors and
Executive Officers of the Registrant), Item 11 (Executive Compensation), Item
12 (Security Ownership of Certain Beneficial Owners and Management), and Item
13 (Certain Relationships and Related Transactions)) is incorporated by
reference, to the extent required, from the Company's definitive proxy
statement to be filed pursuant to Regulation 14A not later than 120 days after
December 31, 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The lists of financial statements and schedules are submitted in a
separate section of this report following Item 14. The exhibit
index immediately precedes the exhibits.
(b) No report on Form 8-K was filed during the last quarter of the
period covered by this report.
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8 and ITEM 14(a)(1) and (2), and (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENT SCHEDULES
Year Ended December 31, 1995
CORCOM, INC.
LIBERTYVILLE, ILLINOIS
CORCOM, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Page(s)
Report of Independent Accountants F-2
The following consolidated financial statements
of Corcom, Inc. and Subsidiaries are included in
Item 8:
Consolidated Balance Sheets,
December 31, 1995 and 1994 F-3
Consolidated Statements of Operations for each of
the three years ended December 31, 1995 F-4
Consolidated Statements of Stockholders' Equity
for each of the three years ended December 31, 1995 F-5
Consolidated Statements of Cash Flows for each
of the three years ended December 31, 1995 F-6
Notes to Consolidated Financial Statements F-7 to F-12
The following consolidated financial statement
schedule of Corcom, Inc. and Subsidiaries
is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts F-13
All other schedules for which provision is made in the applicable
regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have
been omitted
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Stockholders and Board of Directors
Corcom, Inc.
Libertyville, Illinois
We have audited the consolidated financial statements and related
consolidated financial statement schedules of Corcom, Inc. and Subsidiaries
listed in the index on page F-1 of this Form 10-K. These financial
statements and related schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and related schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
related schedules are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and related schedules. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Corcom, Inc.
and Subsidiaries as of December 31, 1995 and 1994 and the consolidated
results of their operations and their cash flows for each of the years in
the three year period ended December 31, 1995 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the
basic financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
s/s Coopers & Lybrand L.L.P.
Chicago, Illinois
February 29, 1996
<PAGE>
<TABLE>
CORCOM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 and 1994
(Amounts in thousands except share information)
<CAPTION>
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 887 $ 202
Trade accounts receivable, net of allowance
for uncollectible accounts of $80 in 1995
and $145 in 1994 5,157 4,225
Inventories 7,071 6,418
Other current assets 531 572
Total current assets 13,646 11,417
Property, plant and equipment:
Land 340 340
Buildings and improvements 936 925
Leasehold improvements 465 874
Machinery and equipment 13,554 12,703
Furniture and fixtures 1,515 1,460
Less accumulated depreciation 13,062 12,903
3,748 3,399
Total assets $17,394 $14,816
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ 130
Bank notes payable 249
Current maturities of long-term debt $ 54 300
Accounts payable 1,023 1,235
Accrued liabilities 1,690 1,257
Total current liabilities 2,767 3,171
Long-term debt, net of current maturities 162 213
Commitments (Note 9)
Stockholders' equity:
Common stock, no par value; 10,000,000
shares authorized; 3,740,543 (1995) and
3,619,543 (1994) issued 13,942 13,749
Retained earnings (deficit) 551 (2,235)
Accumulated exchange rate adjustments (28) (82)
Total stockholders' equity 14,465 11,432
Total liabilities and stockholders'
equity $17,394 $14,816
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
CORCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three years ended December 31, 1995
(Amounts in thousands except share information)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net sales $30,660 $26,726 $25,854
Costs and expenses:
Cost of sales 19,287 18,155 17,923
Engineering expenses 1,247 1,152 1,061
Selling, administrative
and other expenses 7,088 5,932 6,315
Restructuring costs 2,051
27,622 25,239 27,350
Operating income (loss) 3,038 1,487 (1,496)
Interest expense 71 177 497
Income (loss) before provision for
income taxes 2,967 1,310 (1,993)
Provision for income taxes 181 67 54
Net income (loss) $ 2,786 $ 1,243 $(2,047)
Per common and common equivalent share:
Net income (loss) $ .72 $ .33 $ (.58)
Average number of common and common
equivalent shares outstanding 3,867,000 3,720,000 3,560,000
<FN>
The accompanying notes are an integral part of the consolidated financial
statements
</TABLE>
<TABLE>
CORCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the three years ended December 31, 1995
(Amounts in thousands except share information)
<CAPTION>
Cost of
Common Stock Retained Accumulated Common
Issued Earnings Exchange Rate Stock in
Shares Amount (Deficit) Adjustments Treasury
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 3,560,543 $13,656 $(1,431) $ (79)
Purchase of 6,800 shares
of common stock for
treasury $(12)
Issuance of 6,054 shares
of common stock under
employee stock purchase
plan 11
Net loss (2,047)
Exchange rate adjustments (54)
Balance at December 31, 1993 3,560,543 13,656 (3,478) (133) (1)
Purchase of 5,000 shares of
common stock for treasury (18)
Issuance of 5,811 shares of
common stock under employee
stock purchase plan 19
Stock options exercised for
$1.12 to $2.25 per share 59,000 93
Net income 1,243
Exchange rate adjustments (51)
Balance at December 31, 1994 3,619,543 13,749 (2,235) (82) 0
Stock options exercised for
$1.00 to $2.50 per share 121,000 193
Net income 2,786
Exchange rate adjustments 54
Balance at December 31, 1995 3,740,543 $13,942 $ 551 $ (28) $ 0
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
CORCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three years ended December 31, 1995
(Amounts in thousands)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $2,786 $1,243 $(2,047)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Gain on sale of properties (237)
Provision for uncollectible accounts receivable 77 34 4
Restructuring costs (263) (198) 2,051
Depreciation and amortization 1,105 1,075 1,192
Common stock issued under employee
stock purchase plan 19 11
Changes in operating assets and liabilities:
Trade accounts receivable (1,009) (448) (99)
Inventories (599) 498 613
Other current assets 41 (96) (91)
Accounts payable (212) (347) (170)
Accrued liabilities 696 46 33
Net cash provided by operating activities 2,622 1,589 1,497
Cash flows from investing activities:
Proceeds from sale of properties 2,548
Expenditures for property, plant and equipment (1,454) (1,239) (471)
Net cash provided by (used in)
investing activities (1,454) 1,309 (471)
Cash flows from financing activities:
Common stock purchased for treasury (18) (12)
Net payments under bank line of credit agreement (483) (1,536) (878)
Stock options exercised 193 93
Principal payments on long-term debt (63) (1,200) (93)
(Decrease) increase in cash overdraft (130) (273) 36
Net cash used in financing activities (483) (2,934) (947)
Net increase (decrease) in cash and cash
equivalents 685 (36) 79
Cash and cash equivalents at beginning of year 202 238 159
Cash and cash equivalents at end of year $ 887 $ 202 $ 238
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 71 $ 177 $ 497
Income taxes 181 68 50
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
CORCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Corcom, Inc.
and its wholly-owned subsidiaries (the Company). Intercompany accounts and
transactions have been eliminated in consolidation.
Cash Equivalents
The Company considers all highly liquid investments with original maturities
of three months or less as cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. The first-in,
first-out method is used to determine cost. Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation and
amortization are computed principally by the straight-line method over the
estimated useful lives of the related assets or terms of the related leases
for leasehold improvements, if shorter. Estimated useful lives range from
three to eight years.
Amounts incurred for maintenance and repairs are charged to operations as
incurred. Expenditures for improvements are capitalized. Upon sale or
retirement, the related cost and accumulated depreciation are removed from
the respective accounts and any resulting gain or loss is included in the
consolidated statements of operations.
Income Taxes
Income taxes are accounted for in accordance with SFAS No. 109, "Accounting
for Income Taxes," for the years ended December 31, 1995 and 1994. The
Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income taxes are
recorded to reflect the tax consequences on future years of differences
between the basis of assets and liabilities for income tax and for financial
reporting purposes using enacted tax rates in effect for the year in which
the differences are expected to reverse. In addition, the amounts of any
future tax benefits are reduced by a valuation allowance to the extent such
benefits are not expected to be fully realized.
Translation of Foreign Currencies
The Company measures foreign assets, liabilities, equity and results of
operations in the functional currencies of the countries in which it operates
except for its operations in Mexico for which the U.S. dollar is the
functional currency. The Company translates foreign currency financial
statements by translating balance sheet accounts at the current exchange
rate in effect at year-end and income statement accounts at the average
exchange rates during the year.
Translation adjustments result from the process of translating foreign
currency financial statements into U.S. dollars. These translation
adjustments, which are generally not included in the determination of net
income, are reported separately as a component of stockholders' equity.
Per Share Data
Net income (loss) per common and common equivalent share is based on the
weighted average number of shares of common stock and common stock
equivalents (stock options) outstanding during each year. The anti-dilutive
effect of common stock equivalents is not presented for loss years.
Revenue Recognition
Sales to customers are recorded at the time of shipment net of estimated
discounts and allowances.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. Inventories
The Company's inventories consist of the following at December 31 (in
thousands):
1995 1994
Finished products $3,033 $2,848
Raw materials and work-in-process 4,038 3,570
$7,071 $6,418
3. Accrued Liabilities
Accrued liabilities consist of the following at December 31 (in
thousands):
1995 1994
Restructuring costs $ 119 $ 382
Accrued payroll, incentive bonus and commissions 1,069 659
Other 502 216
$1,690 $1,257
4. Bank Notes Payable
The Company has a loan agreement with a bank which provides for a revolving
line of credit through December 31, 1996, of up to $4,000,000, limited by a
borrowing base calculated as a percentage of eligible accounts receivable,
with interest at the bank's base rate (8.5% at December 31, 1995) or LIBOR
plus 1.5%. No amounts were outstanding at December 31, 1995. Under the
provisions of the agreement the Company is subject to certain covenants
which, among other things, restrict the payment of dividends to a calculation
based upon net income.
Borrowings under a previous bank arrangement were collateralized by
the Company's domestic receivables, inventories, machinery and other
assets, with interest at prime (8.5% at December 31, 1994) plus 2-3/4%.
There was $237,000 outstanding under this arrangement at December 31, 1994.
The prior agreement prohibited the payment of dividends.
5. Long-term Debt
Long-term debt consists of the following at December 31 (in thousands):
1995 1994
Installment note, interest at 9.75% $ 246
Other $216 267
216 513
Less current maturities (54) (300)
$162 $ 213
6. Restructuring Costs
In 1993 the Company recorded adjustments of $2,051,000 related to a planned
consolidation of facilities due to excess productive capacity. The principal
components of the adjustments related to a $953,000 writedown of goodwill
related to acquired product lines with marginal projected future
profitability and a $775,000 charge to write down costs of plant and equipment
which will not be utilized for future operations. The Company reduced costs
and expenses by $39,000 and $198,000 in 1995 and 1994, respectively, due to
revision of the previously estimated accrual for restructuring costs.
7. Income Taxes
Income (loss) before provision for income taxes consisted of the
following as of December 31:
<TABLE>
<CAPTION>
1995 1994 1993
(In thousands)
<S> <C> <C> <C>
Domestic $2,184 $1,166 $(2,648)
Foreign 783 144 655
$2,967 $1,310 $(1,993)
</TABLE>
The provisions for income taxes are comprised of the following:
<TABLE>
<CAPTION>
1995 1994 1993
(In thousands)
<S> <C> <C> <C>
Current income tax expenses:
State $ 1 $ 1 $ 1
Domestic 80
Foreign 100 66 53
$181 $67 $54
</TABLE>
The provisions for income tax differ from a provision computed at the U.S.
statutory rate as follows:
<TABLE>
<CAPTION>
1995 1994 1993
(In thousands)
<S> <C> <C> <C>
Statutory rate provision $1,008 $445 $(678)
State taxes, net 1 1 1
Effect of losses for which no tax
benefits are currently available 534
Effect of utilization of net
operating loss carryforward (848) (381)
Goodwill amortization 334
Effect of foreign income tax rates 33 17 (148)
Other (13) (15) 11
$ 181 $ 67 $ 54
</TABLE>
The components of the deferred tax asset and the tax effect are as follows
at December 31, 1995:
<TABLE>
<CAPTION>
Temporary Tax
Difference Effect
(In thousands)
<S> <C> <C>
Inventory valuation $ 183 $ 73
Fixed assets 310 124
Reserve for lease cancellation 119 48
Self-insurance 95 38
Allowance for doubtful accounts 80 32
Foreign NOL carryforwards 1,400 313
Domestic NOL carryforwards 7,234 2,894
Other 4 1
Alternative minimum tax credit 149
Sub-total $9,425 3,672
Valuation allowance (3,672)
Total $ 0
</TABLE>
As of December 31, 1995, the Company maintained a valuation allowance with
respect to the deferred tax asset as a result of the uncertainty of ultimate
realization of NOL carryforwards. The valuation allowance was principally
reduced by $1,219,000 in 1995 principally due to the utilization of
$2,493,000 income tax NOL carryforward.
At December 31, 1995, the Company has a domestic income tax NOL carryforward
of $7,234,000 which expires in the years 2001 through 2008, and foreign
income tax NOL carryforwards of $1,400,000. The foreign NOL carryforwards
were generated principally in Hong Kong, Mexico, Germany, and the West
Indies. Approximately $975,000 of the foreign NOL carryforwards have no
expiration date.
8. Stock Option, Stock Purchase and Incentive Savings Plans
The Company has stock option plans which provide for the granting of options
to certain officers, key employees and directors. The option price per share
is not less than the market price at the date of grant. Options granted under
the officer and key employee plan become exercisable at 40% one year from date
of grant and an additional 20% per year thereafter. Options granted under the
directors' plan become exercisable six months after the date of grant. All
unexercised options expire five years after the date of grant.
During the years ended December 31, 1995 and 1994 options for 121,000 shares
and 59,000 shares, respectively, were exercised. During the year ended
December 31, 1993, no options were exercised. As of December 31, 1995 there
were options for 293,000 shares outstanding at prices ranging from $1.00 to
$3.58 per share. Of this amount, options for 184,800 shares were exercisable.
Under an employee stock purchase plan, the Company is authorized to issue up
to 150,000 shares of common stock to eligible employees through December 31,
1994. The purchase price of such shares is equal to 85% of the lower of
market value at the beginning or end of a six-month purchase period which
commences each January 1 and July 1. During 1994 and 1993, 5,811 and 6,054
shares of common stock, respectively, were issued pursuant to the plan. The
resulting expense charged to operations amounted to approximately $8,000
(1994) and $4,000 (1993). The plan expired on December 31, 1994 and was not
renewed.
Statement of Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation" (SFAS No. 123) is effective for fiscal years
beginning after December 15, 1995. The Company intends to utilize the fair
value based method in future financial statements and will provide proforma
amounts to reflect the difference in its current method versus fair value
method. The Company does not believe that adoption of SFAS No. 123 will have
a material impact on its reported financial condition.
Under the Company's defined contribution incentive savings plan, covering
substantially all United States employees, Company contributions are based
upon varying percentages of the participants' total contributions. The
aggregate contributions made by the Company to the savings plan and charged
to operations were $34,000 (1995), $28,000 (1994), and $34,000 (1993).
9. Leases
The Company leases certain facilities and equipment under operating leases.
The leases generally require the Company to pay real estate taxes, insurance
and maintenance costs. Rental expense amounted to $597,000 (1995), $508,000
(1994), and $490,000 (1993).
Future minimum rental commitments as of December 31, 1995 for noncancelable
leases (principally real estate) are as follows:
(In thousands)
1996 $528
1997 503
1998 289
1999 105
$1,425
10. Business Information by Geographic Area
The Company's operations consist of one business segment: the design,
manufacture and sale of radio frequency interference filters for digital
electronic equipment to the commercial, military and facility filter markets.
Operations are conducted principally in the United States, Mexico, and
Germany. The net assets of the Company's operations located outside the
United States at December 31 were: $2,660,000 (1995), $2,331,000 (1994),
and $2,472,000 (1993).
Foreign sales and operations may be subject to various risks including, but
not limited to, possible unfavorable exchange rate fluctuations, governmental
regulations (including import and export controls), restrictions on currency
repatriation and labor relations laws.
Intercompany transactions consist of the transfer of raw material between the
United States parent and its manufacturing subsidiaries and the purchase of
finished goods by the United States parent or its German or Far East
subsidiaries. Raw materials are transferred at cost. Finished goods are
purchased at predetermined transfer prices that allow the parent or its
manufacturing subsidiaries to recover cost plus an operating profit.
No single customer accounted for 10% of net sales for any of the
years presented.
Interest and dividend income, interest expense and general corporate
expenses are not allocated to specific geographic areas. Corporate
assets consist of cash and cash equivalents.
CORCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_______
10. Business Information by Geographic Area, continued
<TABLE>
<CAPTION>
(In thousands)
United States Germany
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales $24,098 $21,577 $20,727 $5,424 $4,271 $3,936
Intercompany transfers 4,013 3,210 3,110 3 68 101
Geographic area
totals $28,111 $24,787 $23,837 $5,427 $4,339 $4,037
Elimination of inter-
company transfers
Net sales
Income (loss) before
income taxes:
Operating income
(loss) $ 3,458 $ 2,853 $(1,280) $ 215 $ (49) $ 202
Interest expense
General corporate
expenses
Income (loss) before income
taxes
Identifiable assets at
December 31:
Operating assets $ 7,774 $ 6,587 $ 8,349 $1,354 $1,105 $1,493
Corporate assets
Total assets
</TABLE>
<TABLE>
<CAPTION>
(In thousands)
Other Consolidated
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales $1,138 $ 878 $1,191 $30,660 $26,726 $25,854
Intercompany transfers 3,079 3,612 3,362 7,095 6,890 6,573
Geographic area
totals $4,217 $4,490 $4,553 37,755 33,616 32,437
Elimination of inter-
company transfers (7,095) (6,890) (6,573)
Net sales $30,660 $26,726 $25,854
Income (loss) before
income taxes:
Operating income
(loss) $ 255 $ (304) $ 372 $ 3,928 $ 2,500 $ (790)
Interest expense (71) (177) (497)
General corporate
expenses (890) (1,013) (790)
Income (loss) before income
taxes $ 2,967 $ 1,310 $(1,993)
Identifiable assets at
December 31:
Operating assets $7,379 $6,922 $6,856 $16,507 $14,614 $16,698
Corporate assets 887 202 238
Total assets $17,394 $14,816 $16,936
</TABLE>
<TABLE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
CORCOM, INC. AND SUBSIDIARIES
COL. A COL. B COL. C COL. D COL. E
<CAPTION>
Additions
(1)
Balance at Charged to (2) Balance
Beginning Costs and Charge for Deductions at End
Description of Period Expenses Restructuring Describe of Period
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1995:
Allowance for
doubtful accounts $145 $ 77 $142 (A) $ 80
Reserve for excess and
obsolete inventories 523 489 429 (B) 583
Year ended
December 31, 1994:
Allowance for doubtful
accounts $174 $ 34 $ 63 (A) $145
Reserve for excess and
obsolete inventories 695 119 291 (B) 523
Year ended
December 31, 1993:
Allowance for
doubtful accounts $ 52 $ 4 $104 $ (14) (A) $174
Reserve for excess and
obsolete inventories 750 2 113 170 (B) 695
<FN>
Note A Uncollectible accounts written off, net of recoveries
<FN>
Note B Obsolete inventories disposed of and written off
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
Date: March 14, 1996
CORCOM, INC.
(Registrant)
By: s/s Thomas J. Buns
Thomas J. Buns
Vice President & Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
WERNER E. NEUMAN* President and Director )
(Werner E. Neuman) (Principal Executive Officer) )
)
Thomas J. Buns Vice President and Treasurer )
(Thomas J. Buns) (Principal Financial and )
Accounting Officer) )
)
DAVID B. PIVAN* Director ) March 14, 1996
(David B. Pivan) )
)
HERBERT L. ROTH* Director )
(Herbert L. Roth) )
)
JAMES A. STEINBACK* Director )
(James A. Steinback) )
)
GENE F. STRAUBE* Director )
(Gene F. Straube) )
)
) )
* By s/s Thomas J. Buns )
Thomas J. Buns )
Attorney-in-Fact )
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
3.1 Registrant's Articles of Incorporation and all amendments
thereto, filed as Exhibit 3.1 to registrant's Form 10-Q
for the quarter ended July 2, 1994 and hereby incorporated
by reference.
3.2 Registrant's By-laws, as amended, filed as Exhibit 3(ii) to
registrant's Form 10-Q for the quarter ended July 3, 1993
and hereby incorporated by reference.
10.1 Office space lease between registrant and Komatsu Dresser
Corporation, filed as Exhibit 10.1 to registrant's Form
10-Q for the quarter ended July 2, 1994 and hereby
incorporated by reference.
10.2* Medical reimbursement plan, filed as Exhibit 13.11 to
registrant's registration statement on Form S-1,
Reg. No. 2-67474, and hereby incorporated by reference.
10.3 Loan and Security Agreement with Norwest Business Credit
Inc. dated June 13, 1991, filed as Exhibit 19.1 to
registrant's Form 10-Q for the quarter ended June 29, 1991,
and hereby incorporated by reference.
10.4 Amendment to Loan and Security Agreement between registrant
and Norwest Business Credit, Inc., filed as Exhibit 19.1
to registrant's Form 10-Q for the quarter ended
June 27, 1992, and hereby incorporated by reference.
10.5* CORCOM 1985 Key Employees' Incentive Stock Option Plan,
filed as Exhibit 10.7 to registrant's Form 10-K for 1985,
and hereby incorporated by reference.
10.6* CORCOM, Inc. 1991 Directors' Stock Option Plan, filed as
Exhibit 10.5 to registrant's Form 10-K for 1990, and
hereby incorporated by reference.
10.7* Amendment to CORCOM, Inc. 1991 Directors' Stock Option
Plan as adopted in March, 1992, filed as Exhibit 10.7
to registrant's Form 10-K for 1991, and hereby
incorporated by reference.
10.8* Amendments to 1985 Key Employees' Incentive Stock Option
Plan, as adopted in February, 1987, filed as Exhibit 10.9
to registrant's Form 10-K for 1986 and hereby incorporated
by reference.
10.9* CORCOM 1988 Key Employees' Incentive Stock Option Plan,
filed as Exhibit 10.13 to registrant's Form 10-K for
1987, and hereby incorporated by reference.
10.10* Executive Bonus Plan for 1996.
10.11* Employment agreement between Werner E. Neuman and registrant,
dated November 9, 1988, filed as Exhibit 10.15 to
registrant's Form 10-K for 1988, and hereby incorporated
by reference.
10.12* Amendment to employment agreement between Werner E. Neuman
and registrant dated August 15, 1990, filed as Exhibit
19.2 to registrant's Form 10-Q for the quarter ended
September 29, 1990 and hereby incorporated by reference.
10.13* Employment agreement between Thomas J. Buns and registrant
dated November 18, 1991, filed as Exhibit 10.19 to
registrant's Form 10-K for 1991, and hereby incorporated
by reference.
10.14* Executive Bonus Plan for 1993, filed as Exhibit 10.21
to registrant's Form 10-K for 1992, and hereby incorporated
by reference.
10.15* Executive Bonus Plan for 1994, filed as Exhibit 10.22 to
registrant's Form 10-K for 1993, and hereby incorporated
by reference.
10.16* Executive Bonus Plan for 1995, filed as Exhibit 10.11 to
registrant's Form 10-K for 1994 and hereby incorporated
by reference.
10.17* CORCOM, Inc. 1994 Directors' Stock Option Plan, filed as
Exhibit 10.24 to registrant's Form 10-K for 1993, and
hereby incorporated by reference.
10.18 Third Amendment to Loan and Security Agreement and
Installment Note filed as Exhibit 10.1 to registrant's
Form 10-Q for the quarter ended October 2, 1993, and
hereby incorporated by reference.
10.19 Loan Agreement and Note with American National Bank and Trust
Company of Chicago, filed as Exhibit 4.1 to registrant's
Form 10-Q for the quarter ended April 1, 1995, and hereby
incorporated by reference.
10.20 Loan Agreement with American National Bank and Trust
Company of Chicago, dated December 27, 1995.
11.1 Computation of Income/(Loss) per share.
22.1 Significant subsidiaries of the registrant are listed below:
State or Other Jurisdiction
Subsidiary of Incorporation and Organization
Corcom S.A. de C.V. Mexico
Corcom Far East, Ltd. Hong Kong
23.1 Consent of Coopers and Lybrand.
24.1 Power of Attorney.
27.1 Financial Data Schedule (EDGAR only).
* Management contract or compensatory plan.
<PAGE>
EXHIBIT 10.10
1996 OFFICER BONUS PLAN
If the pre-tax, pre-bonus earnings of Corcom, Inc. exceed $2,500,000,
the bonus pool is five percent (5%) of such pre-tax, pre-bonus earnings.
In addition, once Corcom's pretax, pre-bonus earnings exceed $3,000,000,
there will be allocated an additional three percent (3%) of all pre-tax,
pre-bonus earnings to the bonus pool.
<PAGE>
EXHIBIT 10.20
LOAN AGREEMENT
This Loan Agreement (this "Agreement"), made as of the 27th day of
December, 1995, by and between AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO ("Bank"), a national banking association with its principal place
of business at 33 North LaSalle Street, Chicago, Illinois 60690, and CORCOM,
INC., ("Borrower"), a corporation with its principal place of business at
844 East Rockland Road, Libertyville, Illinois, has reference to the
following facts and circumstances
Pursuant to Borrower's request, Bank will lend monies to Borrower
pursuant hereto,
NOW, THEREFORE, in consideration of the promises set forth herein,
Borrower agrees to borrow monies from Bank, and Bank agrees to lend monies
to Borrower, upon the following terms and conditions.
1.DEFINITIONS AND TERMS
1.1 The following words, terms and/or phrases shall have the
meanings set forth thereafter and such meanings shall be applicable to
[singular and plural form thereof, giving effect to the numerical difference;
whenever the context so requires], the use of "it" in reference to Borrower
shall mean Borrower as identified at the beginning of this Agreement:
A. "Borrower's Liibilities": all obligations and liabilities of
Borrower to Bank (including without limitation all debts, claims,
and indebtedness) whether primary, secondary, direct, contingent,
fixed or otherwise, heretofore, now and/or from time to time
hereafter owing, due or payable, however evidenced, created,
incurred, acquired or owing, and however arising, whether under
this Agreement or the "Other Agreements" (hereinafter defined)
or operation of law or otherwise.
B. "Charges": all national, federal, state, county, city, municipal
and/or other Governmental (or any instrumentality, division,
agency, body or department thereof,including without limitation
the Pension Benefit Guaranty Corporation) taxes, levies,
assessments, charges, liens, claims or encumbrances upon and/or
relating to the Borrower's Liabilities, Borrower's business,
Borrower's ownership and/or use of any of its assets, and/or
Borrower's income and/or gross receipts.
C. "Indebtedness": (i) indebtedness for borrowed money or for the
deferred purchase price of property or services, (ii) obligations
as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded
as capital leases, (iii) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others
of the kinds referred to in clauses (i) or (ii) above, and (iv)
liabilities in respect of unfunded vested benefits under plans
covered by Title IV of the Employee Retirement Income Security Act
of 1974, as the same may be amended and in effect from time to time.
D. "Other Agreements": all agreements, instruments and documents,
including without limitation guaranties, mortgages, deeds of trust,
notes, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing
statements and all other written matter heretofore, now and/or
from time to time hereafter executed by and/or on behalf of
Borrower and delivered to Bank.
E. "Persons": any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association
corporation, institution, entity, party or government (whether
national, federal, state, county, city, municipal or otherwise,
including without limitations any instrumentality, division,
agency, body or department thereof).
1.2 Except as otherwise defined in this Agreement or the Other
Agreements, all words, terms and/or phrases used herein and therein shall be
defined by the applicable definition therefor (if any) in the Uniform
Commercial Code of the State of Illinois.
2. LOANS
2.1 Loans made by Bank, to Borrower pursuant to this Agreement
shall be evidenced by notes or other instruments issued or made by Borrower
to Bank. Except as otherwise provided in this Agreement or in any notes
executed and delivered by Borrower to Bank in connection herewith the
principal portion of Borrower's Liabilities shall be payable by Borrower to
Bank on the maturity date(s) described in any such note(s) (as the same may
be amended or renewed) and all costs, fees and expenses payable hereunder or
under the Other Agreements, shall be payable by Borrower to Bank on demand,
in either case at Bank's principal place of business or such other place as
Bank shall specify in writing to Borrower.
2.2 Notwithstanding anything contained in this Agreement or the
Other Agreements to the contrary, the principal portion of Borrower's
Liabilities outstanding at any one time shall not exceed the lesser of
$4,000,000.00 in the aggregate and (ii) the "Borrowing Base" as hereinafter
defined.
2.3 Each loan made by Bank to Borrower pursuant to this Agreement
or the Other Agreements shall constitute an automatic warranty and
representation by Borrower to Bank that there does not then exist an "Event of
Default" (as hereinafter defined) or any event or condition which with notice,
lapse of time and/or the making of such loan would constitute an Event of
Default.
2.4 This Agreement shall be in effect until all of Borrower's
Liabilities have been paid in full and any and all commitments of Bank to
make loans have terminated.
2.5 Bank's commitment to loan shall expire on the earlier of (i)
the date on which Borrower's Liabilities mature under the terms of any note
given by Borrower to Bank evidencing such liabilities, or (ii) the occurrence
of the Event of Default pursuant to Section 7 hereof.
2.6 Provided that an Event of Default does not then exist or would
not then be created thereby or any event which with notice or lapse of time
or both would constitute an Event of Default does not then exist, Bank shall
loan to Borrower an amount (the "Borrowing Base") equal to (i) the sum of 80%
of the face amount (less maximum discounts, credits and allowances which may
have been taken by or granted to obligors in connection therewith) of all
then existing "Eligible Accounts" (as hereinafter defined) that are scheduled
on the initial Schedule of Accounts delivered to Bank, and (ii) the sum of 80%
of the face amount (less maximum discounts, credits and allowances which may
be taken by or granted to Obligors in connection therewith) of all then
existing Eligible Accounts that are scheduled on each related subsequent
Schedule of Accounts delivered to Bank (excepting therefrom those Eligible
Accounts theretofore scheduled to Bank on the initial Schedule of Accounts or
any subsequent Schedule of Accounts delivered to the Bank theretofore). Upon
Bank's request therefore, Borrower shail attach to each Schedule of Accounts
a true and correct copy of such invoices, delivery receipts and other
documents relating to the account's scheduled thereon, as Bank may request.
2.7 An "Eligible Account" is an Account of Borrower which meets
each of the following requirements (a) if it arises from the sale or lease of
goods, such goods have been shipped or delivered to the Obligor thereof,
(b) it is valid, legally enforceable obligation of the Obligor thereunder, to
the extent it is not subject to any offset, counterclaim or other defense on
the part of such Obligor denying liability thereunder in whole or in part;
(c) It is not subject to any lien or security interest whatsoever, except
those of Bank, (d) it is evidenced by an invoice (dated not later than the
date of shipment to the Obligor or performance and having a due date not more
than 3O days after the date of invoice) rendered to such Obligor, and is not
evidenced by any instrument or chattel paper, (e) it is payable in United
States dollars; (f) it is not owing by any Obligor involved in any bankruptcy
or insolvency proceeding; (g) it is not owing by any affiliate of Borrower;
(h) it is not unpaid more than 90 days after the date of such invoice, (i) it
is not owing by an Obligor which then shall have failed to pay in full any
invoice evidencing any account within 90 days after the date of such invoice,
unless the total invoice amounts of such Obligor which then have not been paid
within 90 days of the date of such invoice represent less than 25% of the
total invoice amounts then outstanding of such Obligor; and (j) it is not an
Account as to which Bank at any time or times hereafter, reasonably
determines, in good faith, that the prospect of payment or performance by the
Obligor thereof is or will be impaired. An Account which is at any time an
Eligible Account, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be an Eligible Account. Borrower,
immediately upon demand from Bank, shall pay to Bank an amount of money equal
to the monies theretofore advanced Bank to Borrower upon an Account that is
no longer an Eligible Account. Borrower warrants and represents to and
covenants with Bank that the aggregate of the then outstanding amounts (less
maximum discounts, credits and allowances which may be taken by or granted to
Obligors in connection therewith) of all then existing, Eligible Accounts
shall at all times hereafter be at least 125% of the principal portion of
Borrower's Liabilities represented by loans made by Bank to Borrower pursuant
to paragraph 2.6 above.
2.8 With respect to Eligible Accounts, except as otherwise
disclosed by Borrower to Bank in writing, Borrower warrants and represents to
Bank that: (a) they are genuine, in all respects what they purport to be and
are not evidenced by a judgement, (b) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained
in the invoices and other documents delivered to Bank with respect thereto,
(c) the amounts thereof, which may be shown on any Schedule of Accounts and/or
all invoices and statements delivered to Bank with respect thereto, are
actually and absolutely owing to Borrower and are not contingent for any
reason; (d) no payments have been or shall be made thereon except payments
immediately delivered to Bank pursuant to this Agreement; (e) there are no
setoffs, counterclaims or disputes existing or asserted with respect thereto
and Borrower has not made any agreement with any Obligor thereof for any
deduction therefrom except a regular discount allowed by Borrower in the
ordinary course of its business for prompt payment; (f) there are no facts,
events or occurrences which in any way impair the validity or enforcement
thereof or tend to reduce the amount payable thereunder from the amount
thereof, which may be shown on any Schedule of Accounts and on all invoices
and statements delivered to Bank with respect thereto; (g) to the best of
Borrower's knowledge, all Obligors thereof have the capacity to contract and
are solvent; (h) the services furnished and/or goods sold giving rise thereto
are not subject to any lien, claim, encumbrance or security interest except
that of Bank; (i) Borrower has no knowledge of any fact or circumstance which
would impair the validity or collectibility thereof; (j) to Borrower's
knowledge, there are no proceedings or actions which are threatened or pending
against any Obligor thereof which might result in any material adverse change
in its fiscal condition; and (k) the Obligors thereof are not located in
Minnesota or New Jersey, or if so located, Borrower has filed a Notice of
Business Activities Report With the New Jersey Division of Taxation or
Minnesota Department of Revenue for the then current year.
2.9 Any of Bank's officers, employees, or agents shall have the
right, at any time or times hereafter, in Bank's name or in the name of a
nominee of Bank, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, telegraph or otherwise. All reasonable
costs, fees and expenses relating thereto incurred by Bank (or for which Bank
becomes obigated) shall be part of Borrower's Liabilities, payable by Borrower
to Bank on demand.
3. NEGATIVE PLEDGE
3.1 Borrower shall not, and shall not permit any of its
subsidiaries to create, incur, permit, or suffer to exist any lien upon any of
its property or assets, now owned or hereafter acquired, except for the
following permitted liens; (a) pledges or deposits made to secure payment of
worker's compensation insurance; (b) liens imposed by mandatory provisions of
law such as for materialmen, mechanics, warehousemen and other liens arising
in the ordinary course of business; (c) liens for taxes, assessments and
governmental charges or levies imposed upon the Borrower's income or profits
or property, if the same are not yet due and payable or if the same are being
contested in good faith and as to which adequate cash reserves have been
provided; (d) liens arising out of good faith deposits in connection with
tenders, leases, real estate bids or contracts (other than contracts involving
the borrowing of money), pledges, or deposits to secure (or in lieu of surety,
stay, appeal or customs bonds and deposits to secure the payment of taxes,
assessments, customs duties or similar charges; and (e) encumbrances
consisting of zoning restrictions, easements, or other restrictions on the
use of real property, provided that such items do not materially impair the
use of such property for the purposes intended by Borrower, and none of which
is violated by existing structures or land use.
4. WARRANTIES, REPRESENTATIONS AND COVENANTS:
INSURANCE AND TAXES
4.1 Borrower, at its sole cost and expense, shall keep and
maintain business interruption insurance and public liability and property
damage insurance. All such policies of insurance shall be in form, with
insurers and in such amounts as may be reasonably satisfactory to Bank.
Borrower shall deliver to Bank the original (or certified) copy of each policy
of insurance, or a certificate of insurance.
4.2 Borrower shall pay promptly, when due, all of the Charges,
and shall not permit the Charges to arise, or to remain and will promptly
discharge the same except to the extent the same are contested in good faith
and as to which adequate reserves have been provided.
5. WARRANTEES, REPRESENTATIONS AND COVENANTS: GENERAL
5.1 Borrower warrants and represents to and covenants with Bank
that: (a) Borrower has the right, power and capacity and is, or upon execution
will be, duly authorized and empowered to enter into, execute, deliver and
perform this Agreement and Other Agreements; (b) the execution, delivery
and/or performance by Borrower of this Agreement and Other Agreements shall
not, by the lapse of time, the giving of notice or otherwise, constitute a
violation of any applicable law or a breach of any provision contained in
Borrower's Articles of Incorporation, By-Laws, Articles of Partnership or
similar document, or contained in any agreement, instrument or document to
which Borrower is now or hereafter a party or by which it is or may be bound;
(c) Borrower is now and at all times hereafter shall be solvent and generally
paying its debts as they mature and Borrower now owns and shall at all times
hereafter own property which, at a fair valuation, is greater than the sum of
its debts; (d) Borrower is not and will not be during the term hereof in
violation of any applicable federal, state or local statute, regulation or
ordinance, in any respect materially and adversely affecting its business,
property, assets, operations or condition, financial or otherwise; and (e)
Borrower is not in default with respect to any indenture, loan agreement,
mortgage, deed or other similar agreement relating to the borrowing of monies
to which it is a party or by which it is bound.
5.2 Borrower warrants and represents to and covenants with Bank
that Borrower shall not, without Bank's prior written consent thereto: (a)
enter into any transaction not in the ordinary course of business which
materially and adversely affects Borrower's ability to repay Borrower's
Liabilities or Indebtedness; (b) other than as specifically permitted in or
contemplated bv this Agreement, encumber, pledge, mortgage, sell, lease or
othewise dispose of or transfer, whether by sale, merger, consolidation or
otherwise, any of Borrower's assets, other than sales in the ordinary course
of business; and (c) incur Indebtedness except renewals or extensions of
existing Indebtedness and interest thereon, except ordinary trade payables,
and except other Indebtedness that is unsecured and is to Persons who execute
and deliver to Bank in form and substance acceptable to Bank and its counsel
subordination agreements subordinating their claims against Borrower therefor
to the payment of Borrower's Liabilities,
5.3 Borrower covenants with Bank that Borrower shall furnish to
Bank; (a) as soon as available but not later than ninety (90) days after the
close of each fiscal year of Borrower, financial statements of Borrower
prepared in accordance with generally accepted accounting principles,
consistently applied, audited by a firm of independent certified public
accountants selected by Borrower and reasonably acceptable to Bank; (b) as
soon as available but not later than thirty (30) days after the end of each
calendar quarter hereafter, financial statements (1O Q's) of Borrower
certified by Borrower to be prepared in accordance with generally accepted
accounting principles and to present fairly the financial position and results
of operations of Borrower for such period; and (c) such other data and
information (financial and otherwise) as Bank, from time to time, may request.
5.4 Borrower covenants with Bank the following:
A. Borrower shall not permit its ratio of Cash Flow Available to Debt
Service ("Cash Flow Ratio") to be less than 1.25:1.00. For
purposes of the Cash Flow Ratio, "Cash Flow Available" on any date
means the Borrower's earnings before interest and taxes, plus (i)
the Borrower's depreciation, amortization and other "non-cash
expense items" (ii) plus or minus net changes in deferred taxes and
LIFO adjustments less (iii) the Borrower's cash payments for capital
expenditures not reflected as an expense, net of any borrowinas to
support the expenditures. For the purposes of Cash Flow Ratio,
"Debt Service" on any date means the sum of the following: (i)
actual amount of total principal and interest payments that
Borrower is obligated to the Bank during the period; (ii) actual
amount of total principal and interest payments Borrower is
obligated to make to financing sources other than the Bank during
the period, anticipated tax payments for the current period, and
(iv) any other cash distributions including, but not limited to,
dividends or stock repurchases.
B. Borrower shall not permit the ratio of its total debt ("Total
Debt") to Tangible Net Worth ("TNW") to at any time be greater than
or equal to 1.0:1.O. As used in this Agreement, Total Debt shall
mean as of any time the aggregate of indebtedness, obligations,
liabilities, reserves and/or other items which will be listed as a
liability on the balance sheet of Borrower in accordance with
generally accepted accounting principles. TNW shall mean the value
of the assets of Borrower after subtracting therefrom the
aggregate of any intangible assets of Borrower, including without
limitation, prepaids, other accounts receivable, goodwill,
franchises, licenses, patents, trademarks, tradenames, copyrights
and brand names, minus the aggregate of all contingent and
non-contingent liabilities of Borrower.
C. Borrower shall not declare or pay a Dividend if such Dividend plus
any Dividends paid in the previous three calendar quarters exceeds
Borrower's Net Income of the previous four calendar quarters.
"Net Income" shall mean Net Income as set forth in Borrowers
Financial Statements supplied to Bank pursuant to Section 5.3 of
this Agreement. "Dividend" shall mean a distribution of Borrower's
assets to shareholders.
6. SETOFF
6.1 To assure the prompt payment to Bank of Borrower's Liabilities
and the prompt, full and faithful performance by Borrower of all the
provisions to be kept, observed or performed by Borrower under this Agreement
and/or the Other Agreements, Borrower expressly acknowledges Bank's right to
setoff all of Borrower's now or hereafter existing monies, reserves, deposits,
deposit accounts and interest given thereon, securities, cash, cash
equivalents and other propertn, now or at any time or times hereafter in
possession or control of Bank or its bailee.
6.2 Borrower shall now and hereafter execute and deliver to Bank,
at the request of Bank, all agreements, instruments and documents (the
"Supplemental Documentation") that Bank may reasonably request in a form and
substance acceptable to Bank to consummate the transaction contemplated in or
by this Agreement or the Other Agreement. Borrower agrees that a carbon,
photographic or photostatic copy, or other reproduction of this Agreement or
of any financing statement shall be sufficient as a financing statement.
7. DEFAULT
7.1 The occurrence of any one of the Following events shall
constitute a default ("Event of Default"): (a) if Borrower fails or neglects
to perform, keep or observe any term, provision, condition, covenant, warranty
or representation contained in this Agreement or in the Other Agreements and
the same is not remedied or cured within thirty (3O) days, which is required
to be performed, kept or observed by Borrower; (b) if Borrower fails to pay
any of Borrower's Liabilities, when due and payable or declared due and
payable within five (5) days of such due date; (c) if any of Borrower's assets
are attached, seized, subjected to a writ of distress warrant, or are levied
upon, or become subject to any lien, or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors; (d) if
Borrower becomes insolvent or generally fails to pay, or admits in writing its
inability to pay, debts as they become due, if a petition under Title 11,
United States Code or any similar law or regulation shall be filed by or
against Borrower, and if filed against Borrower is not dismissed within sixty
(60) days of such filing, or if Borrower shall make an assignment for the
benefit of its creditors or if any case or proceeding is filed by or against
Borrower or if Borrower shall make an assignment for the benefit of its
creditors or if any case or proceeding is filed by or against Borrower for its
dissolution or liquidation, or if Borrower is enjoined, restrained or in any
way prevented by court order from conducting all or any material part of its
business affairs; (e) if a notice of lien, levy or assessment if filed of
record or given to Borrower with respect to all or any substantial part of
Borrower's assets by any federal, state or local department or agency; (f) if
a contribution failure occurs with respect to any pension plan maintained by
Borrower or any corporation, trades or business that is, alone with Borrower,
a member of a controlled group of corporations or controlled group of trades
or businesses (as described in Section 414(b) and (c) of the Internal Revenue
Code of 1986 or Section 4001, of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") sufficient to give rise to a lien under Section
302(f) of ERISA; (g) if Borrower is in default in the payment of any
obligations, indebtedness or other liabilities in excess of $50,000 to any
third parties and such default is declared and is not cured within the time,
if any, specified therefor in any agreement governing the same; (h) the
occurrence of a default (subject to applicable grace or cure periods) or an
Event of Defiult under any of the Other Agreements; or (i) the reasonable
insecurity of Bank.
7.2 All of Bank's rights and remedies under this Agreement and the
Other Agreements are cumulative and non-exclusive.
7.3 Upon an Event of Default without notice by Bank to or demand
by Bank of Borrower, Bank shall have no further obligation to any may then
forthwith cease advancing monies or extending credit to or for the benefit of
Borrower under this Agreement and the Other Agreements. Upon an Event of
Default, without notice by Bank to or demand by Bank of Borrower, Borrower's
Liabilities shall be due and payable, forthwith.
7.4 Any notice required to be given by Bank to Borrower deposited
in the United States mail, postage prepaid shall be delivered by registered or
certified mail to the address specified at the beginning of this Agreement not
less than ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice to Borrower thereof.
7.5 Under an event of default Borrower waives and releases any
cause of action and claim against Bank's possession or collection of the
monies, reserves, deposits, deposit accounts and interest or dividends
thereof, cash or cash equivalents, collectively the "Monies", in conjunction
with this Loan Agreement, absent gross negligence or willful misconduct.
8.GENERAL
8.1 Borrower covenants, warrants and represents to Bank that
all representations and warranties of Borrower contained in this Agreement
and the Other Agyeements shall be true from time of Borrower's execution of
this Agreement to the end of the original term and each renewal term hereof.
All of Borrower's warranties, representations, undertakings, and covenants
contained in thi Agreement or the Other Agreements shall survive the
termination or cancellation of the same, until payment of all of Borrower's
Liabilities.
8.2 The terms and provisions of this Agreement and the Other
Agreements shall supersede any prior agreement or understanding of the parties
hereto, and contain the entire agreement of the parties hereto with respect to
the matter covered hereby. This Agreement and the Other Agreements may not be
modified, altered, or amended except by an agreement in writing signed by
Borrower and Bank. Except for the provisions of Section 2 hereof, this
Agreement shall continue to full force and effect so long as any portion or
component of Borrower's Liabilities shall be outstanding. Should a claim
("Recovery Claim") be made upon the Bank at any time for recovery of any
amount received by the Bank in payment of Borrower's Liabilities (whether
received from Borrower or otherwise) and should the Bank repay all or part of
said amount by reason of (1) any judgment, decree or order of any court or
administrative body having Jurisdiction over Bank or any of its property or
(2) any settlement or comprormse of any such Recovery Claim effected by the
Bank with the claimant (including Borrower), this Agreement shall continue in
effect with respect to the amount so repaid to the same extent as if such
amount had never originally been received by the Bank, notwithstanding any
prior termination of this Agreement, the return of this Aareement to Borrower,
or the cancellation of any note or other instrument evidencing Borrower's
Liabilities. Borrower may not sell, assign or transfer this Agreement,
or the Other Aoreements or any portion thereof
8.3 Bank's failure to require strict performance by Borrower of
any provision of this Agreement shall not waive, affect or diminish any right
of Bank thereafter to demand strict Default by Borrower under this Agreement
or the Other Agreements, whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the undertakings, or the
Other Agreements and no Event of Default by Borrower under this Agreement or
the Other Agreements shall be deemed to have been Suspended or waived by Bank
unless such suspension or waiver is by an instrument in writing signed by
an officer of Bank and directed to Borrower specifying such suspension
or waiver.
8.4 If any provision of this Agreement or the Other Agreements or
the application thereof to any Person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the Other Agreements and
the application of such provision to other Persons or circumstances will not
be affected thereby and the provisions of this Aareement and the Other
Agreements shall be severable in any such instance.
8.5 This Agreement and the Other Agreements shall be binding upon
and inure to the benefit of the successors and assigns of Borrower and Bank.
This provision, however, shall not be deemed to modify Paragraph 8.2 hereof.
8.6 Borrower hereby appoints Bank as Borrower's agent and
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement in the event of Bank's commitment to Borrower is outstanding and
taking any action and executing any agreement, instrument or document which
Bank may deem necessary or advisable to accomplish the purposes hereof which
appointment is irrevocable and coupled with an interest. All monies paid for
the purposes herein and all costs, fees and expenses paid or incurred in
connection therewith, shall be part of Borrower's Liabilities, payable by
Borrower to Bank on demand.
8.7 Except as otherwise provided in the Other Agreements, if any
provision contained in this Agreement is in conflict with, or inconsistent
with any provision in the Other Agreements, the provision contained in this
Agreement shall govern and control.
8.8 Except as otherwise specifically provided in this Agreement,
Borrower waives any and all notice or demand which Borrower might be entitled
to receive by virtue of any applicable statute of law, and waives presentment,
demand and protest and notice of presentment, protest, default, dishonor,
non-payment, maturity, release, compromise, settlement, extension or renewal
of any and all agreements, instruments or documents at any time held by Bank
on which Borrower may in any way be liable.
8.9 Until Bank is notified by Borrower to the contrary in writing
by registered or certified mail directed to Bank's principal place of
business, the signature upon this Agreement or upon any of the Other
Agreements or any partner, manager, employee or agent of the Borrower, or of
any other Person designated in writing to Bank by any of the foregoing, shall
bind Borrower and be deemed to be the duly authorized act of Borrower.
8.10 This Agreement and the Other Agreements shall be governed and
controlled by the laws of the State of Illinois.
8.11 After an Event of Default, if at anytime or time hereafter
whether or not Borrower's Liabilities are outstanding at such time, Bank; (a)
employs counsel for advice or other representation (i) with respect to this
Agreement, the Other Agreements or the administration of Borrower's
Liabilities, (ii) to represent Bank in any litigation, arbitration contest,
dispute, suit or proceeding or to commence. defend or intervene or to take
any other action in or with respect to any litigation, arbitration, contest,
dispute, suit or proceeding or to commence, defend or intervene or to take
any other action in or VA'th respect to any litigation, arbitration, contest,
dispute, suit or proceeding (whether instituted by Bank, Borrower or any other
Person) in any way or respect relating to this Agreement, the Other
Agreements, or Borrowees affairs, or (iii) to enforce any rights of Bank
against Borrower or any other Person which may be obligated to Bank by virtue
of this Agreement or the Other Agreements, including, without limitation,
any Obligor attempts to or enforces any of Bank's rights or remedies under
this Agreement or the Other Agreements, including the reasonable costs and
expenses incurred by Bank in any manner or way with respect to the foregoing,
shall be part of Borrower's Liabilities, payable by Borrower to Bank on
demand.
8.12 BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO BANK'S SOLE AND
ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS
SHALL BE LITIGATED ONLY @T COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO,
STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE OF ANY
LITIGATION BROUGHT AGAINST BORROWER BY BANK IN ACCORDANCE WITH THIS PARAGRAPH.
8.13 BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR PROCEEDING (I) TO ENTORCE OR DEFEND
ANY RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE OTHER AGREEMENTS,
OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (II) ARISING
FROM ANY DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH OR RELATED TO THIS
AGREEMENT, THE OTHER AGREEMENTS, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT, AND AGREES THAT ANY SUCH ACTION, SUIT, COUNTERCLAIM OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS THEREOF, this Agreement has been duly executed as of the day and
year specified at the beginning hereof.
CORCOM, INC.
By: s/s Thomas J. Buns
Its: Vice President
ATTEST:
By: s/s Walter Roth
Its: Secretary
Accepted this 27th day of December, 1995, at Bank's principal place of
business in the City of Chicago, State of Illinois.
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
By: s/s Todd B. Younger
Its: Second Vice President
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
REVOLVING LINE OF CREDIT
NOTE
$4,000,000.00 Date: December 27, 1995
Chicago, Illinois Due: December 31, 1996
FOR VALUE RECEIVED, the undersigned, (jointly and severally if more than
one)("Borrower"), promises to pay to the order of American National Bank and
Trust Company of Chicago ("Bank"), at its principal place of business in
Chicago, Illinois or such other place as Bank may designate from time to time
hereafter, the principal sum of Four Million and No/100 Dollars
($4,000,000.00) or such lesser principal sum as may be owed by Borrower to
Bank hereunder, such payment to occur on December 31, 1996. Borrower's
obligations under this Note shall be defined and referred to herein as
"Borrower's Liabilities."
Borrower may prepay all or part of the principal, together with accrued
interest on the amount so prepaid, without penalty during the term of the
Note. All prepayments shall be applied upon installments of the most remote
maturity.
The principal amount of this Note is available to the Borrower on a
revolving basis. The undersigned may borrow, repay and reborrow any amount,
subject to the limitations contained in the Loan Agreement dated March 28,
1995, as amended from time to time, executed by and between Corcom, Inc. and
Bank (the "Loan Agreement"), provided that the total outstanding principal
balance does not exceed the principal amount of this Note and that Borrower
has complied with all the terms of this Note and the Loan Agreement. The books
and records of the Bank shall be determinitive of the unpaid balance of this
Note from time to time outstanding, absent manifest error.
Reference is hereby made to the Loan Acreement for a statement of the
terms and conditions under which the loan evidenced hereby has been made, is
to be repaid and for a statement of Bank's remedies upon the occurrence of an
"Event of Default" as defined in the Loan Agreement. The terms and conditions
of the Loan Agreement are incorporated herein by reference in their entirety.
Borrower's Liabilities unpaid from time to time shall bear interest
(computed on the basis of a 360-day year and actual days elapsed) from the
date hereof until paid at a per annum rate at all times equal to the Bank's
Base Rate or equivalent as announced or published publicly from time to time
(the "Base Rate"). Therefore, interest shall be calculated for each day at
1/360th of the applicable per annum rate. The Base Rate is not indicative of
the lowest or best rate offered by the Bank to any customer or group of
customers. A change in the Base Rate shall constitute a corresponding change
in the interest rate hereunder effective on and as of the date of such change
in the Base Rate. The above notwithstanding, Borrower may elect to and cause
all or a portion of the principal outstanding on this Note to bear interest
at a daily rate equal to one and one-half percent (1 1/2) in excess of the
London Interbank Offered Rate ("LIBOR") as announced by Bank from time to time
pursuant to the terms and conditions of that certain London Interbank Offered
Rate Borrowing Agreement between Borrower and Bank of even date herewith.
Interest accruing prior to maturity shall be payable by Borrower to Bank
monthly, or as billed by Bank to Borrower, at Bank's principal place of
business, or at such other place as Bank may designate from time to time
hereafter. All unpaid interest at maturity shall be paid with the principal
amount of Borrower's Liabilities due hereunder.
Upon the occurrence of an Event of Default, as hereinafter defined,
interest on the unpaid principal balance shall accrue at a rate equal to the
then existing Base Rate plus three percent (3%) per annum.
Borrower agrees that in any action or proceeding instituted to collect
or enforce collection of this Note, the amount recorded on the books and
records of the Bank shall be prima facie evidence of the unpaid principal
balance of this Note; provided that the failure of the Bank to record any
advance hereunder shall not limit or otherwise affect the obligation of the
Company to repay the principal amount owing on this Note together with accrued
interest thereon.
If any payment becomes due and payable on a Saturday, Sunday or legal
holiday under the laws of the State of Illinois, the due date of such payment
shall be extended to the next business day. If the date for any payment of
principal is thereby extended or is extended by operation of law or otherwise,
interest thereon shall be payable at the then applicable rate of interest for
such extended time.
Borrower warrants and represents to Bank that Borrower shall use the
proceeds represented by this Note solely for the proper business purposes, and
consistently with all applicable laws and statutes.
All of Bank's rights and remedies under this Note are cumulative and non-
exclusive. The acceptance by Bank of any partial payment made hereunder after
the time when any of Borrower's Liabilities become due and payable will not
establish a custom, or waive any rights of Bank to enforce prompt payment
thereof Bank's failure to require strict performance by Borrower of any
provision of this Note shall not waive, affect or diminish any right of Bank
thereafter to demand strict compliance and performance therewith. Any waiver
of an Event of Default hereunder shall not suspend, waive or affect any other
Event of Default hereunder. Borrower and every endorser waive presentment,
demand and protest and notice of presentment, protest, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of this Note,
and hereby ratify and confirm whatever Bank may do in this regard. Borrower
further waives any and all notice or demand to which Bank might to entitled
with respect to this Note by virtue of any applicable statute or law (to the
extent permitted by law).
Borrower agrees to pay, upon Bank's demand therefore, any and all
reasonable costs, fees and expenses (including attorneys' fees, costs and
expenses) incurred in enforcing any of Bank's rights hereunder, and to the
extent not paid the same shall become part of Borrower's Liabilities
hereunder.
If any provision of this Note or the application thereof to any party or
circumstance is held invalid or unenforceable, the remainder of this Note and
the application thereof to other parties or circumstances will not be affected
thereby, the provisions of this Note being severable in any such instance.
This Note is submitted by Borrower to Bank at Bank's principal place of
business and shall be deemed to have been made there at. This Note shall be
governed and controlled by the laws of the State of Illinois as to
interpretation, validity, construction, affect, choice of law and in all other
respects.
No modification, waiver, estoppel, amendment, discharge or change of this
Note or any related instrument shall be valid unless the same is in writing
and signed by the party against which the enforcement of such modification,
waiver, estoppel, amendment, discharge or change is sought.
TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER IRREVOCABLY AGREES THAT,
SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN
ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS NOTE
SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE
OF ILLINOIS. BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY LOCAL, STATE
OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE AND WAIVES ANY OBJECTION
IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF
ANY PROCEEDING INSTITUTED HEREUNDER.
BORROWER AND BANK IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (1) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN
CONNECTION WITH THIS NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
(II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO
THIS NOTE OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREE
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
BORROWER:
CORCOM, INC.
By: s/s Thomas J. Buns
Its: Vice President
ATTESTED:
By: s/s Walter Roth
Its: Secretary
LONDON INTERBANK OFFERED RATE BORROWING AGREEMENT
THIS LONDON INTERBANK OFFERED RATE ("LIBOR") BORROWING AGREEMEENT (this
"Ageement"), dated as of the 27th day of December, 1995 by and between
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO ("Bank"), a national
banking association with its principal place of business at 33 North LaSalle
Street, Chicaco,Illinois 60690, and CORCOM, INC., ("Borrower"); an Illinois
corporation with its principal place of business at 844 East Rockland Road,
Libertyville, Illinois, has reference to the following facts and
circumstances:
A. The Promissory Note of even date hereof in the principal amount of
Four Million Dollars ($4,000,000.00) between Borrower and Bank
(the "Note"), has reference to this Ageement; and
B. Borrower has requested and Bank has agreed to extend an interest
rate option of 150 basis points (1.5%) per annum in excess of the
London Interbank- Offered Rate ("LIBOR").
NOW, THEREFORE, in consideration of any loan, advance, extension of
credit and/or other financial accommodation at any time made by Bank to or for
the benefit of Borrower, and of the promises set forth herein, the parties
hereto agree as follows:
1.DEFINITIONS AND TERMS
1.1 The following, words, terms and/or phrases shall have the
meanings set forth thereafter and such meaningss shall be applicable to the
singular and plural form thereof, whenever the context so requires, the use of
"it" in reference to Borrower shall mean Borrower as identified at the
beginning of this Agreement:
(a) "Borrowing": any portion of Borrower's Labilities bearing
interest at LIBOR.
(b) "Business Day": any day in which the American National Bank and
Trust Company of Chicago, 33 N. LaSalle Street, Chicago,
Illinois 60690, is open for regular business.
(c) "Event of Default": the definition ascribed to this term in the
Note and Loan Agreement between Borrower and Bank of even date
herewith (the "Loan Agreement").
(d) "Interest Period": the period commencing on the date a LIBOR
Loan is made, and ending as the Borrower may select.
(e) "LIBOR Loans": any principal portion of Borrower's liabilities
bearing interest at LIBOR.
(f) "LIBOR Margin": 150 basis points (1.5%).
(g) "Maturity Date": the date specified in the Note upon which the
Borrower's liabilities are due and payable in full.
1.2 Any terms or phrases not specifically defined in this
Agreement shau have the meanings ascribed to them in the Note.
2. MANNER OF LIBOR ELECTION
2.1 Borrower may elect to cause all or a portion of the principal
outstanding on the Note to bear interest at a daily rate equal to the daily
rate equivalent of 1 1/2% in excess of LIBOR, subject to the following
conditions:
(a) Not more than five (5) nor less than two (2) Business Days prior
to the requested date of any LIBOR borrowing, Borrower shall
deliver to Bank an irrevocable written or telephonic notice
setting forth the requested date and amount of such Borrowing
(which amount shall not be less than $100,000.00 and, if in
excess of Sl00,000.00, shall be in integral multiples of
$100,000.00 in excess of S100,000.00) and the requested period of
such Borrowing which shall be either 30, 60, 90, 120 or 180 days
("Interest Period");
(b) The LIBOR used in computing the interest rate appdcable to such
borrowing shall be the LIBOR as quoted by Bank to Borrower as
being 'in effect for the date of such Borrowing plus the LIBOR
Margin, computed on the basis of a 36O-day year and actual days
elapsed, and shall be fixed for the requested period of such
Borrowing;
(c) Such Borrowing may not be prepaid prior to the expiration of the
requested Interest Period of such Borrowing and shall be repaid
in full on the last day of the requested Interest Period of such
Borrowing.
(d) With respect to any Borrowing of LIBOR Loans, Borrower may not
select an Interest Period that extends beyond the Maturity Date
of any of the Note.
2.2 In the event Borrower fails to give notice pursuant to Section
2.1(a) above of the reborrowing of the principal amount of any maturing LIBOR
Borrowing and has not notified the Banks by 10:00 a.m. (Chicago time) on the
last day, specified in Section 2.1(a), that it intends to renew such
Borrowing, then Borrower shall be deemed to have requested a rate of interest
announced or published publicly from time to time by Bank as its Base Rate of
interest (the "Base Rate").
3. GENERAL PROVISIONS
3.1 Funding Indemnity. In the event Bank shall incur any
reasonable loss, cost or expense (including, without limitation, any loss of
profit, and any loss, cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such Bank to fund or
maintain any LIBOR Loan or the relending or reinvesting of such deposits or
amounts paid or prepaid to such Bank) as a result of:
(a) any payment or prepayment of a LIBOR Loan on a date other than
the last day of its Interest Period,
(b) any failure by Borrower to borrow a LIBOR Loan on the date
specified in a notice given pursuant to Section 2.1 hereof,
(c) any failure by Borrower to make any payment of principal on any
LIBOR Loan when due (whether by acceleration or otherwise), or
(d) any acceleration of the maturity of a LIBOR Loan as a result of
the occurrence of any Event of Default,
then, upon the demand of such Bank, Borrower shall pay to Bank such amount as
will reimburse Bank for such loss, cost or expense. If Bank makes such a claim
for compensation, it shall provide to Borrower a certificate executed by an
officer of Bank setting forth the amount of such loss, cost or expense in
reasonable detail (including an explanation of the basis for the computation
of such loss, cost or expense) and the amounts shown on such certificate if
reasonably calculated shall be conclusive.
3.2 Availability of LIBOR Loans. If Bank deternunes that maintenance
of its Loans would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if Bank determines that deposits of
a type and maturity appropriate to match fund LIBOR Loans are not available
to it then Bank shall forthwith give notice thereof to Borrower, whereupon
until Bank notifies Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Bank to make LIBOR shall
be suspended.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
CORCOM, INC.
(Borrower)
By: s/s Thomas J. Buns
Its: Vice President
ATTEST:
By: s/s Walter Roth
Its: Secretary
<PAGE>
<TABLE>
EXHIBIT 11.1
CORCOM, INC. AND SUBSIDIARIES
COMPUTATION OF INCOME (LOSS) PER SHARE
for the years ended December 31, 1995, 1994 and 1995
(Amounts in thousands except per share information)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Common and common equivalent shares:
Average shares outstanding 3,686 3,570 3,560
Additional shares assuming exercise of dilutive
stock options, based on the treasury stock
method using average market price 181 150
Average number of common and common
equivalent shares 3,867 3,720 3,560
Net income (loss) $2,786 $1,243 $(2,047)
Net income (loss) per common and common
equivalent share $ .72 $ .33 $ (.58)
Net income (loss) per common and common
equivalent share, assuming full dilution:
Average shares outstanding 3,686 3,570 3,560
Additional shares assuming exercise of
dilutive stock options, based on the
treasury stock method using the period-end
price if higher than the average market price 209 152
Fully diluted average number of common
and common equivalent shares 3,895 3,722 3,560
Net income (loss) $2,786 $1,243 $(2,047)
Net income (loss) per common and common
equivalent share $ .72 $ .33 $ (.58)
<FN>
Note: Common equivalent shares were not considered in the 1993 computations
since they would have been anti-dilutive. They were, however, taken into
account for 1994.
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Corcom, Inc. on Form S-8 (File No. 2-96731,33-22257, 33-41142,
and 33-80204) of our report dated February 29, 1996, on our audits of the
consolidated financial statements and financial statement schedules of
Corcom, Inc. and Subsidiaries as of December 31, 1995 and 1994, and for each
of the three years in the period ended December 31, 1995, which report is
included in this Annual Report on Form 10-K.
s/s Coopers & Lybrand L.L.P.
Chicago, Illinois
February 29, 1996
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of CORCOM, INC., an Illinois corporation (the "Company"), does hereby
constitute and appoint Werner E. Neuman, Thomas J. Buns, and Walter Roth, and
each of them severally, the true and lawful attorneys and agents of the
undersigned, each with full power to act without any other and with full power
of substitution and resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents may deem
necessary or desirable to enable the Company to comply with the Securities
Exchange Act of 1934, as amended (the "Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission thereunder in
connection with the filing under the Act of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 and all related matters,
including specifically, but without limiting the generality of the foregoing,
power and authority to sign the names of the undersigned directors and
officers in the capacities indicated below to said Form 10-K to be filed with
the Securities and Exchange Commission, to any and all amendments to said
Form 10-K, and to any and all instruments or documents filed as part of or in
connection with any of the foregoing and any and all amendments thereto;
and each of the undersigned hereby ratifies and confirms all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these presents
this 7th day of March, 1996.
Capacities Signatures
President and Director s/s Werner E. Neuman
(Principal Executive Officer) Werner E. Neuman
Vice President and Treasurer s/s Thomas J. Buns
(Principal Financial and Thomas J. Buns
Accounting Officer)
Director s/s David B. Pivan
David B. Pivan
Director s/s Herbert L. Roth
Herbert L. Roth
Director s/s James A. Steinback
James A. Steinback
Director s/s Gene F. Straube
Gene F. Straube
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET AND CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 887
<SECURITIES> 0
<RECEIVABLES> 5,157
<ALLOWANCES> 0
<INVENTORY> 7,071
<CURRENT-ASSETS> 13,646
<PP&E> 16,810
<DEPRECIATION> 13,062
<TOTAL-ASSETS> 17,394
<CURRENT-LIABILITIES> 2,767
<BONDS> 0
<COMMON> 13,942
0
0
<OTHER-SE> 523
<TOTAL-LIABILITY-AND-EQUITY> 17,394
<SALES> 30,660
<TOTAL-REVENUES> 30,660
<CGS> 19,287
<TOTAL-COSTS> 8,335
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71
<INCOME-PRETAX> 2,967
<INCOME-TAX> 181
<INCOME-CONTINUING> 2,786
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,786
<EPS-PRIMARY> .72
<EPS-DILUTED> .72
