ALDEN ELECTRONICS INC, 10-K, 1996-07-16

ALDEN ELECTRONICS INC
10-K, 1996-07-16
TELEPHONE & TELEGRAPH APPARATUS

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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: March 31, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ___________

Commission file number: 1-7404

ALDEN ELECTRONICS, INC.
(Exact name of Registrant as specified in its charter)

MASSACHUSETTS 04-2156392
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

Washington Street, Westboro, Massachusetts 01581
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 508-366-8851

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of Exchange on Which Registered
-------------------- ------------------------------------
Class A Common Stock Boston Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [ ]

1
<PAGE>

The Index to Exhibits appears at Page 45.

Indicate by check mark 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 any amendment to this
Form 10-K. [ X ]

No shares of the Class B Common Stock of the Registrant are held by
non-affiliates. The aggregate market value of the Class A Common Stock held by
non-affiliates of the Registrant as of June 19, 1996 was $1,132,829 based on the
last traded price of such stock ($.875) as reported on the NASDAQ System. See
Note 5 to the Financial Statements (Item 8 below) for an explanation of the
respective voting rights of each class of the Registrant's Common Stock.

Number of shares outstanding of each of the Registrant's classes of Common
Stock as of June 19, 1996:

Class A Common Stock 2,010,410
Class B Common Stock 25,000

Documents Incorporated by Reference: None.

-2-
<PAGE>

PART I

ITEM 1. Business.

A. Products.

Alden Electronics, Inc. (the "Company") designs, assembles, sells
and leases communications equipment, computerized graphic display systems,
imaging equipment and related supplies. The Company also operates communications
networks, making use of both satellite and terrestrial technologies, to
facilitate the delivery of meteorological and other data to customers.

The Company's communications equipment is used primarily for
meteorological applications. The meteorological communications equipment,
graphic display systems and data are used by various users of weather
information including professional weather forecasters, commercial airlines,
radio and television stations, colleges and universities, private pilots,
mariners as well as various domestic (local, state and federal) and foreign
governmental agencies.

Data distributed through the Company's communications networks are
primarily acquired from governmental agencies such as the National Oceanic &
Atmospheric Administration, National Weather Service ("NWS") and the Federal
Aviation Administration ("FAA"). This information is either distributed
centrally from Company facilities or by providing customers direct access to NWS
and FAA weather radar information through proprietary access devices installed
by the Company at or near government radar installations.

The Company's imaging products include its CTP continuous tone thermal
printer, which provides high resolution images on various media, thermal paper
and plastic materials.

Subsequent to March 31, 1996, the Company divested itself of substantially
all of its marine electronics products. The Company's marine electronics
products consisted of communication products either manufactured by the Company
or manufactured by others and sold through the Company's marine distribution
network. These marine communication products included the SATFIND-406(TM)
SURVIVAL EPIRB (Emergency Position Indicating Radio Beacon) which transmits
radio signals to allow search and rescue authorities to locate distressed
vessels. On June 11, 1996, the Company completed the divestiture of its marine
electronics products with the sale of its manufacturing and distribution rights
for its SATFIND-406(TM) SURVIVAL EPIRB to Northern Airborne Technology Inc., an
affiliate of Chelton Ltd, a UK company.

-3-
<PAGE>

During each of the three years in the period ended March 31, 1996, the
Company incurred substantial losses. The Company continues to implement cost
containment measures with the objective of maintaining revenues and reducing
costs. Concurrently, the Company is reviewing strategic alternatives with
respect to all of its product lines and assets. The alternatives under
consideration include divestiture of some or all of its product lines and
liquidation of some or all of its assets. The Company has retained Argus
Management Corporation, a management consulting firm, to assist the Company in
its review of strategic alternatives and general operational matters.

B. Sales and Leasing.

The Company's sales of equipment, parts, supplies and services accounted
for approximately 94.4% of the Company's revenues for the year ended March 31,
1996, and income from leased equipment accounted for approximately 5.6% of the
Company's revenues for the year. A majority of the Company's leasing business is
with governmental agencies. Most of the Company's leases with governmental
agencies are for one year and, generally, give the agency a right to extend the
term of the lease for additional terms, subject to appropriation of funds by
Congress.

During the year ended March 31, 1996, no single customer accounted for
more than 10% of total revenues.

C. Backlog of Orders.

As of March 31, 1996, there was a backlog of orders believed to be firm of
approximately $1,422,754. As of March 31, 1995, the amount of backlog was
approximately $1,049,000. Because the amount of backlog may at any given time
reflect nonrecurring orders with extended delivery schedules, the Company does
not consider the amount of its backlog to be indicative of anticipated sales for
a fiscal year.

D. Competition.

Most of the business areas in which the Company is involved are
competitive and require highly skilled and experienced technical personnel.
There are other companies which compete in these business areas, some of which
have greater resources than the Company. As such, there can be no assurance that
the Company will compete successfully in the future. The Company believes the
skills and experience that its personnel have with the products that it markets
are the key to its growth and competitive position.

-4-
<PAGE>

E. Patents, Licenses, Product Development and Employees.

Although the Company holds a number of patents in the field of facsimile
and instant graphic recording, the Company's reliance on these patents is
diminishing as the products related to these patents constitute a declining
share of the Company's product mix. Moreover, the Company believes that its
accumulated experience and know-how in these areas are as important as the
underlying patents.

The Company expended approximately $574,000 during the year ended March
31, 1996, for the development of new products and improvements of existing
products.

The Company employs 57 persons.

ITEM 2. Properties

The Company owns approximately 26.1 acres of land in Westborough,
Massachusetts near the intersection of Routes 9 and 495. Situated on this land
are approximately 85,500 square feet of building space the Company utilizes for
office, manufacturing, service, engineering and warehouse purposes. The Company
has entered into an agreement, which contains standard closing conditions, to
sell a portion of its real estate holdings.

The Company's real estate holdings are subject to a mortgage granted to
the Company's prinicpal lender as collateral for its credit facility.

The Company also has one lease for approximately 2,500 square feet of
floor space in Epsom, England.

Leased equipment in the field had a depreciated book value of
approximately $118,206 as of March 31, 1996.

ITEM 3. Legal Proceedings.

There were no pending legal proceedings, other than ordinary routine
litigation incidental and not material to the business of the Company, to which
the Company is party or to which any of its property is subject.

ITEM 4. Submission of Matters to a Vote of Security Holders.

The Company did not submit any matters to a vote of security holders
during the fourth quarter of the fiscal year ended March 31, 1996.

-5-
<PAGE>

PART II

ITEM 5. Market For The Registrant's Common Equity and Related Stockholder
Matters.

(a) The Company's Class A Common Stock is principally traded over the
counter on the NASDAQ System under the symbol ADNEA. Such stock is also traded
on the Boston Stock Exchange under the symbol ADN.

The following table shows the market range of the Company's Class A
Common Stock based upon the high and low bid as reported by NASD.

1995/1996 1994/1995
--------- ----------
Period High Low High Low
- - ------ ----------- ------------
First Quarter 2 3/4 2 2 7/8 2 5/8
Second Quarter 2 5/8 2 1/4 2 3/4 2 1/2
Third Quarter 2 3/8 1 1/4 2 5/8 2 1/4
Fourth Quarter 1 3/8 3/4 2 1/4 2

(b) As of June 19, 1996, there were 1,510 holders of record of the
Company's Class A Common Stock and six (6) holders of record of the Company's
Class B Common Stock.

(c) The Company did not declare a dividend for the 1995 fiscal year or the
1996 fiscal year. Under the terms of the Company's Loan Agreement with its
principal lender entered into on August 5, 1994, the Company is prohibited from
paying cash dividends on any class of its capital stock.

-6-
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
March 31 March 31 March 31 March 27 March 28
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total sales $12,806,700 $18,227,312 $16,803,966 $15,396,877 $18,781,238
and revenues

Net earnings
(loss) (3,088,722) (3,347,542) (1,838,024) (374,296) 205,980

Net earnings
(loss) per
share of
Class A Common
Stock (1.41) (1.53) (.84) (.17) .10

Cash dividends
per share of
Class A and
Class B Common
Stock ------- ------ ------- .05 .08

Total assets $7,364,342 $10,680,163 $12,880,102 $14,219,081 $14,793,867

Long-term
obligations -0- $330,290 -0- -0- $583,350

</TABLE>

-7-
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

A. Results of Operations - 1996 compared to 1995.

Revenues for the year ended March 31, 1996 were $12,806,700 compared to
$18,227,312 for the year ended March 31, 1995, while a net loss of $3,088,722
($1.41 per share) was posted for 1996 compared to a net loss of $3,347,542
($1.53 per share) for 1995.

Decreased revenues for 1996 reflect reduced sales from three Marine
products discontinued during the year, including the ALDENSART(TM) (search and
rescue transponder), the Alden SATPHONE(TM) (satellite telephone) and the TRIV
MARINEFAX recorder. The Company also had reduced sales of the 9315CTP continuous
tone printer and paper products. Revenues from the three Marine products in 1996
were $900,000 compared to $3,500,000 in 1995. Revenues from the sales of the
Company's 9315CTP continuous tone printer were $900,000 less in 1996 when
compared to 1995. Revenues from the sale of paper products were $900,000 less in
1996 when compared to 1995. The Company also had a decline of $400,000 in
revenues from equipment lease and service contracts.

Gross profit of 15% in 1996 is comparable to that of the prior year;
however, both levels are below historical levels. In 1996, gross profit margins
were adversely affected by reduced margins on weather display systems relating
to continuing development efforts, losses relating to custom systems produced
during the year, increased costs of providing weather data and the continued
decline of highly profitable lease and service revenues.

Selling, General and Administrative expenses were $1,800,000 less in 1996
when compared to 1995. This decline was primarily related to declines in
revenue, cost containment measures implemented by the Company and
non-reoccurrence of costs experienced in 1995 associated with new product
introductions.

B. Results of Operations - 1995 compared to 1994.

Revenues for the year ended March 31, 1995 were $18,227,312 compared to
$16,803,966 for the year ended March 31, 1994, while a net loss of $3,347,542
($1.53 per share) was posted for 1995 compared to a net loss of $1,838,024
($0.84 per share) for 1994.

-8-
<PAGE>

Increased revenues for 1995 reflect sales for two Marine products
introduced in the first quarter of 1995, the ALDENSART(TM) (search and rescue
transponder) and the Alden SATPHONE(TM) (satellite telephone). Revenues from the
sales of these two products were $2,700,000 in 1995. These increases offset
decreased revenues from sales of the Company's AE-900 NAVTEX(TM) Receiver of
$1,200,000 when compared to 1994. Increases in sales of equipment used in the
ingest and display of weather data amounting to $900,000 offset decreases in
revenue from leased equipment, equipment service and data services.

Gross profit declined from 21% in 1994 to 15% in 1995. The
decline was attributable to less than expected gross profit performance of the
ALDENSART(TM) and Alden SATPHONE(TM) which reduced overall gross profits by
3.25%, the decline of highly profitable lease revenues on older equipment, the
provision for costs relating to the December 19, 1994 recall of the
SATFIND-406(TM) SURVIVAL EPIRB ($464,000) and the provision of $363,000 for the
write-down of inventory related to discontinued products in 1995. In late fiscal
1995, the Company discontinued the ALDENSART(TM) and Alden SATPHONE(TM) product
lines.

Selling, General and Administrative expenses for 1995 exceeded those of
1994 by $900,000. This increase was primarily related to additional costs
associated with the introduction of new products (approximately $600,000) and
the payment of commissions and sales incentives in excess of historical rates
(approximately $300,000).

C. Liquidity and Sources of Capital.

The ratio of current assets to current liabilities was 1.1 to 1 at
March 31, 1996, compared to 1.8 to 1 at March 31, 1995 and 3.4 to 1 at March 31,
1994. The decrease in working capital during 1996 reflects decreases in accounts
receivable and inventories of approximately $2,500,000 relating to the Company's
reduced revenues for the year, efforts by the Company to improve inventory
turnover without a corresponding reduction in accounts payable and the repayment
and reclassification of certain obligations.

During 1996, the Company experienced a net increase in cash and cash
equivalents of $66,200 compared to net decreases in cash and cash equivalents of
$1,297,000 and $821,000 in 1995 and 1994, respectively.

During 1996, operating activities provided $1,158,000 in cash primarily
attributable to reduction in investments in inventories of $1,715,000, and net
reductions in other working capital amounting to $678,000. These sources along
with non-cash charges of $1,874,000 for depreciation and amortization and
impairment of assets and restructuring charges offset the net loss of $3,089,000
for the year.

-9-
<PAGE>

Investing activities during 1996 consisted exclusively of additions to
property, plant and equipment of $677,000.

Financing activities during 1996 used $395,000 in cash, primarily for the
repayment of debt to the Company's bank.

During 1995, operating activities used $1,421,000 in cash primarily
attributable to the net loss of $3,348,000. These activities were offset by
non-cash charges included in operating costs (such as depreciation and
provisions for inventory write-downs of $1,360,000).

Investing activities during 1995 consisted exclusively of additions to
property, plant and equipment of $530,000.

Financing activities in 1995 provided $633,000 in cash, primarily from
short-term borrowings of $700,000.

As indicated above, the Company has incurred substantial losses in each of
the three years ended March 31, 1996. On June 12, 1995 the Company secured a
commitment from its bank to forebear from collection of certain amounts due
under its credit facility with the Company until June 30, 1996. This commitment
was contingent upon the Company making scheduled payments of interest and
principal and to continued compliance with existing covenants, as amended. The
Company is currently in default of its payment obligations and certain existing
covenants, including covenants relative to minimum cash flows and tangible net
worth levels. The Company has informed the bank that it intends to reduce these
balances under its credit facility with the proceeds from an impending real
estate sale and the collection of receivables related to certain discontinued
product lines.

With respect to operating results, the Company continues to implement cost
containment measures with the objective of maintaining revenues and reducing
costs. Concurrently, the Company is reviewing strategic alternatives with
respect to all of its product lines and assets. The alternatives under
consideration include divestiture of some or all of its product lines and
liquidation of some or all of its assets. The Company has retained Argus
Management Corporation, a management consulting firm, to assist the Company in
its review of strategic alternatives and general operational matters.

-10-
<PAGE>

D. Impact of Inflation and Price Changes.

In recent years, the Company has not experienced significant inflation in
the cost of its products. In those cases where the Company experiences increased
costs, it seeks ways to cope with the impact of those increases so as not to
materially impact profit margins. Substantially all of the Company's revenue
decrease in 1996 and increases in 1995 and 1994 were the result of fluctuations
in sales volume from existing products and new product introductions.

A portion of the Company's products are purchased from foreign suppliers.
When it is practical, the Company enters into foreign exchange contracts to
minimize the risk of foreign exchange losses on the purchase of products. During
fiscal 1996, changes in exchange rates affecting the gross profit margins of the
Company's products were not material.

ITEM 8. Financial Statements and Supplementary Data.

See the next page for financial statements and supplementary data.

-11-
<PAGE>

Report of Independent Auditors

Board of Directors
Alden Electronics, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Alden
Electronics, Inc. and subsidiaries (the Company) as of March 31, 1996 and 1995,
and the related consolidated statements of operations and retained earnings, and
cash flows for each of the three years in the period ended March 31, 1996. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 Alden Electronics,
Inc. and subsidiaries at March 31, 1996 and 1995, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended March 31, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

The accompanying financial statements have been prepared assuming that Alden
Electronics, Inc. will continue as a going concern. As more fully described in
Note 1, the Company has incurred recurring operating losses. In addition, the
Company has not complied with certain covenants of loan agreements with its
bank. These conditions raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regards to these matters are
also described in Note 1. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

ERNST & YOUNG LLP
Boston, Massachusetts
June 21, 1996

-12-

<PAGE>

Alden Electronics, Inc. and Subsidiaries

Consolidated Balance Sheets

March 31
1996 1995
----------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 209,438 $ 143,238
Trade accounts receivable, less allowance of
$113,000 in 1996 and $42,000 in 1995 for
doubtful accounts 2,087,215 2,552,994
Refundable income taxes 98,000
Inventories:
Finished products 435,153 440,086
Work in process 1,080,012 2,410,033
Parts and materials 207,606 587,386
----------------------------------
1,722,771 3,437,505
Prepaid expenses 132,941 170,543
Deferred tax assets 20,000 53,000
----------------------------------
Total current assets 4,172,365 6,455,280

Property, plant and equipment:
Land and buildings 3,731,776 3,715,654
Equipment on lease 282,176 5,768,450
Other machinery and equipment 7,748,327 7,666,017
----------------------------------
11,762,279 17,150,121
Less allowance for depreciation 8,600,223 12,979,112
----------------------------------
3,162,056 4,171,009

Other assets 29,921 53,874
----------------------------------

$7,364,342 $10,680,163
==================================
</TABLE>

-13-

<PAGE>

March 31
1996 1995
----------------------------------

<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,480,823 $ 1,204,026
Accrued expenses 714,433 1,044,936
Accrued warranty expenses 348,323
Notes payable to bank 400,000 700,000
Deferred revenues 109,736 73,224
Other current liabilities 327,697 400,222
Current portion of long-term debt 330,155 96,672
----------------------------------
Total current liabilities 3,711,167 3,519,080

Deferred income taxes 25,000 103,000
Long-term debt 330,290

Stockholders' equity
Class A Common Stock, par value $1 per
share--authorized 2,500,000 shares, issued
2,010,385 shares in 1996 and 1995 2,010,385 2,010,385
Class B Common Stock, without par value--authorized
and issued 25,000 shares 75 75
Additional paid-in capital 1,611,418 1,611,418
Retained earnings 83,176 3,171,898
Treasury shares (2,086)
Currency translation adjustment (76,879) (63,897)
----------------------------------
3,628,175 6,727,793
==================================

$7,364,342 $10,680,163
==================================
</TABLE>

See accompanying notes.

-14-

<PAGE>

Alden Electronics, Inc. and Subsidiaries

Consolidated Statements of Operations and Retained Earnings

Year ended March 31
----------------------------------------------------
1996 1995 1994
----------------------------------------------------
<S> <C> <C> <C>
Revenues:
Net sales and service revenues $12,043,785 $17,237,843 $15,257,731
Income from leased equipment 723,114 967,012 1,504,873
Interest 25,631 22,457 41,362
Other 14,170
----------------------------------------------------
12,806,700 18,227,312 16,803,966

Cost and expenses:
Cost of products sold and
expenses of leasing equipment 10,796,073 15,433,663 13,240,327
Selling, administrative and
general 4,212,109 5,995,422 5,089,886
Loss on impairment of assets and
restructuring charge 766,886 455,751
Interest 130,354 135,769 59,026
----------------------------------------------------
15,905,422 21,564,854 18,844,990
----------------------------------------------------
Loss before income taxes (3,098,722) (3,337,542) (2,041,024)

Income taxes (benefit) (10,000) 10,000 (203,000)
----------------------------------------------------
Net loss (3,088,722) (3,347,542) (1,838,024)

Retained earnings at beginning of
year 3,171,898 6,519,440 8,357,464
----------------------------------------------------

Retained earnings at end of year $ 83,176 $ 3,171,898 $ 6,519,440
====================================================

Net loss per share $ (1.41) $ (1.53) $ (.84)
====================================================
</TABLE>

See accompanying notes.

-15-

<PAGE>

Alden Electronics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

Year ended March 31
----------------------------------------------------
1996 1995 1994
----------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net loss $(3,088,722) $(3,347,542) $(1,838,024)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 1,004,754 997,446 1,143,487
Loss on disposal of
equipment 13,488
Provision for losses on
accounts receivable 147,596 47,000 15,000
Deferred income tax benefit (45,000) (16,000) (139,000)
Provisions for impairment of
assets, restructuring and
related charges 766,886 363,000 1,355,751
Changes in operating assets and
liabilities:
Accounts receivable 303,779 (293,076) (227,614)
Refundable income taxes 98,000 154,000 (46,000)
Inventories 1,714,734 (284,914) (1,032,220)
Prepaid expenses 37,602 (49,623) (44,119)
Other assets (20,000)
Deferred revenue 36,512 40,654 9,282
Accounts payable, accrued
expenses and other current
liabilities 222,092 960,921 457,172
Other (20,261) (6,730) 2,285
----------------------------------------------------
Net cash provided (used) by
operating activities 1,157,972 (1,421,376) (344,000)

Investing activities
Proceeds from sale of equipment 20,000
Purchases of property, plant and
equipment (676,880) (550,499) (364,741)
----------------------------------------------------
Net cash used in investing
activities (676,880) (530,499) (364,741)
</TABLE>

-16-

<PAGE>

Alden Electronics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (continued)

Year ended March 31
----------------------------------------------------
1996 1995 1994
----------------------------------------------------
<S> <C> <C> <C>
Financing activities
Proceeds from issuance of common
stock $ 83,800
Principal payments on long-term debt
$ (96,807) $ (64,725) (91,663)
Issuance (payments) of notes
payable to bank (300,000) 700,000

Sale (purchase) of treasury stock 2,086 (2,086)
Dividends paid (100,769)
----------------------------------------------------
Net cash provided (used) by
financing activities (394,721) 633,189 (108,632)

Effect of exchange rate changes on
cash and cash equivalents (20,171) 21,699 (3,482)
----------------------------------------------------

Increase (decrease) in cash and
cash equivalents 66,200 (1,296,987) (820,855)

Cash and cash equivalents at
beginning of year 143,238 1,440,225 2,261,080
----------------------------------------------------

Cash and cash equivalents at end of
year $ 209,438 $ 143,238 $1,440,225
====================================================

Supplemental Cash Flow Information

Interest paid $ 130,000 $ 136,000 $ 37,000
================ ================ ================
</TABLE>

See accompanying notes.

-17-

<PAGE>

Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 1996

1. The Company, Operations and Liquidity

The Company designs, assembles, sells and leases computer-based weather display
systems, color weather radar terminals, weather satellite ground receiving
systems and a variety of printers and supplies. The Company also manufactures
and distributes specialized communication and safety equipment used in marine
applications and operates communication networks to facilitate the delivery of
meteorological and other data to its customers. The Company markets its products
worldwide.

During each of the three years in the period ended March 31, 1996, the Company
incurred substantial losses. On June 12, 1995, the Company obtained a commitment
from its bank to forebear from collection of certain amounts due under its
credit facility with the Company until June 30, 1996. This commitment was
contingent upon the Company making scheduled payments of interest and principal
and to continued compliance with existing covenants, as amended. The Company has
informed the bank that it does not anticipate the repayment of remaining
principal on June 30, 1996, but intends to reduce these balances with proceeds
of an impending real estate sale and the sale of certain assets relating to its
marine product lines during the first quarter of fiscal 1997 (see Note 10).

-18-

<PAGE>
Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

2. Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries: Alden International, Inc., Alfax Paper &
Engineering Company, Inc. and Alfax Paper of United Kingdom Limited. All
intercompany accounts and transactions have been eliminated upon consolidation.

Foreign Currency Translation

Balance sheet accounts of the Company's foreign subsidiary are translated into
United States dollars at fiscal year-end exchange rates. Operating accounts are
translated at weighted average exchange rates for each year. Net translation
gains or losses are adjusted directly to a separate component of stockholders'
equity.

Inventories

The Company's inventories are carried at the lower of cost (first-in, first-out
method) or market.

Research and Development Costs

Costs of research and development ($574,000 in 1996; $1,026,000 in 1995;
$731,000 in 1994) have been charged to expense and are included in the
consolidated statements of operations and retained earnings under the caption
"Cost of products sold and expenses of leasing equipment."

Property, Plant and Equipment

The Company's property, plant and equipment is stated at historical cost.
Expenditures for maintenance, repairs and renewals are charged to expense;
betterments are capitalized. The Company provides for depreciation based on the
estimated useful lives of the assets, which range from three to 30 years. An
accelerated method is used to provide for depreciation of substantially all
equipment on lease; the straight-line method is used for other plant and
equipment. The Company routinely removes fully depreciated assets from its books
and records.

-19-

<PAGE>
Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

2. Accounting Policies (continued)

Revenues

Revenues for product sales are recognized when equipment is shipped to
customers. The Company leases equipment generally for terms of one year or less;
rental revenue is recognized over the lease term.

Income Taxes

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (Statement
No. 109). Under Statement No. 109, deferred tax assets and liabilities are
recorded for decreases and increases in taxes payable or refundable in future
years as a result of temporary differences between the tax bases of assets or
liabilities and their reported amounts in the financial statements. Deferred tax
assets and liabilities are measured using the enacted tax rates expected to
apply in periods in which the deferred tax asset or liability is expected to be
realized or settled.

Net Loss Per Share

Net loss per share has been computed on the basis of the weighted-average number
of shares of Class A Common Stock outstanding, plus the effect of common stock
equivalents when dilutive, added to the equivalent number of shares that would
have been issued if the Class B Common Stock were converted. The number of
shares used in calculating net loss per share was 2,185,385 in 1996 and 1995 and
2,177,988 in 1994.

Cash and Cash Equivalents

The Company considers all highly liquid financial instruments which have an
original maturity of three months or less to be cash equivalents. The Company
invests its excess cash in short-term government securities and certificates of
deposit. These investments are recorded at cost, which approximates market
value.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to a concentration
of credit risk principally consist of cash on deposit with a major bank and
trade receivables.

-20-

<PAGE>
Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

2. Accounting Policies (continued)

The Company sells its products and services to Government agencies and
commercial enterprises. To reduce credit risk, the Company performs ongoing
credit evaluations of the financial condition of its customers. Although the
Company is directly affected by the overall financial condition of weather data
and marine products industries, management does not believe significant credit
risk exists at March 31, 1996.

Estimates

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.

Impairment of Long-Lived Assets

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
establishes criteria for the recognition and measurement of impairment of loss
associated with long-lived assets. Assets that are impaired are written down to
their fair value based on the future cash flows expected to be generated,
discounted at a market rate of interest. Effective April 1, 1995, the Company
adopted this standard and recognized a loss on impairment of certain assets used
in its operations by $766,886 in fiscal 1996 (see Note 3).

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25), in accounting for its
stock-based compensation plans, rather than the alternative fair value
accounting method provided for under Financial Accounting Standards Board
Statement No. 123, "Accounting for Stock-Based Compensation," as this
alternative requires the use of option valuation models that were not developed
for use in valuing employee stock options. Since the exercise price of options
granted under these plans equals the market price of the underlying stock on the
date of grant, no compensation expense is required under APB 25.

-21-

<PAGE>
Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

3. Impairment of Assets, Restructuring and Related Charges

During 1996, 1995 and 1994, the Company, as disclosed in Notes 1 and 10, has
discontinued certain unprofitable product lines and services and entered into
agreements to sell certain assets which, combined with cost reductions initiated
in late fiscal 1995, are intended to allow the Company to improve its operating
results. In connection with these initiatives, in fiscal 1994, the Company
charged operations $1,355,751 of which $455,751 related to the disposal of
equipment and $900,000 related to write-downs of inventories related to the
discontinued product lines. The disposal of the equipment has been recognized as
a restructuring charge, and the inventory write-down has been charged to cost of
products sold and expenses of leasing equipment.

During 1995, the Company discontinued additional unprofitable product lines,
which resulted in inventory write-downs of $363,000. In addition, the Company
provided $464,000 in connection with a recall of a defective product
attributable to a component not manufactured by the Company. During 1996, the
Company recovered $223,933 in a settlement related to the recall which was
credited to costs of products sold and expenses of leasing equipment.

The Company provides weather data services to various government agencies
through the use of equipment placed at various locations throughout the United
States. During 1996, the Company determined that that service would not generate
sufficient cash flows to support the ongoing operating costs and the value of
the capitalized equipment. The Company recognized an impairment loss of $766,886
on this equipment which represents the entire carrying value of the equipment
(see Note 3).

4. Financing Arrangements

During 1995, the Company entered into an agreement with its bank to provide a
revolving line of credit which had a maximum availability of $1,500,000 through
August 31, 1995 and a term loan in an amount of $483,354. On June 12, 1995, the
Company secured a commitment letter and entered into a forebearance agreement
dated June 12, 1995 in which the bank agreed to extend amounts then outstanding
under the line of credit ($700,000) and to forebear from calling the term loan
through June 30, 1996. These loans are secured by the assets of the Company and
contain certain restrictive covenants, including that the Company generate
minimum cash flows, maintain tangible net worth above specific levels and
restrict the payment of dividends. As previously disclosed in Note 1, at March
31, 1996, the Company was in violation of covenants relative to minimum cash
flows and tangible net worth levels. The terms of the commitment letter provide
for interest on all borrowings to bear interest at the bank's base rate (8.25%
at March 31, 1996) plus 2%.

-22-

<PAGE>
Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

4. Financing Arrangements (continued)

Borrowings under the term loan require that the Company continue to make monthly
payments of $8,083 plus interest through June 30, 1996, at which time the
remaining balance will be due. Borrowing under the forebearance agreement
require that the Company repay $200,000 of the amount outstanding under the
revolving line of credit by July 31, 1995, make additional repayments of $50,000
per quarter beginning October 31, 1995 and repay any remaining balance by June
30, 1996. The forebearance agreement also requires the Company's compliance with
existing covenants, as amended. The weighted-average interest rate on revolving
debt for the year ended March 31, 1996 was 9.96%.

During fiscal 1996 all payments required under the forebearance agreement were
made on a timely basis. The Company has informed the bank that it does not
anticipate the repayment of remaining principal on June 30, 1996, but intends to
reduce these balances from proceeds of an impending real estate sale and the
sale of certain assets relating to its marine product lines during the first
quarter of fiscal 1997 (see Note 10).

Long-term debt consists of the following:

March 31
1996 1995
-----------------------------
Term loan payable to a bank in monthly principal
installments of $8,083 plus interest
with the remaining balance due on
June 30, 1996 $330,155 $426,962

Less current portion 330,155 96,672
-----------------------------

$ 0 $330,290
==============================

The fair value of the Company's debt obligations approximates the outstanding
principal balances based on the short repayment period and variable interest
rate.

5. Stockholders' Equity

The Class A and Class B Common Stocks are entitled to dividends based on a
share-for-share basis. Each share of Class B Common Stock may be converted into
seven shares of Class A Common Stock. Class B Common Stock has sole voting
rights unless more than 5,000 shares of Class B Common Stock are converted into
Class A Common Stock, at which time the holders of Class A Common Stock will
have sole voting rights. At

-23-

<PAGE>
Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

5. Stockholders' Equity (continued)

March 31, 1996, 175,000 shares of Class A Common Stock were reserved for
issuance in connection with the conversion rights of Class B Common Stock.

6. Stock Options

Under terms of the Incentive Stock Option Plan, options may be granted to key
employees to purchase shares of Class A Common Stock at prices not less than the
fair market value at date of grant. The options, subject to termination of
employment, expire five years after date of grant; however, the term may be
extended up to ten years at the discretion of the Stock Option Plan Committee.
Options are nontransferable other than upon death.

On April 15, 1994, the Class B Common Stockholders voted to increase the maximum
number of shares available to 250,000 shares. Options become exercisable at the
discretion of the Stock Option Plan Committee. Stock option information is as
follows:

Stock Option Stock Option
Shares Price Per Share
------------------------------------

Outstanding at March 31, 1994 155,032 $3.12-$4.19
Granted 22,500 $2.00
Exercised
Expired 10,000 $4.19
------------------------------------
Outstanding at March 31, 1995 167,532 $2.00-$3.19
Granted 15,000 $2.16
Exercised - -
Expired 15,000 $3.19
------------------------------------

Outstanding at March 31, 1996 167,532 $2.00-$3.19
====================================

Exercisable at March 31, 1996 91,749 $2.00-$3.19
====================================

During fiscal 1996, the Company issued nonqualified stock options for 30,000
shares of the Company's common stock at an exercise price of $2.25. At March 31,
1996, 13,333 nonqualified stock option shares were exercisable.

-24-

<PAGE>
Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

7. Employee Benefit Plans

The Company has a qualified contributory Profit Sharing Retirement Plan (the
Profit Sharing Plan) for all employees who have completed six months of service.
Contributions to the Profit Sharing Plan are made at the discretion of the Board
of Directors, provided that the total amount contributed for any plan year does
not exceed the maximum amount allowable under the Internal Revenue Code. There
was no employer contribution to the Profit Sharing Plan during the years ended
March 31, 1996, 1995 and 1994.

On April 18, 1991, the Company entered into agreements with three executives
which provide for retirement, death and severance benefits. The agreements
provide for retirement benefits equal to 1 2/3 times annual salary at retirement
payable over five years. Pursuant to these agreements, the Company provided
$62,700 of retirement expense during 1994. The retirement, death and severance
benefits were fully accrued at March 31, 1994. At March 31, 1996 and 1995, the
deferred compensation liability amounted to $250,675 and $339,380, respectively,
and is included in accrued expenses in the accompanying balance sheet.

8. Transactions with Affiliated Companies

The Company, in the ordinary course of business, purchases from and sells
products and services to companies in which certain Company directors own an
interest. Purchases of such products and services amounted to approximately
$124,000 in 1996, $220,000 in 1995 and $373,000 in 1994; sales to affiliated
companies were less than $10,000 in each year.

-25-

<PAGE>

Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

9. Income Taxes

Significant components of the Company's deferred tax assets and liabilities are
as follows:

1996 1995
----------------------------------
<S> <C> <C>
Deferred tax assets and liabilities (current
and noncurrent):

Current:
Inventory valuation allowance $ 248,000 $ 319,000
Deferred compensation accruals 101,000 137,000
Accruals for compensated absences 28,000 28,000
Doubtful accounts 46,000 17,000
Other 3,000 9,000
----------------------------------

Total deferred tax assets (current) 426,000 510,000
Valuation allowance for deferred tax assets
(current) 406,000 457,000
----------------------------------

Net deferred tax assets (current) $ 20,000 $ 53,000
==================================

Noncurrent:
Deferred tax assets (noncurrent):
Federal net operating loss carryforward $2,311,000 $1,690,000
State net operating loss carryforward 392,000 289,000
Other 10,000 10,000
----------------------------------

Total deferred tax assets (noncurrent) 2,713,000 1,989,000
Valuation allowance for deferred tax assets
(noncurrent) 2,713,000 1,782,000
----------------------------------

Net deferred tax assets (noncurrent) 0 207,000
Deferred tax liabilities (tax depreciation in
excess of book depreciation) 25,000 310,000
----------------------------------

Net deferred tax liability (noncurrent) $ 25,000 $ 103,000
==================================
</TABLE>

-26-

<PAGE>

Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

9. Income Taxes (continued)

Income tax provisions (benefit) consist of the following:

1996 1995 1994
-------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 15,000 $ (79,000)
Foreign $ 35,000 11,000 15,000
-------------------------------------------
35,000 26,000 (64,000)
Deferred (45,000) (16,000) (139,000)
-------------------------------------------

$(10,000) $ 10,000 $(203,000)
===========================================
</TABLE>

A reconciliation of income taxes computed at the statutory federal income tax
rate to the income tax provision follows:

1996 1995 1994
-------------------------------------------
<S> <C> <C> <C>
Income tax benefit at statutory federal
income tax rate $(1,038,000) $(1,135,000) $(694,000)
Tax benefit from foreign sales
corporation (38,000) (43,000)
Net operating loss without benefit 907,000 1,152,000 399,000
Foreign dividend 102,000
Other, net 121,000 31,000 33,000
-------------------------------------------

$ (10,000) $ 10,000 $(203,000)
===========================================
</TABLE>

The Company recorded refundable income taxes of $79,000 in 1994 from the
carryback of net operating losses. No income tax payments were made in 1996,
1995 and 1994.

The Company has federal net operating loss carryforwards of $6,796,000 to offset
future taxable income. These carryforwards expire as follows: $822,000 in the
year 2009, $3,306,000 in the year 2010 and $2,668,000 in the year 2011.

For financial reporting purposes, valuation allowances have been recognized to
offset deferred tax assets related to net operating loss carryforwards and
certain other reserves. Valuation allowances amounted to $880,000, $1,572,000
and $667,000 in 1996, 1995 and 1994, respectively.

-27-

<PAGE>

Alden Electronics, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

10. Subsequent Events

Subsequent to March 31, 1996, the Company entered into agreements to sell a
portion of its real estate holdings and equipment and inventory related to its
marine product line to separate buyers. These sales of assets are not expected
to result in the recognition of any significant gains or losses.

The Company also entered into termination agreements with two senior executives.
Compensation and termination benefits amount to approximately $210,000 which
will be recognized in fiscal 1997.

11. Major Customer and Segment Information

Sales and leases to the United States Government and its agencies accounted for
approximately 42%, 30%, and 38% of the Company's revenue for 1996, 1995 and
1994, respectively. Foreign operations generated earnings before income taxes of
$103,000, $44,000, and $67,000 in 1996, 1995 and 1994, respectively. In
addition, the Company had export sales from the United States of $1,583,000,
$2,942,000, and $2,115,000 in 1996, 1995 and 1994, respectively.

12. Quarterly Results of Operations (Unaudited)

Year ended
March 31, 1996 First Quarter Second Quarter Third Quarter Fourth Quarter
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $3,843,487 $3,453,983 $2,914,414 $2,603,816
Gross profit 1,154,927 719,244 (156,196) 292,652
Net loss (7,263) (384,062) (1,990,859) (706,538)
Net loss per share $ (.00) $ (.18) $ (.91) $ (.32)
</TABLE>

Year ended
March 31, 1995 First Quarter Second Quarter Third Quarter Fourth Quarter
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $3,821,077 $4,845,729 $ 4,629,292 $4,931,214
Gross profit 1,185,736 1,501,238 (246,905) 353,580
Net loss (72,763) (258,820) (1,862,896) (1,153,063)
Net loss per share $ (.03) $ (.12) $ (.85) $ (.53)
</TABLE>

-28-

<PAGE>

ITEM 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

PART III

ITEM 10. Directors and Executive Officers.

(a) Identification of Directors.

Year Since
Expiration Other Named Person
Date of Positions Has Contin-
Term of with the uously Been
Name Office (1) Company Age a Director
- - ---- ---------- ------- --- ----------

Elizabeth J. Alden (2) None 42 1989

William L. Alden (3)(4) None 70 1971

Arnold A. Kraft President 52 1994
& Chief
Executive
Officer

J. David Luening (3) None 61 1994

George P. Bauer (2) None 65 1995

(1) The Expiration Date of the term of office of each Director is the Deferred
Annual Meeting of Stockholders scheduled for July 23, 1996.

(2) Member of the Audit Committee.

(3) Member of the Compensation Committee.

(4) William L. Alden was also a Director during the years 1952-1955.

-29-
<PAGE>

(b) Identification of Executive Officers.

The following table sets forth certain information concerning each
executive officer of the Company. The principal occupation of each executive
officer, unless otherwise indicated in the table, has remained unchanged during
the past five years.

Executive Other Positions
Name Office Held Age with the Company
---- ----------- --- ----------------
Arnold A. Kraft (1) President & 52 Director
Chief Executive
Officer

Robert J. Chief Operating
Wentworth (2) Officer, Treasurer 41 Clerk
& Vice President
of Finance and
Administration

John L. Vice President of
Alexanderson (3) Marketing 57 None

(1) Prior to joining the Company in January, 1994, Mr. Kraft served as the
President and Chief Executive Officer of Bachman Information Systems, Inc., a
software products and services company, for at least the preceding five years.
Mr. Kraft intends to leave the Company by September 8, 1996, and it is expected
that Mr. Wentworth will assume his duties and responsibilities at that time.

(2) Mr. Wentworth was elected Vice President of Finance and Administration
in March, 1994, and Treasurer and Clerk in September, 1993. Mr. Wentworth was
elected Chief Operating Officer in June, 1996. Prior to joining the Company as
Senior Controller in May, 1993, Mr. Wentworth served as an Audit Executive with
Ernst & Young LLP in Boston, Massachusetts, for at least the preceding five
years.

(3) Mr. Alexanderson managed his own marketing firm from July, 1993 until
joining the Company in May, 1994. Mr. Alexanderson also held various positions
with Digital Equipment Corporation, including Vice President of Sales Training
from July, 1991 to July, 1993, and Vice President of Direct Marketing for at
least the preceding five years. As of July 1, 1996, Mr. Alexanderson is engaged
on a part-time basis, and is expected to remain with the Company until September
1, 1996.

-30-
<PAGE>

Not Applicable.

(d) Family Relationships.

William L. Alden is the uncle of Elizabeth J. Alden.

(e) Business Experience.

Unless described in (a) or (b) above, the principal occupations and
employment during the past five years of each person identified in (a) and (b)
above are set forth in the following paragraphs.

For at least the preceding five years, William L. Alden has been the
President of a film development company, Pilgrim Productions, Ltd.

For at least the preceding five years, Elizabeth J. Alden has been
the President, Treasurer and Assistant Clerk of Alden Products Co., a
manufacturer of components for OEM electronic equipment and a supplier of the
Company. (See Item 13).

For at least the preceding five years, J. David Luening has been a
principal in the international management consulting firm, Marakon Associates,
and from 1990 to 1993, Mr. Luening served as guest lecturer and advisor in the
Graduate School of Business Administration of New York University and a Director
of its Management Decision Laboratory.

A former executive with IBM whose positions included Group
Director of Business Systems for Europe, Africa and the Middle East, George
P. Bauer has managed his own investment banking firm, G.P.B. Group, Ltd. for
at least the preceding five years. Mr. Bauer also consults with profit and
non-profit institutions in the United States and Europe in the area of
corporate and information systems planning. He is a trustee of Yale Divinity
School in New Haven, Connecticut, and a Director of Pinellas Community Bank
in St. Petersburg, Florida.

(f) Involvement in Certain Legal Proceedings.

None.

-31-
<PAGE>

(g) Compliance with Section 16(a) of the Securities Exchange Act of
1934.

Section 16(a) of the Securities Exchange Act of 1934 requires
officers and directors of the Company and persons who own more than ten percent
of a registered class of the Company's equity securities (collectively,
"Reporting Persons") to file reports of ownership and changes in ownership of
the Company's Class A Common Stock with the Securities and Exchange Commission,
and to furnish the Company with copies of all such reports. Based solely on its
review of the copies of such reports furnished to the Company by such Reporting
Persons or on the written representations of such Reporting Persons that no
reports were required, the Company believes that during the fiscal year ended
March 31, 1995, all of the Reporting Persons complied with their Section 16(a)
filing requirements with respect to their ownership of the Company's Class A
Common Stock.

ITEM 11. Executive Compensation.

(a) Summary Compensation Table.

The Summary Compensation Table sets forth individual compensation
information on the Chief Executive Officer and other executive officers of the
Company and its subsidiaries whose total compensation exceeded $100,000 for
services rendered in all capacities during the fiscal year ended March 31, 1996.

Annual
Name and Principal Compensation Options/ All Other
Position Year Salary Bonus SARS (4) Compensation
- - ------------------- ---- ------ ----- -------- ------------
Arnold A. Kraft (1) 1996 $180,000 1,179 (5)
Chief Executive 1995 180,075 $20,000 7,241 (6)
Officer 1994 31,154 110,032

John L. Alexanderson (2) 1996 $125,000 $20,000 15,000
Vice President of Marketing 1995 103,440

Robert J. Wentworth (3) 1996 $105,000 $20,000
Chief Operating Officer 1995 100,229 5,000
1994 78,489 15,000

(1) Mr. Kraft joined the Company as President and Chief Executive Officer
on January 24, 1994.

(2) Mr. Alexanderson joined the Company in May, 1994, and was elected a
Vice President of Marketing in July, 1995.

-32-
<PAGE>

(3) Mr. Wentworth joined the Company as Senior Controller in May, 1993.

(4) Awards in fiscal years 1996, 1995 and 1994 represent the granting of stock
options under the Company's Amended and Restated 1987 Incentive Stock Option
Plan.

(5) The amount reported includes $1,179 of term life insurance premiums
paid by the Company on behalf of Mr. Kraft.

(6) The amount reported includes a reimbursement of $6,062 for health insurance
coverage maintained by Mr. Kraft's former employer, and $1,179 of term life
insurance premiums paid by the Company on behalf of Mr. Kraft.

(b) Individual Option Grants in Last Fiscal Year.

The following table sets forth, with respect to the Executive
Officers named in the Summary Compensation Table, information with respect to
the aggregate number of options granted during the last fiscal year.

Percentage
of Total
Options
Granted to
Employees
Options in Fiscal Exercise Expiration
Granted (1) Year Price Date
------- ----------- ----- ----

John L. Alexanderson 15,000 100% $2.16 5/17/05

(1) Options for 4,200 shares of the Company's Class A Common Stock vested on May
17, 1995, and options for 300 additional shares vest on the first day of each
calendar month thereafter commencing July 1, 1995.

The following table sets forth, with respect to the Executive
Officers named in the Summary Compensation Table, information with respect to
the aggregate amount of options exercised during the last fiscal year, any value
realized thereon, the number of unexercised options at the end of the fiscal
year (exercisable and unexercisable) and the value with respect thereto.

-33-
<PAGE>

Shares Number of Unexercised
Acquired on Value Options at Fiscal
Exercise Realized Year End (1)
----------- -------- ---------------------
Exercisable Unexercisable
----------- -----------
Arnold A. Kraft ___ ___ 67,849 42,183

John L. Alexanderson ___ ___ 6,900 8,100

Robert J. Wentworth ___ ___ 9,200 10,800

(1) As of the fiscal year end, the exercise price of such options equalled or
exceeded the market price of the underlying security.

(d) Compensation of Directors.

The Company generally compensates outside Directors, who are not
employed by the Company, at $1,000 per meeting attended.

On July 25, 1995, Mr. Luening, a Director of the Company, received
non-qualified stock options for 30,000 shares of the Company's Class A Common
Stock at an exercise price of $2.25 per share. As of March 31, 1996, options for
13,333 shares were exercisable, and 833 1/3 shares become exercisable on the
first day of each calendar month thereafter. The term of the options expires
July 24, 2005.

(e) Employment Contracts, Termination of Employment and Change in
Control Arrangements.

On April 18, 1991, the Company entered into Employment and Severance
Benefits Agreements with Joseph H. Girouard and other former executive officers
of the Company, Messrs. Lawrence A. Farrington and S. Charles Sviokla. The
Agreements generally defined the compensation received by each of the
individuals as well as the scope and term of employment. Provisions were made
for severance benefits payable upon death, disability, retirement, involuntary
termination without cause, and termination following change in control. Amounts
paid in fiscal 1996 under these Agreements totalled $113,388. Mr. Farrington
retired on May 21, 1993, and Messrs. Sviokla and Girouard retired on December
31, 1993.

Under their respective Agreements, Messrs. Girouard, Farrington and
Sviokla are entitled to 1 2/3 times the individual's annual salary on the date
of his retirement payable over five (5) years, and, during such period, health
insurance

-34-
<PAGE>

coverage and a death benefit equal to the remaining payments due the individual
at the time of his death.

In January, 1994, the Company entered into an Employment Agreement
with Arnold A. Kraft, providing for a minimum annual salary of $180,000, and a
performance bonus beginning with the 1995 fiscal year. The Employment Agreement
provides for, among other things, the grant of options to purchase 110,032
shares of the Company's Class A Common Stock pursuant to the Company's Amended
and Restated 1987 Incentive Stock Option Plan, and severance payments in the
event of a change in control. Upon a termination of Mr. Kraft's employment
following a change in control, the Company is obligated to continue fringe
benefits made available to Mr. Kraft during the term of the Employment Agreement
and his annual salary for a period not to exceed three years following the date
of his employment termination. Severance payments, including fringe benefits and
salary for a one year period, are payable to Mr. Kraft should the Company
terminate his employment without cause, or Mr. Kraft terminates his employment
following the Company's breach of the Employment Agreement, a change in Mr.
Kraft's title or a diminution of his duties, the failure of the Board to
nominate Mr. Kraft for election to the Board of Directors, or to recommend to
the stockholders his election to the Board of Directors, a change in the
Company's principal place of business, or a change in control which is not
approved by the Board of Directors.

On June 10, 1996, the Company elected to terminate Mr. Kraft's employment
without cause by issuing a ninety day termination notice pursuant to the terms
of the Employment Agreement. Mr. Kraft will be entitled to the continuation of
his salary and fringe benefits for a period of one year following expiration of
the interim ninety day period.

On November 15, 1995, the Company granted Robert J. Wentworth certain
severance benefits, payable if the Company terminates his employment without
cause. The severance benefits include the payment of base pay and certain fringe
benefits for a minimum period of six months. If Mr. Wentworth remains unemployed
at the end of the six month period, he will continue to receive severance
benefits until the earlier of the expiration

-35-
<PAGE>

of an additional three month period or the date Mr. Wentworth gains new
employment.

The Company's severance commitment to Mr. Alexanderson is the continuation
of base pay and certain fringe benefits for a minimum of three months. If Mr.
Alexanderson remains unemployed at the end of the three month period, he will
continue to receive severance benefits until the earlier of the expiration of an
additional three month period or the date Mr. Alexanderson gains new employment.
Mr. Alexanderson and the Company have agreed that Mr. Alexanderson will receive
his initial three month severance over a four month period, commencing July 1,
1996, in exchange for Mr. Alexanderson working on a part-time basis until
September 1, 1996.

The remainder of this page is intentionally left blank.

-36-
<PAGE>

ITEM 12. Security Ownership of Certain Beneficial Owners and Management.

(a) Security Ownership of Certain Beneficial Owners.

The following is a table showing those who own, beneficially, more
than 5% of the outstanding shares of Class B Common Stock of the Company as of
June 19, 1996.

Name and Amount and Percent
Address of Nature of of
Beneficial Owner Beneficial Ownership Class
- - ----------------- -------------------- -------
Elizabeth J. Alden 7,000 Shares. (1) 28%
68 Dover Road Sole voting and
Wellesley, MA 02181 investment power.

9,000 Shares. (2) 36%
Shared voting and
investment power.

Joan K. Alden 7,000 Shares. (1) 28%
380 Grove Street
Needham, MA 02192

William L. Alden 9,000 Shares. (2) 36%
40 Washington Street Shared voting and
Westboro, MA 01581 investment power.

Henry C. Horner 4,500 Shares. (3) 18%
370 Main Street Sole voting and
Worcester, MA 01608 investment power.

John Sands 1,500 Shares. 6%
5 Carpenter Lane Sole voting and
Marshfield, MA 02054 investment power.

Priscilla Beck 1,500 Shares. 6%
37 Oldham Road Sole voting and
Pembroke, MA 02359 investment power.

Janet Samson 1,500 Shares. 6%
12715 Fredericksburg Drive Sole voting and
Saratoga, CA 95070 investment power.

The Bank of Boston 9,000 Shares. (2) 36%
100 Federal Street Shared voting and
Boston, MA 02210 investment power.

-37-
<PAGE>

Frances H. Nolan 7,000 Shares. (l) 28%
Miller, Wachman & Co.
40 Broad Street
Boston, MA 02109

(1) Held as Trustee of the John M. Alden GST Exempt Qualified Terminable
Interest Marital Deduction Trust. Elizabeth J. Alden exercises sole voting
and investment control of the shares of Class B Common Stock held by the
Trust. Joan K. Alden is the sole beneficiary of the Trust.

(2) Held as Trustee of the Trust under Article Fifth of the Milton Alden
Trust-1960.

(3) These shares are held by Henry C. Horner as Trustee of the Judith G.
Alden Irrevocable Trust-1986 of which William L. Alden, a Director of the
Registrant, is the sole beneficiary.

The remainder of this page is intentionally left blank.

-38-
<PAGE>

(b) Security Ownership of Management.

The following is a table showing the ownership as of June 19, 1996,
by each Director of the Registrant and each Executive Officer identified in the
Summary Compensation Table under Item 11 above and by all Directors and
Executive Officers of the Registrant as a group of each class of equity
securities of the Registrant:

Name of Directors, Title
Executive Officers Of Amount and Nature of Percent
or Identity of Group Class Beneficial Ownership of Class
- - -------------------- ------ -------------------- --------
Elizabeth J. Alden Class B (i) 9,000 Shares. 36%
Shared voting and
investment power.

(ii) 7,000 Shares. 28%
Sole voting and
investment power.

Class A (i) 194,612 Shares. (4) 9% (2)
Shared voting (3)
and investment power.

(ii) 158,620 Shares. (1) 7% 2)
Sole voting (3) and
investment power.

William L. Alden (5) Class B 9,000 Shares. 36%
Shared voting and
investment power.

Class A 194,612 Shares. (4) 9% (2)
Shared Voting (3) and
investment power.

J. David Luening Class A 10,000 Shares. Sole Less than
voting (3) and 1% (2)
investment power.

George P. Bauer Class A 284,000 Shares 13% (2)
Sole voting (3) and
investment power.

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<PAGE>

All Directors & Class B (i) 9,000 Shares. 36%
Officers as a Group (5) Shared voting (3) and
investment power.

(ii) 7,000 Shares. 28%
Sole voting (3) and
investment power.

Class A (i) 452,620 Shares. (1) 21% (2)
Sole voting (3) and
investment power.

(ii) 195,212 Shares. 9% (2)
(4) Shared voting (3)
and investment power.

(1) This amount includes 49,000 shares which may be acquired upon conversion of
Class B Common Stock.

(2) This percentage is based upon issued shares and assumes the conversion of
all shares of Class B Common Stock (25,000 shares) into the Class A Common Stock
(175,000 shares).

(3) See Note 5 to Financial Statements (Item 8 above) for an explanation of the
voting rights of the holders of the Class A Common Stock and the Class B Common
Stock.

(4) This amount includes 63,000 shares which may be acquired upon conversion of
Class B Common Stock.

(5) Amounts shown in this table do not include 83,910 shares of Class A Common
Stock and 4,500 shares of Class B Common Stock held by Henry C. Horner as
Trustee of the Judith G. Alden Irrevocable Trust-1986 of which William L. Alden,
a Director of the Company, is sole beneficiary.

The Company's Class B Common Stock has sole voting rights unless
more than 5,000 shares of the Class B Common Stock are converted into Class A
Common Stock, at which time the holders of Class A Common Stock will have sole
voting rights.

ITEM 13. Certain Relationships and Related Transactions.

(a) Transactions with Management and Others.

Alden Products Co. may be considered a related or affiliated
company to the Registrant.

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<PAGE>

The voting common stock of Alden Products Co. is wholly owned by
Elizabeth J. Alden. Alden Products Co. is a manufacturer, and a supplier to
the Company, of some of the mechanical portions of recorders and of certain
other component parts.

During fiscal 1996 the Company engaged in various transactions with
Alden Products Co., all of which transactions have been on terms which the
Company believes are no less favorable to the Company than were otherwise
available on the market. Purchases from Alden Products Co. amounted to
approximately $123,981 in fiscal 1996.

(b) Certain Business Relationships.

None, except as may be described in (a) above.

None required to be reported.

(d) Transactions with Promoters.

Not applicable.

PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) 1. Financial Statements.

The following consolidated financial statements of the
Registrant are included in Item 8:

Report of Independent Auditors

Consolidated balance sheets--March 31, 1996 and March 31, 1995.

Consolidated statements of operations and retained earnings--Years
ended March 31, 1996; March 31, 1995; and March 31, 1994.

Consolidated statements of cash flows--Years ended March 31, 1996;
March 31, 1995; and March 31, 1994.

Notes to consolidated financial statements.

-41-
<PAGE>

2. Financial Statement Schedules.

The following financial statement schedule of the Registrant
is included in Item 14(d):

Schedule II - Valuation and Qualifying Accounts.

All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have been
omitted.

3. Listing of Exhibits.

A Listing of Exhibits filed as part of this Form 10-K is included on
Page 45 hereof.

(b) Reports on Form 8-K. There have been no filings on Form 8-K during the
three months ended March 31, 1996. On June 26, 1996, the Company filed a Report
on Form 8-K regarding the disposition of certain assets which occurred on June
11, 1996.

(d) Financial Statement Schedule.

See next page for financial statement schedule.

-42-
<PAGE>
Alden Electronics, Inc.
Schedule II - Valuation and Qualifying Accounts
March 31, 1996
<TABLE>
<CAPTION>

Col. A Col. B Col. C Col. D Col. E
- - -----------------------------------------------------------------------------------------------------------------------------------
Additions
(1) (2)
Balance at Beginning Charged to Charged to Other Deductions Balance at End
Description of Period Costs & Expenses Accounts (describe) (describe) of Period
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts:

Year Ended March 31, 1996 $ 42,000 $ 140,402 $ 69,402 (A) $ 113,000

Year Ended March 31, 1995 $ 40,000 $ 22,515 $ 20,515 (B) $ 42,000

Year Ended March 31, 1994 $ 36,000 $ 15,000 $ 11,000 (C) $ 40,000
</TABLE>

(A) This amount represents amounts charged off as uncollectible of $69,402

(B) This amount represents amounts charged off as uncollectible of $20,515

-43-
<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.

ALDEN ELECTRONICS, INC.

/s/ Robert J. Wentworth
------------------------------
Robert J. Wentworth, Treasurer
& Chief Financial Officer

Date: July 15, 1996

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.

SIGNATURE TITLE DATE
- - --------- ----- -----

/s/ Arnold A. Kraft President & Chief July 15, 1996
- - ------------------------ Executive Officer
Arnold A. Kraft (Principal Executive
Officer), Director

/s/ William L. Alden
- - -------------------- Director July 11, 1996
William L. Alden

/s/ Elizabeth J. Alden Director July 12, 1996
- - ----------------------
Elizabeth J. Alden

- - -------------------- Director --------------
J. David Luening

/s/ George P. Bauer Director July 12, 1996
- - -------------------
George P. Bauer

-44-
<PAGE>

LIST AND INDEX OF EXHIBITS

Item Incorporated By
Number Description Reference To

3.1 Restated Articles Form 10-K for fiscal
of Organization year ended March 27,
1982

3.2 Amendment to Form 10-K for fiscal
Articles of year ended
Organization March 26, 1983
effective
June 13, 1983

3.3 Amendment to Form 10-K for fiscal
Articles of year ended March 28,
Organization 1987
effective
March 30, 1987

3.4 By-Laws, as Form 10-K for fiscal
amended to date year ended March 31, 1994

4.1 Specimen Stock Form 10, Exhibit 3;
Certificate, Class S-1 Registration
A Common Stock Statement (No. 2-27991)
Exhibit 4(A)

10.1 Amended and Restated Form 10-K for fiscal
1987 Incentive year ended March 31, 1994
Stock Option Plan

10.2 Loan Agreement Form 10-K for
with Shawmut fiscal year ended
Bank, N.A. dated March 31, 1995
August 5, 1994

10.3 $483,354 Secured Term Form 10-K for
Note dated August 5, fiscal year ended
1994 to Shawmut March 31, 1995
Bank, N.A.

10.4 $1,500,000 Secured Form 10-K for
Revolving Time Note fiscal year ended
to Shawmut Bank, N.A. March 31, 1995
dated August 5, 1994

-45-
<PAGE>

10.5 Financing Commitment Form 10-K for
Letter from Shawmut fiscal year ended
Bank dated June 12, March 31, 1995
1995

10.6 Modification
Agreement dated
November 21, 1995
with Shawmut Bank,
N.A.

10.7 Employment and Form 10-K for fiscal
Severance Benefits year ended March 30,
Agreement with 1991
Joseph H. Girouard,
dated April 18, 1991.

10.8 Employment and Form 10-K for fiscal
Severance Benefits year ended March 30,
Agreement with 1991
Lawrence A. Farrington
dated April 18, 1991.

10.9 Employment and Form 10-K for fiscal
Severance Benefits year ended March 30,
Agreement with 1991
S. Charles Sviokla
dated April 18, 1991.

10.10 Employment Agreement Form 10-K for fiscal
with Arnold A. Kraft year ended March 31, 1994
dated January 24, 1994

10.11 Severance Agreement
with Robert J. Wentworth
dated November 15, 1995

10.12 Severance Agreement
with John L. Alexanderson
dated May 19, 1994

11 Statement re: Note 2 to the Financial
Computation of Statements in Item 8
per share earnings of this Form 10-K

-46-
<PAGE>

21 Subsidiaries of Form 10-K for fiscal
the Registrant year ended March 28, 1987

23 Consent of
Independent
Auditors

27 Financial Data Schedule

30641

-47-

MODIFICATION AGREEMENT

This Modification Agreement (the "Agreement"), dated as of November 21,
1995 between Alden Electronics, Inc. (the "Borrower"), a duly organized and
existing Massachusetts corporation with a place of business at 40 Washington
Street, Westborough Massachusetts 01581 and Shawmut Bank, N.A. (the "Bank"),
a national banking association with a place of business at One Federal Street,
Boston Massachusetts 02211.

RECITAL OF FACTS

WHEREAS, the Borrower entered into a Loan Agreement dated August 5, 1994
pursuant to which the Bank advanced the Borrower a total of $1,983,354. The sums
advanced under the Loan Agreement are evidenced by (i) a Secured Term Note dated
August 5, 1994 in the original principal amount of $483,354 made by the Borrower
payable to the Bank (the "$483,354 Note"); and (ii) a Secured Revolving Time
Note dated August 5, 1994 in the original principal amount of $1,500,000 made by
the Borrower payable to the Bank(the "$1.5 Million Note"). The $483,354 Note and
the $1.5 Million Note are together referred to herein as the "Notes"; and

WHEREAS, the Notes are secured by, among other things, a Security
Agreement (All Assets) dated August 5, 1994 (the "Borrower Security Agreement")
covering all of the assets of the Borrower; and

WHEREAS, the Borrower's obligations under the Notes were guaranteed by (i)
the Unlimited Guaranty of Alfax Paper & Engineering Company, Inc. ("Alfax")
dated August 5, 1994 (the "Alfax Guaranty"), (ii) the Unlimited Guaranty of
Alden International, Inc. ("Alden International") dated August 5, 1994 (the
"Alden International Guaranty"), (iii) and the Unlimited Guaranty of Zephyr
Weather Information Service, Inc. ("Zephyr") dated August 5, 1994 (the "Zephyr
Guaranty"). Alfax, Alden International and Zephyr are collectively referred to
herein as the "Guarantors." The Alfax Guaranty, Alden International Guaranty and
the Zephyr Guaranty are collectively referred to herein as the "Guaranties"; and

WHEREAS, the Alfax Guaranty is secured by a certain Security Agreement
(All Assets) dated August 5, 1994 (the "Alfax Security Agreement") covering all
of the assets of Alfax, the Alden International Guaranty is secured by a certain
Security Agreement (All Assets) dated August 5, 1994 (the "Alden International
Security Agreement") covering all of the assets of Alden

-1-
<PAGE>

International, and the Zephyr Guaranty is secured by a certain Security
Agreement (All Assets) dated August 5, 1994 (the "Zephyr Security Agreement")
covering all of the assets of Zephyr. The Alfax Security Agreement, Alden
International Security Agreement and Zephyr Security Agreement are collectively
referred to herein as the "Guarantor Security Agreements". The Loan Agreement,
Notes, Borrower Security Agreement, Guaranties and the Guarantor Security
Agreements and any and all documents executed in connection therewith or
incidental thereto are collectively referred to herein as the "Loan Documents";
and

WHEREAS, the Borrower has not complied with certain financial covenants as
set forth in the Loan Agreement and the $483,354 Note and therefore is in
default of the $483,354 Note. As a result, the balance of the $483,354 Note is
due and payable immediately. The $1.5 Million Note matured on September 1, 1995
and the balance thereof was fully due and payable on that date. As a result of
the Borrower's failure to pay the balance of the $1.5 Million Note upon maturity
the Borrower is in default under the $1.5 Million Note. As a consequence of the
Borrower's defaults the Bank may exercise all of its rights and remedies under
the Loan Documents, including, foreclosing upon its collateral; and

WHEREAS, as of November 21, 1995 the unpaid balances of (i) the $483,354
Note equaled $362,514 in principal and $1,812.57 in accrued but unpaid interest,
and (ii) the $1.5 Million Note equaled $450,000.00 in principal and $2,401.39 in
accrued but unpaid interest. Thus, the Borrower's and the Guarantors' total
indebtedness to the Bank under the Notes as of November 21, 1995 equaled
$816,727.96 (the "Indebtedness"); and

WHEREAS, the Borrower has requested that the Bank refrain from exercising
its rights and remedies and modify certain terms of the Loan Documents and the
Bank has agreed to do so, subject to the terms and provisions set forth herein,
which include, among other things, an extension of the maturity date of the $1.5
Million Note and an acceleration of the maturity date of the $483,354 Note.

NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, and in reliance upon the
representations and warranties set forth below and for good and valuable
consideration, the Borrower, Guarantors and the Bank hereby agree as follows:

-2-
<PAGE>

1. Incorporation of Recitals. The above recitals are incorporated
herein by reference and are expressly made a part hereof.

2. Ratification of Obligations. The Borrower and the Guarantors, as
applicable, hereby ratify and confirm in all respects and without condition all
of the terms and provisions of the Loan Documents, as modified herein and each
agrees that said terms and provisions, except to the extent expressly modified
herein or therein, continues in full force and effect. Without limiting the
foregoing, the Borrower and the Guarantors, as applicable, expressly acknowledge
that the Borrower Security Agreement and the Guarantor Security Agreements, as
applicable, constitute valid liens on the assets described therein. With respect
to the payment and performance of any obligation under the Loan Documents, as
modified herein, the Borrower and the Guarantors acknowledge and agree that as
of the date hereof they do not have any defense, right of setoff, recoupment or
counterclaim against the Bank, all of which together are hereby waived.

3. Modification of $483,354 Note. The Borrower hereby agrees that the
$483,354 Note shall be modified and repaid as follows notwithstanding anything
contained in the $483,354 Note to the contrary:

(a) Maturity Date - The maturity date of the $483,354 Note, as
amended, upon which all unpaid principal, accrued and unpaid interest, fees, and
other costs relating thereto shall be due and payable, shall be June 30, 1996;
and

(b) Interest Rate - Commencing as of the date of this Agreement,
interest shall accrue on the outstanding principal balance of the $483,354 Note,
as amended, at a variable rate per year of two (2%) percentage points in excess
of the Base Rate of interest in effect from time to time at the Bank. The Bank's
"Base Rate" shall mean the rate of interest announced by the Bank from time to
time as its Base Rate. Interest shall be computed on the basis of a 360-day year
and on actual days elapsed; and

(c) Monthly Payments - The outstanding indebtedness due under the
$483,354 Note shall be payable in the total number of 8 payments of principal
and interest, with each of the first 7 payments to consist of principal in the
amount of $8,083 plus interest, and the final payment to consist of the entire
unpaid principal balance plus accrued interest thereon. The first of said
payments of principal and interest is to be made on December 1, 1995 and the
remainder of said payments are payable on the

-3-
<PAGE>

corresponding day of each succeeding month, with the final payment, unless
sooner paid, to be made on the maturity date of June 30, 1996; and

(d) Default Rate - Upon the first to occur of (i) the maturity date
of the $483,354 Note, unless extended in writing by the Bank, or (ii) an Event
of Default under any of the Loan Documents or hereunder, without notice or
demand, the same being expressly waived, the aggregate per annum rate of
interest charged pursuant to the $483,354 Note shall be increased, at the option
of the Bank, to the greater of a rate which is equal to eighteen percent (18%)
per annum (or the maximum amount permitted by law, if lesser) until such Event
of Default is cured to the satisfaction of the Bank and waived in writing by the
Bank. Further, the Bank may collect a late charge not to exceed five percent
(5%) of any installment of interest or principal, or any other amount due to the
Bank which is not paid or reimbursed by the Borrower within fifteen (15) days of
the due date thereof to defray the extra cost and expense involved in handling
such delinquent payment and the increase risk of noncollection. The minimum late
charge shall be Fifteen Dollars ($15.00).

Except as expressly modified herein, all of the terms and conditions of
the $483,354 Note and the Loan Agreement shall remain in full force and effect.

4. Modification of $1.5 Million Note. The Borrower hereby agrees that the
$1.5 Million Note shall be modified and repaid as follows notwithstanding
anything contained in the $1.5 Million Note to the contrary.

(a) Maturity Date - The maturity date of the $1.5 Million Note, upon
which all unpaid principal, accrued and unpaid interest, fees, and other costs
relating thereto shall be due and payable, shall be June 30, 1996; and

(b) Interest Rate - Commencing as of the date of this Agreement,
interest shall accrue on the outstanding principal balance of the $1.5 Million
Note at a variable rate per year of two (2%) percentage points in excess of the
Base Rate of interest (as defined in the $1.5 Million Note) in effect from time
to time at the Bank; and

(c) Monthly Payments - The Borrower shall make monthly payments to
the Bank in an amount equal to the monthly accrued interest (at the rate set
forth above) on the unpaid balance of the $1.5 Million Note, payable in arrears
on the first day of each calendar month, commencing on December 1, 1995 until

-4-
<PAGE>

maturity on June 30, 1996 whereupon all unpaid principal, accrued and unpaid
interest, fees and other costs relating thereto shall be due and payable.

In addition to the payments due under the $1.5 Million Note as set forth
above, the Borrower also agrees that it shall also make the following payments
to the Bank on or before the corresponding dates referenced below, which shall
be applied first to any outstanding accrued interest under the $1.5 Million
Note, and then to the principal balance thereof:

Date of Payment Payment Amount
--------------- --------------

February 1, 1996 $50,000
May 1, 1996 $50,000

The Borrower acknowledges and agrees that notwithstanding anything
contained in the Loan Agreement to the contrary, the Borrower's ability to
obtain advances under its line of credit are hereby terminated and the Bank
shall not be obligated to advance or readvance any additional amounts to the
Borrower under the Loan Agreement or the $1.5 Million Note.

(d) Default Rate - Upon the first to occur of (i) the maturity date
of the $1.5 Million Note, unless extended in writing by the Bank, or (ii) an
Event of Default under any of the Loan Documents or hereunder, without notice or
demand, the same being expressly waived, the aggregate per annum rate of
interest charged pursuant to the $1.5 Million Note shall be increased, at the
option of the Bank, to the greater of a rate which is equal to eighteen percent
(18%) per annum (or the maximum amount permitted by law, if lesser) until such
Event of Default is cured to the satisfaction of the Bank and waived in writing
by the Bank. Further, the Bank may collect a late charge not to exceed five
percent (5%) of any installment of interest or principal, or any other amount
due to the Bank which is not paid or reimbursed by the Borrower within fifteen
(15) days of the due date thereof to defray the extra cost and expense involved
in handling such delinquent payment and the increase risk of noncollection. The
minimum late charge shall be Fifteen Dollars ($15).

Except as specifically modified herein, all of the terms and conditions of
the $1.5 Million Note and the Loan Agreement shall remain in full force and
effect.

5. Additional Security for Notes. Prior to the execution of this Agreement
and as a condition precedent hereto, (i) the Borrower shall execute and deliver
to the Bank a first mortgage

-5-
<PAGE>

in form and substance satisfactory to the Bank covering the premises known as 40
Washington Street, Westborough, Massachusetts (the "40 Washington Street
Premises"); and (ii) Alfax shall execute and deliver to the Bank a first
mortgage in form and substance satisfactory to the Bank covering the premises
known as 35 Washington Street, Westborough, Massachusetts (the "35 Washington
Street Premises"). The 40 Washington Street Premises and the 35 Washington
Street Premises are together referred to herein as the "Mortgaged Premises".

6. Fees Payable to Bank. In consideration of the Bank agreeing to enter
into this Agreement, the Borrower shall pay the Bank following fees (in addition
to the amounts otherwise due under the Notes) on or before the corresponding
dates referenced below:

Date of Fee Payment Fee Amount
------------------- ----------

November 21, 1995 $4,500 (i.e. one percent (1%)
of balance due under $1.5 Million
Note as of the date hereof).

December 31, 1995 An amount equal to one percent
(1%) of the then outstanding
balance due under the $483,354 Note.

December 31, 1996 An amount equal to one percent
(1%) of the then outstanding
balance due under the $1.5 Million
Note.

March 31, 1996 An amount equal to one percent
(1%) of the then outstanding
balance due under the $483,354 Note.

March 31, 1996 An amount equal to one percent
(1%) of the then outstanding
balance due under the $1.5 Million
Note.

7. Reimbursement of Legal Fees. Prior to the execution of this Agreement,
the Borrower shall reimburse the Bank for legal fees and expenses in the amount
of $6,388.95 (the "Legal Fee") which have been incurred by the Bank in
connection with the preparation and negotiation of this Agreement, provided
however,

-6-
<PAGE>

that the payment of the Legal Fee does not constitute a waiver of the Bank's
right to obtain reimbursement for legal fees incurred after the date hereof to
the extent provided in the Loan Documents.

8. Conditions. The following conditions constitute conditions
precedent to the effectiveness of this Agreement and shall be performed prior
to the execution hereof.

(a) The Borrowers shall pay the costs of obtaining a title insurance
policy insuring that the mortgages to be taken on the Mortgaged Premises are
valid and perfected first priority liens.

(b) The Borrower and Alfax shall provide the Bank with evidence,
satisfactory to the Bank, that all real property taxes due and payable with
respect to each of the Mortgaged Premises have been paid in full.

(c) The Borrower and Alfax shall provide the Bank with evidence,
satisfactory to the Bank, that the Mortgaged Premises are satisfactorily insured
in accordance with the terms of the Mortgages to be taken and that the Bank is
named as mortgagee/loss payee.

(d) The Borrower and the Guarantors shall provide the Bank with the
following authority documents in form and substance satisfactory to the Bank,
which certify that they are legally authorized to execute this Agreement and
perform the undertakings described herein on behalf of the Borrower.

(i) Secretary's Certificate of incumbency and
Authorization with Articles of Organization and By Laws;

(ii) Certificate of Legal Existence and Good Standing.

(e) The Guarantors shall execute ratifications of their Guaranties
in form and substance satisfactory to the Bank.

9. Covenants. Without any prejudice or impairment whatsoever to any
of the Bank's rights and remedies contained in the Loan Documents, the
Borrower and the Guarantors, as applicable, covenant and agree with the Bank
as follows:

(a) The Borrower and Guarantors shall comply with all the terms,
covenants and provisions contained in the Loan Documents, except as such terms,
covenants and provisions are

-7-
<PAGE>

expressly modified by this Agreement upon the terms set forth herein.

(b) The covenant regarding the Borrower's Maximum Debt to Tangible
Net Worth Ratio as set forth in Section 4.9 of the Loan Agreement is hereby
amended such that the reference to the phrase "fifty (50%) percent" therein
shall be deleted and replaced with "sixty five (65%) percent".

(c) The Borrower shall not permit its Current Ratio to fail below
1.75 to 1.00 at the end of any calendar month during the term of the Notes.
"Current Ratio" means the ratio of Total Current Assets to Total Current
Liabilities. "Total Current Assets" means total current assets determined in
accordance with GAAP. "Total Current Liabilities" means the total current
indebtedness under the Notes as determined in accordance with GAAP.

(d) Upon request, the Guarantors shall provide to the Bank annually,
(i) financial statements; (ii) tax returns; and (iii) credit reports in form and
substance satisfactory to the Bank which must demonstrate to the Bank's
satisfaction that there has been no material adverse change in the Borrower's
and Guarantors' consolidated financial condition.

(e) The Borrower shall at any time or from time to time execute and
deliver such further instruments, and take such action as the Bank may
reasonably request, in each case further to effect the purpose of this Agreement
and the Loan Documents.

10. Default. The occurrence of any one or more of the following
events shall constitute an event of default under this Agreement:

(a) The failure of the Borrower to pay any amounts required to be
paid under the Notes, as amended, or this Agreement as and when due, including,
payments due under the Notes upon maturity, it being expressly agreed that time
is of the essence;

(b) The failure of the Borrowers to comply with each and every term
of this Agreement as and when due, it being expressly agreed that time is of the
essence; or

(c) The occurrence of any default or event of default under either
the Notes, as amended, the mortgages, or any of the Loan Documents or any other
document, instrument or agreement

-8-
<PAGE>

evidencing the loan arrangements between the Bank and the Borrower, it being
expressly agreed that time is of the essence.

Upon the occurrence of any such event of default, the Notes, as amended
shall become immediately due and payable in full without further demand, notice,
or protest, all of which are hereby expressly waived by the Borrower, and the
Bank may immediately commence enforcing its rights and remedies under the Loan
Documents, including, without limitation, the commencement of foreclosure
proceedings against its collateral.

11. Representation and Warranties. The Borrower and the Guarantors,
as applicable, hereby warrant and represent to the Bank as follows:

(a) The liens evidenced by the Borrower's Security Agreement and the
Guarantor Security Agreements constitute valid and duly perfected liens on the
collateral described therein. Further, no person or entity has a lien on the
collateral or any of the Bank's other collateral covered by the Loan Documents
and neither the Borrower nor the Guarantors shall take any action to impair the
Bank's liens.

(b) The Borrowers and the Guarantors' obligations, indebtedness and
liabilities to the Bank under the Loan Documents are joint and several.

(c) The Borrower and the Guarantors have no counterclaims, rights of
setoff or defenses of any kind with respect to their obligations, liabilities
and indebtedness.

12. Release of Bank. The Borrower and Guarantors remit, release and
forever discharge the Bank and each of the Bank's present, future and former
officers, directors, employees and agents from any and all claims, losses,
liabilities, demands and causes of action of any kind whatsoever, if any,
whether absolute or contingent, known or unknown, matured or unmatured that the
Borrower and the Guarantors may now have or ever have as of the date hereof, and
related to the Borrower's and Guarantors' lending relationship with the Bank, in
whatever capacity, against the Bank or its present, future or former officers,
directors, employees and agents.

13. Waiver of Jury Trial. THE BORROWER AND GUARANTORS KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE ANY RIGHT THEY MAY HAVE OR
HEREAFTER HAVE TO A TRIAL BY JURY IN ANY PROCEEDING HEREAFTER INSTITUTED BY OR
AGAINST ANY OF THEM IN RESPECT OF THE LOAN DOCUMENTS OR THIS AGREEMENT OR THE
UNDERLYING

-9-
<PAGE>

TRANSACTIONS. THE BORROWER AND GUARANTORS CERTIFY THAT NEITHER THE BANK NOR ANY
OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF ANY SUCH PROCEEDING, SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

14. No Waiver. Except as otherwise expressly provided for in this
Agreement, upon the maturity of the Notes, a default under the Loan Documents,
or upon the Borrower's failure to fulfill any of its obligations hereunder
(including but not limited to a violation of the covenants, warranties or
representations contained herein), the Bank shall be free in its sole and
absolute discretion to proceed to enforce any and all of its rights and remedies
under or in respect of the Loan Documents, as amended pursuant to this
Agreement, or applicable law. All of the Borrower's and the Guarantors'
obligations and liabilities to the Bank under the Loan Documents and hereunder,
including, without limitation, the Borrower's payment obligations, are confirmed
and ratified in all respects and all of such obligations shall continue to be
secured as provided for in the Loan Documents. Except as specifically provided
for herein, nothing in this Agreement shall in any way affect any of the
Borrowers or the Guarantors' obligations or any of the rights and remedies of
the Bank arising under the Loan Documents, and the Bank shall not be deemed to
waive any or all of such rights or remedies with respect to any default which
has occurred (except with respect to the Borrower's default of certain financial
covenants, which defaults occurring through the date hereof but not after the
date hereof, are hereby waived) or shall occur under the Loan Documents, or of
any condition which, with notice or the lapse of time, or both, would become an
event of default under the Loan Documents and which, upon the Borrower's
execution and delivery of this Agreement might otherwise exist or which might
hereafter occur.

15. Headings. All headings contained in this Agreement are for
reference purposes only and are not intended to affect in any way the meaning
or interpretation of this Agreement.

16. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts and the Borrower and the Guarantors specifically
and irrevocably consent to the jurisdiction and venue of the Commonwealth of
Massachusetts with respect to all matters concerning this Agreement or the Loan
Documents or the enforcement of any of the foregoing.

17. Binding Affect. This Agreement shall inure to, and be binding upon,
the parties hereto in the same manner and to the

-10-
<PAGE>

same extent as is set forth in the Loan Documents. In any case where the
provisions of this Agreement differ from the provisions of the Loan Documents,
then the provisions of this Agreement shall have effect over those in the Loan
Documents.

18. Voluntary Agreement. The Borrower and Guarantors represent and warrant
that they are represented by counsel and that they are fully aware of the terms
contained in this Agreement and have voluntarily and without coercion of any
kind, entered into this Agreement and the documents executed in connection with
this Agreement.

IN WITNESS WHEREOF, the undersigned have each caused this Agreement to be
duly executed and delivered as an instrument under seal effective as of the date
first written above.

WITNESS: SHAWMUT BANK, N.A.

- - --------------------------- By: /s/ Robert Foley
---------------------------
Robert Foley,
Vice President

ALDEN ELECTRONICS, INC.

- - ---------------------------- By: /s/ Robert Wentworth
---------------------------
Robert Wentworth, Treasurer

GUARANTORS:

ALFAX PAPER & ENGINEERING
COMPANY, INC.

- - ---------------------------- By: /s/ Robert Wentworth
---------------------------
Robert Wentworth, Treasurer

ALDEN INTERNATIONAL, INC.

- - ---------------------------- By: /s/ Robert Wentworth
---------------------------
Robert Wentworth, Treasurer

-11-
<PAGE>

ZEPHYR WEATHER INFORMATION
SERVICE, INC.

- - ----------------------------- By: /s/ Robert Wentworth
---------------------------
Robert Wentworth, Treasurer

COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. November 21, 1996

Then personally appeared the above named Robert Foley, Vice President,
Shawmut Bank, N.A. and acknowledged the foregoing instrument to be the free act
and deed of said Bank, before me.

/s/ Kim M. Viera
----------------------------------
Notary Public
My Commission Expires: June 18, 1999

COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. November 21, 1996

Then personally appeared the above named Robert Wentworth, Treasurer,
Alden Electronics, Inc. and acknowledged the foregoing instrument to be the
free act and deed of the Company, before me.

/s/ Kim M. Viera
-----------------------------------
Notary Public
My Commission Expires: June 18, 1999

-12-
<PAGE>

COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. November 21, 1996

Then personally appeared the above named Robert Wentworth, Treasurer,
Alfax Paper & Engineering, Inc. and acknowledged the foregoing instrument to be
the free act and deed of the Company, before me.

/s/ Kim M. Viera
------------------------------------
Notary Public
My Commission Expires: June 18, 1999

COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. November 21, 1996

Then personally appeared the above named Robert Wentworth, Treasurer,
Alden International, Inc. and acknowledged the foregoing instrument to be the
free act and deed of the Company, before me.

/s/ Kim M. Viera
------------------------------------
Notary Public
My Commission Expires: June 18, 1999

COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. November 21, 1996

Then personally appeared the above named Robert Wentworth, Treasurer,
Zephyr Weather Information Service, Inc. and acknowledged the foregoing
instrument to be the free act and deed of the Company, before me.

/s/ Kim M. Viera
-----------------------------------
Notary Public
My Commission Expires: June 18, 1999

-13-

November 15, 1995

Mr. Robert W. Wentworth
21 Holt Street
Hopkinton, MA 01748

Dear Bob:

In recognition of your continuing contributions to Alden Electronics, we are
pleased to extend to you a severance arrangement as follows, should one ever be
needed.

In the event of Alden terminating your employment for other than good cause, we
agree to pay 6 months of base pay as severance, payable monthly; and an
additional 3 months of base pay payable monthly, until the sooner of you gain
new employment or the additional 3 months is over. Alden Electronics will also
pay your insurance costs in the amounts that would normally be paid to you as an
employee until you find new employment or the total of 9 months is up.

Sincerely,

/s/ Arnold A. Kraft
- - -------------------
Arnold A. Kraft
President & CEO

Thursday, May 19, 1994

Mr. John Alexanderson
61 Bartlett Hill
Concord, MA 01742

Dear John:

Alden is pleased to offer to you the position of Manager, Weather Division, of
Alden Electronics, Inc.

The salary will be $125,000 base and $25,000 incentive per year. The incentive
portion will be payable based on a set of mutually agreed upon goals and
objectives.

Subject to Board of Director's approval, we will grant to you 15,000 stock
options that vest as follows: 4200 at the end of 12 months and 300 per month for
the next 36 months. These options have a 10 year term.

Alden offers a choice of medical and dental insurance coverage plans. Attached
is the descriptive literature for our 3 choices. You will need to pay a portion
of the cost of coverage, per the attached schedule.

There is a non-contributory 401k plan, details attached.

We are in the process of revising our vacation and sick day policy and will
forward a copy of those updated policies as soon as they are completed, which is
expected to be in 2 to 3 weeks.

In the event of Alden terminating your employment for other than good cause, we
agree to pay 3 months of base pay as severance, payable monthly; and an
additional 3 months of base pay payable monthly, until the sooner of you gain
new employment or the additional 3 months is over.

We understand and agree that you have a long standing commitment to assist a
company in the area in an advisory capacity and wish to continue to do so for
about 2 hours per month. It is understood that this is not a competitive
situation.

We look forward to your joining the Alden Electronics team in the very near
future.

Sincerely,

/s/ Arnold A. Kraft
- - -------------------
Arnold A. Kraft
President & CEO

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form
S-8, No. 33-17434) pertaining to the 1987 Incentive Stock Option Plan and
Registration Statement (Form S-8, No. 33-81928-3) pertaining to the Amended and
Restated Alden Electronics, Inc. 1987 Incentive Stock Option Plan and in the
related Prospectuses of our report dated June 21, 1996 with respect to the
consolidated financial statements and schedule of Alden Electronics, Inc.
included in the Annual Report (Form 10-K) for the year ended March 31, 1996.

ERNST & YOUNG LLP

Boston, Massachusetts
July 11, 1996

31848

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