SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(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 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number 0-5633
ENVIRONMENT ONE CORPORATION
(Name of small business issuer in its charter)
New York 14-1505298
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation of organization) Identification No.)
2773 Balltown Road, Niskayuna, NY 12309-1090
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (518) 346-6161
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of Common Stock, par value $.10 as of June 30, 1997:
4,230,762.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE>
Environment One Corporation
FORM 10-QSB
INDEX
Page No.
--------
Part I. Financial Information-
Item 1. - Financial Statements
Consolidated Balance Sheets June 30, 1997 and
December 31, 1996 3 - 4
Consolidated Statements of Income for the Six Months
Ended June 30, 1997 and 1996 5
Consolidated Statements of Income for the Three Months
Ended June 30, 1997 and 1996 6
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1997 and 1996 7 - 8
Notes to Consolidated Financial Statements 9
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 14
Part II. Other Information 15
Signatures 16
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<PAGE>
Item 1. Financial Statements
<TABLE>
<CAPTION>
Environment One Corporation
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
6/30/97 12/31/96
------------ ------------
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents .............. $ 561,883 62,637
Accounts Receivable, Net ............... 4,911,763 4,931,421
Inventories
Raw Materials .................. 1,534,559 1,439,020
Work in Process ................ 204,990 469,001
Finished Goods ................. 221,159 364,079
------------ ------------
1,960,708 2,272,100
Other Current Assets ........................ 475,046 347,577
------------ ------------
Total Current Assets ................... 7,909,400 7,613,735
------------ ------------
Property, Plant and Equipment
Land ................................... 334,491 334,491
Buildings .............................. 2,294,861 2,271,832
Machinery and Equipment ................ 5,194,684 5,024,175
Construction in Progress ............... 86,569 50,689
Less: Accumulated Depreciation ......... (4,610,173) (4,310,173)
------------ ------------
Net Property, Plant and Equipment ...... 3,300,432 3,371,014
Other Assets ................................ 242,113 269,792
------------ ------------
Total Assets ................................ 11,451,945 11,254,541
============ ============
Liabilities and Shareholders' Equity
Current Liabilities
Current Installments - Long Term Debt .. 338,100 338,100
Note Payable - Bank .................... 0 75,000
Accounts Payable ....................... 1,806,096 1,918,866
Accrued Expenses ....................... 1,176,484 1,296,170
------------ ------------
Total Current Liabilities ......... 3,320,680 3,628,136
Deferred Compensation ....................... 369,461 369,461
Minority Interest ........................... 49,175 43,068
Long Term Debt .............................. 1,331,445 1,500,494
------------ ------------
Total Liabilities ..................... 5,070,761 5,541,159
------------ ------------
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Environment One Corporation
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
(continued)
6/30/97 12/31/96
------------ ------------
<S> <C> <C>
Shareholders' Equity
Common Stock at Par Value .............. 425,115 416,997
Additional Paid in Capital ............. 7,899,222 7,446,789
Accumulated Deficit .................... (1,492,873) (2,076,164)
------------ ------------
6,831,464 5,787,622
Less: Treasury Stock at Cost ........... (450,280) (74,240)
------------ ------------
Total Shareholders' Equity ........... 6,381,184 5,713,382
------------ ------------
Total Liabilities and Shareholders' Equity .. $ 11,451,945 11,254,541
============ ============
(See Accompanying Notes to Consolidated Financial Statements)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Environment One Corporation
Consolidated Statements of Income
For the Six Months Ended June 30, 1997 and 1996
Six Months Ended June 30,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenue .................................... $ 10,250,728 9,273,381
------------ ------------
Costs and Expenses
Cost of Sales .................... 6,692,690 6,569,901
Selling and Marketing ............ 1,220,681 1,083,242
General and Administrative ....... 1,321,042 769,662
Interest Expense, Net ............ 81,946 129,828
Other Income, Net ................ (10,222) (180,090)
------------ ------------
Total Expenses, Net ........................ 9,306,137 8,372,543
------------ ------------
Net Earnings Before Taxes .................. 944,591 900,838
Income Tax Expense ......................... 361,300 340,800
------------ ------------
Net Earnings ............................... 583,291 560,038
============ ============
Per Share Amounts:
Primary Earnings per Common Share .......... $ 0.13
Fully Diluted Earnings per Common Share .... 0.13
Weighted Average Earnings per Common Share . $ 0.14
============ ============
(See Accompanying Notes to Consolidated Financial Statements)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Environment One Corporation
Consolidated Statements of Income
For the Three Months Ended June 30, 1997 and 1996
Three Months Ended June 30,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenue ...................................... $ 5,703,003 5,328,145
----------- -----------
Costs and Expenses
Cost of Sales ...................... 3,758,257 3,703,526
Selling and Marketing .............. 618,805 553,885
General and Administrative ......... 582,665 407,460
Interest Expense, Net .............. 39,962 67,105
Other Income, Net .................. (7,733) (2,126)
----------- -----------
Total Expenses, Net .......................... 4,991,956 4,729,850
----------- -----------
Net Earnings Before Taxes .................... 711,047 598,295
Income Tax Expense ........................... 272,700 227,100
----------- -----------
Net Earnings ................................. 438,347 371,195
=========== ===========
Per Share Amounts:
Primary Earnings per Common Share ............ $ 0.10
Fully Diluted Earnings per Common Share ...... 0.10
Weighted Average Earnings per Common Share ... $ 0.09
=========== ===========
(See Accompanying Notes to Consolidated Financial Statements)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Environment One Corporation
Consolidated Statements of Cash Flows
For the Six Months Ended June 30,1997 and 1996
Six Months Ended June 30,
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash Flows-Operating Activities:
Net Earnings ................................................. $ 583,291 560,038
Adjustments to Reconcile Net Earnings
to Net Cash Provided (Used) by Operating Activities:
Non-cash Compensation Expense ................................ 70,000 0
Depreciation and Amortization ................................ 315,612 296,658
Decrease (Increase) - Accounts Receivable, Net ............... 19,658 (1,602,358)
Decrease (Increase) - Inventories ............................ 311,392 (90,006)
Decrease (Increase) - Prepaid Expenses ....................... (127,469) (81,425)
Decrease (Increase) - Other L/T Assets ....................... 12,067 3,766
Increase (Decrease) - Accounts Payable ....................... (112,770) 633,108
Increase (Decrease) - Accrued Expenses and Other Liabilities . (112,272) 157,090
Increase (Decrease) - Minority Interest ...................... 6,107 (13,756)
---------- ----------
Net Cash Provided (Used) by Operating Activities ............. 965,616 (136,885)
---------- ----------
Cash Flows Used in Investing Activities:
Capital Expenditures ......................................... (229,418) (273,599)
---------- ----------
Cash Flows From Financing Activities:
Increase (Decrease) - Note Payable to Bank ................... (75,000) 575,000
Increase (Decrease) - Long Term Debt ......................... (169,049) (169,194)
Issuance of Common Stock ..................................... 7,097 2,073
Purchase of Treasury Stock ................................... 0 (34,489)
---------- ----------
Net Cash Provided (Used) by Financing Activities ............. (236,952) 373,390
---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents ......... 499,246 (37,094)
Cash and Cash Equivalents at Beginning of Period ............. 62,637 91,115
---------- ----------
Cash and Cash Equivalents at End of Period ................... $ 561,883 54,021
========== ==========
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Environment One Corporation
Consolidated Statements of Cash Flows
For the Six Months Ended June 30,1997 and 1996
(continued)
Six Months Ended June 30,
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Supplemental disclosure of non-cash financing activity:
Issuance of 65,681 shares of common stock held in trust
and recorded as treasury stock as part of the Company's
deferred compensation plan for certain executive officers. $ 369,461 --
========== ==========
Exchange of 892 and 2,390 shares of common stock in
partial payment of exercise price on stock options
during 1997 and 1996, respectively ....................... $ 6,579 14,340
========== ==========
Tax benefit from exercise of stock options ................. $ 7,414 31,425
========== ==========
Cash paid during the year for:
Interest .................................................. $ 89,736 129,964
========== ==========
Income Taxes .............................................. $ 461,894 231,321
========== ==========
(See Accompanying Notes to Consolidated Financial Statements)
</TABLE>
-8-
<PAGE>
Environment One Corporation
Notes to Consolidated Financial Statements
For the Three Months Ended June 30, 1997 and 1996
(Unaudited)
1. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, which are only of a
normal recurring nature, necessary to fairly present Environment One
Corporation's financial position as of June 30, 1997 and December 31, 1996, the
results of operations for the three and six months ended June 30, 1997 and 1996
and cash flows for the six months ended June 30, 1997 and 1996. Operating
results for any quarter are not necessarily indicative of results for any future
periods.
2. Net earnings per share computations are based on primary and fully
diluted number of shares of Common Stock outstanding for the period ended June
30, 1997 and the weighted average number of shares of Common Stock outstanding
for the period ended June 30, 1996. (June 30, 1997; 4,400,164 and 4,453,742
shares, June 30, 1996; 4,114,851 shares).
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (Statement 128),
which establishes standards for computing and presenting earnings per share
(EPS). This Statement simplifies the standards for computing EPS making them
comparable to international EPS standards and supersedes Accounting Principals
Board Opinion No. 15, "Earnings per Share" and related interpretations.
Statement 128 replaces the presentation of primary EPS with the presentation of
basic EPS. It also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
Basic EPS excludes dilution (such as the effect of the Company's outstanding
stock options) and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities of other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity (such as the Company's stock options). This
Statement is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods. Earlier application is not
permitted. This Statement requires restatement of all prior-period EPS data
presented.
The Company will present its EPS information in accordance with Statement 128 as
of December 31, 1997. Management anticipates that the effect of the adoption of
this Statement will not have a material effect on the Company's consolidated
financial statements.
3. In January, 1996, the Company concluded an agreement with PROTEC
Fire Detection, plc of Nelson, Lancashire, England for the sale of its Cirrus
IFD product line. In a two-stage transaction with an approximate value of
$750,000, the Company transferred all Cirrus IFD assets and operations to PROTEC
and simultaneously entered into a product technology development contract that
was concluded in 1996. The pre-tax impact of the sale, net of certain expenses,
was a gain of $176,000 and is recorded as other income in the statement of
operations for the six months ended June 30, 1996.
-9-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following information should be read in conjunction with the consolidated
financial statements and notes thereto included in Item 1 of this Quarterly
Report, and the consolidated financial statements and notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996.
Six Months Ended June 30, 1997 and 1996
(all figures rounded to the nearest 000's)
Revenue for the period increased $977,000, or 10.5% over the same period last
year. Increased revenues were recorded over the first six months of 1996 in both
Sewer Systems and Detection Systems businesses.
Revenue's from the Company's Sewer Systems business continue to show improvement
over prior periods. Management is of the opinion that the addition of a more
powerful distribution network, increases in the number and size of municipal
projects, continued growth in the overall market and realignment of its sales
territories accounts for this growth and bodes well for future growth.
As part of the Detection Systems business revenue increase, sales of the
Company's Hydrogen Control Cabinet showed significant improvement over the same
period last year as the Company began shipment of the product in the second
quarter of 1996. Generator Condition Monitor sales also showed improvement over
the same period last year buoyed by strong second quarter sales.
The Company continued to manufacture and supply Cirrus IFD units to PROTEC
during the first six months of 1997 and is expecting to finish its commitment
with PROTEC in the third quarter of 1997.
Cost of sales increased $123,000 when compared to the same period last year.
Expressed as a percent of sales, cost of sales decreased by 5.5 points from
70.8% to 65.3%. The resulting improvement in gross margin is mainly attributable
to reduced direct material costs expressed as a percent of sales resulting from
changes in product mix on a comparative period basis. Indirect costs increased
slightly in the categories of maintenance, incoming freight and small tools
reflecting the impact of higher variable indirect manufacturing costs as a
result of increased shipments during the period.
Selling and Marketing costs increased $137,000 compared to the first six months
of 1996. The majority of this increase resulted from increased expenditures for
sales promotion and literature as the Company continues its effort to support
the Sewer Systems business distribution network. During the first quarter of
1997, the Company closed its Sewer System sales offices in Georgia and Texas.
During 1996, the Company added new and more powerful distributors in both areas
along with opening a new sales office in New Mexico allowing for a smooth
transition in territory realignment despite closing of the two offices.
General and Administrative costs, including research and development, increased
$551,000 over the same period last year. Research and development costs
increased $23,000 while other general and administrative costs increased
$528,000.
-10-
<PAGE>
Six Months Ended June 30, 1997 and 1996, continued
(all figures rounded to the nearest 000's)
The major portion of the increase in other general and administrative costs is
attributable to an increased growth performance sharing expense accrual. In the
first quarter of 1996, the Company implemented a new growth performance sharing
plan to take the place of its profit sharing plan. Targets for growth in sales
and operational earnings along with return on assets were established and are
reviewed on an annual basis. Quarterly expense accruals are made based on the
performance of the Company. Other expense categories showing increases over the
same period last year include training, legal, consultant and investor
relations.
Interest expense decreased $48,000 over the same period last year. The primary
reason for the lower interest expense is reduced borrowing on the line of
credit. In the second quarter of 1997, the Company had very limited borrowing
during the early part of the quarter and was able to make overnight investments
with available funds for the majority of the quarter thereby generating interest
income.
Other income decreased $168,000 over last year as a result of the sale of the
Cirrus IFD product line to PROTEC in the first quarter of 1996.
Three Months Ended June 30, 1997 and 1996
(all figures rounded to the nearest 000's)
Revenue for the period increased $375,000, or 7.0% over the same period last
year. Increased revenues from the quarter ended June 30, 1996 were recorded in
both Sewer Systems and Detection Systems businesses.
Revenue's from the Company's Sewer Systems business continue to show improvement
over prior periods. Management is of the opinion that the addition of a more
powerful distribution network, increases in the number and size of municipal
projects, continued growth in the overall market and realignment of its sales
territories accounts for this growth and bodes well for future growth.
As part of the Detection Systems business revenue increase, sales of the
Company's Hydrogen Control Cabinet and Generator Condition Monitor showed
significant improvement over the same period last year.
The Company continued to manufacture and supply Cirrus IFD units to PROTEC
during the second quarter of 1997 and is expecting to finish its commitment with
PROTEC in the third quarter of 1997.
Cost of Sales increased $55,000 when compared to the same period last year.
Expressed in percent of sales, cost of sales decreased from 69.5% in the second
quarter of 1996 to 65.9% in the second quarter of 1997. The resulting
improvement in gross margin is mainly attributable to reduced direct material
costs expressed as a percent of sales resulting from changes in product mix on a
comparative quarter basis. Indirect costs increased slightly in the categories
of incoming freight, small tools and scrap reflecting the impact of higher
variable indirect manufacturing costs as a result of increased shipments during
the period.
Selling and Marketing costs increased $65,000 compared to the second quarter of
1996. The majority of this increase resulted from increased expenditures in
sales promotion and selling and marketing labor costs as the Company continues
its effort to support the Sewer Systems business distribution network.
-11-
<PAGE>
Three Months Ended June 30, 1997 and 1996, continued
(all figures rounded to the nearest 000's)
General and Administrative costs, including research and development, increased
$175,000 over the same period last year. Research and development costs remained
flat with other general and administrative costs accounting for the increased
expense on a comparative quarter basis.
In the other general and administrative costs area, increased expenses over the
prior comparative quarter were recognized in legal, consultant, tuition,
investor relations and training expense categories.
Interest expense decreased $27,000 over the second quarter of 1996. In the
second quarter of 1997, the Company had very limited borrowing during the early
part of the quarter and was able to make overnight investments with available
funds for the majority of the quarter thereby generating interest income.
Other income increased $6,000 over the same period last year.
Financial Position and Liquidity
(all figures rounded to the nearest 000's)
Cash needs for the first six months of 1997 were met primarily by short term
borrowing on the Company's line of credit during the first three months of the
year along with cash flow provided from operating activities during the second
quarter. During the period, the Company was able to reduce short term borrowing
by $75,000 and end the period with no borrowing on its line of credit. Capital
expenditures decreased by $45,000 over the same period in 1996 while long term
debt was reduced by $169,000. During the same period last year, the Company
increased short term borrowing by $575,000 along with reducing long term debt by
$169,000.
During the first quarter of 1997, the Company improved its method of banking by
initiating a "target balance" program with Fleet Bank. This program allows the
maximum use of outstanding check float and provides for overnight investment of
available funds when line of credit borrowing is zero.
Continued control over inventory, operating expenses and capital expenditures
along with forecasted cash receipts and line of credit availability will enable
the Company to meet its day-to-day working capital requirements in the near
term.
The line of credit, which expired in April of 1997, was approved for renewal
with borrowing capability increasing from $2.5 million to $5.0 million. At the
same time, a pricing modification to the Company's term loan was agreed to
allowing the Company to purchase a fixed rate swap. In consideration for the
renewal and pricing modification, the lender has modified certain loan
covenants. Management is of the opinion that the revised covenants are in line
with the increased borrowing available to the Company.
-12-
<PAGE>
Cautionary Statement for the Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for forward-looking statements to encourage companies to provide
prospective information about themselves while limiting unwarranted litigation,
provided that the statements are identified as forward-looking and are
accompanied by meaningful cautionary statements regarding important factors that
could cause actual results to differ materially from those projected in the
statement. The Company desires to take advantage of the "safe harbor" provisions
of the Act, and is including the information set forth below in the Form 10-QSB
to point out the inherent difficulties in predicting the impact of certain
factors.
While the Company believes that its assumptions underlying any forward-looking
statements are reasonable, the following information includes important factors
which could cause the Company's actual results to differ materially from any
result which might be projected, forecasted, estimated, or budgeted by the
Company in its forward-looking statements, whether contained in this Form 10-QSB
or otherwise.
1. Heightened competition, including the intensification of price competition,
the entry of new competitors, and the introduction of new products by new
and existing competitors.
2. Failure to obtain new customers or retain existing customers.
3. Adverse publicity and news coverage impacting the Company's reputation and
sales potential.
4. Inability to carry out marketing and sales plans due to unforeseen factors.
5. Significant economic downturns in the geographic market areas serviced by
the Company.
6. Higher service, administrative, or general expenses occasioned by the need
for additional advertising, marketing, administrative, or management
information systems expenditures.
7. A lack of availability of raw materials, necessary manufacturing equipment,
or contract manufacturers to meet the Company's needs.
8. Under utilization of the Company's manufacturing resources, resulting in
production inefficiencies and higher costs.
9. Start-up expenses, inefficiencies, delays, and increased depreciation costs
in connection with the start of production in new facilities and expansions
of existing facilities.
10. The acquisition of fixed and other assets, including inventory and
receivables, and the making or incurring of any expenditures and expenses,
including but not limited to depreciation and research and development
expenses.
11. Any revaluation of assets or related expenses and the amount of, and any
changes to, tax rates.
-13-
<PAGE>
12. Loss or retirement of key executives.
13. Any activities of parties with which the Company has agreements or
understandings, including matters affecting any investment or joint venture
in which the Company has an investment.
14. The amount, type, and cost of the financing available to the Company, and
any changes to that financing.
15. Adverse results in significant litigation or regulatory proceedings.
16. Adverse changes in laws, regulations, interpretations, and enforcement
policies affecting the company and its business operations.
17. Natural disasters, work stoppages, and other events beyond the control of
the Company.
The foregoing list of factors should not be construed as exhaustive, or as any
admission regarding the adequacy of disclosures made by the Company prior to the
filing of this Form 10-QSB.
-14-
<PAGE>
Environment One Corporation
FORM 10-QSB
Part II - Other Information
Item 1. Legal Proceedings
In the second quarter of 1997, the Company was served with a complaint by a
former distributor, Abaxial Associates, Inc., who was terminated for cause in
1996. The action was filed in the Ontario Court of Justice (General Division),
in Toronto, Canada. Prior to termination, Abaxial Associates, Inc. was a
distributor for the Company's grinder pumps in the Province of Ontario. The
plaintiff's complaint seeks monetary damages in the amount of $1,600,000, plus
interest and costs based on allegations of misrepresentation and breach of
contract relating to the Company's termination of its relationship with the
plaintiff.
Management of the Company is of the opinion that the claim, filed as a result of
termination of the business relationship with Abaxial Associates, Inc., is
unsubstantiated and without merit and that the Company acted properly in
terminating its relationship with Abaxial Associates, Inc. The Company has
engaged legal counsel in Toronto, Canada and intends to vigorously defend the
action. Management does not currently expect the action to have a material
impact on the results of the Company. However, it is possible that the results
of operations or cash flow of the Company in a particular quarterly or annual
period could be materially affected by the ultimate outcome of pending
litigation matters.
Item 4. Submission of Matters to a Vote of Security Holders
On May 15, 1997 the annual meeting of shareholders was held in Albany, NY. The
following is the result of the shareholders voting relative to the election of
two (2) directors:
Election of Directors - 3,601,054 votes were received and at least 99%
of the vote cast voted for the election of the directors on the ballot.
Immediately following the shareholders meeting the Board of Directors held their
meeting and the following Officers were elected to serve a one year term:
Chairman of the Board Stephen V. Ardia
President and Chief Executive Officer Stephen V. Ardia
Vice President David Doin
Secretary Edward J. Grogan
Treasurer Philip W. Welsh
-15-
<PAGE>
Environment One Corporation
FORM 10-QSB
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ENVIRONMENT ONE CORPORATION
Date: August 6, 1997 By:/s/Stephen V. Ardia
-------------------
Stephen V. Ardia
Chairman, President and CEO
Date: August 6, 1997 By:/s/Philip W. Welsh
-------------------
Philip W. Welsh
Director of Finance
Treasurer
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 561,883
<SECURITIES> 0
<RECEIVABLES> 5,018,653
<ALLOWANCES> 106,890
<INVENTORY> 1,960,708
<CURRENT-ASSETS> 7,909,400
<PP&E> 7,910,605
<DEPRECIATION> 4,610,173
<TOTAL-ASSETS> 11,451,945
<CURRENT-LIABILITIES> 3,320,680
<BONDS> 1,331,445
0
0
<COMMON> 425,115
<OTHER-SE> 5,956,069
<TOTAL-LIABILITY-AND-EQUITY> 11,451,945
<SALES> 10,250,728
<TOTAL-REVENUES> 10,250,728
<CGS> 6,692,690
<TOTAL-COSTS> 6,692,690
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,946
<INCOME-PRETAX> 944,591
<INCOME-TAX> 361,300
<INCOME-CONTINUING> 583,291
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 583,291
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
