SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Mark One
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended JUNE 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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
incorporation or organization) Identification No.)
844 E. Rockland Road, Libertyville, Illinois 60048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 680-7400
NOT APPLICABLE
Former name, former address and former fiscal year if changed since last
report.
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
Common Stock, No Par Value - 3,813,843 Shares as of July 11, 1997
Exhibit Index on Page 9
<PAGE>
CORCOM, INC.
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - June 28, 1997
(unaudited) and December 31, 1996 3
Consolidated Condensed Statements of Operations (unaudited)
- for the 13 weeks and 26 weeks ended June 28, 1997 and 4
June 29, 1996
Consolidated Condensed Statements of Cash Flows (unaudited)
- for the 26 weeks ended June 28, 1997 and June 29, 1996 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 7-8
Item 3. Quantitative and Qualitative Disclosures about Market Risk N/A
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
Exhibit 10.1 - 1997 Key Employees'Stock Option Plan 11
Exhibit 11.1 - Computation of Earnings per Share 15
Exhibit 27.1 - Financial Data Schedule (EDGAR ONLY)
<PAGE>
PART I. FINANCIAL INFORMATION
CORCOM, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, except Share Data)
June 28, December 31,
1997 1996
----------- -----------
ASSETS (Unaudited)
CURRENT ASSETS
Cash & cash equivalents $ 5,909 $ 4,789
Accounts receivable (net) 5,529 4,688
Inventories - Note B 7,121 6,691
Deferred income tax benefit, net 1,160 2,000
Other current assets 730 682
Total current assets 20,449 18,850
PROPERTY, PLANT & EQUIPMENT - AT COST 18,837 18,391
Less accumulated depreciation & amortization 14,306 14,014
4,531 4,377
TOTAL ASSETS $24,980 $23,227
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 58 $ 59
Accounts payable 2,238 1,368
Other accrued liabilities 1,241 1,728
Total current liabilities 3,537 3,155
LONG TERM DEBT 73 102
STOCKHOLDERS' EQUITY
Common stock, no par value:
Authorized 10,000,000 shares; issued
3,848,243 shares in 1997 and 3,815,543
shares in 1996 14,113 14,057
Retained earnings 7,754 6,023
Accumulated exchange rate adjustments (254) (110)
21,613 19,970
Less cost of common stock in treasury -
34,400 shares in 1997 and none in 1996 (243) 0
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $24,980 $23,227
See notes to Consolidated Condensed Financial Statements.
<PAGE>
CORCOM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share data)
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------- -----------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
--------- --------- --------- ---------
Net Sales
$ 9,803 $ 8,507 $18,796 $16,820
Costs and expenses
Cost of sales 5,902 5,334 11,526 10,464
Engineering expenses 333 299 671 610
Selling, administrative
& other expenses 2,038 1,844 4,014 3,713
Interest expense 3 4 6 8
Interest income (66) (28) (115) (47)
Earnings before income tax 1,593 1,054 2,694 2,072
Income tax provision/
(benefit) 603 (249) 963 (495)
Net earnings $ 990 $ 1,303 $ 1,731 $ 2,567
Average number of common
and common equivalent
shares outstanding 3,958,021 3,993,234 3,962,029 3,962,934
Net earnings per common
and common equivalent
share - Note C $ .25 $ .33 $ .44 $ .65
Cash dividends have not been declared in the periods covered by these
statements.
See notes to Consolidated Condensed Financial Statements.
<PAGE>
CORCOM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
Twenty-six Weeks Ended
------------------------
June 28, June 29,
1997 1996
--------- ---------
OPERATING ACTIVITIES
Net cash flows from operating
activities $ 2,140 $ 2,762
INVESTING ACTIVITIES
Additions to property, plant &
equipment (net) (803) (533)
FINANCING ACTIVITIES
Treasury stock purchases (243) 0
Stock options exercised 56 83
Repayments of notes payable & long
term debt (30) (207)
Proceeds from borrowings under notes
payable & long term debt 0 230
TOTAL FINANCING ACTIVITIES (217) 106
INCREASE IN CASH AND CASH EQUIVALENTS 1,120 2,335
Cash and cash equivalents at beginning
of year 4,789 887
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 5,909 $ 3,222
See notes to Consolidated Condensed Financial Statements
<PAGE>
CORCOM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information in a format provided by the instructions to Form 10-Q
and Rule 10-01 or Regulation S-X. Accordingly, they do not include all of the
information and disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the twenty-
six weeks ended June 28, 1997 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1996.
NOTE B - INVENTORIES
Major classes of the Company's inventories are as follows (in thousands):
June 28, 1997 December 31, 1996
Finished products $ 2,451 $ 2,693
Materials & work-in-process 4,670 3,998
$ 7,121 $ 6,691
NOTE C - EARNINGS PER SHARE
Net earnings per common and common equivalent share are based upon the
weighted average number of shares of common stock and common stock equivalents
(dilutive stock options) outstanding during each period.
NOTE D - INCOME TAXES
The components of the net deferred tax asset, tax effected, recognized in the
accompanying balance sheet as of June 28, 1997 are as follows (in thousands):
Deferred tax assets $1,440
Less: valuation reserve ( 280)
Net deferred tax assets $1,160
NOTE E - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
revises the disclosure requirements and increases the comparability of EPS
data on an international basis by simplifying the existing computational
guidelines in APB Opinion No. 15. The pronouncement will require the Company
to present both basic and diluted EPS for net income on the face of the
income statement and is effective for the Company's year ended December 31,
1997. The Company believes that any earnings per share adjustment from the
application of this statement will not be material to the current method of
computing earnings per share.
Statements of Financial Accounting Standards No. 129, "Disclosure of Informa-
tion about Capital Structure," No. 130, "Reporting Comprehensive Income
Summary," and No. 131, "Disclosures about Segments of an Enterprise and
Related Information," are also effective for the Company's year ended
December 31, 1997. The Company does not believe these statements will have a
material impact on its financial statements.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - Second Quarter 1997 vs. Second Quarter 1996
CORCOM's net sales for the second quarter of 1997 were $9,803,000, an
increase of 15.2% from the $8,507,000 reported for the second quarter of 1996.
This increase was the result of volume increases in the Company's North
American and European commercial filter businesses. North American revenue
represented over 76% of total revenue in the second quarter of 1997 and was up
15.1% over the comparable number in 1996 as a result of the continued strength
in this segment of the overall electronics market. European sales, which
represents approximately 21% of total second quarter 1997 revenue, was up
18.4% in 1997 over 1996. There were no appreciable price changes year to year.
Cost of sales for the current quarter were 60.2% of net sales compared to
62.7% for the year ago period. Certain peso-based costs at the Company's
main manufacturing plant in Juarez, Mexico have increased year to year as a
result of the inflation in this currency over the past year. This cost
increase, however, has been more than offset by the contribution margin of the
increased sales volume in 1997. Since a portion of the Company's costs are
peso- based, the Company's manufacturing costs could rise further if the value
of the peso increases relative to the dollar, or if inflation in Mexico
escalates.
Engineering expenses, at $333,000 in the second quarter of 1997, were higher
than the $299,000 reported in the second quarter of 1996 as a result of higher
prototype costs for new products. Selling, administrative and other
expenses rose in 1997 to $2,038,000 from the $1,844,000 reported in the second
quarter of 1996. The largest components of this increase were higher
commission and selling expenses on the higher level of volume, and increased
incentive compensation costs computed on the higher level of earnings.
Interest income in the second quarter of 1997 was $66,000, compared to $28,000
for the year ago period, the result of higher cash investments in 1997.
The Company's pre-tax earnings for the second quarter of 1997 were $1,593,000
as compared with $1,054,000 for the second quarter of 1996. The reasons for
the improvement are discussed above.
The income tax provision in the second quarter of 1997, at $603,000,
represents a normal statutory provision based on current pretax earnings.
This compares to an income tax benefit of $249,000 in the second quarter of
1996. The principal component of this benefit was a reversal of part of the
valuation allowance against the deferred tax asset related to existing tax
net operating loss (NOL) carryforwards at the beginning of 1996. This was a
one-time benefit experienced in 1996 only and was not repeatable in 1997.
After tax, the Company's net earnings for the second quarter of 1997 were
$990,000 ($0.25 per share). This compares to net earnings in the year ago
period of $1,303,000 ($0.33 per share). The average number of common and
common equivalent shares outstanding as of June 28, 1997 were 3,958,021, a
decrease of 35,213 from the 3,993,234 shares reported as of June 29, 1996.
The decrease was mainly due to the repurchase by the Company of 34,400 shares
of its common stock in the second quarter.
Results of Operations - First Half 1997 vs. First Half 1996
CORCOM's net sales for the first half of 1997 were $18,796,000, an increase of
11.7% from the $16,820,000 reported for the first half of 1996. This increase
was the result of volume increases in the Company's North American and
European commercial filter businesses. North American revenue represented
over 74% of total revenue in the first half of 1997 and was up 12.8% over the
comparable number in 1996 as a result of the continued strength of this
segment of the overall electronics market. European sales, which represents
approximately 23% of total first half 1997 revenue, was up 11.4% in 1997 over
1996. There were no appreciable price changes year to date.
Cost of sales for the first half of 1997 were 61.3% of net sales compared to
62.2% for the year ago period. Certain peso-based costs at the Company's
main manufacturing plant in Juarez, Mexico have increased year to year as a
result of the inflation in this currency over the past year. This cost
increase, however, has been more than offset by the contribution margin of the
increased sales volume in 1997. Since a portion of the Company's costs are
peso-based, the Company's manufacturing costs could rise further if the value
of the peso increases relative to the dollar, or if inflation in Mexico
escalates.
<PAGE>
Engineering expenses, at $671,000 in the first half of 1996, were higher than
the $610,000 reported in the first half of 1996 as a result of higher
prototype costs for new products under development. Selling, administrative
and other expenses rose in 1997 to $4,014,000 from the $3,713,000 reported in
the first half of 1996. The largest components of this increase were higher
commission and selling expenses on the higher level of volume, and increased
incentive compensation costs computed on the higher level of earnings.
Interest income in the first half of 1997 period was $115,000 compared to
interest income of $47,000 in the first half of 1996, the result of higher
cash investments in 1997.
The Company's pre-tax earnings for the first half of 1997 were $2,694,000 as
compared with $2,072,000 for the first half of 1996. The reasons for the
improvement are discussed above.
The income tax provision in the first half of 1997, at $963,000, represents a
normal statutory provision based on current pretax earnings. This compares
to an income tax benefit of $495,000 in the first half of 1996. The principal
component of this benefit was a reversal of part of the valuation allowance
against the deferred tax asset related to existing tax net operating loss
(NOL) carryforwards at the beginning of 1996. This was a one-time benefit
experienced in 1996 only and was not repeatable in 1997.
After tax, the Company's net earnings for the first half of 1997 were
$1,731,000 ($0.44 per share). This compares to net earnings in the year ago
period of $2,567,000 ($0.65 per share). The average number of common and
common equivalent shares outstanding for the first six months of 1997 were
3,962,029 a decrease of 905 from the 3,962,934 average shares reported for the
first six months of 1996. The decrease was the result of the repurchase by
the Company of 34,400 shares of its common stock, partially offset by the
issuance of additional shares on exercise of stock options by certain key
employees over the past year and the dilutive effect of existing unexercised
stock options.
Liquidity and Capital Resources
As of June 28, 1997, the Company had cash reserves on hand of $5,909,000 as
compared to $4,789,000 as of December 31, 1996. In addition to current cash
reserves, the Company's loan agreement with American National Bank and Trust
Company of Chicago is still in place. 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. This agreement runs through April 30, 1998. There were no
borrowings against this agreement as of June 28, 1997.
On March 26, 1997, the Company announced that the Board of Directors had
approved a stock repurchase program for up to 200,000 shares of the Company's
common stock. During the second quarter, the Company repurchased 34,400
shares of stock for $243,000. Per-share prices ranged from $6.50 to $7.50
and averaged $7.06.
The Company does not believe it will need to identify additional sources of
capital over the next year and feels that current cash reserves, cash
provided by operating activities, and the existing credit facility will be
sufficient to meet its operating needs and capital resource requirements.
<PAGE>
PART II. OTHER INFORMATION
CORCOM
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders held May 22, 1997, the
following vote totals were tabulated:
1. Election of Directors
Nominees Number of Votes Votes Withheld
Bruce P. Anderson 3,269,390 5,150
Carolyn A. Berry 3,270,590 3,950
Werner E. Neuman 3,270,590 3,950
Herbert L. Roth 3,270,590 3,950
James A. Steinback 3,270,590 3,950
Gene F. Straube 3,270,590 3,950
Renato Tagiuri 3,270,590 3,950
2. Approval of 1997 Key Employees' Stock Option Plan:
For 3,173,452
Against 88,129
Abstain 12,959
There were no broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description Page
10.1* 1997 Key Employees' Stock Option Plan 10
11.1 Computation of Earnings Per Share 11
27.1 Financial Data Schedule (EDGAR only) --
---------
* Management Compensatory Plan
(b) The Company did not file any reports on Form 8-K during the thirteen
week period ended June 28, 1997.
<PAGE>
CORCOM, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Corcom, Inc.
s/s Thomas J. Buns
by: Thomas J. Buns
Vice President and Treasurer
(Principal Financial Officer)
Dated: July 17, 1997
<PAGE>
Exhibit 10.1
CORCOM 1997 KEY EMPLOYEES' INCENTIVE STOCK OPTION PLAN
1. Purpose.
The purpose of this stock option plan ("the Plan") is to assist CORCOM, INC.
("Corcom") in retaining and developing strong management by providing a means
whereby officers and other key management employees of Corcom and of its
subsidiaries will be given an opportunity to purchase the stock of Corcom.
The word "subsidiary," as used herein, means any corporation in which Corcom
owns, directly or indirectly, stock possessing 50 percent or more of the total
combined voting power of all classes of stock.
2. Administration.
This Plan shall be administered by the Executive Compensation Committee of the
Board of Directors of Corcom (the "Committee"), which shall be composed of
such members (not less than two) as shall be appointed from time to time by
the Board. No member of the Committee shall be appointed who does not qualify
as a non-employee director, as defined by SEC Rule 16b-3. Subject to the
provisions of this Plan, the Committee shall have the exclusive power to:
(a) Determine from time to time which of the eligible persons shall be
granted Options under the Plan, and the time or times when, and the number of
shares for which, an Option or Options shall be granted to each;
(b) Construe and interpret the Plan and Options, granted under it, and
establish, amend, and revoke rules and regulations for its administration.
The Committee, in the exercise of this power, may correct any defect, supply
any omission, or reconcile any inconsistency in the Plan, or in any option
agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective;
(c) Prescribe the terms and provisions of each Option granted (which
need not be identical); and
(d) Determine all questions of policy and expediency that may arise in
the administration of the Plan, and generally, exercise such powers and
perform such acts as are deemed necessary or expedient to promote the best
interests of Corcom.
Decisions and determinations by the Committee shall be final and binding upon
all parties, including Corcom, its shareholders, participants and other
employees.
3. Shares Subject to the Plan.
Subject to the provisions of paragraph 10 (relating to the adjustment upon
changes in stock), the stock that may be sold pursuant to Options granted
under the Plan shall not exceed in the aggregate 170,000 shares of Corcom's
authorized, no par value Common Stock, and may be unissued shares, reacquired
shares or shares bought on the market for the purposes of the Plan. If any
Options granted under the Plan shall for any reason terminate or expire or be
surrendered without having been exercised in full, the stock not purchased
under such Options shall be available again for the purposes of the Plan.
4. Eligibility.
Options may be granted only to salaried officers and other salaried key
management employees of Corcom or of its subsidiaries (whether or not
directors of Corcom or any subsidiary). A director of Corcom shall not be
eligible for the benefits of the Plan unless he also is a salaried officer or
other salaried key management employee of Corcom or of a subsidiary. A person
otherwise eligible nevertheless shall not be eligible for an Option under the
Plan at any time when he owns stock possessing more than ten percent of the
total combined voting power or value of all classes of stock of Corcom or of
a subsidiary of Corcom, unless, anything herein to the contrary
notwithstanding, the purchase price under an Option granted to such person
shall not be less than 110% of the fair market value of the stock subject to
such an Option on the date the Option is granted, and the Option by its terms
is not exercisable after five years from the date granted.
<PAGE>
A person otherwise eligible shall not be granted an incentive stock option
under this Plan or any other such plans of Corcom or its subsidiaries, during
any one calendar year if the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by any person during any calendar
year (under all plans of Corcom and its parent and subsidiary corporations)
shall exceed $100,000.
5. Terms of Option Agreements.
Each option agreement shall be in such form and shall contain such provisions
as the Committee from time to time shall deem appropriate. Option agreements
need not be identical, but each option agreement by appropriate language shall
include the substance of all of the following provisions:
(a) The purchase price under each Option shall not be less than 100% of
the fair market value of the stock subject to the Option on the date the
Option is granted.
(b) The purchase price shall be payable in full in cash upon exercise
of the Option; provided, however, that in lieu of cash an option holder may
make payment in whole or in part by tendering to Corcom shares of Common stock
of Corcom held for at least six months and valued at fair market value.
(c) The maximum term of any Option shall be ten years from the date it
was granted.
(d) No Option shall be exercisable within the first six months
following its grant; provided, however, that this limitation shall not apply
in the event of the death of the option holder; provided, further, that in no
event shall any Option be exercisable prior to the approval of this Plan by
the holders of a majority of the shares of Corcom's Common Stock at its next
annual shareholders' meeting.
(e) An Option shall not be transferable except by will or by the laws
of descent and distribution, and during the lifetime of the person to whom the
Option is granted he alone may exercise it.
(f) An Option shall terminate and may not be exercised if the person
to whom it is granted ceases to be employed by Corcom, or by a subsidiary of
Corcom, except that, subject to the limitation hereafter stated in this
subparagraph (e), (i) if his employment is terminated by any reason other than
his death or conduct which in the judgment of the Committee involves
dishonesty or action by him which is detrimental to the best interest of
Corcom, he may at any time within three months after termination of his
employment exercise his Option but only to the extent that it was exercisable
by him on the date of termination of his employment; and (ii) if he dies while
in the employ of Corcom or of a subsidiary, or within three months after
termination of his employment, his Option may be exercised at any time within
18 months following his death by the person or persons to whom his rights
under the Option shall pass by will or by the laws of descent or distribution,
but only to the extent that such Option was exercisable by him on the date of
termination of his employment. The limitation mentioned above is that an
Option may not be exercised to any extent by anyone after the expiration of
its term.
(g) Neither a person to whom an Option is granted, nor his legal
representative, heir, legates, or distributee, shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Option unless and until he has received a certificate
or certificates therefor.
(h) The minimum number of shares with respect to which an Option may
be exercised in part at any time is 100.
<PAGE>
6. Restrictions on Shares.
As a condition to exercise of any Option, the option holder shall represent,
warrant and agree with Corcom as follows:
(a) He is purchasing the shares with respect to which such Option is
being exercised for his own account for investment and not with any present
intention to resell or distribute the same.
(b) He has been advised that the issuance of said shares to him has
not been registered under the Securities Act of 1933, as amended (the "Act"),
and that said shares must be held by him indefinitely unless (i) distribution
of said shares has been registered under the Act, (ii) a sale of said shares
is made in conformity with the provisions of SEC Rule 144 or (iii) in the
opinion of counsel acceptable to Corcom some other exemption from registration
is available.
(c) He will not make any sale, transfer or other disposition of said
shares except in compliance with the Act and the Rules and Regulations
thereunder. He is familiar with all of the provisions of Rule 144, including
(without limitation) the holding period thereunder.
(d) He understands that Corcom is under no obligation to him to
register the sale, transfer or other disposition of said shares by him or on
his behalf or to take any other action necessary in order to make compliance
with an exemption from registration available. In particular (but without
limitation), Corcom is under no obligation to him to make available adequate
current public information to enable him to utilize Rule 144.
(e) He understands that stop transfer instructions will be given
Corcom's transfer agent with respect to said shares and that there will be
placed on the certificates for said shares a legend stating in substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be sold,
pledged or otherwise transferred except pursuant to an effective
registration statement under said Act, SEC Rule 144 or an opinion
of counsel acceptable to Corcom that some other exemption from
registration is available."
If Corcom should elect in the future to register under the Act shares issuable
under this Plan, the Committee may modify or eliminate each of the foregoing
representations and warranties as the Committee may deem appropriate.
If at any time Corcom shall be advised by counsel that certain requirements
under the federal or state securities laws must be met before shares may be
issued under the Plan, Corcom shall notify option holders thereof and Corcom
shall have no liability for failure to issue shares upon any exercise of
Options because of a delay pending the meeting of any such requirements.
7. Use of Proceeds from Stock.
Proceeds from the sale of stock pursuant to Options granted under the Plan
shall constitute general funds of Corcom.
8. No Implied Covenants.
No employee or other person shall have any claim or right to be granted an
Option under this Plan. Neither this Plan nor any action taken hereunder
shall be construed as giving any employee any right to be retained in the
employ of Corcom or any subsidiary.
9. Withholding.
Corcom or the subsidiary which employs a participant under this Plan, as the
case may be, may take such action as it deems necessary or appropriate for
the withholding of any taxes which Corcom or such subsidiary is required by
any law or regulation of any governmental authority, whether federal, state
or local, domestic or foreign, to withhold in connection with the grant or
exercise of Options. Such action may include, but shall not be limited to,
the withholding of all or any portion of the shares of stock subject to such
Option until the participant reimburses Corcom or its subsidiary for the
amount which Corcom or such subsidiary is required to withhold with respect
to such taxes.
<PAGE>
10. Adjustment Upon Changes in Stock.
If any change is made in the stock subject to the Plan, or subject to any
Option granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, split-up, combination of shares, exchange of
shares, change in corporate structure, or otherwise) appropriate adjustments
shall be made by the Board of Directors as to the kind and maximum number of
shares subject to the Plan, and the kind and number of shares and price per
share of stock subject to outstanding Options.
11. Amendment of the Plan.
The Board of Directors at any time, and from time to time, may amend the Plan,
subject to the limitation, however, that, except as provided in paragraph 10
(relating to adjustments upon changes in stock), no amendment shall be made,
except upon approval by vote of a majority of the outstanding shares of
Corcom, which will:
(a) Increase the number of shares reserved for Options under the Plan;
or
(b) Reduce the Option price below 100% of fair market value at the
time an Option is granted.
12. Termination or Suspension of the Plan.
The Board of Directors at any time may suspend or terminate the Plan. Unless
previously terminated by the Board, this Plan shall terminate on March 1,
2007.
Rights and obligations under any Option granted while the Plan is in effect
shall not be altered or impaired by, suspension or termination of the Plan,
except by consent of the person to whom the Option was granted.
13. Effective Date.
Subject to approval by the holders of a majority of the shares of Corcom
prior to May 31, 1997, this Plan shall become effective as of March 6, 1997.
<PAGE>
Exhibit 11.1
CORCOM, INC.
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
(In Thousands, except Share Data)
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------- ------------------------
June 28, June 29, June 28, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
Net earnings per common and
common equivalent share:
Average shares outstanding 3,822 3,787 3,824 3,769
Additional shares assuming
exercise of dilutive stock
options based on the treasury
stock method using average
market price 136 206 138 194
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES 3,958 3,993 3,962 3,963
Net earnings $ 990 $ 1,303 $ 1,731 $ 2,567
Net earnings per common and
common equivalent share: $ .25 $ .33 $ .44 $ .65
Net earnings per common and
common equivalent share -
assuming full dilution:
Average shares outstanding 3,822 3,787 3,824 3,769
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. 137 206 138 197
FULLY DILUTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES 3,959 3,993 3,962 3,966
Net earnings $ 990 $ 1,303 $ 1,731 $2,567
Net earnings per common and
common equivalent shares $ .25 $ .33 $ .44 $ .65
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated condensed balance sheet and the consolidated condensed statement
of operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-28-1997
<CASH> 5909
<SECURITIES> 0
<RECEIVABLES> 5529
<ALLOWANCES> 0
<INVENTORY> 7121
<CURRENT-ASSETS> 20725
<PP&E> 18837
<DEPRECIATION> 14306
<TOTAL-ASSETS> 25256
<CURRENT-LIABILITIES> 3813
<BONDS> 0
<COMMON> 14113
0
0
<OTHER-SE> 7257
<TOTAL-LIABILITY-AND-EQUITY> 25256
<SALES> 18796
<TOTAL-REVENUES> 18796
<CGS> 11526
<TOTAL-COSTS> 16096
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 2694
<INCOME-TAX> 963
<INCOME-CONTINUING> 1731
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1731
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
